Document:

Exhibit 10f Second Amended & Restated Loan

__________________________________________________
MFRI, INC., MIDWESCO FILTER RESOURCES, INC.,
PERMA‐PIPE, INC., THERMAL CARE, INC.,
TDC FILTER MANUFACTURING, INC.,
MIDWESCO MECHANICAL AND ENERGY, INC.,
PERMA-PIPE INTERNATIONAL COMPANY, LLC,
AND PERMA‐PIPE CANADA, INC., AS BORROWERS
__________________________________________________

SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
Dated:  April 30, 2012
$38,000,000
__________________________________________________
__________________________________________________
__________________________________________________
BANK OF AMERICA, N.A.
Individually and as Agent for any Lender which is
or becomes a Party hereto
__________________________________________________

Table of Contents

          Page
		
	SECTION 1.
	CREDIT FACILITY                            1

		
	1.1
	Loans                                        1

		
	1.2
	Letters of Credit; LC Guaranties                            2

		
	1.3
	Term Loan                                    3

		
	1.4
	Intentionally Omitted                                3

		
	SECTION 2.
	INTEREST, FEES AND CHARGES                    3

		
	2.1
	Interest                                        3

		
	2.2
	Computation of Interest and Fees                        3

		
	2.3
	Intentionally Omitted                                3

		
	2.4
	Letter of Credit and LC Guaranty Fees                        3

		
	2.5
	Unused Line Fee                                4

		
	2.6
	Intentionally Omitted                                4

		
	2.7
	Audit Fees                                    4

		
	2.8
	Reimbursement of Expenses                            4

		
	2.9
	Bank Charges                                    4

		
	2.10
	Collateral Protection Expenses; Appraisals                    4

		
	2.11
	Payment of Charges                                5

		
	2.12
	No Deductions                                    5

		
	SECTION 3.
	LOAN ADMINISTRATION                        5

		
	3.1
	Manner of Borrowing Revolving Credit Loans/LIBOR Option            5

		
	3.2
	Payments                                    7

		
	3.3
	Mandatory and Optional Prepayments                        8

		
	3.4
	Application of Payments and Collections                    9

		
	3.5
	All Loans to Constitute One Obligation                        9

		
	3.6
	Loan Account                                    9

		
	3.7
	Statements of Account                                9

		
	3.8
	Increased Costs                                    9

		
	3.9
	Basis for Determining Interest Rate Inadequate                    10

		
	3.10
	Sharing of Payments, Etc                            10

		
	SECTION 4.
	TERM AND TERMINATION                        11

		
	4.1
	Term of Agreement                                11

		
	4.2
	Termination                                    11

		
	SECTION 5.
	SECURITY INTERESTS                            11

		
	5.1
	Security Interest in Collateral                            11

		
	5.2
	Other Collateral                                    12

		
	5.3
	Lien Perfection; Further Assurances                        13

		
	5.4
	Lien on Realty                                    13

		
	SECTION 6.
	COLLATERAL ADMINISTRATION                    13

		
	6.1
	General                                        13

		
	6.2
	Administration of Accounts                            14

		
	6.3
	Administration of Inventory                            15

		
	6.4
	Administration of Equipment                            15

		
	6.5
	Payment of Charges                                15

Table of Contents
(continued)
           Page
		
	SECTION 7.
	REPRESENTATIONS AND WARRANTIES                15

		
	7.1
	General Representations and Warranties                        15

		
	7.2
	Continuous Nature of Representations and Warranties                19

		
	7.3
	Survival of Representations and Warranties                    20

		
	SECTION 8.
	COVENANTS AND CONTINUING AGREEMENTS            20

		
	8.1
	Affirmative Covenants                                20

		
	8.2
	Negative Covenants                                22

		
	8.3
	Specific Financial Covenants                            26

		
	SECTION 9.
	CONDITIONS PRECEDENT                        26

		
	9.1
	Documentation                                    26

		
	9.2
	No Default                                    26

		
	9.3
	Other Conditions                                26

		
	SECTION 10.
	EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT    26

		
	10.1
	Events of Default                                26

		
	10.2
	Acceleration of the Obligations                            28

		
	10.3
	Other Remedies                                    28

		
	10.4
	Set Off and Sharing of Payments                        29

		
	10.5
	Remedies Cumulative; No Waiver                        29

		
	SECTION 11.
	AGENT                                    29

		
	11.1
	Authorization and Action                            29

		
	11.2
	Agent's Reliance, Etc                                30

		
	11.3
	Bank of America and Affiliates                            30

		
	11.4
	Lender Credit Decision                                31

		
	11.5
	Indemnification                                    31

		
	11.6
	Rights and Remedies to be Exercised by Agent Only                31

		
	11.7
	Agency Provisions Relating to Collateral                    31

		
	11.8
	Agent's Right to Purchase Commitments                        32

		
	11.9
	Right of Sale, Assignment, Participations                    32

		
	11.10
	Amendment                                    33

		
	11.11
	Resignation of Agent; Appointment of Successor                    33

		
	11.12
	Audit and Examination Reports; Disclaimer by Lenders                34

		
	SECTION 12.
	MISCELLANEOUS                            34

		
	12.1
	Power of Attorney                                34

		
	12.2
	Indemnity                                    35

		
	12.3
	Sale of Interest                                    35

		
	12.4
	Severability                                    35

		
	12.5
	Successors and Assigns                                35

		
	12.6
	Cumulative Effect; Conflict of Terms                        35

		
	12.7
	Execution in Counterparts                            35

		
	12.8
	Notice                                        35

		
	12.9
	Consent                                    36

		
	12.10
	Credit Inquiries                                    36

		
	12.11
	Time of Essence                                36

		
	12.12
	Entire Agreement                                36

		
	12.13
	Interpretation                                    36

Table of Contents
(continued)
Page
		
	12.14
	Confidentiality                                    37

		
	12.15
	GOVERNING LAW; CONSENT TO FORUM                    37

		
	12.16
	WAIVERS BY BORROWERS                            37

		
	12.17
	Advertisement                                    38

		
	12.18
	Reimbursement                                    38

		
	12.19
	Effect of Amendment and Restatement                        38

SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is made as of this 30th day of April, 2012, by and among BANK OF AMERICA, N.A., a national banking association (“Bank of America”) with an office at One South Wacker Drive, Suite 3400, Chicago, Illinois 60606, individually as a Lender and as Agent (“Agent”) for itself and any other financial institution which is or becomes a party hereto (each such financial institution, including Bank of America, is referred to hereinafter individually as a “Lender” and collectively as the “Lenders”), the LENDERS and MFRI, INC., a Delaware corporation (“MFRI”), MIDWESCO FILTER RESOURCES, INC., a Delaware corporation (“Midwesco”), PERMA‐PIPE, INC., a Delaware corporation (“Perma‐Pipe”), THERMAL CARE, INC., a Delaware corporation (“Thermal Care”), TDC FILTER MANUFACTURING, INC., a Delaware corporation (“TDC”), MIDWESCO MECHANICAL AND ENERGY, INC., a Delaware corporation (“Mechanical”), PERMA-PIPE INTERNATIONAL COMPANY, LLC, a Delaware limited liability company (“Perma-Pipe International” and f/k/a Freezone Holdings Limited Liability Company) and PERMA‐PIPE CANADA, INC., a Delaware corporation (“Perma‐Pipe Canada”).  Capitalized terms used in this Agreement have the meanings assigned to them in Appendix A, General Definitions.  Accounting terms not otherwise specifically defined herein shall be construed in accordance with GAAP consistently applied.  MFRI, Midwesco, Perma‐Pipe, Thermal Care, TDC, Mechanical, Perma-Pipe International and Perma‐Pipe Canada are sometimes hereinafter referred to individually as a “Borrower” and collectively as “Borrowers”.
WHEREAS, the Borrower signatories thereto, Agent, and the Lender signatories thereto entered into that certain Amended and Restated Loan and Security Agreement dated September 15, 2006 (said Amended and Restated Loan and Security Agreement, as amended from time to time, the “2006 Loan Agreement”); and
WHEREAS, Borrowers, Agent and Lenders desire to amend and restate the 2006 Loan Agreement as provided herein;
NOW, THEREFORE, in consideration of the following terms and conditions, the parties agreed as follows:
SECTION I CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the representations and warranties made in, this Agreement and the other Loan Documents, Lenders agree to make a Total Credit Facility of up to Thirty‐Eight Million Dollars ($38,000,000) available upon Borrowers' request therefor, as follows:
1.1 Loans.
1.1.1    Revolving Credit Loans.  Each Lender agrees, severally and not jointly, for so long as no Default or Event of Default exists, to make Revolving Credit Loans to Borrowers from time to time during the period from the date hereof to, but not including, the last day of the Term, as requested by MFRI, on its own behalf and on behalf of all Borrowers, in the manner set forth in subsection 3.1.1 hereof, up to a maximum principal amount at any time outstanding equal to the lesser of (i) such Lender's Revolving Loan Commitment minus the product of such Lender's Revolving Loan Percentage and the LC Amount minus the product of such Lender's Revolving Loan Percentage and reserves, if any and (ii) the product of such Lender's Revolving Loan Percentage and an amount equal to the Borrowing Base at such time minus the LC Amount minus reserves, if any.  Agent shall have the right to establish reserves in such amounts, and with respect to such matters, as Agent shall deem necessary or appropriate in its sole judgment, exercised in a commercially reasonable manner, against the amount of Revolving Credit Loans which Borrowers may otherwise request under this subsection 1.1.1, including without limitation, with respect to (i) price adjustments, damages, unearned discounts, returned products or other matters for which credit memoranda are issued in the ordinary course of any Borrower's business; (ii) potential dilution related to Accounts; (iii) shrinkage, spoilage and obsolescence of any Borrower's Inventory; (iv) slow‐moving Inventory; (v) other sums chargeable against Borrowers' Loan Account as Revolving Credit Loans under any section of this Agreement; (vi) amounts owing by any Borrower to any Person to the extent secured by a Lien on, or trust over, any Property of any Borrower; (vii) amounts owing by any Borrower in connection with Product Obligations; and (viii) such other specific events, conditions or contingencies as to which Agent, in its sole judgment, exercised in a commercially reasonable manner, determines reserves should be established from time to time hereunder.  The Revolving Credit Loans shall be repayable in accordance with the terms of the Revolving Notes and shall be secured by all of the Collateral.
1.1.2    Overadvances.  Insofar as Borrowers may request and Agent or Majority Lenders (as provided below) may be willing in their sole and absolute discretion to make Revolving Credit Loans to Borrowers at a time 

1

when the unpaid balance of Revolving Credit Loans plus the sum of the LC Amount plus the amount of LC Obligations that have not been reimbursed by Borrowers or funded with a Revolving Credit Loan, plus reserves, exceeds, or would exceed with the making of any such Revolving Credit Loan, the Borrowing Base (and such Loan or Loans being herein referred to individually as an “Overadvance” and collectively, as “Overadvances”), Agent shall enter such Overadvances as debits in the Loan Account.  All Overadvances shall be repaid on demand, shall be secured by the Collateral and shall bear interest as provided in this Agreement for Revolving Credit Loans generally.  Any Overadvance made pursuant to the terms hereof shall be made by all Lenders ratably in accordance with their respective Revolving Loan Percentages.  Overadvances in the aggregate amount of $500,000 or less may, unless a Default or Event of Default has occurred and is continuing, be made in the sole and absolute discretion of Agent.  Overadvances in an aggregate amount of more than $500,000 but less than $1,000,000 may, unless a Default or an Event of Default has occurred and is continuing, be made in the sole and absolute discretion of the Majority Lenders.  Overadvances in an aggregate amount of $1,000,000 or more and Overadvances to be made after the occurrence and during the continuation of a Default or an Event of Default shall require the consent of all Lenders.  The foregoing notwithstanding, in no event, unless otherwise consented to by all Lenders, (w) shall any Overadvances be outstanding for more than sixty (60) consecutive days, (x) after all outstanding Overadvances have been repaid, shall Agent or Lenders make any additional Overadvances unless sixty (60) days or more have expired since the last date on which any Overadvances were outstanding, (y) shall Overadvances be outstanding on more than ninety (90) days within any one hundred eighty day (180) period or (z) shall Agent make Revolving Credit Loans on behalf of Lenders under this subsection 1.1.2 to the extent such Revolving Credit Loans would cause a Lender's share of the Revolving Credit Loans to exceed such Lender's Revolving Loan Commitment minus such Lender's Revolving Loan Percentage of the LC Amount.
1.1.3    Use of Proceeds.  The Revolving Credit Loans shall be used solely for (i) Borrowers' general operating capital needs in a manner consistent with the provisions of this Agreement and all applicable laws, and (ii) other purposes permitted under this Agreement.
1.1.4    Agent Loans.  Upon the occurrence and during the continuance of an Event of Default, Agent, in its sole discretion, may make Revolving Credit Loans on behalf of Lenders, in an aggregate amount not to exceed One Million Dollars ($1,000,000), if Agent, in its reasonable business judgment, deems that such Revolving Credit Loans are necessary or desirable (i) to protect all or any portion of the Collateral, (ii) to enhance the likelihood, or maximize the amount of, repayment of the Loans and the other Obligations, or (iii) to pay any other amount chargeable to any Borrower pursuant to this Agreement, including without limitation costs, fees and expenses as described in Sections 2.8 and 2.9 (hereinafter, “Agent Loans”); provided, that in no event shall (a) the maximum principal amount of the Revolving Credit Loans exceed the aggregate Revolving Loan Commitments and (b) Majority Lenders may at any time revoke Agent's authorization to make Agent Loans.  Any such revocation must be in writing and shall become effective prospectively upon Agent's receipt thereof.  Each Lender shall be obligated to advance its Revolving Loan Percentage of each Agent Loan.  If Agent Loans are made pursuant to the preceding sentence, then (a) the Borrowing Base shall be deemed increased by the amount of such permitted Agent Loans, but only for so long as Agent allows such Agent Loans to be outstanding, and (b) all Lenders that have committed to make Revolving Credit Loans shall be bound to make, or permit to remain outstanding, such Agent Loans based upon their Revolving Loan Percentages in accordance with the terms of this Agreement.
1.2Letters of Credit; LC Guaranties.  Agent agrees, for so long as no Default or Event of Default exists and if requested by MFRI, on its own behalf and on behalf of all other Borrowers, to (i) issue its, or cause to be issued by Bank or another Affiliate of Agent, on the date requested by MFRI, on its own behalf and on behalf of all other Borrowers, Letters of Credit for the account of Borrowers or (ii) execute LC Guaranties by which Agent, Bank, or another Affiliate of Agent, on the date so requested by MFRI, shall guaranty the payment or performance by Borrowers of their reimbursement obligations with respect to letters of credit; provided that the LC Amount shall not exceed Eleven Million Dollars ($11,000,000) at any time.  No Letter of Credit or LC Guaranty may have an expiration date after the last day of the Term.  Notwithstanding anything to the contrary contained herein, Borrowers, Agent and Lenders hereby agree that all LC Obligations and all obligations of Borrowers relating thereto shall be satisfied by the prompt issuance of one or more Revolving Credit Loans that are Base Rate Portions, which Borrowers hereby acknowledge are requested and Lenders hereby agree to fund.  In the event that Revolving Credit Loans are not, for any reason, promptly made to satisfy all then existing LC Obligations, each Lender hereby agrees to pay to Agent, on demand, an amount equal to such LC Obligations multiplied by such Lender's Revolving Loan Percentage, and until so paid, such amount shall be secured by the Collateral and shall bear interest and be payable at the same rate and in the same manner as Base Rate Portions.  Immediately upon the issuance of a Letter of Credit or an LC Guaranty under 

2

this Agreement, each Lender shall be deemed to have irrevocably and unconditionally purchased and received from Agent, without recourse or warranty, an undivided interest and participation therein equal to such LC Obligations multiplied by such Lender's Revolving Loan Percentage.
1.3Term Loan.  On or about March 28, 2005, each Lender made a term loan (collectively, the “Term Loan”) to Borrowers in the original aggregate principal amount of $4,300,000, which Term Loan is repayable in accordance with the terms of the Term Loan Notes and shall be secured by all of the Collateral.  The proceeds of the Term Loan were used solely for the repayment of Indebtedness outstanding under the Term Loan Documents and for the purposes for which the proceeds of the Revolving Credit Loans are authorized to be used.
1.4Intentionally Omitted.  

SECTION 2. INTEREST, FEES AND CHARGES
2.1Interest.
2.1.1Rates of Interest.  Interest shall accrue on the principal amount of the Base Rate Revolving Portion outstanding at the end of each day at a fluctuating rate per annum equal to the Applicable Margin then in effect plus the Base Rate.  Interest shall accrue on the principal amount of the Base Rate Term Portion outstanding at the end of each day at a fluctuating rate per annum equal to the Applicable Margin then in effect plus the Base Rate.  Said rate of interest shall increase or decrease by an amount equal to any increase or decrease in the Base Rate, effective as of the opening of business on the day that any such change in the Base Rate occurs.  If MFRI, on its own behalf and on behalf of all other Borrowers, exercises its LIBOR Option as provided in Section 3.1, (i) interest shall accrue on the principal amount of the LIBOR Revolving Portions outstanding at the end of each day at a rate per annum equal to the Applicable Margin then in effect plus the LIBOR applicable to each LIBOR Portion for the corresponding Interest Period and (ii) interest shall accrue on the principal amount of the LIBOR Term Portions outstanding at the end of each day at a per annum rate equal to the Applicable Margin then in effect plus the LIBOR applicable to each LIBOR Portion for the corresponding Interest Period.
2.1.2Default Rate of Interest.  At the option of Agent, upon and after the occurrence of an Event of Default, and during the continuation thereof, the principal amount of all Loans shall bear interest at a rate per annum equal to 2.0% plus the interest rate otherwise applicable thereto (the “Default Rate”).
2.1.3Maximum Interest.  In no event whatsoever shall the aggregate of all amounts deemed interest hereunder or under the Notes and charged or collected pursuant to the terms of this Agreement or pursuant to the Notes exceed the highest rate permissible under any law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto.  If any provisions of this Agreement or the Notes are in contravention of any such law, such provisions shall be deemed amended to conform thereto (the “Maximum Rate”).  If at any time, the amount of interest paid hereunder is limited by the Maximum Rate, and the amount at which interest accrues hereunder is subsequently below the Maximum Rate, the rate at which interest accrues hereunder shall remain at the Maximum Rate, until such time as the aggregate interest paid hereunder equals the amount of interest that would have been paid had the Maximum Rate not applied.
2.2Computation of Interest and Fees.  Interest, Letter of Credit and LC Guaranty fees and Unused Line Fees hereunder shall be calculated daily and shall be computed on the actual number of days elapsed over a year of 360 days.  For the purpose of computing interest hereunder, all items of payment received by Agent shall be deemed applied by Agent on account of the Obligations (subject to final payment of such items) on the first Business Day after receipt by Agent of such items in Agent's account located in Hartford, Connecticut.
2.3Intentionally Omitted.
2.4Letter of Credit and LC Guaranty Fees.  Borrowers shall pay to Agent:
(i)for standby Letters of Credit and LC Guaranties of standby letters of credit, for the ratable benefit of Lenders a per annum fee equal to the Applicable Margin of the aggregate face amount of such Letters of Credit and LC Guaranties outstanding from time to time during the term of this Agreement, plus all normal and customary charges associated with the issuance thereof, which fees and charges shall be deemed fully earned upon issuance of each such Letter of Credit or LC Guaranty, shall be due and payable on the first Business Day of each month and shall not be subject to rebate or proration upon the termination of this Agreement for any reason;
(ii)for documentary Letters of Credit and LC Guaranties of documentary letters of credit, for the ratable benefit of Lenders, a per annum fee equal to the Applicable Margin of the face amount of each such Letter of Credit or LC Guaranty, payable upon the issuance of such Letter of Credit or execution of such LC Guaranty and an additional fee equal to the Applicable Margin per annum of the face amount of such Letters of Credit or LC Guaranty 

3

payable upon each renewal thereof and each extension thereof plus all normal and customary charges associated with the issuance and administration of each such Letter of Credit or LC Guaranty (which fees and charges shall be fully earned upon issuance, renewal or extension (as the case may be) of each such Letter of Credit or LC Guaranty, shall be due and payable on the first Business Day of each month, and shall not be subject to rebate or proration upon the termination of this Agreement for any reason); and
(iii)with respect to all Letters of Credit and LC Guaranties, for the account of Agent only, a per annum fronting fee equal to one‐quarter of one percent (1⁄4%) of the aggregate face amount of such Letters of Credit and LC Guaranties outstanding from time to time during the term of this Agreement, which fronting fees shall be payable monthly in arrears on the first Business Day of each month and shall not be subject to rebate or proration upon the termination of this Agreement for any reason.
2.5Unused Line Fee.  Borrowers shall pay to Agent, for the ratable benefit of Lenders, a fee (the “Unused Line Fee”) equal to the Applicable Margin per annum multiplied by the average daily amount by which Revolving Credit Maximum Amount exceeds the sum of (i) the outstanding principal balance of the Revolving Credit Loans plus (ii) the LC Amount.  The Unused Line Fee shall be payable monthly in arrears on the first day of each month hereafter.
2.6Intentionally Omitted.
2.7Audit Fees.  Borrowers shall pay to Agent audit fees in accordance with Agent's current schedule of fees payable by borrowers of Agent generally in effect from time to time in connection with audits of the books and records and Properties of Borrowers and their Subsidiaries and such other matters as Agent shall deem appropriate in its sole judgment, plus all reasonable out-of-pocket expenses incurred by Agent in connection with such audits, whether such audits are conducted by employees of Agent or by third parties hired by Agent.  Such audit fees and out-of-pocket expenses shall be payable on the first day of the month following the date of issuance by Agent of a request for payment thereof to Borrowers immediately upon demand therefor by Agent from time to time.  Agent may, in its discretion, provide for the payment of such amounts by making appropriate Revolving Credit Loans to Borrowers and charging Borrowers' Loan Account therefor.
2.8Reimbursement of Expenses.  If, at any time or times regardless of whether or not an Event of Default then exists, (i) Agent incurs legal or accounting expenses or any other costs or out-of-pocket expenses in connection with (1) the negotiation and preparation of this Agreement or any of the other Loan Documents, any amendment of or modification of this Agreement or any of the other Loan Documents, or any syndication or attempted syndication of the Obligations (including, without limitation, printing and distribution of materials to prospective Lenders and all costs associated with bank meetings, but excluding any closing fees paid to Lenders in connection therewith) or (2) the administration of this Agreement or any of the other Loan Documents and the transactions contemplated hereby and thereby; or (ii) Agent or any Lender incurs legal or accounting expenses or any other costs or out-of-pocket expenses in connection with (1) any litigation, contest, dispute, suit, proceeding or action (whether instituted by Agent, any Lender, any Borrower or any other Person) relating to the Collateral, this Agreement or any of the other Loan Documents or any Borrower's, any of its Subsidiaries' or any Guarantor's affairs; (2) any attempt to enforce any rights of Agent or any Lender against any Borrower or any other Person which may be obligated to Agent or any Lender by virtue of this Agreement or any of the other Loan Documents, including, without limitation, the Account Debtors; or (3) any attempt to inspect, verify, protect, preserve, restore, collect, sell, liquidate or otherwise dispose of or realize upon the Collateral; then all such legal and accounting expenses, other costs and out of pocket expenses of Agent or any Lender, as applicable, shall be charged to Borrowers; provided, that Borrowers shall not be responsible for such costs and out-of-pocket expenses to the extent incurred because of the gross negligence or willful misconduct of Agent or any Lender.  All amounts chargeable to Borrowers under this Section 2.8 shall be Obligations secured by all of the Collateral, shall be payable on demand to Agent or such Lender, as the case may be, and shall bear interest from the date such demand is made until paid in full at the rate applicable to Base Rate Revolving Portions from time to time.  Borrowers shall also reimburse Agent for expenses incurred by Agent in its administration of the Collateral to the extent and in the manner provided in Sections 2.9 and 2.10 hereof.
2.9Bank Charges.  Borrowers shall pay to Agent, on demand, any and all fees, costs or expenses which Agent or any Lender pays to a bank or other similar institution arising out of or in connection with (i) the forwarding to any Borrower or any other Person on behalf of any Borrower, by Agent or any Lender, of proceeds of Loans made to Borrowers pursuant to this Agreement and (ii) the depositing for collection by Agent or any Lender of any check or item of payment received or delivered to Agent or any Lender on account of the Obligations.
2.10Collateral Protection Expenses; Appraisals.  All out-of-pocket expenses incurred in protecting, storing, warehousing, insuring, handling, maintaining and shipping the Collateral, and any and all excise, property, sales, and 

4

use taxes imposed by any state, federal, or local authority on any of the Collateral or in respect of the sale thereof shall be borne and paid by Borrowers.  If Borrowers fail to promptly pay any portion thereof when due, Agent may, at its option, but shall not be required to, pay the same and charge Borrowers therefor.  Additionally, from time to time, if Agent or any Lender determines that obtaining appraisals is necessary in order for it to comply with applicable laws or regulations, and at any time if a Default or an Event of Default shall have occurred and be continuing, Agent may, at Borrowers' expense, obtain appraisals from appraisers (who may be personnel of Agent), stating the then current fair market value of all or any portion of the real estate or personal property of any Borrower or any of its Subsidiaries, including without limitation the Inventory of Borrowers and their Subsidiaries.
2.11Payment of Charges.  All amounts chargeable to Borrowers under this Agreement shall be Obligations secured by all of the Collateral, shall be, unless specifically otherwise provided, payable on demand and shall bear interest from the date demand was made or such amount is due, as applicable, until paid in full at the rate applicable to the Base Rate Revolving Portion from time to time.
2.12No Deductions.  Any and all payments or reimbursements made hereunder shall be made free and clear of and without deduction for any and all taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto; excluding, however, the following:  taxes imposed on the income of Agent or any Lender or franchise taxes by the jurisdiction under the laws of which Agent or any Lender is organized or doing business or any political subdivision thereof and taxes imposed on its income by the jurisdiction of Agent's or such Lender's applicable lending office or any political subdivision thereof or franchise taxes (all such taxes, levies, imposts, deductions, charges or withholdings and all liabilities with respect thereto excluding such taxes imposed on net income, herein “Tax Liabilities”).  If any Borrower shall be required by law to deduct any such Tax Liabilities from or in respect of any sum payable hereunder to Agent or any Lender, then the sum payable hereunder shall be increased as may be necessary so that, after all required deductions are made, Agent or such Lender receives an amount equal to the sum it would have received had no such deductions been made.

SECTION 3 LOAN ADMINISTRATION

3.1Manner of Borrowing Revolving Credit Loans/LIBOR Option.  Borrowings under the credit facility established pursuant to Section 1 hereof shall be as follows:
3.1.1Manner of Borrowing Revolving Credit Loans/LIBOR Option.  Borrowings under the credit facility established pursuant to Section 1 hereof shall be as follows:
3.1.2Loan Requests; Revolving Credit Loans.  A request for a Revolving Credit Loan shall be made, or shall be deemed to be made, in the following manner:  (a) MFRI, on its own behalf and on behalf of all other Borrowers, may give Agent notice of Borrowers' intention to borrow a Revolving Credit Loan, in which notice MFRI shall specify the amount of the proposed borrowing of a Revolving Credit Loan and the proposed borrowing date, which shall be a Business Day, no later than 11:00 a.m. (Chicago, Illinois time) on the proposed borrowing date (or in accordance with subsection 3.1.7, 3.1.8 or 3.1.9, as applicable, in the case of a request for a LIBOR Revolving Portion), provided, however, that no such request may be made at a time when there exists a Default or an Event of Default; and (b) the becoming due of any amount required to be paid under this Agreement, or the Notes, whether as interest or for any other Obligation, shall be deemed irrevocably to be a request for a Revolving Credit Loan on the due date in the amount required to pay such interest or other Obligation.
3.1.3Disbursement.  Borrowers hereby irrevocably authorize Agent to disburse the proceeds of each Loan requested, or deemed to be requested, pursuant to subsection 3.1.1 as follows:  (i) the proceeds of each Revolving Credit Loan requested under subsection 3.1.1(a) shall be disbursed by Agent in lawful money of the United States of America in immediately available funds, in the case of the initial borrowing, in accordance with the terms of the written disbursement letter from MFRI, on its own behalf and on behalf of all other Borrowers, and in the case of each subsequent borrowing, by wire transfer to Borrowers' main disbursement account or such other bank account as Agent in its discretion may agree to from time to time; and (ii) the proceeds of each Revolving Credit Loan deemed requested under subsection 3.1.1(i)(b) shall be disbursed by Agent by way of direct payment of the relevant interest or other Obligation.  If at any time any Loan is funded by Agent or Lenders in excess of the amount requested or deemed requested by MFRI, on its own behalf and on behalf of all other Borrowers, Borrowers agree to repay the excess to Agent immediately upon the earlier to occur of (a) any Borrower's discovery of the error and (b) notice thereof to Borrowers from Agent or any Lender.
3.1.4Payment by Lenders.  Agent shall give to each Lender prompt written notice by facsimile, 

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telex or cable of the receipt by Agent from MFRI of any request for a Revolving Credit Loan.  Each such notice shall specify the requested date and amount of such Revolving Credit Loan, whether such Revolving Credit Loan shall be subject to the LIBOR Option, and the amount of each Lender's advance thereunder (in accordance with its applicable Revolving Loan Percentage, as applicable.  Each Lender shall, not later than 12:00 p.m. (Chicago time) on such requested date, wire to a bank designated by Agent the amount of that Lender's Revolving Loan Percentage of the requested Revolving Credit Loan.  The failure of any Lender to make the Revolving Credit Loans to be made by it shall not release any other Lender of its obligations hereunder to make its Revolving Credit Loan.  Neither Agent nor any other Lender shall be responsible for the failure of any other Lender to make the Revolving Credit Loan to be made by such other Lender.  The foregoing notwithstanding, Agent, in its sole discretion, may from its own funds make a Revolving Credit Loan on behalf of any Lender.  In such event, the Lender on behalf of whom Agent made the Revolving Credit Loan shall reimburse Agent for the amount of such Revolving Credit Loan made on its behalf, on a weekly (or more frequent, as determined by Agent in its sole discretion) basis.  On each such settlement date, Agent will pay to each Lender the net amount owing to such Lender in connection with such settlement, including without limitation amounts relating to Loans, fees, interest and other amounts payable hereunder.  The entire amount of interest attributable to such Revolving Credit Loan for the period from the date on which such Revolving Credit Loan was made by Agent on such Lender's behalf until Agent is reimbursed by such Lender, shall be paid to Agent for its own account.”
3.1.5Method of Making Requests.  As an accommodation to Borrowers, unless a Default or an Event of Default is then in existence, (i) Agent shall permit telephonic or electronic requests for Revolving Credit Loans to Agents, (ii) Agent and Bank may, in their discretion, permit electronic transmittal of requests for Letters of Credit and LC Guaranties to them, and (iii) Agent may, in Agent's discretion, permit electronic transmittal of instructions, authorizations, agreements or reports to Agent.  Unless MFRI, on its own behalf and on behalf of all other Borrowers, specifically directs Agent or Bank in writing not to accept or act upon telephonic or electronic communications from any Borrower, neither Agent nor Bank shall have any liability to Borrowers for any loss or damage suffered by any Borrower as a result of Agent's or Bank's honoring of any requests, execution of any instructions, authorizations or agreements or reliance on any reports communicated to it telephonically or electronically and purporting to have been sent to Agent or Bank by any Borrower, and neither Agent nor Bank shall have any duty to verify the origin of any such communication or the authority of the Person sending it.  Each telephonic request for a Revolving Credit Loan, Letter of Credit or LC Guaranty accepted by Agent and Bank, if applicable, hereunder shall be promptly followed by a written confirmation of such request from MFRI, on its own behalf and on behalf of all other Borrowers, to Agent and Bank, if applicable.
3.1.6LIBOR Portions.  Provided that as of both the date of the LIBOR Request and the first day of the Interest Period, no Default or Event of Default exists, in the event Borrowers desire to obtain a LIBOR Portion, MFRI, on its own behalf and on behalf of all other Borrowers, shall give Agent a LIBOR Request no later than 11:00 a.m. (Chicago, Illinois time) on the third Business Day prior to the requested borrowing date.  Each LIBOR Request shall be irrevocable and binding on all Borrowers.  In no event shall Borrowers be permitted to have outstanding at any one time LIBOR Portions with more than five (5) different Interest Periods.  LIBOR Portions shall be included within the definition of LIBOR Revolving Credit Portion or LIBOR Term Portion as determined by the definitions of such terms.”
3.1.7Conversion of Base Rate Portions.  Provided that as of both the date of the LIBOR Request and the first day of the Interest Period, no Default or Event of Default exists, Borrowers may, on any Business Day, convert any Base Rate Portion into a LIBOR Portion.  If Borrowers desire to convert a Base Rate Portion, MFRI, on its own behalf and on behalf of all other Borrowers, shall give Agent a LIBOR Request no later than 11:00 a.m. (Chicago, Illinois time) on the third Business Day prior to the requested conversion date.  After giving effect to any conversion of Base Rate Portions to LIBOR Portions, Borrowers shall not be permitted to have outstanding at any one time LIBOR Portions with more than five (5) different Interest Periods.
3.1.8Continuation of LIBOR Portions.  Provided that as of both the date of the LIBOR Request and the first day of the Interest Period, no Default or Event of Default exists, Borrowers may, on any Business Day, continue any LIBOR Portions into a subsequent Interest Period of the same or a different permitted duration.  If Borrowers desire to continue a LIBOR Portion, MFRI, on its own behalf and on behalf of all other Borrowers, shall give Agent a LIBOR Request no later than 11:00 a.m. (Chicago, Illinois time) on the third Business Day prior to the requested continuation date.  After giving effect to any continuation of LIBOR Portions, Borrowers shall not be permitted to have outstanding at any one time LIBOR Portions with more than five (5) different Interest Periods.  If MFRI shall fail to give timely notice of its election to continue any LIBOR Portion or portion thereof as provided 

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above, or if such continuation shall not be permitted, such LIBOR Portion or portion thereof, unless such LIBOR Portion shall be repaid, shall automatically be converted into a Base Rate Portion at the end of the Interest Period then in effect with respect to such LIBOR Portion.
3.1.9Inability to Make LIBOR Portions.  Notwithstanding any other provision hereof, if any applicable law, treaty, regulation or directive, or any change therein or in the interpretation or application thereof, shall make it unlawful for any Lender (for purposes of this subsection 3.1.10, the term “Lender” shall include the office or branch where such Lender or any corporation or bank then controlling such Lender makes or maintains any LIBOR Portions) to make or maintain its LIBOR Portions, or if with respect to any Interest Period, Agent is unable to determine the LIBOR relating thereto, or adverse or unusual conditions in, or changes in applicable law relating to, the London interbank market make it, in the reasonable judgment of Agent, impracticable to fund therein any of the LIBOR Portions, or make the projected LIBOR unreflective of the actual costs of funds therefor to any Lender, the obligation of Agent and Lenders to make or continue LIBOR Portions or convert Base Rate Portions to LIBOR Portions hereunder shall forthwith be suspended during the pendency of such circumstances and Borrowers shall, if any affected LIBOR Portions are then outstanding, promptly upon request from Agent, convert such affected LIBOR Portions into Base Rate Portions.
3.2Payments.  Except where evidenced by notes or other instruments issued or made by Borrowers to any Lender and accepted by such Lender specifically containing payment instructions that are in conflict with this Section 3.2 (in which case the conflicting provisions of said notes or other instruments shall govern and control), the Obligations shall be payable as follows:
3.2.1Principal.
i.Revolving Credit Loans.  Principal on account of Revolving Credit Loans shall be payable by Borrowers to Agent for the ratable benefit of Lenders immediately upon the earliest of (i) the receipt by Agent or any Borrower of any proceeds of any of the Collateral (except as otherwise provided herein), including without limitation pursuant to subsections 3.3.1 and 6.2.4, to the extent of said proceeds, subject to Borrowers' rights to reborrow such amounts in compliance with subsection 1.1.1 hereof; (ii) the occurrence of an Event of Default in consequence of which Agent or Majority Lenders elect to accelerate the maturity and payment of the Obligations, or (iii) termination of this Agreement pursuant to Section 4 hereof; provided, however, that, if an Overadvance shall exist at any time, Borrowers shall, on demand, repay the Overadvance.  Each payment (including principal prepayment) by Borrowers on account of principal of the Revolving Credit Loans shall be applied first to the Base Rate Portion, and second to LIBOR Portions.
ii.Term Loan.  Principal payable on account of the Term Loan shall be payable by Borrowers in accordance with the terms of the Term Notes.
3.2.2Interest.
i.Base Rate Portion.  Interest accrued on the Base Rate Portion shall be due and payable on the earliest of (1) the first calendar day of each month (for the immediately preceding month), computed through the last calendar day of the preceding month, (2) the occurrence of an Event of Default in consequence of which Agent or Majority Lenders elect to accelerate the maturity and payment of the Obligations or (3) termination of this Agreement pursuant to Section 4 hereof.
ii.LIBOR Portion.  Interest accrued on each LIBOR Portion shall be due and payable on each LIBOR Interest Payment Date and on the earlier of (1) the occurrence of an Event of Default in consequence of which Agent or Majority Lenders elect to accelerate the maturity and payment of the Obligations or (2) termination of this Agreement pursuant to Section 4 hereof.
3.2.3Costs, Fees and Charges.  Costs, fees and charges payable pursuant to this Agreement shall be payable by Borrowers to Agent, as and when provided in Section 2 or Section 3 hereof, as applicable to Agent or a Lender, as applicable, or to any other Person designated by Agent or such Lender in writing.
3.2.4Other Obligations.  The balance of the Obligations requiring the payment of money, if any, shall be payable by Borrowers to Agent for distribution to Lenders, as appropriate, as and when provided in this Agreement, the Other Agreements or the Security Documents, or on demand, whichever is later.
3.2.5Prepayment of/Failure to Borrow LIBOR Portions.  Borrowers may prepay a LIBOR Portion only upon at least three (3) Business Days prior written notice to Agent (which notice shall be irrevocable).  Borrowers shall pay to each Lender, upon request of such Lender, such amount or amounts as shall be sufficient (in the reasonable opinion of such Lender) to compensate such Lender for any loss, cost, or expense incurred as a result of:  (i) any payment of a LIBOR Portion on a date other than the last day of the Interest Period for such LIBOR Portion; (ii) any failure by Borrowers to borrow a LIBOR Portion on the date specified by Borrowers' LIBOR Request; or (iii) any 

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failure by Borrowers to pay a LIBOR Portion on the date for payment specified in Borrowers' written notice.  Without limiting the foregoing, Borrowers shall pay to each Lender a “yield maintenance fee” in an amount computed as follows:  the current rate for United States Treasury securities (bills on a discounted basis shall be converted to a bond equivalent) with a maturity date closest to the Interest Period chosen pursuant to the LIBOR Portion as to which the prepayment is made, shall be subtracted from the LIBOR in effect at the time of prepayment.  If the result is zero or a negative number, there shall be no yield maintenance fee.  If the result is a positive number, then the resulting percentage shall be multiplied by the amount of the principal balance being prepaid.  The resulting amount shall be divided by 360 and multiplied by the number of days remaining in the Interest Period chosen pursuant to the LIBOR Portion as to which the prepayment is made.  Said amount shall be reduced to present value calculated by using the above referenced United States Treasury securities rate and the number of days remaining in the term chosen pursuant to the LIBOR Portion as to which prepayment is made.  The resulting amount shall be the yield maintenance fee due to the applicable Lender upon the prepayment of a LIBOR Portion.  If by reason of an Event of Default, Agent or Majority Lenders elect to declare the Obligations to be immediately due and payable, then any yield maintenance fee with respect to a LIBOR Portion shall become due and payable in the same manner as though Borrowers had exercised such right of prepayment.
3.3Mandatory and Optional Prepayments.
3.3.1Proceeds of Sale, Loss, Destruction or Condemnation of Collateral.  Except as provided in subsections 6.4.2 and 8.2.9, if any Borrower or any of its Subsidiaries sells any of the Collateral or if any of the Collateral is lost or destroyed or taken by condemnation, such Borrowers shall, unless otherwise agreed by Majority Lenders, pay to Agent for the ratable benefit of Lenders as and when received by such Borrowers or such Subsidiary and as a mandatory prepayment of the Loans, as herein provided, a sum equal to the proceeds (including insurance payments but net of costs and taxes incurred in connection with such sale or event) received by such Borrower or such Subsidiary from such sale, loss, destruction or condemnation.  To the extent that the Collateral sold, lost, destroyed or condemned consists of Equipment, real Property, or other Property other than Accounts or Inventory, the applicable prepayment shall be applied first to the installments of principal due under the Term Notes ratably, to be applied to future installment payments in inverse order of maturity/on a ratable basis until paid in full and second to repay outstanding principal of Revolving Credit Loans and to reduce the Revolving Loan Commitments on a ratable basis.  To the extent that the Collateral sold, lost, destroyed or condemned consists of Accounts or Inventory, the applicable prepayment shall be applied to reduce the outstanding principal balance of the Revolving Credit Loans, but shall not permanently reduce the Revolving Loan Commitments.  Notwithstanding the foregoing, if the proceeds of insurance (net of costs and taxes incurred) with respect to any loss or destruction of Equipment, Inventory or real Property (i) are less than $500,000, unless an Event of Default is then in existence, Agent shall remit such proceeds to Borrowers for use in replacing or repairing the damaged Collateral or (ii) are equal to or greater than $500,000 and Borrowers have requested that Agent agree to permit Borrowers or the applicable Subsidiary to repair or replace the damaged Collateral, such amounts shall be provisionally applied to reduce the outstanding principal balance of the Revolving Credit Loans until the earlier of Agent's decision with respect thereto or the expiration of 90 days from such request.  If Agent agrees, in its reasonable judgment, to permit such repair or replacement under such clause (ii), such amount shall, unless an Event of Default is in existence, be remitted to Borrowers for use in replacing or repairing the damaged Collateral; if Agent declines to permit such repair or replacement or does not respond to Borrowers within such 90 day period, such amount shall be applied to the Loans in the manner specified in the second or third sentence of this subsection 3.3.1, as applicable, until payment thereof in full.
3.3.2Proceeds from Issuance of Additional Indebtedness or Equity.  If, after the Closing Date, any Borrower issues any additional Indebtedness or obtains any additional equity in a manner permitted under this Agreement, then, except as otherwise provided in Section 8.2.6, such Borrower shall pay to Agent for the ratable benefit of Lenders, when and as received by such Borrower and as a mandatory prepayment of the Obligations, a sum equal to one hundred percent (100%) of the net proceeds to such Borrower of the issuance of such Indebtedness or equity.  Any such prepayment shall be applied to the Loans in the manner specified in the second sentence of subsection 3.3.1 until payment thereof in full.  Any Revolving Credit repaid pursuant to this Section 3.3.2 shall be subject to Borrowers' right to reborrow such funds pursuant to Section 1.1.1.
3.3.3LIBOR Portions.  If the application of any payment made in accordance with the provisions of this Section 3.3 at a time when no Event of Default has occurred and is continuing would result in termination of a LIBOR Portion prior to the last day of the Interest Period for such LIBOR Portion, the amount of such prepayment shall not be applied to such LIBOR Portion, but will, at Borrowers' option, be held by Agent in a non-interest bearing 

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account at a Lender or another bank satisfactory to Agent in its discretion, which account is in the name of Agent and from which account only Agent can make any withdrawal, in each case to be applied as such amount would otherwise have been applied under this Section 3.3 at the earlier to occur of (i) the last day of the relevant Interest Period or (ii) the occurrence of a Default or an Event of Default.
3.3.4Optional Prepayments.  Borrowers may, at their option from time to time upon not less than 3 days prior written notice to Agent, prepay installments of the Term Loan Notes; provided that the amount of any such prepayment is at least $500,000 and in integral multiples of $100,000 above $500,000, that such prepayments are made ratably with respect to all Term Notes.  Each such prepayment shall be applied to the installments or principal due under the Term Notes in the inverse order of maturity.  Except for charges under Section 2.6 applicable to the termination of the Total Credit Facility, such prepayments shall be without premium or penalty.
3.4Application of Payments and Collections.
3.4.1Collections.  All items of payment received by Agent by 12:00 noon, Chicago, Illinois, time, on any Business Day shall be deemed received on that Business Day.  All items of payment received after 12:00 noon, Chicago, Illinois, time, on any Business Day shall be deemed received on the following Business Day.  If as the result of collections of Accounts as authorized by subsection 6.2.4 hereof or otherwise, a credit balance exists in the Loan Account, such credit balance shall not accrue interest in favor of Borrowers, but shall be disbursed to Borrowers or otherwise at MFRI's direction in the manner set forth in subsection 3.1.2, upon Borrowers' request at any time, so long as no Default or Event of Default then exists.  Agent may at its option, offset such credit balance against any of the Obligations upon and during the continuance of an Event of Default.
3.4.2Apportionment, Application and Reversal of Payments.  Principal and interest payments shall be apportioned ratably among Lenders (according to the unpaid principal balance of the Loans to which such payments relate held by each Lender).  All payments shall be remitted to Agent and all such payments not relating to principal or interest of specific Loans, or not constituting payment of specific fees, and all proceeds of Accounts, or, except as provided in subsection 3.3.1, other Collateral received by Agent, shall be applied, ratably, subject to the provisions of this Agreement, first, to pay any fees, indemnities, or expense reimbursements (other than amounts related to Product Obligations) then due to Agent or Lenders from Borrowers; second, to pay interest due from Borrowers in respect of all Loans, including Agent Loans; third, to pay or prepay principal of Agent Loans; fourth, to pay or prepay principal of the Revolving Credit Loans (other than Agent Loans) and unpaid reimbursement obligations in respect of Letters of Credit; fifth, to pay an amount to Agent equal to all outstanding Letter of Credit Obligations to be held as cash Collateral for such Obligations; sixth, to the payment of any other Obligation (other than amounts related to Product Obligations) due to Agent or any Lender by Borrowers; and seventh, to pay any fees, indemnities or expense reimbursements related to Product Obligations.  After the occurrence and during the continuance of an Event of Default, Agent shall have the continuing exclusive right to apply and reapply any and all such payments and collections received at any time or times hereafter by Agent or its agent against the Obligations, in such manner as Agent may deem advisable, notwithstanding any entry by Agent or any Lender upon any of its books and records.
3.5All Loans to Constitute One Obligation.  The Loans and LC Guarantees shall constitute one general Obligation of Borrowers, and shall be secured by Agent's Lien upon all of the Collateral.
3.6Loan Account.  Agent shall enter all Loans as debits to a loan account (the “Loan Account”) and shall also record in the Loan Account all payments made by any Borrower on any Obligations and all proceeds of Collateral which are finally paid to Agent, and may record therein, in accordance with customary accounting practice, other debits and credits, including interest and all charges and expenses properly chargeable to Borrowers.
3.7Statements of Account.  Agent will account to Borrowers monthly with a statement of Loans, charges and payments made pursuant to this Agreement during the immediately preceding month, and such account rendered by Agent shall be deemed final, binding and conclusive upon Borrowers absent demonstrable error unless Agent is notified by MFRI, on its own behalf and on behalf of all other Borrowers, in writing to the contrary within 30 days of the date each accounting is received by Borrowers.  Such notice shall only be deemed an objection to those items specifically objected to therein.
3.8Increased Costs.  If any law or any governmental or quasi-governmental rule, regulation, policy, guideline or directive (whether or not having the force of law) adopted or implemented after the date of this Agreement and having general applicability to all banks or finance companies within the jurisdiction in which any Lender operates (excluding, for the avoidance of doubt, the effect of and phasing in of capital requirements or other regulations or guidelines passed prior to the date of this Agreement), or any interpretation or application thereof by any governmental authority charged with the interpretation or application thereof, or the compliance of such Lender therewith, shall:

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3.8.1(1) subject such Lender to any tax with respect to this Agreement (other than (a) any tax based on or measured by net income or otherwise in the nature of a net income tax, including, without limitation, any franchise tax or any similar tax based on capital, net worth or comparable basis for measurement and (b) any tax collected by a withholding on payments and which neither is computed by reference to the net income of the payee nor is in the nature of an advance collection of a tax based on or measured by the net income of the payee) or (2) change the basis of taxation of payments to such Lender of principal, fees, interest or any other amount payable hereunder or under any Loan Documents (other than in respect of (a) any tax based on or measured by net income or otherwise in the nature of a net income tax, including, without limitation, any franchise tax or any similar tax based on capital, net worth or comparable basis for measurement and (b) any tax collected by a withholding on payments and which neither is computed by reference to the net income of the payee nor is in the nature of an advance collection of a tax based on or measured by the net income of the payee);
3.8.2impose, modify or hold applicable any reserve (except any reserve taken into account in the determination of the applicable LIBOR), special deposit, assessment or similar requirement against assets held by, or deposits in or for the account of, advances or loans by, or other credit extended by, any office of such Lender, including (without limitation) pursuant to Regulation D of the Board of Governors of the Federal Reserve System; or
3.8.3impose on such Lender or the London interbank market any other condition with respect to any Loan Document;

and the result of any of the foregoing is to increase the cost to such Lender of making, renewing or maintaining Loans hereunder or the result of any of the foregoing is to reduce the rate of return on such Lender's capital as a consequence of its obligations hereunder, or the result of any of the foregoing is to reduce the amount of any payment (whether of principal, interest or otherwise) in respect of any of the Loans, then, in any such case, Borrowers shall pay such Lender, upon demand and certification not later than sixty (60) days following its receipt of notice of the imposition of such increased costs, such additional amount as will compensate such Lender for such additional cost or such reduction, as the case may be, to the extent such Lender has not otherwise been compensated, with respect to a particular Loan, for such increased cost as a result of an increase in the Base Rate or the LIBOR.  An officer of the applicable Lender shall determine the amount of such additional cost or reduced amount using reasonable averaging and attribution methods and shall certify the amount of such additional cost or reduced amount to Borrowers, which certification shall include a written explanation of such additional cost or reduction to Borrowers.  Such certification shall be conclusive absent manifest error.  If a Lender claims any additional cost or reduced amount pursuant to this Section 3.8, then such Lender shall use reasonable efforts (consistent with legal and regulatory restrictions) to designate a different lending office or to file any certificate or document reasonably requested by Borrowers if the making of such designation or filing would avoid the need for, or reduce the amount of, any such additional cost or reduced amount and would not, in the sole discretion of such Lender, be otherwise disadvantageous to such Lender.
3.9Basis for Determining Interest Rate Inadequate.  In the event that Agent or any Lender shall have determined that:
i.reasonable means do not exist for ascertaining the LIBOR for any Interest Period; or
ii.Dollar deposits in the relevant amount and for the relevant maturity are not available in the London interbank market with respect to a proposed LIBOR Portion, or a proposed conversion of a Base Rate Portion into a LIBOR Portion; then

Agent or such Lender shall give Borrowers prompt written, telephonic or electronic notice of the determination of such effect.  If such notice is given, (i) any such requested LIBOR Portion shall be made as a Base Rate Portion, unless MFRI, on its own behalf and on behalf of all other Borrowers, shall notify Agent no later than 10:00 a.m. (Chicago, Illinois time) three (3) Business Days prior to the date of such proposed borrowing that the request for such borrowing shall be canceled or made as an unaffected type of LIBOR Portion, and (ii) any Base Rate Portion which was to have been converted to an affected type of LIBOR Portion shall be continued as or converted into a Base Rate Portion, or, if MFRI, on its own behalf and on behalf of all other Borrowers, shall notify Agent, no later than 10:00 a.m. (Chicago, Illinois time) three (3) Business Days prior to the proposed conversion, shall be maintained as an unaffected type of LIBOR Portion.
3.10Sharing of Payments, Etc.  If any Lender shall obtain any payment (whether voluntary, involuntary, 

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through the exercise of any right of set-off, or otherwise) on account of any Loan made by it in excess of its ratable share of payments on account of Loans made by all Lenders, such Lender shall forthwith purchase from each other Lender such participation in such Loan as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each other Lender; provided, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lenders the purchase price to the extent of such recovery, together with an amount equal to such Lender's ratable share (according to the proportion of (i) the amount of such Lender's required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered.  Borrowers agree that any Lender so purchasing a participation from another Lender pursuant to this Section 3.10 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of Borrowers in the amount of such participation.  Notwithstanding anything to the contrary contained herein, all purchases and repayments to be made under this Section 3.10 shall be made through Agent.

SECTION 4. TERM AND TERMINATION

4.1Term of Agreement.  Subject to the right of Lenders to cease making Loans to Borrowers during the continuance of any Default or Event of Default, this Agreement shall be in effect for a period through and including November 30, 2013 (the “Term”), unless terminated as provided in Section 4.2 hereof.
4.2Termination.
4.2.1Termination by Lenders.  Agent may, and at the direction of Majority Lenders shall, terminate this Agreement without notice upon or after the occurrence and during the continuance of an Event of Default.
4.2.2Termination by Borrowers.  Upon at least thirty (30) days prior written notice to Agent and Lenders, Borrowers may, at their option, terminate this Agreement; provided, however, no such termination shall be effective until Borrowers have paid or collateralized to Agent's satisfaction all of the Obligations in immediately available funds, all Letters of Credit and LC Guaranties have expired, terminated or have been cash collateralized to Agent's satisfaction and Borrowers have complied with Section 2.6 and subsection 3.2.5.  Any notice of termination given by Borrowers shall be irrevocable unless all Lenders otherwise agree in writing and no Lender shall have any obligation to make any Loans or issue or procure any Letters of Credit or LC Guaranties on or after the termination date stated in such notice.  Borrowers may elect to terminate this Agreement in its entirety only.  No section of this Agreement or type of Loan available hereunder may be terminated singly.
4.2.3Effect of Termination.  All of the Obligations shall be immediately due and payable upon the termination date stated in any notice of termination of this Agreement.  All undertakings, agreements, covenants, warranties and representations of Borrowers contained in the Loan Documents shall survive any such termination and Agent shall retain its Liens in the Collateral and Agent and each Lender shall retain all of its rights and remedies under the Loan Documents notwithstanding such termination until all Obligations have been discharged or paid, in full, in immediately available funds, including, without limitation, all Obligations under Section 2.6 and subsection 3.2.5 resulting from such termination.  Notwithstanding the foregoing or the payment in full of the Obligations, Agent shall not be required to terminate its Liens in the Collateral unless, with respect to any loss or damage Agent may incur as a result of dishonored checks or other items of payment received by Agent from any Borrower or any Account Debtor and applied to the Obligations, Agent shall, at its option, (i) have received a written agreement satisfactory to Agent, executed by Borrowers and by any Person whose loans or other advances to Borrowers are used in whole or in part to satisfy the Obligations, indemnifying Agent and each Lender from any such loss or damage or (ii) have retained cash Collateral or other Collateral for such period of time as Agent, in its discretion, may deem necessary to protect Agent and each Lender from any such loss or damage.

SECTION 5. SECURITY INTERESTS
5.1Security Interest in Collateral.  To secure the prompt payment and performance to Agent and each Lender of the Obligations, each Borrower hereby grants to Agent for the benefit of itself and each Lender a continuing Lien upon all of each such Borrower's assets, including all of the following Property and interests in Property of each such Borrower, whether now owned or existing or hereafter created, acquired or arising and wheresoever located:
i.Accounts;
ii.Certificated Securities;

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iii.Chattel Paper;
iv.Computer Hardware and Software and all rights with respect thereto, including, any and all licenses, options, warranties, service contracts, program services, test rights, maintenance rights, support rights, improvement rights, renewal rights and indemnifications, and any substitutions, replacements, additions or model conversions of any of the foregoing;
v.Contract Rights;
vi.Deposit Accounts;
vii.Documents;
viii.Equipment;
ix.Financial Assets;
x.Fixtures, other than Fixtures which secure Existing Mortgage Indebtedness;
xi.General Intangibles, including Payment Intangibles and Software;
xii.Goods (including all of its Equipment, Fixtures and Inventory), and all accessions, additions, attachments, improvements, substitutions and replacements thereto and therefor;
xiii.Instruments;
xiv.Intellectual Property;
xv.Inventory;
xvi.Investment Property;
xvii.money (of every jurisdiction whatsoever);
xviii.Letter-of-Credit Rights;
xix.Payment Intangibles;
xx.Security Entitlements;
xxi.Software;
xxii.Supporting Obligations;
xxiii.Uncertificated Securities; and
xxiv.to the extent not included in the foregoing, all other personal property of any kind or description;

together with all books, records, writings, data bases, information and other property relating to, used or useful in connection with, or evidencing, embodying, incorporating or referring to any of the foregoing, and all Proceeds, products, offspring, rents, issues, profits and returns of and from any of the foregoing; provided that to the extent that the provisions of any lease or license of Computer Hardware and Software or Intellectual Property expressly prohibit (which prohibition is enforceable under applicable law) any assignment thereof, and the grant of a security interest therein, Agent will not enforce its security interest in any Borrower's rights under such lease or license (other than in respect of the Proceeds thereof) for so long as such prohibition continues, it being understood that upon request of Agent, the applicable Borrower will in good faith use reasonable efforts to obtain consent for the creation of a security interest in favor of Agent (and to Agent's enforcement of such security interest) in Agent's rights under such lease or license.  Notwithstanding any other provisions provided for in this Agreement, there shall be an exclusion from the definition of Collateral for any assets that are owned by a Foreign Subsidiary.  At no time prior to the date hereof was it the intention of Borrowers, Agent or Lenders that Borrowers pledge more than sixty‐five percent (65%) of the issued and outstanding Securities of any first tier Foreign Subsidiary or any of the Securities of a Foreign Subsidiary that is not a first tier Foreign Subsidiary.
5.2Other Collateral.
5.2.1Commercial Tort Claims.  Borrowers shall promptly notify Agent in writing upon any Borrower incurring or otherwise obtaining a Commercial Tort Claim after the Closing Date against any third party and, upon request of Agent, promptly enter into an amendment to this Agreement and do such other acts or things deemed appropriate by Agent to give Agent a security interest in any such Commercial Tort Claim.  Borrowers represent and warrant that as of the date of this Agreement, to their knowledge, no Borrower possesses any Commercial Tort Claims.
5.2.2Other Collateral.  Borrowers shall promptly notify Agent in writing upon any Borrower acquiring or otherwise obtaining any Collateral after the date hereof consisting of Deposit Accounts, Investment Property, Letter-of-Credit Rights or Electronic Chattel Paper and, upon the request of Agent, promptly execute such 

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other documents, and do such other acts or things deemed appropriate by Agent to deliver to Agent control with respect to such Collateral; promptly notify Agent in writing upon acquiring or otherwise obtaining any Collateral after the date hereof consisting of Documents or Instruments and, upon the request of Agent, will promptly execute such other documents, and do such other acts or things deemed appropriate by Agent to deliver to Agent possession of such Documents which are negotiable and Instruments, and, with respect to nonnegotiable Documents, to have such nonnegotiable Documents issued in the name of Agent; and with respect to Collateral in the possession of a third party, other than Certificated Securities and Goods covered by a Document, obtain an acknowledgment from the third party that it is holding the Collateral for the benefit of Agent.
5.3Lien Perfection; Further Assurances.  Each Borrower shall execute such UCC‐1 financing statements as are required by the UCC and such other instruments, assignments or documents as are necessary to perfect Agent's Lien upon any of the Collateral and shall take such other action as may be required to perfect or to continue the perfection of Agent's Lien upon the Collateral.  Unless prohibited by applicable law, each Borrower hereby authorizes Agent to execute and file any such financing statement, including, without limitation, financing statements that indicate the Collateral (i) as all assets of such Borrower or words of similar effect, or (ii) as being of an equal or lesser scope, or with greater or lesser detail, than as set forth in Section 5.1, on such Borrower's behalf.  Each Borrower also hereby ratifies its authorization for Agent to have filed in any jurisdiction any like financing statements or amendments thereto if filed prior to the date hereof.  The parties agree that a carbon, photographic or other reproduction of this Agreement shall be sufficient as a financing statement and may be filed in any appropriate office in lieu thereof.  At Agent's request, each Borrower shall also promptly execute or cause to be executed and shall deliver to Agent any and all documents, instruments and agreements deemed necessary by Agent, to give effect to or carry out the terms or intent of the Loan Documents.
5.4Lien on Realty.  The due and punctual payment and performance of the Obligations shall also be secured by the Lien created by the Mortgage upon all real Property of Perma‐Pipe described therein.  If any Borrower shall acquire at any time or times hereafter any fee simple interest in other real Property (other than leasehold interests in sales offices or warehouses), such Borrower agrees promptly to execute and deliver to Agent, for its benefit and the ratable benefit of Lenders, as additional security and Collateral for the Obligations, deeds of trust, security deeds, mortgages or other collateral assignments reasonably satisfactory in form and substance to Agent and its counsel (herein collectively referred to as “New Mortgages”) covering such real Property.  The Mortgages and each New Mortgage shall be duly recorded (at Borrowers' expense) in each office where such recording is required to constitute a valid Lien on the real Property covered thereby.  In respect to any Mortgage or any New Mortgage, the applicable Borrower shall deliver to Agent, at Borrowers' expense, mortgagee title insurance policies issued by a title insurance company reasonably satisfactory to Agent, which policies shall be in form and substance reasonably satisfactory to Agent and shall insure a valid Lien in favor of Agent for the benefit of itself and each Lender on the Property covered thereby, subject only to Permitted Liens and those other exceptions reasonably acceptable to Agent and its counsel.  Borrowers shall also deliver to Agent such other usual and customary documents, including, without limitation, ALTA Surveys of the real Property described in the Mortgage or any New Mortgage, as Agent and its counsel may reasonably request relating to the real Property subject to the Mortgage or the New Mortgages.

SECTION 6 COLLATERAL ADMINISTRATION
6.1General.
6.1.1Location of Collateral.  All Collateral, other than Inventory in transit, motor vehicles and Collateral having an aggregate value of not more than Five Hundred Thousand Dollars ($500,000), will at all times be kept by Borrowers and their Subsidiaries at one or more of the business locations set forth in Exhibit 6.1.1 hereto, as updated by Borrowers providing prior written notice to Agent of any new location.
6.1.2Insurance of Collateral.  Borrowers shall maintain and pay for insurance upon all Collateral wherever located and with respect to the business of Borrowers and each of their Subsidiaries, covering casualty, hazard, public liability, workers' compensation and such other risks in such amounts and with such insurance companies as are reasonably satisfactory to Agent.  Borrowers shall deliver certified copies of such policies to Agent as promptly as practicable, with satisfactory lender's loss payable endorsements, naming Agent as a loss payee, assignee or additional insured, as appropriate, as its interest may appear, and showing only such other loss payees, assignees and additional insureds as are satisfactory to Agent.  Each policy of insurance or endorsement shall contain a clause requiring the insurer to give not less than 10 days' prior written notice to Agent in the event of cancellation of the policy for nonpayment of premium and not less than 30 days' prior written notice to Agent in the event of cancellation of the policy for any 

13

other reason whatsoever and a clause specifying that the interest of Agent shall not be impaired or invalidated by any act or neglect of any Borrower, any of its Subsidiaries or the owner of the Property or by the occupation of the premises for purposes more hazardous than are permitted by said policy.  Borrowers agree to deliver to Agent, promptly as rendered, true copies of all reports made in any reporting forms to insurance companies.  All proceeds of business interruption insurance (if any) of any Borrower and its Subsidiaries shall be remitted to Agent for application to the outstanding balance of the Revolving Credit Loans.
Unless Borrowers provide Agent with evidence of the insurance coverage required by this Agreement, Agent may purchase insurance at Borrowers' expense to protect Agent's interests in the Properties of Borrowers and their Subsidiaries.  This insurance may, but need not, protect the interests of Borrowers and their Subsidiaries.  The coverage that Agent purchases may not pay any claim that any Borrower or any Subsidiary makes or any claim that is made against any Borrower or any such Subsidiary in connection with said Property.  Borrowers may later cancel any insurance purchased by Agent, but only after providing Agent with evidence that Borrowers and their Subsidiaries have obtained insurance as required by this Agreement.  If Agent purchases insurance, Borrowers will be responsible for the costs of that insurance, including interest and any other charges Agent may impose in connection with the placement of insurance, until the effective date of the cancellation or expiration of the insurance.  The costs of the insurance may be added to the Obligations.  The costs of the insurance may be more than the cost of insurance that Borrowers and their Subsidiaries may be able to obtain on their own.
6.1.3Protection of Collateral.  Neither Agent nor any Lender shall be liable or responsible in any way for the safekeeping of any of the Collateral or for any loss or damage thereto (except for reasonable care in the custody thereof while any Collateral is in Agent's or any Lender's actual possession) or for any diminution in the value thereof, or for any act or default of any warehouseman, carrier, forwarding agency, or other person whomsoever, but the same shall be at Borrowers' sole risk.
6.2Administration of Accounts.
6.2.1Records, Schedules and Assignments of Accounts.  Borrowers shall keep accurate and complete records of their Accounts and all payments and collections thereon and shall submit to Agent on such periodic basis as Agent shall request a sales and collections report for the preceding period, in form acceptable to Agent.  Concurrently with the delivery of each Borrowing Case Certificate described in subsection 8.1.4, or more frequently as requested by Agent, from and after the date hereof, Borrowers shall deliver to Agent a detailed aged trial balance of all of their Accounts, specifying the names, addresses, face values, dates of invoices and due dates for each Account Debtor obligated on an Account so listed (“Schedule of Accounts”), and upon Agent's request therefor, copies of proof of delivery and the original copy of all documents, including, without limitation, repayment histories and present status reports relating to the Accounts so scheduled and such other matters and information relating to the status of then existing Accounts as Agent shall request.  If requested by Agent, Borrowers shall execute and deliver to Agent formal written assignments of all of their Accounts weekly or daily, which shall include all Accounts that have been created since the date of the last assignment, together with copies of invoices or invoice registers related thereto.
6.2.2Discounts, Allowances, Disputes.  If any Borrower grants any discounts, allowances or credits that are not shown on the face of the invoice for the Account involved, Borrowers shall report such discounts, allowances or credits, as the case may be, to Agent as part of the next required Schedule of Accounts.
6.2.3Account Verification.  Any of Agent's officers, employees or agents shall have the right, at any time or times hereafter, in the name of Agent, any designee of Agent or any Borrower, to verify the validity, amount or any other matter relating to any Accounts by mail, telephone, electronic communication or otherwise.  Each Borrower shall cooperate fully with Agent in an effort to facilitate and promptly conclude any such verification process.
6.2.4Maintenance of Dominion Account.  Borrowers shall maintain a Dominion Account or Accounts pursuant to lockbox and blocked account arrangements acceptable to Agent with Bank.  Borrowers shall issue to Bank an irrevocable letter of instruction directing Bank to deposit all payments or other remittances received in the lockbox and blocked accounts to the Dominion Account for application on account of the Obligations as provided in subsection 3.2.1.  All funds deposited in any Dominion Account shall immediately become the property of Agent, for the ratable benefit of Lenders, and Borrowers shall obtain the agreement by Bank in favor of Agent to waive any recoupment, setoff rights, and any security interest in, or against, the funds so deposited.  Agent assumes no responsibility for such lockbox and blocked account arrangements, including, without limitation, any claim of accord and satisfaction or release with respect to deposits accepted by any bank thereunder.
6.2.5Collection of Accounts, Proceeds of Collateral.  Each Borrower agrees that all invoices 

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rendered and other requests made by any Borrower for payment in respect of Accounts shall contain a written statement directing payment in respect of such Accounts to be paid to a lockbox established pursuant to subsection 6.2.4.  To expedite collection, each Borrower shall endeavor in the first instance to make collection of its Accounts for Agent.  All remittances received by any Borrower on account of Accounts, together with the proceeds of any other Collateral, shall be held as Agent's property, for its benefit and the benefit of Lenders, by such Borrower as trustee of an express trust for Agent's benefit and each Borrower shall immediately deposit same in kind in the Dominion Account.  Agent retains the right at all times after the occurrence and during the continuance of a Default or an Event of Default to notify Account Debtors that any Borrower's Accounts have been assigned to Agent and to collect Borrowers' Accounts directly in its own name, or in the name of Agent's agent, and to charge the collection costs and expenses, including attorneys' fees, to Borrowers.
6.2.6Taxes.  If an Account includes a charge for any tax payable to any governmental taxing authority, Agent is authorized, in its sole discretion, to pay the amount thereof to the proper taxing authority for the account of Borrowers and to charge Borrowers therefor, except for taxes that (i) are being actively contested in good faith and by appropriate proceedings and with respect to which Borrowers maintain reasonable reserves on their books therefor and (ii) would not reasonably be expected to result in any Lien other than a Permitted Lien.  In no event shall Agent or any Lender be liable for any taxes to any governmental taxing authority that may be due by any Borrower.
6.3Administration of Inventory.  Each Borrower shall keep records of its Inventory which records shall be complete and accurate in all material respects.  Borrowers shall furnish to Agent Inventory reports concurrently with the delivery of each Borrowing Base Certificate described in subsection 8.1.4 or more frequently as requested by Agent, which reports will be in such other format and detail as Agent shall request and shall include a current list of all locations of each Borrower's Inventory.  Borrowers shall conduct a physical inventory no less frequently than annually and shall provide to Agent a report based on each such physical inventory promptly thereafter, together with such supporting information as Agent shall reasonably request.
6.4Administration of Equipment.
6.4.1    Records and Schedules of Equipment.  Each Borrower shall keep records of its Equipment which shall be complete and accurate in all material respects itemizing and describing the kind, type, quality, quantity and book value of its Equipment and all dispositions made in accordance with subsection 6.4.2 hereof, and Borrowers shall, and shall cause each of their Subsidiaries to, furnish Agent with a current schedule containing the foregoing information on at least an annual basis and more often if requested by Agent.  Promptly after the request therefor by Agent, Borrowers shall deliver to Agent any and all evidence of ownership, if any, of any of their Equipment.
6.4.2    Dispositions of Equipment.  Borrowers shall not, and shall not permit any of their Subsidiaries to, sell, lease or otherwise dispose of or transfer any of their respective Equipment or other fixed assets or any part thereof without the prior written consent of Agent; provided, however, that the foregoing restriction shall not apply, for so long as no Default or Event of Default exists and is continuing, to (i) dispositions of Equipment and other fixed assets which, in the aggregate during any consecutive twelve-month period, have a fair market value or a book value, whichever is less, of One Million ($1,000,000) or less, provided that all proceeds thereof are remitted to Agent for application to the Loans as provided in subsection 3.3.1, or (ii) replacements of Equipment or other fixed assets that are substantially worn, damaged or obsolete with Equipment or other fixed assets of like kind, function and value which are useful in the business of any Borrower or one of its Subsidiaries, provided that the replacement Equipment or other fixed assets shall be acquired within ninety (90) days after any disposition of the Equipment or other fixed assets that are to be replaced and the replacement Equipment or other fixed assets shall be free and clear of Liens other than Permitted Liens that are not Purchase Money Liens.
6.5Payment of Charges.  All amounts chargeable to Borrowers under Section 6 hereof shall be Obligations secured by all of the Collateral, shall be payable on demand and shall bear interest from the date such advance was made until paid in full at the rate applicable to Base Rate Revolving Portions from time to time.

REPRESENTATIONS AND WARRANTIES

7.1General Representations and Warranties.  To induce Agent and each Lender to enter into this Agreement and to make advances hereunder, Borrowers warrant, represent and covenant to Agent and each Lender, on a joint and several basis, that:
7.1.1Qualification.  Each Borrower and each of its Subsidiaries is a corporation, limited partnership or limited liability company duly organized, validly existing and in good standing under the laws of the jurisdiction 

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of its incorporation or organization.  Each Borrower and each of its Subsidiaries is duly qualified and is authorized to do business and is in good standing as a foreign limited liability company, limited partnership or corporation, as applicable, in each state or jurisdiction listed on Exhibit 7.1.1 hereto and in all other states and jurisdictions in which the failure of any Borrower or any of its Subsidiaries to be so qualified could reasonably be expected to have a Material Adverse Effect.
7.1.2Power and Authority.  Each Borrower and each of its Subsidiaries executing this Agreement is duly authorized and empowered to enter into, execute, deliver and perform this Agreement and each of the other Loan Documents to which it is a party.  The execution, delivery and performance of this Agreement and each of the other Loan Documents have been duly authorized by all necessary corporate or other relevant action and do not and will not:  (i) require any consent or approval of the shareholders or members of any Borrower or any of the shareholders, partners or members, as the case may be, of any Subsidiary of any Borrower; (ii) contravene any Borrower's or any of its Subsidiaries' charter, articles or certificate of incorporation, partnership agreement, certificate of formation, by‐laws, limited liability agreement, operating agreement or other organizational documents (as the case may be); (iii) violate, or cause any Borrower or any of its Subsidiaries to be in default under, any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award in effect having applicability to any Borrower or any of its Subsidiaries, the violation of which could reasonably be expected to have a Material Adverse Effect; (iv) result in a breach of or constitute a default under any indenture or loan or credit agreement or any other agreement, lease or instrument to which any Borrower or any of its Subsidiaries is a party or by which it or its Properties may be bound or affected, the breach of or default under which could reasonably be expected to have a Material Adverse Effect; or (v) result in, or require, the creation or imposition of any Lien (other than Permitted Liens) upon or with respect to any of the Properties now owned or hereafter acquired by any Borrower or any of its Subsidiaries.
7.1.3Legally Enforceable Agreement.  This Agreement is, and each of the other Loan Documents when delivered under this Agreement will be, a legal, valid and binding obligation of each Borrower and each of its Subsidiaries party thereto, enforceable against it in accordance with its respective terms.
7.1.4Capital Structure.  Exhibit 7.1.4 hereto states, as of the date hereof, (i) the correct name of each of the Subsidiaries of each Borrower, its jurisdiction of incorporation or organization and the percentage of its Voting Stock owned by each Borrower, (ii) the name of each Borrower's and each of its Subsidiaries' corporate or joint venture relationships and the nature of the relationship, (iii) the number, nature and holder of all outstanding Securities of each Borrower and the holder of Securities of each Subsidiary of each Borrower (other than MFRI) and (iv) the number of authorized, issued and treasury Securities of each Borrower.  Each Borrower has good title to all of the Securities it purports to own of each of such Subsidiaries, free and clear in each case of any Lien other than Permitted Liens.  All such Securities have been duly issued and are fully paid and non-assessable.  As of the date hereof, there are no outstanding options to purchase, or any rights or warrants to subscribe for, or any commitments or agreements to issue or sell, any Securities or obligations convertible into, or any powers of attorney relating to, any Securities of any Borrower or any of its Subsidiaries.  Except as set forth on Exhibit 7.1.4, as of the date hereof, there are no outstanding agreements or instruments binding upon any of any Borrower's or any of its Subsidiaries' partners, members or shareholders, as the case may be, relating to the ownership of its Securities.
7.1.5Names; Organization.  Since June 1, 1997, neither any Borrower nor any of its Subsidiaries has been known as or has used any legal, fictitious or trade names except those listed on Exhibit 7.1.5 hereto.  Except as set forth on Exhibit 7.1.5, neither any Borrower nor any of its Subsidiaries has been the surviving entity of a merger or consolidation or has acquired all or substantially all of the assets of any Person since June 1, 1997.  Each of each Borrower's and each of its Subsidiaries' state(s) of incorporation or organization, Type of Organization and Organizational I.D. Number is set forth on Exhibit 7.1.5.  The exact legal name of each Borrower and each of its Subsidiaries is set forth on Exhibit 7.1.5.
7.1.6Business Locations; Agent for Process.  Each of each Borrower's and each of its Subsidiary's chief executive office, location of books and records and other places of business are as listed on Exhibit 6.1.1 hereto, as updated from time to time by Borrowers in accordance with the provisions of subsection 6.1.1.  During the preceding one‐year period, neither any Borrower nor any of its Subsidiaries has had an office, place of business or agent for service of process, other than as listed on Exhibit 6.1.1.  All tangible Collateral is and will at all times be kept by Borrowers and their Subsidiaries in accordance with subsection 6.1.1.  Except as shown on Exhibit 6.1.1, as of the date hereof, no Inventory is stored with a bailee, distributor, warehouseman or similar party, nor is any Inventory consigned to any Person.
7.1.7Title to Properties; Priority of Liens.  Each Borrower and each of its Subsidiaries has good, 

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indefeasible and marketable title to and fee simple ownership of, or valid and subsisting leasehold interests in, all of its real Property, and good title to all of the Collateral and all of its other Property, in each case, free and clear of all Liens except Permitted Liens.  Each Borrower and each of its Subsidiaries has paid or discharged all lawful claims which, if unpaid, might become a Lien against any of any Borrower's or such Subsidiary's Properties that is not a Permitted Lien.  The Liens granted to Agent under Section 5 hereof are first priority Liens, subject only to Permitted Liens.
7.1.8Accounts.  Agent may rely, in determining which Accounts are Eligible Accounts, on all statements and representations made by any Borrower with respect to any Account or Accounts.  With respect to each of each Borrower's Accounts, whether or not such Account is an Eligible Account, unless otherwise disclosed to Agent in writing:
i.It is genuine and in all respects what it purports to be, and it is not evidenced by a judgment;
ii.It arises out of a completed, bona fide sale and delivery of goods or rendition of services by a Borrower, in the ordinary course of its business and in accordance with the terms and conditions of all purchase orders, contracts or other documents relating thereto and forming a part of the contract between such Borrower and the Account Debtor;
iii.It is for a liquidated amount maturing as stated in the duplicate invoice covering such sale or rendition of services, a copy of which has been furnished or is available to Agent;
iv.There are no facts, events or occurrences which in any way impair the validity or enforceability of any Accounts or tend to materially reduce the amount payable thereunder from the face amount of the invoice and statements delivered or made available to Agent with respect thereto;
v.To the best of each Borrower's knowledge, the Account Debtor thereunder (1) had the capacity to contract at the time any contract or other document giving rise to the Account was executed and (2) such Account Debtor is Solvent; and
vi.To the best of each Borrower's knowledge, there are no proceedings or actions which are threatened or pending against the Account Debtor thereunder which might result in any material adverse change in such Account Debtor's financial condition or the collectibility of such Account.
7.1.9Equipment.  The Equipment of Borrowers and their Subsidiaries is in good operating condition and repair, and all necessary replacements of and repairs thereto shall be made so that the operating efficiency thereof shall be maintained and preserved, reasonable wear and tear excepted.  Neither any Borrower nor any of its Subsidiaries will permit any Equipment to become affixed to any real Property leased to any Borrower or any of its Subsidiaries so that an interest arises therein under the real estate laws of the applicable jurisdiction unless the landlord of such real Property has executed a landlord waiver or leasehold mortgage in favor of and in form reasonably acceptable to Agent, and no Borrower will permit any of the Equipment of any Borrower or any of its Subsidiaries to become an accession to any personal Property other than Equipment that is subject to first priority (except for Permitted Liens) Liens in favor of Agent.
7.1.10Financial Statements; Fiscal Year.  The Consolidated and consolidating balance sheets of MFRI and its Subsidiaries (including the accounts of all Subsidiaries of MFRI and their respective Subsidiaries for the respective periods during which a Subsidiary relationship existed) as of January 31, 2011, and the related statements of income, changes in shareholder's equity, and changes in financial position for the periods ended on such dates, have been prepared in accordance with GAAP, and present fairly in all material respects the financial positions of MFRI and such Persons, taken as a whole, at such dates and the results of MFRI's and such Persons' operations, taken as a whole, for such periods.  As of the date hereof, since January 31, 2011, there has been no material adverse change in the financial position of MFRI and such other Persons, taken as a whole, as reflected in the Consolidated balance sheet as of such date.  As of the date hereof, the fiscal year of MFRI and each of its Subsidiaries ends on January 31 of each year.
7.1.11Full Disclosure.  The financial statements referred to in subsection 7.1.10 hereof do not, nor does this Agreement or any other written statement of any Borrower to Agent or any Lender contain any untrue statement of a material fact or omit a material fact necessary to make the statements contained therein or herein not misleading.  There is no fact which any Borrower has failed to disclose to Agent or any Lender in writing which could reasonably be expected to have a Material Adverse Effect.
7.1.12Solvent Financial Condition.  Each Borrower and each of its Subsidiaries, is now and, after giving effect to the initial Loans to be made and the initial Letters of Credit and LC Guaranties to be issued hereunder 

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and all related transactions, will be, Solvent.
7.1.13Surety Obligations.  Except as set forth on Exhibit 7.1.13, as of the date hereof, neither any Borrower nor any of its Subsidiaries is obligated as surety or indemnitor under any surety or similar bond or other contract or has issued or entered into any agreement to assure payment, performance or completion of performance of any undertaking or obligation of any Person.
7.1.14Taxes.  MFRI's federal tax identification number is 36‐3922969.  The federal tax identification number of each Subsidiary of MFRI is shown on Exhibit 7.1.14 hereto.  Each Borrower and each of its Subsidiaries has filed all federal, state and local tax returns and other reports relating to taxes it is required by law to file, and has paid, or made provision for the payment of, all taxes, assessments, fees, levies and other governmental charges upon it, its income and Properties as and when such taxes, assessments, fees, levies and charges are due and payable, unless and to the extent any thereof are being actively contested in good faith and by appropriate proceedings and each Borrower and each of its Subsidiaries maintains reasonable reserves on its books therefor.  The provision for taxes on the books of each Borrower and its Subsidiaries is adequate for all years not closed by applicable statutes, and for the current fiscal year.
7.1.15Brokers.  Except as shown on Exhibit 7.1.15 hereto, there are no claims for brokerage commissions, finder's fees or investment banking fees in connection with the transactions contemplated by this Agreement.
7.1.16Patents, Trademarks, Copyrights and Licenses.  Each Borrower and each of its Subsidiaries owns, possesses or licenses or has the right to use all the patents, trademarks, service marks, trade names, copyrights, licenses and other Intellectual Property necessary for the present and planned future conduct of its business without any known conflict with the rights of others, except for such conflicts as could not reasonably be expected to have a Material Adverse Effect.  All such patents, trademarks, service marks, trade names, copyrights, licenses, and other similar rights are listed on Exhibit 7.1.16 hereto.  No claim has been asserted to any Borrower or any of its Subsidiaries which is currently pending that their use of their Intellectual Property or the conduct of their business does or may infringe upon the Intellectual Property rights of any third party.  To the knowledge of Borrowers and except as set forth on Exhibit 7.1.16 hereto, as of the date hereof, no Person is engaging in any activity that infringes in any material respect upon any Borrower's or any of its Subsidiaries' material Intellectual Property.  Except as set forth on Exhibit 7.1.16, each Borrower's and each of its Subsidiaries' (i) material trademarks, service marks, and copyrights are registered with the U.S. Patent and Trademark Office or in the U.S. Copyright Office, as applicable and (ii) material license agreements and similar arrangements relating to its Inventory (1) permits, and does not restrict, the assignment by any Borrower or any of its Subsidiaries to Agent, or any other Person designated by Agent, of all of any Borrower's or such Subsidiary's, as applicable, rights, title and interest pertaining to such license agreement or such similar arrangement and (2) would permit the continued use by any Borrower or such Subsidiary, or Agent or its assignee, of such license agreement or such similar arrangement and the right to sell Inventory subject to such license agreement for a period of no less than 6 months after a default or breach of such agreement or arrangement.  The consummation and performance of the transactions and actions contemplated by this Agreement and the other Loan Document, including without limitation, the exercise by Agent of any of its rights or remedies under Section 10, will not result in the termination or impairment of any of any Borrower's or any of its Subsidiaries' ownership or rights relating to its Intellectual Property, except for such Intellectual Property rights the loss or impairment of which could not reasonably be expected to have a Material Adverse Effect.  Except as listed on Exhibit 7.1.16 and except as could not reasonably be expected to have a Material Adverse Effect, (i) neither any Borrower nor any of its Subsidiaries is in breach of, or default under, any term of any license or sublicense with respect to any of its Intellectual Property and (ii) to the knowledge of any Borrower, no other party to such license or sublicense is in breach thereof or default thereunder, and such license is valid and enforceable.
7.1.17Governmental Consents.  Each Borrower and each of its Subsidiaries has, and is in good standing with respect to, all governmental consents, approvals, licenses, authorizations, permits, certificates, inspections and franchises necessary to continue to conduct its business as heretofore or proposed to be conducted by it and to own or lease and operate its Properties as now owned or leased by it, except where the failure to possess or so maintain such rights could not reasonably be expected to have a Material Adverse Effect.
7.1.18Compliance with Laws.  Each Borrower and each of its Subsidiaries has duly complied, and its Properties, business operations and leaseholds are in compliance with, the provisions of all federal, state and local laws, rules and regulations applicable to such Borrower or such Subsidiary, as applicable, its Properties or the conduct of its business, except for such non-compliance as could not reasonably be expected to have a Material Adverse Effect, 

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and there have been no citations, notices or orders of noncompliance issued to any Borrower or any of its Subsidiaries under any such law, rule or regulation, except where such noncompliance could not reasonably be expected to have a Material Adverse Effect.  Each Borrower and each of its Subsidiaries has established and maintains an adequate monitoring system to insure that it remains in compliance in all material respects with all federal, state and local rules, laws and regulations applicable to it.  No Inventory has been produced in violation of the Fair Labor Standards Act (29 U.S.C. §201 et seq.), as amended.
7.1.19Restrictions.  Neither any Borrower nor any of its Subsidiaries is a party or subject to any contract or agreement which restricts its right or ability to incur Indebtedness, other than as set forth on Exhibit 7.1.19 hereto, none of which prohibit the execution of or compliance with this Agreement or the other Loan Documents by any Borrower or any of its Subsidiaries, as applicable.
7.1.20Litigation.  Except as set forth on Exhibit 7.1.20 hereto, there are no actions, suits, proceedings or investigations pending, or to the knowledge of any Borrower, threatened, against or affecting any Borrower or any of its Subsidiaries, or the business, operations, Properties, prospects, profits or condition of any Borrower or any of its Subsidiaries which, singly or in the aggregate, could reasonably be expected to have a Material Adverse Effect.  Neither any Borrower nor any of its Subsidiaries is in default with respect to any order, writ, injunction, judgment, decree or rule of any court, governmental authority or arbitration board or tribunal, which, singly or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
7.1.21No Defaults.  Except as set forth on Exhibit 7.1.21 attached hereto, no event has occurred and no condition exists which would, upon or after the execution and delivery of this Agreement or any Borrower's performance hereunder, constitute a Default or an Event of Default.  Neither any Borrower nor any of its Subsidiaries is in default in (and no event has occurred and no condition exists which constitutes, or which the passage of time or the giving of notice or both would constitute, a default in) the payment of any Indebtedness to any Person for Money Borrowed in excess of One Million Dollars ($1,000,000).
7.1.22Leases.  Exhibit 7.1.22 hereto is a complete listing of all capitalized and operating personal property leases of each Borrower and its Subsidiaries and all real property leases of each Borrower and its Subsidiaries.  Each Borrower and each of its Subsidiaries is in full compliance with all of the terms of each of its respective capitalized and operating leases, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect.
7.1.23Pension Plans.  Except as disclosed on Exhibit 7.1.23 hereto, neither any Borrower nor any of its Subsidiaries has any Plan.  Each Borrower and each of its Subsidiaries is in compliance with the requirements of ERISA and the regulations promulgated thereunder with respect to each Plan, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect.  No fact or situation that could reasonably be expected to result in a material adverse change in the financial condition of any Borrower and its Subsidiaries exists in connection with any Plan.  Neither any Borrower nor any of its Subsidiaries has any withdrawal liability in connection with a Multiemployer Plan.
7.1.24Trade Relations.  There exists no actual or, to any Borrower's knowledge, threatened termination, cancellation or limitation of, or any modification or change in, the business relationship between any Borrower or any of its Subsidiaries and any customer or any group of customers whose purchases individually or in the aggregate are material to the business of any Borrower and its Subsidiaries, or with any material supplier, except in each case, where the same could not reasonably be expected to have a Material Adverse Effect, and there exists no present condition or state of facts or circumstances which would prevent any Borrower or any of its Subsidiaries from conducting such business after the consummation of the transactions contemplated by this Agreement in substantially the same manner in which it has heretofore been conducted.
7.1.25Labor Relations.  Except as described on Exhibit 7.1.25 hereto, as of the date hereof, neither any Borrower nor any of its Subsidiaries is a party to any collective bargaining agreement.  There are no material grievances, disputes or controversies with any union or any other organization of any Borrower's or any of its Subsidiaries' employees, or threats of strikes, work stoppages or any asserted pending demands for collective bargaining by any union or organization, except those that could not reasonably be expected to have a Material Adverse Effect.
7.2Continuous Nature of Representations and Warranties.  Each representation and warranty contained in this Agreement and the other Loan Documents shall be continuous in nature and shall remain accurate, complete and not misleading at all times during the term of this Agreement, except for changes in the nature of any Borrower's or one of Borrower's Subsidiary's business or operations that would render the information in any exhibit attached hereto or to any other Loan Document either inaccurate, incomplete or misleading, so long as Majority Lenders have 

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consented to such changes or such changes are expressly permitted by this Agreement.  Without limiting the generality of the foregoing, each Loan request made or deemed made pursuant to subsection 3.1.1 hereof shall constitute Borrowers' reaffirmation, as of the date of each such loan request, of each representation, warranty or other statement made or furnished to Agent or any Lender by or on behalf of any Borrower, any Subsidiary of any Borrower, or any Guarantor in this Agreement, any of the other Loan Documents, or any instrument, certificate or financial statement furnished in compliance with or in reference thereto.  The foregoing notwithstanding, the Exhibits delivered by Borrowers with respect to the Original Loan Agreement shall be deemed to be the Exhibits to this Agreement; provided that Borrowers covenant to provide Agent and Lenders with updates to such Exhibits on or prior to May 15, 2012, which updates shall not evidence any Material Adverse Effect.
7.3Survival of Representations and Warranties.  All representations and warranties of Borrowers contained in this Agreement or any of the other Loan Documents shall survive the execution, delivery and acceptance thereof by Agent and each Lender and the parties thereto and the closing of the transactions described therein or related thereto.

COVENANTS AND CONTINUING AGREEMENTS
8.1Affirmative Covenants.  During the Term, and thereafter for so long as there are any Obligations outstanding, Borrowers covenant that, unless otherwise consented to by Majority Lenders, in writing, they shall:
8.1.1    Visits and Inspections; Lender Meeting.  Permit (i) representatives of Agent, and during the continuation of any Default or Event of Default any Lender, from time to time, as often as may be reasonably requested, but only during normal business hours, to visit and inspect the Properties of each Borrower and each of its Subsidiaries, inspect, audit and make extracts from its books and records, and discuss with its officers, its employees and its independent accountants, each Borrower's and each of its Subsidiaries' business, assets, liabilities, financial condition, business prospects and results of operations and (ii) appraisers engaged pursuant to Section 2.10 (whether or not personnel of Agent), from time to time, as often as may be reasonably requested, but only during normal business hours, to visit and inspect the Properties of each Borrower and each of its Subsidiaries, for the purpose of completing appraisals pursuant to Section 2.10.  Agent, if no Default or Event of Default then exists, shall give Borrowers reasonable prior notice of any such inspection or audit.  Without limiting the foregoing, Borrowers will participate and will cause their key management personnel to participate in a meeting with Agent and Lenders periodically during each year (except that during the continuation of an Event of Default such meetings may be held more frequently as requested by Agent or Majority Lenders), which meeting(s) shall be held at such times and such places as may be reasonably requested by Agent.
8.1.2    Notices.  Promptly notify Agent in writing of the occurrence of any event or the existence of any fact which renders any representation or warranty in this Agreement or any of the other Loan Documents inaccurate, incomplete or misleading in any material respect as of the date made or remade.  In addition, each Borrower agrees to provide Agent with prompt written notice of any change in the information disclosed in any Exhibit hereto, in each case after giving effect to the materiality limits and Material Adverse Effect qualifications contained therein.
8.1.3    Financial Statements.  Keep, and cause each of its Subsidiaries to keep, adequate records and books of account with respect to its business activities in which proper entries are made in accordance with customary accounting practices reflecting all its financial transactions; and cause to be prepared and furnished to Agent and each Lender, the following, all to be prepared in accordance with GAAP applied on a consistent basis, unless MFRI's certified public accountants concur in any change therein and such change is disclosed to Agent and is consistent with GAAP:
i.not later than 90 days after the close of each fiscal year of MFRI, unqualified (except for a qualification for a change in accounting principles with which the accountant concurs) audited financial statements of MFRI and its Subsidiaries as of the end of such year, on a Consolidated and consolidating basis, certified by a firm of independent certified public accountants of recognized standing selected by MFRI but acceptable to Agent and, within a reasonable time thereafter permit Agent to review a copy of any management letter issued in connection therewith;
ii.not later than 30 days (40 days with respect to each January and February within the Term) after the end of each month hereafter, including the last month of MFRI's fiscal year, unaudited interim financial statements of MFRI and its Subsidiaries as of the end of such month and of the portion of the fiscal year then elapsed, on a Consolidated and consolidating basis, certified by the principal financial officer of MFRI as prepared in accordance with GAAP and fairly presenting in all material respects the financial position and results of operations of MFRI and its Subsidiaries for such month and period subject only to changes from audit and year-end adjustments and except that such statements need not contain notes;

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iii.together with each delivery of financial statements pursuant to clauses (i) and (ii) of this subsection 8.1.3, a management report (1) setting forth in comparative form the corresponding figures for the corresponding periods of the previous fiscal year and the corresponding figures from the most recent Projections for the current fiscal year delivered pursuant to subsection 8.1.7 and (2) identifying the reasons for any significant variations.  The information above shall be presented in reasonable detail and shall be certified by the chief financial officer of MFRI to the effect that such information fairly presents in all material respects the results of operation and financial condition of MFRI and its Subsidiaries as at the dates and for the periods indicated;
iv.promptly after the sending or filing thereof, as the case may be, copies of any proxy statements, financial statements or reports which MFRI has made available to its Securities holders and copies of any regular, periodic and special reports or registration statements which MFRI or any of its Subsidiaries files with the Securities and Exchange Commission or any governmental authority which may be substituted therefor, or any national securities exchange;
v.upon request of Agent, copies of any annual report to be filed with ERISA in connection with each Plan;
vi.within forty‐five (45) days after the end of each fiscal quarter hereafter, a certificate in form and substance reasonably acceptable to Agent, evidencing that Borrowers are in compliance with the financial covenants contained in the Term Loan Documents; and
vii.such other data and information (financial and otherwise) as Agent or any Lender, from time to time, may reasonably request, bearing upon or related to the Collateral or any Borrower's or any of its Subsidiaries' financial condition or results of operations.

Promptly after the receipt of the financial statements by MFRI described in clause (i) of this subsection 8.1.3, MFRI shall permit Agent to review the accountants' letter to MFRI's management that is prepared in connection with such financial statements and also shall cause to be prepared and shall furnish to Agent a certificate of the aforesaid certified public accountants certifying to Agent that, based upon their examination of the financial statements of MFRI and its Subsidiaries performed in connection with their examination of said financial statements, they are not aware of any Default or Event of Default, or, if they are aware of such Default or Event of Default, specifying the nature thereof.  Concurrently with the delivery of the financial statements described in paragraph (i) and (ii) of this subsection 8.1.3, or more frequently if reasonably requested by Agent, MFRI shall cause to be prepared and furnished to Agent a Compliance Certificate in the form of Exhibit 8.1.3 hereto executed by the Chief Financial Officer of MFRI (a “Compliance Certificate”).
8.1.4Borrowing Base Certificates.  On or before the third Business Day of each week from and after the date hereof, Borrowers shall deliver to Agent, in form acceptable to Agent, a Borrowing Base Certificate (on a Consolidated and consolidating basis) as of the last day of the immediately preceding week, with such supporting materials as Agent shall reasonably request.  If Borrowers deem it advisable, or Agent shall request, Borrowers shall execute and deliver to Agent Borrowing Base Certificates more frequently than weekly.
8.1.5Landlord, Processor and Storage Agreements.  Provide Agent with copies of all agreements between any Borrower or any of its Subsidiaries and any landlord, warehouseman, processor, distributor or consignee which owns or is the lessee of any premises at which any Collateral may, from time to time, be kept.  With respect to any lease (other than leases for sales offices), warehousing agreement or any processing agreement in any case entered into after the Closing Date, Borrowers shall provide Agent with landlord waivers, bailee letters or processor letters with respect to such premises.  Such landlord waivers, bailee letters or processor letters shall be in a form supplied by Agent to Borrowers with such reasonable revisions as are customarily accepted by Agent or by similar financial institutions in similar financial transactions.
8.1.6Projections.  No later than the first day of each fiscal year of MFRI, deliver to Agent projections of sales and gross margins of MFRI and each of its Subsidiaries for such fiscal year, month by month.  No later than February 28 of each fiscal year of MFRI, deliver to Agent Projections of MFRI and each of its Subsidiaries for the then current fiscal year month by month with respect to income statements and quarter by quarter with respect to balance sheets and statements of cash flows.
8.1.7Subsidiaries.  Cause each Subsidiary of each Borrower that is not a Borrower, whether now or hereafter in existence, promptly upon Agent's request therefor, to execute and deliver to Agent a Guaranty Agreement and a security agreement pursuant to which such Subsidiary guaranties the payment of all Obligations and grants to 

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Agent a first priority Lien (subject only to Permitted Liens) on all of its Properties of the types described in Section 5.1; provided, however, that with respect to existing Subsidiaries, no such Guaranty Agreement and/or security agreement shall be required to be executed or delivered by any such Subsidiary if such Subsidiary is prohibited from executing any such document or agreement by the terms of any statute, law, contract, agreement, instrument or document existing as of the Closing Date evidencing such Subsidiary's Money Borrowed.  Additionally, the applicable Borrower shall execute and deliver to Agent a pledge agreement pursuant to which such Borrower grants to Agent a first priority Lien (subject only to Permitted Liens) with respect to all of the issued and outstanding Securities of each such Subsidiary.
8.1.8Deposit and Brokerage Accounts.  For each deposit account or brokerage account that any Borrower at any time opens or maintains, such Borrower shall, at Agent's request and option, pursuant to an agreement in form and substance reasonably satisfactory to Agent, cause the depository bank or securities intermediary, as applicable, to agree to comply at any time with instructions from Agent to such depository bank or securities intermediary, as applicable, directing the disposition of funds from time to time credited to such deposit or brokerage account, without further consent of the applicable Borrower.
8.1.9Cash Management Services.  Borrower shall maintain mutually agreeable cash management agreements with Bank, to the extent Bank offers such services at competitive rates.
8.2Negative Covenants.  During the Term, and thereafter for so long as there are any Obligations outstanding, Borrowers covenant that, unless otherwise consented to by Majority Lenders, in writing, it shall not:
8.2.1    Mergers; Consolidations; Acquisitions; Structural Changes.  Merge or consolidate, or permit any Subsidiary of any Borrower to merge or consolidate, with any Person; nor change its or any of its Subsidiaries' state of incorporation or organization, Type of Organization or Organizational I.D. Number; nor change its or any of its Subsidiaries' legal name; nor acquire, nor permit any of its Subsidiaries to acquire, all or any substantial part of the Properties of any Person, except for:
i.mergers of any Subsidiary of any Borrower into another Borrower or another wholly-owned Subsidiary of another Borrower; and
ii.acquisitions of assets consisting of fixed assets or real property that constitute Capital Expenditures permitted under subsection 8.2.8.
8.2.2    Loans.  Make, or permit any Subsidiary of any Borrower to make, any loans or other advances of money to any Person, other than (i) for salary, travel advances, advances against commissions and other similar advances to employees in the ordinary course of business, (ii) extensions of trade credit in the ordinary course of business, (iii) deposits with financial institutions permitted under this Agreement, (iv) intercompany advances (and repayments thereof) in the ordinary course of business by MFRI to its Subsidiaries for such Subsidiaries' working capital needs and (v) prepaid expenses.
8.2.3    Total Indebtedness.  Create, incur, assume, or suffer to exist, or permit any Subsidiary of any Borrower to create, incur or suffer to exist, any Indebtedness, except:
iii.Obligations owing to Agent or any Lender under this Agreement or any of the other Loan Documents;
iv.Indebtedness, including without limitation Subordinated Debt, existing on the date of this Agreement and listed on Exhibit 8.2.3;
v.Permitted Purchase Money Indebtedness;
vi.contingent liabilities arising out of endorsements of checks and other negotiable instruments for deposit or collection in the ordinary course of business;
vii.Guaranties of any Indebtedness permitted hereunder;
viii.Indebtedness in respect of intercompany advances permitted by Section 8.2.2(iv);
ix.obligations to pay Rentals permitted by subsection 8.2.18;
x.Intentionally Omitted;
xi.IRB Indebtedness;
xii.Existing Mortgage Indebtedness;
xiii.Intentionally Omitted;
xiv.Indebtedness incurred pursuant to the Perma-Pipe Equipment Loan;
xv.to the extent not included above, trade payables, accruals and accounts payable in the ordinary course of business (in each case to the extent not overdue) not for Money Borrowed;
xvi.Indebtedness incurred in connection with loans on the cash surrender value of key‐man life insurance policies so long as the principal amount of such Indebtedness does not exceed 

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$2,000,000, the per annum interest rate payable with respect to such Indebtedness does not exceed 4.25% and such Indebtedness does not require any principal amortization on or prior to December 31, 2013;
xvii.Money Borrowed incurred by foreign Subsidiaries of Borrowers and other Indebtedness not included in paragraphs (i) through (xiv) above which does not exceed at any time, in the aggregate, the sum of Twenty‐Seven Million Dollars ($27,000,000) and the guaranty of such Money Borrowed by Borrowers so long as all such guaranties are unsecured;
xviii.Indebtedness in respect to deferred taxes;
xix.Indebtedness relating to compensation owed to Borrowers' employees for services rendered in the ordinary course of business;
xx.All unfunded pension and other employee benefit plan obligations and liabilities but only to the extent they are permitted to remain unfunded under applicable law; and
xxi.Indebtedness not included in paragraphs (i) through (xviii) above does not exceed at any time, in the aggregate, the sum of $500,000.
8.2.4    Affiliate Transactions.  Enter into, or be a party to, or permit any Subsidiary of any Borrower to enter into or be a party to, any transaction with any Affiliate of any Borrower or any holder of any Securities of any Borrower or any Subsidiary of any Borrower, including without limitation any management, consulting or similar fees, except in the ordinary course of and pursuant to the reasonable requirements of the applicable Borrower's or such Subsidiary's business and upon fair and reasonable terms which are fully disclosed to Agent and are no less favorable to such Borrower or such Subsidiary than would be obtained in a comparable arms-length transaction with a Person not an Affiliate or Security holder of Borrower.  Agent acknowledges the Management Services Agreement dated December 30, 1996 between MFRI, Inc. and Midwesco Illinois, Inc., as amended prior to the Closing Date, meets the requirements of, and is permissible under, this Section 8.2.4.  Borrowers covenant that true and correct copies of such Services Agreement and all amendments thereto have been delivered to Agent.
8.2.5    Limitation on Liens.  Create or suffer to exist, or permit any Subsidiary of any Borrower to create or suffer to exist, any Lien upon any of its Property, income or profits, whether now owned or hereafter acquired, except:
xxii.Liens at any time granted in favor of Agent for the benefit of Lenders;
xxiii.Liens for taxes, assessments or governmental charges (excluding any Lien imposed pursuant to any of the provisions of ERISA) not yet due, or being contested in the manner described in subsection 7.1.14 hereto, but only if in Agent's judgment such Lien would not reasonably be expected to adversely effect Agent's rights or the priority of Agent's lien on any Collateral;
xxiv.Liens arising in the ordinary course of the business of any Borrower or any of its Subsidiaries by operation of law or regulation, but only if payment in respect of any such Lien is not at the time required and such Liens do not, in the aggregate, materially detract from the value of the Property of any Borrower or any of its Subsidiaries or materially impair the use thereof in the operation of the business of any Borrower or any of its Subsidiaries;
xxv.Purchase Money Liens securing Permitted Purchase Money Indebtedness; 
xxvi.such other Liens as appear on Exhibit 8.2.5 hereto; 
xxvii.Liens incurred or deposits made in the ordinary course of business in connection with (1) worker's compensation, social security, unemployment insurance and other like laws or (2) sales contracts, leases, statutory obligations, work in progress advances and other similar obligations not incurred in connection with the borrowing of money or the payment of the deferred purchase price of property;
xxviii.reservations, covenants, zoning and other land use regulations, title exceptions or encumbrances granted in the ordinary course of business, affecting real Property owned or leased by any Borrower or one of its Subsidiaries; provided that such exceptions do not in the aggregate materially interfere with the use of such Property in the ordinary course of such Borrower's or such Subsidiary's business;
xxix.judgment Liens that do not give rise to an Event of Default under subsection 10.1.15;
xxx.Liens securing the IRB Indebtedness;
xxxi.Liens on a Borrower's or Guarantor's real Property, improvements, and Fixtures securing the Existing Mortgage Indebtedness as the same may be refinanced as provided in the definition of Existing Mortgage Indebtedness;
xxxii.Liens on the real Property of Midwesco's Danish Subsidiaries securing Money Borrowed of such Danish Subsidiaries;

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xxxiii.Liens on the cash surrender value of life insurance policies securing Indebtedness permitted under subsection 8.2.8(xii);
xxxiv.Liens incurred in connection with the Computer Sale and Leaseback; 
xxxv.Liens incurred in connection with the Perma-Pipe Equipment Loan on the Equipment described on Exhibit 8.2.5;
xxxvi.Liens incurred in connection with the cash collateralization of standby letters of credit issued by Bank of America India for Borrowers' Indian Foreign Subsidiary; and
xxxvii.such other Liens as Majority Lenders may hereafter approve in writing.
8.2.6    Payments and Amendments of Certain Debt.  Make or permit any Subsidiary of any Borrower to (i) prepay or repurchase, directly or indirectly, any portion of (x) the Existing Mortgage Indebtedness or (y) the IRB Indebtedness or (ii) amend or modify (x) any agreement, instrument, or document evidencing or relating to Existing Mortgage Indebtedness or (z) any agreement, instrument or document relating to the IRB Indebtedness, in either case in a manner materially adverse to Borrowers or Agent and Lenders.
8.2.7    Distributions.  Except as otherwise provided for in Section 8.2.6, declare or make, or permit any Subsidiary of any Borrower to declare or make, any Distributions, except for:
xxxviii.Distributions by any Subsidiary of a Borrower to another Borrower;
xxxix.Distributions paid solely in Securities of a Borrower or any of its Subsidiaries;
xl.Distributions by MFRI in amounts necessary to permit MFRI to repurchase Securities of MFRI from employees of MFRI or any of its Subsidiaries upon the termination of their employment, so long as no Default or Event of Default exists at the time of or would be caused by the making of such Distributions and the aggregate cash amount of such Distributions, measured at the time when made, does not exceed Fifty Thousand Dollars ($50,000) in any fiscal year of MFRI; and
xli.Repurchases by MFRI of outstanding shares of its publicly owned common stock provided that after giving effect to any such repurchase, each of the following conditions precedent is satisfied:  (1) no Default of Event of Default has occurred and is continuing; (2) Availability equals or exceeds Four Million Dollars ($4,000,000); (3) the aggregate amount of such repurchases does not exceed One Million Five Hundred Thousand Dollars ($1,500,000); and (4) the Fixed Charge Coverage Ratio for the most recently ended twelve month period computed on a pro forma basis treating the repurchase in question and all other such repurchases made within the current month as having been made within such most recently ended twelve month period equals or exceeds 1.10 to 1.
2.8.8INTENTIONALLY OMITTED.
2.8.9Disposition of Assets.  Sell, lease or otherwise dispose of any of, or permit any Subsidiary of any Borrower to sell, lease or otherwise dispose of any of, its Properties, including any disposition of Property as part of a sale and leaseback transaction, to or in favor of any Person, except for:
a.sales of Inventory in the ordinary course of business;
b.transfers of Property to a Borrower by a Subsidiary of a Borrower;
c.dispositions of Property that is substantially worn, damaged, uneconomic or obsolete (subject to subsection 6.4.2 hereof);
d.dispositions of investments described in paragraphs (iv), (v), (vi) and (vii) of the definition of the term “Restricted Investments”; and
e.other dispositions expressly authorized by this Agreement.
2.8.10Securities of Subsidiaries.  Permit any Subsidiaries of any Borrower to issue any additional Securities except to a Borrower and except for director's qualifying Securities.
2.8.11Bill-and-Hold Sales, Etc.  Make, or permit any Subsidiary of any Borrower to make, a sale to any customer on a bill-and-hold, guaranteed sale, sale and return, sale on approval, repurchase or return or consignment basis; provided, that Borrowers shall be permitted to make bill and hold sales if so requested by a customer in writing which writing shall contain an acknowledgment that such customer is obligated to pay for the Inventory subject to the bill and hold sale.  Borrowers, upon request by Agent, shall deliver to Agent copies of any such written requests and acknowledgments.
2.8.12Restricted Investment.
a.Make or have, or permit any Subsidiary of any Borrower to make or have, any Restricted Investment, except that Borrowers may invest up to Twenty‐Eight Million Dollars ($28,000,000) in any Foreign Subsidiary so long as (x) immediately after the applicable Borrower has made such Investment, 

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no Event of Default has occurred and is continuing and (y) Borrowers shall have pledged to Agent for the benefit of Lenders sixty‐five percent (65%) of the outstanding capital stock of any such Subsidiary that is a first tier Foreign Subsidiary (i.e., not owned by a Foreign Subsidiary) pursuant to a pledge agreement or amendment in form and substance acceptable to Agent.  In such event, the provisions of subsection 8.1.7 of the Loan Agreement notwithstanding, no such Foreign Subsidiary shall be required to provide a Guaranty or to pledge its assets to secure the Obligations.  The foregoing notwithstanding, so long as average Availability for the most recently ended ninety (90) day period equals or exceeds fifteen percent (15%) of the remainder of the Revolving Credit Maximum Amount minus the unpaid principal balance of the Term Loan and the Equipment Loans, then the Twenty‐Eight Million Dollar ($28,000,000) limit in the first sentence of this subsection 8.2.12 shall be increased to Thirty Million Dollars ($30,000,000).  In addition to the foregoing limitations, Borrowers shall not make any additional investment in any Foreign Subsidiary or in “Canadian Joint Venture” (as defined below) unless average Availability for the most recently ended thirty (30) day period, computed on a proforma basis treating the investment in question and any other investment in Canadian Joint Venture or any Subsidiary that is not a Borrower made within such thirty (30) day period as having been made on the first day of such thirty (30) day period, equals or exceeds $3,000,000; and
b.Make or have or permit any Subsidiary of any Borrower to make or have an investment in Bayou Perma‐Pipe Canada, Ltd. (“Canadian Joint Venture”) unless each of the following “Canadian Acquisition Conditions” have been satisfied.  As used herein, the Canadian Acquisition Conditions shall mean (i) the amount of the investment in Canadian Joint Venture does not exceed $6,000,000; (ii) the proceeds of the investment in Canadian Joint Venture are used by Canadian Joint Venture to purchase the assets of Garneau, Inc.; (iii) Borrowers shall have delivered to Agent, in substantially final form, copies of the applicable asset purchase or comparable agreement and joint venture agreement, the form and contents of which shall be reasonably acceptable to Agent; (iv) MFRI, between the dates of September 1, 2009 and October 31, 2009, shall have received cash proceeds representing repayments of intercompany loans from New UAE Foreign Subsidiary of at least $4,000,000; (v) Availability, after giving effect to such investment, equals or exceeds $2,500,000; and (vi) Borrowers shall have complied with subsection 8.1.7 of the Loan Agreement (as modified by Section 3 of the Sixth Amendment) with respect to the Securities of Canadian Joint Venture).  Upon the satisfaction of the Canadian Joint Venture Conditions, Agent and Lenders shall also have been deemed to have consented to MFRI executing a limited guarantee (for an amount not to exceed $3,000,000) in connection with a mortgage loan to Canadian Joint Venture, the proceeds of which shall be used by Canadian Joint Venture for working capital purposes, so long as Agent shall have received substantially final copies of such limited guaranty and the underlying documents and the form and substance of such limited guaranty and underlying documents are acceptable to Agent.  MFRI's obligations under such limited guaranty shall not be secured by a Lien on any asset of MFRI or its domestic Subsidiaries.
2.8.13Subsidiaries and Joint Ventures.  Create, acquire or otherwise suffer to exist, or permit any Subsidiary of any Borrower to create, acquire or otherwise suffer to exist, any Subsidiary or joint venture arrangement not in existence as of the date hereof.
2.8.14Tax Consolidation.  File or consent to the filing of any consolidated income tax return with any Person other than Borrowers' Subsidiaries.
2.8.15Organizational Documents.  Agree to, or suffer to occur, any amendment, supplement or addition to its or any of its Subsidiaries' charter, articles or certificate of incorporation, certificate of formation, limited partnership agreement, bylaws, limited liability agreement, operating agreement or other organizational documents (as the case may be), that would reasonably be expected to have a Material Adverse Effect.
2.8.16Fiscal Year End.  Change, or permit any Subsidiary of any Borrower to change, its fiscal year end.
2.8.17Negative Pledges.  Enter into any agreement limiting the ability of any Borrower or any of its Subsidiaries to voluntarily create Liens upon any of its Property.
2.8.18Leases.  Become, or permit any of its Subsidiaries to become, a lessee under any operating lease (other than a lease under which any Borrower or any of its Subsidiaries is lessor) of Property if the aggregate Rentals payable during any current or future period of twelve (12) consecutive months under the lease in question and all other leases under which Borrowers or any of their Subsidiaries is then lessee would exceed Two Million Two Hundred Thousand Dollars ($2,200,000).  The term “Rentals” means, as of the date of determination, all payments which the lessee is required to make by the terms of any lease.

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8.3Specific Financial Covenants. During the Term, and thereafter for so long as there are any Obligations outstanding, Borrowers covenant that, unless otherwise consented to by Majority Lenders, in writing, they shall comply with all of the financial covenants set forth in Exhibit 8.3 hereto.  If at any time MFRI shall, in its reasonable judgment and after consulting with its independent certified accountants, determine that a change in GAAP shall have occurred after the Closing Date and that such change will have a Material Adverse Effect on the ability of Borrowers to comply with any one or more of the financial covenants in this Agreement, Agent will, upon the written request of MFRI, negotiate in good faith with Borrowers, to attempt to reach agreement within a reasonable period of time as to the terms of one or more mutually agreeable amendments, in accordance with Section 11.10, with respect to such financial covenants (or the definitions utilized therein) such that the Material Adverse Effect of such change in GAAP on the ability of Borrowers to comply with such financial covenants is fairly and equitably adjustment for, taking into account the nature of such change and the original purpose of such financial covenants (or the definitions utilized therein).  Each written request by MFRI pursuant to the second sentence of this Section 8.3 shall be accompanied by (i) a statement from the independent certified public accountants of MFRI describing the applicable change in GAAP and demonstrating, on a pro forma basis and in reasonable detail, the effect that such change would have in respect of the computations or statements, as the case may be, required by the applicable covenants herein if such change had been effective throughout the financial year of MFRI then most recently ended and (ii) a statement of one or more specific amendment provisions then proposed by MFRI in connection with such change in GAAP.  Unless and until such mutually agreeable amendments shall have become effective in accordance with Section 11.10, such financial covenants (and the definitions used therein) shall remain unchanged and in full force and effect.

SECTION 9. CONDITIONS PRECEDENT

Notwithstanding any other provision of this Agreement or any of the other Loan Documents, and without affecting in any manner the rights of Agent or any Lender under the other sections of this Agreement, no Lender shall be required to make any Loan, nor shall Agent be required to or issue or procure any Letter of Credit or LC Guaranty unless and until each of the following conditions has been and continues to be satisfied:
9.1Documentation.  Agent shall have received, in form and substance satisfactory to Agent and its counsel, a duly executed copy of this Agreement and the other Loan Documents, together with such additional documents, instruments, opinions and certificates as Agent and its counsel shall require in connection therewith from time to time, all in form and substance satisfactory to Agent and its counsel.
9.2No Default. No Default or Event of Default shall exist.
9.3Other Conditions. Each of the conditions precedent set forth in the Loan Documents shall have been satisfied.

SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT

10.1Events of Default. The occurrence of one or more of the following events shall constitute an “Event of Default”:
10.1.1Payment of Obligations.  Borrowers shall fail to pay any of the Obligations hereunder or under any Note on the due date thereof (whether due at stated maturity, on demand, upon acceleration or otherwise).
10.1.2Misrepresentations.  Any representation, warranty or other statement made or furnished to Agent or any Lender by or on behalf of any Borrower, any Subsidiary of any Borrower or any Guarantor in this Agreement, any of the other Loan Documents or any instrument, certificate or financial statement furnished in compliance with or in reference thereto proves to have been false or misleading in any material respect when made, furnished or reaffirmed pursuant to Section 7.2 hereof.
10.1.3Breach of Specific Covenants.  Any Borrower shall fail or neglect to perform, keep or observe any covenant contained in Section or subsection 5.2, 5.3, 6.1.2, 6.2.4, 6.2.5, 8.1.1, 8.1.2, 8.1.4, 8.1.8, 8.2 or 8.3 hereof on the date that any Borrower is required to perform, keep or observe such covenant or shall fail or neglect to perform, keep or observe any covenant contained in Section 6.1.1, 8.1.3 or 8.1.7 hereof within 5 days following the date on which such Borrower is required to perform, keep or observe such covenant.
10.1.4Breach of Other Covenants.  Any Borrower shall fail or neglect to perform, keep or observe any covenant contained in this Agreement (other than a covenant which is dealt with specifically elsewhere in 

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Section 10.1 hereof) and the breach of such other covenant is not cured to Agent's satisfaction within 30 days after the sooner to occur of such Borrower's receipt of notice of such breach from Agent or the date on which such failure or neglect first becomes known to any officer of any Borrower.
10.1.5Default Under Security Documents or Other Agreements.  Any event of default shall occur under, or any Borrower, any of its Subsidiaries or any other Guarantor shall default in the performance or observance of any term, covenant, condition or agreement contained in, any of the Security Documents or the Other Agreements and such default shall continue beyond any applicable grace period.
10.1.6Other Defaults.  There shall occur any default or event of default on the part of any Borrower, any Subsidiary of any Borrower or any other Guarantor under any agreement, document or instrument to which any Borrower, such Subsidiary of any Borrower or such Guarantor is a party or by which any Borrower, such Subsidiary of any Borrower or such Guarantor or any of its Property is bound, evidencing or relating to any Indebtedness (other than the Obligations) with an outstanding principal balance in excess of One Million Dollars ($1,000,000), if the payment or maturity of such Indebtedness is or could be accelerated in consequence of such event of default or demand for payment of such Indebtedness is made or could be made in accordance with the terms thereof.
10.1.7Uninsured Losses.  Any material loss, theft, damage or destruction of any portion of the Collateral having a fair market value of One Hundred Thousand ($100,000), in the aggregate, if not fully covered (subject to such deductibles and self-insurance retentions as Agent shall have permitted) by insurance.
10.1.8Insolvency and Related Proceedings.  Any Borrower, any Subsidiary of any Borrower or any other Guarantor shall cease to be Solvent or shall suffer the appointment of a receiver, trustee, custodian or similar fiduciary, or shall make an assignment for the benefit of creditors, or any petition for an order for relief shall be filed by or against any Borrower, any Subsidiary of any Borrower or any other Guarantor under U.S. federal bankruptcy laws (if against Borrower, any Subsidiary of any Borrower or any other Guarantor the continuation of such proceeding for more than 60 days), or any Borrower, any Subsidiary of any Borrower or any other Guarantor shall make any offer of settlement, extension or composition to their respective unsecured creditors generally.
10.1.9Business Disruption; Condemnation.  There shall occur a cessation of a substantial part of the business of any Borrower, any Subsidiary of any Borrower or any other Guarantor which could reasonably be expected to have a Material Adverse Effect, or any Borrower, any Subsidiary of any Borrower or any other Guarantor shall suffer the loss or revocation of any material license or permit now held or hereafter acquired by such Borrower, any Subsidiary of any Borrower or any other Guarantor which is necessary to the continued or lawful operation of its business; or any Borrower, any Subsidiary of any Borrower or any other Guarantor shall be enjoined, restrained or in any way prevented by court, governmental or administrative order from conducting all or any material part of its business affairs; or any material lease or agreement pursuant to which any Borrower, any Subsidiary of any Borrower or any other Guarantor leases, uses or occupies any Property shall be canceled or terminated prior to the expiration of its stated term, except any such lease or agreement the cancellation or termination of which could not reasonably be expected to have a Material Adverse Effect; or any material portion of the Collateral shall be taken through condemnation or the value of such Property shall be impaired through condemnation.
10.1.10Change of Ownership.  (a) A Change of Control shall have occurred or (b) MFRI shall cease to own and control, beneficially and of record (directly or indirectly), one hundred percent (100%) of the issued and outstanding Securities and Voting Stock of each other Borrower and each of their other Subsidiaries.
10.1.11ERISA.  A Reportable Event shall occur which, in Agent's determination, constitutes grounds for the termination by the Pension Benefit Guaranty Corporation of any Plan or for the appointment by the appropriate United States district court of a trustee for any Plan, or any Plan shall be terminated or any such trustee shall be requested or appointed, or if any Borrower, any Subsidiary of any Borrower or any other Guarantor is in “default” (as defined in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan resulting from any such Borrower's, such Subsidiary's or such Guarantor's complete or partial withdrawal from such Plan and any such event could reasonably be expected to have a Material Adverse Effect.
10.1.12Challenge to Agreement.  Any Borrower, any Subsidiary of any Borrower or any other Guarantor, or any Affiliate of any of them, shall challenge or contest in any action, suit or proceeding the validity or enforceability of this Agreement or any of the other Loan Documents, the legality or enforceability of any of the Obligations or the perfection or priority of any Lien granted to Agent.
10.1.13Repudiation of or Default Under Guaranty Agreement.  Any Guarantor shall revoke or attempt to revoke the Guaranty Agreement signed by such Guarantor, or shall repudiate such Guarantor's liability thereunder or shall be in default under the terms thereof.

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10.1.14Criminal Forfeiture.  Any Borrower, any Subsidiary of any Borrower or any other Guarantor shall be criminally indicted or convicted under any law that could lead to a forfeiture of any Property of any Borrower, any Subsidiary of any Borrower or any other Guarantor.
10.1.15Judgments.  Any money judgments, writ of attachment or similar processes (collectively, “Judgments”) are issued or rendered against any Borrower, any Subsidiary of any Borrower or any other Guarantor, or any of their respective Property (i) in the case of money judgments, in an amount of One Hundred Thousand Dollars ($100,000) or more for any single judgment, attachment or process or Three Hundred Thousand Dollars ($300,000) or more for all such judgments, attachments or processes in the aggregate, in each case in excess of any applicable insurance with respect to which the insurer has admitted liability, and (ii) in the case of non-monetary Judgments, such Judgment or Judgments (in the aggregate) could reasonably be expected to have a Material Adverse Effect, in each case which Judgment is not stayed, released or discharged within 30 days.
10.1.16Material Adverse Effect.  Any event occurs which would reasonably be expected to have a Material Adverse Effect.

10.2Acceleration of the Obligations.
Upon or at any time after the occurrence and during the continuance of an Event of Default, (i) the Revolving Loan Commitments shall, at the option of Agent or Majority Lenders be terminated and/or (ii) Agent or Majority Lenders may declare all or any portion of the Obligations at once due and payable without presentment, demand protest or further notice by Agent or any Lender, and Borrowers shall forthwith pay to Agent, the full amount of such Obligations, provided, that upon the occurrence of an Event of Default specified in subsection 10.1.8 hereof, the Revolving Loan Commitments shall automatically be terminated and all of the Obligations shall become automatically due and payable, in each case without declaration, notice or demand by Agent or any Lender.
10.3Other Remedies.
Upon the occurrence and during the continuance of an Event of Default, Agent shall have and may exercise from time to time the following other rights and remedies:
10.3.1All of the rights and remedies of a secured party under the UCC or under other applicable law, and all other legal and equitable rights to which Agent or Lenders may be entitled, all of which rights and remedies shall be cumulative and shall be in addition to any other rights or remedies contained in this Agreement or any of the other Loan Documents, and none of which shall be exclusive.
10.3.2The right to take immediate possession of the Collateral, and to (i) require each Borrower and each of its Subsidiaries to assemble the Collateral, at Borrowers' expense, and make it available to Agent at a place designated by Agent which is reasonably convenient to both parties, and (ii) enter any premises where any of the Collateral shall be located and to keep and store the Collateral on said premises until sold (and if said premises be the Property of a Borrower or any Subsidiary of a Borrower, such Borrower agrees not to charge, or permit any of its Subsidiaries to charge, Agent for storage thereof).
10.3.3The right to sell or otherwise dispose of all or any Collateral in its then condition, or after any further manufacturing or processing thereof, at public or private sale or sales, with such notice as may be required by law, in lots or in bulk, for cash or on credit, all as Agent, in its sole discretion, may deem advisable.  Agent may, at Agent's option, disclaim any and all warranties regarding the Collateral in connection with any such sale.  Each Borrower agrees that 10 days' written notice to Borrowers or any of their Subsidiaries of any public or private sale or other disposition of Collateral shall be reasonable notice thereof, and such sale shall be at such locations as Agent may designate in said notice.  Agent shall have the right to conduct such sales on any Borrower's or any of their Subsidiaries' premises, without charge therefor, and such sales may be adjourned from time to time in accordance with applicable law.  Agent shall have the right to sell, lease or otherwise dispose of the Collateral, or any part thereof, for cash, credit or any combination thereof, and Agent, on behalf of Lenders, may purchase all or any part of the Collateral at public or, if permitted by law, private sale and, in lieu of actual payment of such purchase price, may set off the amount of such price against the Obligations.  The proceeds realized from the sale of any Collateral may be applied, after allowing two (2) Business Days for collection, first to the costs, expenses and attorneys' fees incurred by Agent in collecting the Obligations, in enforcing the rights of Agent and Lenders under the Loan Documents and in collecting, retaking, completing, protecting, removing, storing, advertising for sale, selling and delivering any Collateral, second to the interest due upon any of the Obligations; and third, to the principal of the Obligations.  If any deficiency shall arise, 

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each Borrower and each Guarantor shall remain jointly and severally liable to Agent and Lenders therefor.
10.3.4Agent is hereby granted a license or other right to use, without charge, each Borrower's and each of its Subsidiary's labels, patents, copyrights, licenses, rights of use of any name, trade secrets, trade names, trademarks and advertising matter, or any Property of a similar nature, as it pertains to the Collateral, in completing, advertising for sale and selling any Collateral and each Borrower's and each of its Subsidiary's rights under all licenses and all franchise agreements shall inure to Agent's benefit.
10.3.5Agent may, at its option, require Borrowers to deposit with Agent funds equal to the LC Amount and, if Borrowers fail to promptly make such deposit, Agent may advance such amount as a Revolving Credit Loan (whether or not an Overadvance is created thereby).  Each such Revolving Credit Loan shall be secured by all of the Collateral and shall constitute a Base Rate Portion.  Any such deposit or advance shall be held by Agent as a reserve to fund future payments on such LC Guaranties and future drawings against such Letters of Credit.  At such time as all LC Guaranties have been paid or terminated and all Letters of Credit have been drawn upon or expired, any amounts remaining in such reserve shall be applied against any outstanding Obligations, or, if all Obligations have been indefeasibly paid in full, returned to Borrowers.

10.4Set Off and Sharing of Payments.
In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, during the continuance of any Event of Default, each Lender is hereby authorized by Borrowers at any time or from time to time, with prior written consent of Agent and with reasonably prompt subsequent notice to Borrowers (any prior or contemporaneous notice to Borrowers being hereby expressly waived) to set off and to appropriate and to apply any and all (i) balances held by such Lender at any of its offices for the account of any Borrower or any of its Subsidiaries (regardless of whether such balances are then due to such Borrowers or its Subsidiaries), and (ii) other property at any time held or owing by such Lender to or for the credit or for the account of any Borrower or any of its Subsidiaries, against and on account of any of the Obligations.  Any Lender exercising a right to set off shall, to the extent the amount of any such set off exceeds its Revolving Loan Percentage of the amount set off, purchase for cash (and the other Lenders shall sell) interests in each such other Lender's pro rata share of the Obligations as would be necessary to cause such Lender to share such excess with each other Lender in accordance with their respective Revolving Loan Percentages.  Borrowers agree, to the fullest extent permitted by law, that any Lender may exercise its right to set off with respect to amounts in excess of its pro rata share of the Obligations and upon doing so shall deliver such excess to Agent for the benefit of all Lenders in accordance with the Revolving Loan Percentages.
10.5Remedies Cumulative; No Waiver.
All covenants, conditions, provisions, warranties, guaranties, indemnities, and other undertakings of Borrowers contained in this Agreement and the other Loan Documents, or in any document referred to herein or contained in any agreement supplementary hereto or in any schedule or in any Guaranty Agreement given to Agent or any Lender or contained in any other agreement between any Lender and any Borrower or between Agent and any Borrower heretofore, concurrently, or hereafter entered into, shall be deemed cumulative to and not in derogation or substitution of any of the terms, covenants, conditions, or agreements of Borrowers herein contained.  The failure or delay of Agent or any Lender to require strict performance by Borrowers of any provision of this Agreement or to exercise or enforce any rights, Liens, powers, or remedies hereunder or under any of the aforesaid agreements or other documents or security or Collateral shall not operate as a waiver of such performance, Liens, rights, powers and remedies, but all such requirements, Liens, rights, powers, and remedies shall continue in full force and effect until all Loans and other Obligations owing or to become owing from Borrowers to Agent and each Lender have been fully satisfied.  None of the undertakings, agreements, warranties, covenants and representations of Borrowers contained in this Agreement or any of the other Loan Documents and no Default or Event of Default by Borrowers under this Agreement or any other Loan Documents shall be deemed to have been suspended or waived by Lenders, unless such suspension or waiver is by an instrument in writing specifying such suspension or waiver and is signed by a duly authorized representative of Agent and directed to Borrowers.
SECTION 11. AGENT
11.1Authorization and Action.
Each Lender hereby appoints and authorizes Agent to take such action on its behalf and to exercise such powers 

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under this Agreement and the other Loan Documents as are delegated to Agent by the terms hereof and thereof, together with such powers as are reasonably incidental thereto.  Each Lender hereby acknowledges that Agent shall not have by reason of this Agreement assumed a fiduciary relationship in respect of any Lender.  In performing its functions and duties under this Agreement, Agent shall act solely as agent of Lenders and shall not assume, or be deemed to have assumed, any obligation toward, or relationship of agency or trust with or for, any Borrower.  As to any matters not expressly provided for by this Agreement and the other Loan Documents (including without limitation enforcement and collection of the Notes), Agent may, but shall not be required to, exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority Lenders, whenever such instruction shall be requested by Agent or required hereunder, or a greater or lesser number of Lenders if so required hereunder, and such instructions shall be binding upon all Lenders; provided, that Agent shall be fully justified in failing or refusing to take any action which exposes Agent to any liability or which is contrary to this Agreement, the other Loan Documents or applicable law, unless Agent is indemnified to its satisfaction by the other Lenders against any and all liability and expense which it may incur by reason of taking or continuing to take any such action.  If Agent seeks the consent or approval of the Majority Lenders (or a greater or lesser number of Lenders as required in this Agreement), with respect to any action hereunder, Agent shall send notice thereof to each Lender and shall notify each Lender at any time that the Majority Lenders (or such greater or lesser number of Lenders) have instructed Agent to act or refrain from acting pursuant hereto.
11.2Agent's Reliance, Etc.
Neither Agent, any Affiliate of Agent, nor any of their respective directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement or the other Loan Documents, except for its or their own gross negligence or willful misconduct.  Without limitation of the generality of the foregoing, Agent:  (i) may treat each Lender party hereto as the holder of Obligations until Agent receives written notice of the assignment or transfer or such lender's portion of the Obligations signed by such Lender and in form reasonably satisfactory to Agent; (ii) may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts, (iii) makes no warranties or representations to any Lender and shall not be responsible to any Lender for any recitals, statements, warranties or representations made in or in connection with this Agreement or any other Loan Documents; (iv) shall not have any duty beyond Agent's customary practices in respect of loans in which Agent is the only lender, to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or the other Loan Documents on the part of Borrower, to inspect the property (including the books and records) of any Borrower, to monitor the financial condition of Borrowers or to ascertain the existence or possible existence or continuation of any Default or Event of Default; (v) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; (vi) shall not be liable to any Lender for any action taken, or inaction, by Agent upon the instructions of Majority Lenders pursuant to Section 11.1 hereof or refraining to take any action pending such instructions; (vii) shall not be liable for any apportionment or distributions of payments made by it in good faith pursuant to Section 3 hereof; (viii) shall incur no liability under or in respect of this Agreement or the other Loan Documents by acting upon any notice, consent, certificate, message or other instrument or writing (which may be by telephone, facsimile, telegram, cable or telex) believed in good faith by it to be genuine and signed or sent by the proper party or parties; and (ix) may assume that no Event of Default has occurred and is continuing, unless Agent has actual knowledge of the Event of Default, has received notice from any Borrower or Borrowers' independent certified public accounts stating the nature of the Event of Default, or has received notice from a Lender stating the nature of the Event of Default and that such Lender considers the Event of Default to have occurred and to be continuing.  In the event any apportionment or distribution described in clause (vii) above is determined to have been made in error, the sole recourse of any Person to whom payment was due but not made shall be to recover from the recipients of such payments any payment in excess of the amount to which they are determined to have been entitled.
11.3Bank of America and Affiliates.
With respect to its commitment hereunder to make Loans, Bank of America shall have the same rights and powers under this Agreement and the other Loan Documents as any other Lender and may exercise the same as though it were not Agent; and the terms “Lender,” “Lenders” or “Majority Lenders” shall, unless otherwise expressly indicated, 

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include Bank of America in its individual capacity as a Lender.  Bank of America and its Affiliates may lend money to, and generally engage in any kind of business with, Borrowers, and any Person who may do business with or own Securities of any Borrower all as if Bank of America were not Agent and without any duty to account therefor to any other Lender.
11.4Lender Credit Decision.
Each Lender acknowledges that it has, independently and without reliance upon Agent or any other Lender and based on the financial statements referred to herein and such other 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 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 this Agreement.  Agent shall not have any duty or responsibility, either initially or on an ongoing basis, to provide any Lender with any credit or other similar information regarding Borrowers.
11.5Indemnification.
Lenders agree to indemnify Agent (to the extent not reimbursed by any Borrower), in accordance with their respective Aggregate Percentages, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against Agent in any way relating to or arising out of this Agreement or any other Loan Document or any action taken or omitted by Agent under this Agreement; provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from Agent's gross negligence or willful misconduct.  Without limitation of the foregoing, each Lender agrees to reimburse Agent promptly upon demand for its ratable share, as set forth above, of any out-of-pocket expenses (including attorneys' fees) incurred by Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiation, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement and each other Loan Document, to the extent that Agent is not reimbursed for such expenses by Borrowers.  The obligations of Lenders under this Section 11.5 shall survive the payment in full of all Obligations and the termination of this Agreement.  If after payment and distribution of any amount by Agent to Lenders, any Lender or any other Person, including any Borrower, any creditor of any Borrower, a liquidator, administrator or trustee in bankruptcy, recovers from Agent any amount found to have been wrongfully paid to Agent or disbursed by Agent to Lenders, then Lenders, in accordance with their respective Aggregate Percentages, shall reimburse Agent for all such amounts.
11.6Rights and Remedies to be Exercised by Agent Only.
Each Lender agrees that, except as set forth in Section 10.4, no Lender shall have any right individually (i) to realize upon the security created by this Agreement or any other Loan Document, (ii) to enforce any provision of this Agreement or any other Loan Document, or (iii) to make demand under this Agreement or any other Loan Document.
11.7Agency Provisions Relating to Collateral.
Each Lender authorizes and ratifies Agent's entry into this Agreement and the Security Documents for the benefit of Lenders.  Each Lender agrees that any action taken by Agent with respect to the Collateral in accordance with the provisions of this Agreement or the Security Documents, and the exercise by Agent of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all Lenders.  Agent is hereby authorized on behalf of all Lenders, without the necessity of any notice to or further consent from any Lender to take any action with respect to any Collateral or the Loan Documents which may be necessary to perfect and maintain perfected Agent's Liens upon the Collateral, for its benefit and the ratable benefit of Lenders.  Lenders hereby irrevocably authorize Agent, at its option and in its discretion, to release any Lien granted to or held by Agent upon any Collateral (i) upon termination of the Agreement and payment and satisfaction of all Obligations; or (ii) constituting property being sold or disposed of if Borrowers certify to Agent that the sale or disposition is made in compliance with subsection 8.2.9 hereof (and Agent may rely conclusively on any such certificate, without further inquiry); or (iii) constituting property in which any Borrower owned no interest at the time the Lien was granted or at any time thereafter; or (iv) in connection with any foreclosure sale or other disposition of Collateral after the occurrence and during the continuation of an Event of Default or (v) if approved, authorized or ratified in writing by Agent at the direction of all Lenders.  Upon request by Agent at any time, Lenders will confirm in writing 

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Agent's authority to release particular types or items of Collateral pursuant hereto.  Agent shall have no obligation whatsoever to any Lender or to any other Person to assure that the Collateral exists or is owned by any Borrower or is cared for, protected or insured or has been encumbered or that the Liens granted to Agent herein or pursuant to the Security Documents have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of its rights, authorities and powers granted or available to Agent in this Section 11.7 or in any of the Loan Documents, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, Agent may act in any manner it may deem appropriate, in its sole discretion, but consistent with the provisions of this Agreement, including given Agent's own interest in the Collateral as a Lender and that Agent shall have no duty or liability whatsoever to any Lender.
11.8Agent's Right to Purchase Commitments.
Agent shall have the right, but shall not be obligated, at any time upon written notice to any Lender and with the consent of such Lender, which may be granted or withheld in such Lender's sole discretion, to purchase for Agent's own account all of such Lender's interests in this Agreement, the other Loan Documents and the Obligations, for the face amount of the outstanding Obligations owed to such Lender, including without limitation all accrued and unpaid interest and fees.
11.9Right of Sale, Assignment, Participations.
Borrowers hereby consent to any Lender's participation, sale, assignment, transfer or other disposition, at any time or times hereafter, of this Agreement and any of the other Loan Documents, or of any portion hereof or thereof, including, without limitation, such Lender's rights, title, interests, remedies, powers, and duties hereunder or thereunder subject to the terms and conditions set forth below:
11.9.1Sales, Assignments.  Each Lender hereby agrees that, with respect to any sale or assignment (i) no such sale or assignment shall be for an amount of less than $5,000,000, (ii) each such sale or assignment shall be made on terms and conditions which are customary in the industry at the time of the transaction, (iii) Agent and, in the absence of a Default or Event of Default, MFRI, must consent, such consent not to be unreasonably withheld, to each such assignment to a Person that is not an original signatory to this Agreement, (iv) the assigning Lender shall pay to Agent a processing and recordation fee of $3,500 and any out-of-pocket attorneys' fees and expenses incurred by Agent in connection with any such sale or assignment and (v) Agent, the assigning Lender and the assignee Lender shall each have executed and delivered an Assignment and Acceptance Agreement.  After such sale or assignment has been consummated (x) the assignee Lender thereupon shall become a “Lender” for all purposes of this Agreement and (y) the assigning Lender shall have no further liability for funding the portion of Revolving Loan Commitments assumed by such other Lender.
11.9.2Participations.  Any Lender may grant participations in its extensions of credit hereunder to any other Lender or other lending institution (a “Participant”), provided that (i) no such participation shall be for an amount of less than $5,000,000, (ii) no Participant shall thereby acquire any direct rights under this Agreement, (iii) no Participant shall be granted any right to consent to any amendment, except to the extent any of the same pertain to (1) reducing the aggregate principal amount of, or interest rate on, or fees applicable to, any Loan or (2) extending the final stated maturity of any Loan or the stated maturity of any portion of any payment of principal of, or interest or fees applicable to, any of the Loans; provided, that the rights described in this subclause (2) shall not be deemed to include the right to consent to any amendment with respect to or which has the effect of requiring any mandatory prepayment of any portion of any Loan or any amendment or waiver of any Default or Event of Default, (iv) no sale of a participation in extensions of credit shall in any manner relieve the originating Lender of its obligations hereunder, (v) the originating Lender shall remain solely responsible for the performance of such obligations, (vi) Borrowers and Agent shall continue to deal solely and directly with the originating Lender in connection with the originating Lender's rights and obligations under this Agreement and the other Loan Documents, (vii) in no event shall any financial institution purchasing the participation grant a participation in its participation interest in the Loans without the prior written consent of Agent, and, in the absence of a Default or an Event of Default, MFRI, which consents shall not unreasonably be withheld and (viii) all amounts payable by Borrowers hereunder shall be determined as if the originating Lender had not sold any such participation.
11.9.3Certain Agreements of Borrowers.  Borrowers agree that (i) each of them will use its best efforts to assist and cooperate with each Lender in any manner reasonably requested by such Lender to effect the sale 

32

of participation in or assignments of any of the Loan Documents or any portion thereof or interest therein, including, without limitation, assisting in the preparation of appropriate disclosure documents and making members of management available at reasonable times to meet with and answer questions of potential assignees and Participants; and (ii) subject to the provisions of Section 12.14 hereof, such Lender may disclose credit information regarding Borrowers to any potential Participant or assignee.
11.9.4Non U.S. Resident Transferees.  If, pursuant to this Section 11.9, any interest in this Agreement or any Loans is transferred to any transferee which is organized under the laws of any jurisdiction other than the United States or any state thereof, the transferor Lender shall cause such transferee (other than any Participant), and may cause any Participant, concurrently with and as a condition precedent to the effectiveness of such transfer, to (i) represent to the transferor Lender (for the benefit of the transferor Lender, Agent, and Borrowers) that under applicable law and treaties no taxes will be required to be withheld by Agent, Borrowers or the transferor Lender with respect to any payments to be made to such transferee in respect of the interest so transferred, (ii) furnish to the transferor Lender, Agent and MFRI either United States Internal Revenue Service Form W‐8BEN or United States Internal Revenue Service Form W‐8ECI (wherein such transferee claims entitlement to complete exemption from United States federal withholding tax on all interest payments hereunder), and (iii) agree (for the benefit of the transferor Lender, Agent and Borrowers) to provide the transferor Lender, Agent and MFRI a new Form W‐8BEN or Form W‐8ECI upon the obsolescence of any previously delivered form and comparable statements in accordance with applicable United States laws and regulations and amendments duly executed and completed by such transferee, and to comply from time to time with all applicable United States laws and regulations with regard to such withholding tax exemption.

11.10Amendment.
No amendment or waiver of any provision of this Agreement or any other Loan Document (including without limitation any Note), nor consent to any departure by Borrowers therefrom, shall in any event be effective unless the same shall be in writing and signed by the Majority Lenders and Borrowers, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, that no amendment, waiver or consent shall be effective, unless (i) in writing and signed by each Lender, do any of the following:  (1) increase or decrease the aggregate Loan Commitments, or any Lender's Revolving Loan Commitment, (2) reduce the principal of, or interest on, any amount payable hereunder or under any Note, other than those payable only to Bank of America in its capacity as Agent, which may be reduced by Bank of America unilaterally, (3) increase or decrease any interest rate payable hereunder, (4) postpone any date fixed for any payment of principal of, or interest on, any amounts payable hereunder or under any Note, other than those payable only to Bank of America in its capacity as Agent, which may be postponed by Bank of America unilaterally, (5) increase any advance percentage contained in the definition of the term Borrowing Base, (6) reduce the number of Lenders that shall be required for Lenders or any of them to take any action hereunder, (7) release or discharge any Person liable for the performance of any obligations of Borrowers hereunder or under any of the Loan Documents, (8) amend any provision of this Agreement that requires the consent of all Lenders or consent to or waive any breach thereof, (9) amend the definition of the term “Majority Lenders”, (10) amend this Section 11.10 or (11) release any substantial portion of the Collateral, unless otherwise permitted pursuant to Section 11.7 hereof; or (ii) in writing and signed by Agent in addition to the Lenders required above to affect the rights or duties of Agent under this Agreement, any Note or any other Loan Document.
11.11Resignation of Agent; Appointment of Successor.
Agent may resign as Agent by giving not less than thirty (30) days' prior written notice to Lenders and Borrowers.  If Agent shall resign under this Agreement, then, (i) subject to the consent of MFRI (which consent shall not be unreasonably withheld and which consent shall not be required during any period in which a Default or an Event of Default exists), Majority Lenders shall appoint from among Lenders a successor agent for Lenders or (ii) if a successor agent shall not be so appointed and approved within the thirty (30) day period following Agent's notice to Lenders and Borrowers of its resignation, then Agent shall appoint a successor agent who shall serve as Agent until such time as Majority Lenders appoint a successor agent, subject to MFRI's consent as set forth above.  Upon its appointment, such successor agent shall succeed to the rights, powers and duties of Agent and the term “Agent” shall mean such successor effective upon its appointment, and the former Agent's rights, powers and duties as Agent shall be terminated without any other or further act or deed on the part of such former Agent or any of the parties to this Agreement.  After the resignation of any Agent hereunder, the provisions of this Section 11 shall inure to the benefit of such former Agent and such former Agent shall not by reason of such resignation be deemed to be released from liability for any actions 

33

taken or not taken by it while it was an Agent under this Agreement.
11.12Audit and Examination Reports; Disclaimer by Lenders.
By signing this Agreement, each Lender:
a.is deemed to have requested that Agent furnish such Lender, promptly after it becomes available, a copy of each audit or examination report (each a “Report” and collectively, “Reports”) prepared by or on behalf of Agent;
b.expressly agrees and acknowledges that Agent (i) does not make any representation or warranty as to the accuracy of any Report, and (ii) shall not be liable for any information contained in any Report;
c.expressly agrees and acknowledges that the Reports are not comprehensive audits or examinations, that Agent or other party performing any audit or examination will inspect only specific information regarding Borrowers and will rely significantly upon Borrowers' books and records, as well as on representations of Borrowers' personnel;
d.agrees to keep all Reports confidential and strictly for its internal use, and not to distribute except to its participants, or use any Report in any other manner, in accordance with the provisions of Section 12.14; and
e.without limiting the generality of any other indemnification provision contained in this Agreement, agrees:  (i) to hold Agent and any such other Lender preparing a Report harmless from any action the indemnifying Lender may take or conclusion the indemnifying Lender may reach or draw from any Report in connection with any loans or other credit accommodations that the indemnifying Lender has made or may make to Borrowers, or the indemnifying Lender's participation in, or the indemnifying Lender's purchase of, a loan or loans of Borrowers; and (ii) to pay and protect, and indemnify, defend and hold Agent and any such other Lender preparing a Report harmless from and against, the claims, actions, proceedings, damages, costs, expenses and other amounts (including attorney's fees and expenses) incurred by Agent and any such other Lender preparing a Report as the direct or indirect result of any third parties who might obtain all or part of any Report through the indemnifying Lender.

SECTION 12. MISCELLANEOUS
12.1Power of Attorney.
Each Borrower hereby irrevocably designates, makes, constitutes and appoints Agent (and all Persons designated by Agent) as each such Borrower's true and lawful attorney (and agent-in-fact), solely with respect to the matters set forth in this Section 12.1, and Agent, or Agent's agent, may, without notice to any Borrower and in any Borrower's or Agent's name, but at the cost and expense of Borrowers:
12.1.1At such time or times as Agent or said agent, in its sole discretion, may determine, endorse any Borrower's name on any checks, notes, acceptances, drafts, money orders or any other evidence of payment or proceeds of the Collateral which come into the possession of Agent or under Agent's control.
12.1.2At such time or times upon or after the occurrence and during the continuance of an Event of Default (provided that the occurrence of an Event of Default shall not be required with respect to clauses (iv), (vi), (viii) and (ix) below), as Agent or its agent in its sole discretion may determine: (i) demand payment of the Accounts from the Account Debtors, enforce payment of the Accounts by legal proceedings or otherwise, and generally exercise all of any Borrower's rights and remedies with respect to the collection of the Accounts; (ii) settle, adjust, compromise, discharge or release any of the Accounts or other Collateral or any legal proceedings brought to collect any of the Accounts or other Collateral; (iii) sell or assign any of the Accounts and other Collateral upon such terms, for such amounts and at such time or times as Agent deems advisable, and at Agent's option, with all warranties regarding the Collateral disclaimed; (iv) take control, in any manner, of any item of payment or proceeds relating to any Collateral; (v) prepare, file and sign any Borrower's name to a proof of claim in bankruptcy or similar document against any Account Debtor or to any notice of lien, assignment or satisfaction of lien or similar document in connection with any of the Collateral; (vi) receive, open and dispose of all mail addressed to any Borrower and notify postal authorities to change the address for delivery thereof to such address as Agent may designate; (vii) endorse the name of any Borrower upon any of the items of payment or proceeds relating to any Collateral and deposit the same to the account of Agent on account of the Obligations; (viii) endorse the name of any Borrower upon any chattel paper, document, instrument, 

34

invoice, freight bill, bill of lading or similar document or agreement relating to the Accounts, Inventory and any other Collateral; (ix) use any Borrower's stationery and sign the name of any Borrower to verifications of the Accounts and notices thereof to Account Debtors; (x) use the information recorded on or contained in any data processing equipment and Computer Hardware and Software relating to the Accounts, Inventory, Equipment and any other Collateral; (xi) make and adjust claims under policies of insurance; and (xii) do all other acts and things necessary, in Agent's determination, to fulfill any Borrower's obligations under this Agreement.

The power of attorney granted hereby shall constitute a power coupled with an interest and shall be irrevocable.
12.2Indemnity.
Each Borrower hereby agrees to indemnify Agent and each Lender (and each of their Affiliates) and hold Agent and each Lender (and each of their Affiliates) harmless from and against any liability, loss, damage, suit, action or proceeding ever suffered or incurred by any such Person (including reasonable attorneys fees and legal expenses) as the result of any Borrower's failure to observe, perform or discharge any Borrower's duties hereunder.  In addition, Borrowers shall defend Agent and each Lender (and each of their Affiliates) against and save it harmless from all claims of any Person with respect to the Collateral (except those resulting from the gross negligence or intentional misconduct of any such Person).  Without limiting the generality of the foregoing, these indemnities shall extend to any claims asserted against Agent or any Lender (and each of their Affiliates) by any Person under any Environmental Laws by reason of any Borrower's or any other Person's failure to comply with laws applicable to solid or hazardous waste materials or other toxic substances.  Notwithstanding any contrary provision in this Agreement, the obligation of any Borrower under this Section 12.2 shall survive the payment in full of the Obligations and the termination of this Agreement.
12.3Sale of Interest.
No Borrower may sell, assign or transfer any interest in this Agreement, any of the other Loan Documents, or any of the Obligations, or any portion thereof, including, without limitation, any Borrower's rights, title, interests, remedies, powers, and duties hereunder or thereunder.
12.4Severability.
Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.
12.5Successors and Assigns.
This Agreement, the Other Agreements and the Security Documents shall be binding upon and inure to the benefit of the successors and assigns of each Borrower, Agent and each Lender permitted under Section 11.9 hereof.
12.6Cumulative Effect; Conflict of Terms.
The provisions of the Other Agreements and the Security Documents are hereby made cumulative with the provisions of this Agreement.  Except as otherwise provided in any of the other Loan Documents by specific reference to the applicable provision of this Agreement, if any provision contained in this Agreement is in direct conflict with, or inconsistent with, any provision in any of the other Loan Documents, the provision contained in this Agreement shall govern and control.
12.7Execution in Counterparts.
This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which counterparts taken together shall constitute but one and the same instrument.
12.8Notice.
Except as otherwise provided herein, all notices, requests and demands to or upon a party hereto, to be effective, shall be in writing, and shall be sent by certified or registered mail, return receipt requested, by personal delivery 

35

against receipt, by overnight courier or by facsimile and, unless otherwise expressly provided herein, shall be deemed to have been validly served, given, delivered or received immediately when delivered against receipt, three (3) Business Days after deposit in the mail, postage prepaid, one (1) Business Day after deposit with an overnight courier or, in the case of facsimile notice, when sent, with receipt confirmed, addressed as follows:
	
		
	If to Agent:
	Bank of America, N.A.
20975 Swenson Drive, Suite 200
Waukesha, Wisconsin  53186
Attention:  Loan Administration Manager
Facsimile No.:  (262) 207-3347

	With a copy to:
	Vedder Price P.C.
222 North LaSalle Street
Suite 2600
Chicago, Illinois  60601
Attention:  John T. McEnroe
Facsimile No.:  (312) 609-5005

	If to Borrowers
	c/o MFRI, Inc.
7720 North Lehigh Avenue
Niles, Illinois 60714
Attention:  David Unger
Facsimile No.:  (847) 929-1310

	With a copy to:
	DLA Piper US LLP 
203 N. LaSalle Street
Suite 1800
Chicago, Illinois 60601
Attention:  Hal M. Brown
Facsimile No.:  (312) 236-7516

or to such other address as each party may designate for itself by notice given in accordance with this Section 12.8; provided, however, that any notice, request or demand to or upon Agent or a Lender pursuant to subsection 3.1.1 or 4.2.2 hereof shall not be effective until received by Agent or such Lender.
12.9Consent.
Whenever Agent's, Majority Lenders' or all Lenders' consent is required to be obtained under this Agreement, any of the Other Agreements or any of the Security Documents as a condition to any action, inaction, condition or event, except as otherwise specifically provided herein, Agent, Majority Lenders or all Lenders, as applicable, shall be authorized to give or withhold such consent in their sole and absolute discretion and to condition its consent upon the giving of additional Collateral security for the Obligations, the payment of money or any other matter.
12.10Credit Inquiries.
Borrowers hereby authorize and permit Agent and each Lender to respond to usual and customary credit inquiries from third parties concerning any Borrower or any of its Subsidiaries.
12.11Time of Essence.
Time is of the essence of this Agreement, the Other Agreements and the Security Documents.
12.12Entire Agreement.
This Agreement and the other Loan Documents, together with all other instruments, agreements and certificates executed by the parties in connection therewith or with reference thereto, embody the entire understanding and agreement between the parties hereto and thereto with respect to the subject matter hereof and thereof and supersede all prior agreements, understandings and inducements, whether express or implied, oral or written.
12.13Interpretation.
No provision of this Agreement or any of the other Loan Documents shall be construed against or interpreted to the disadvantage of any party hereto by any court or other governmental or judicial authority by reason of such party having or being deemed to have structured or dictated such provision.

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12.14Confidentiality.
Agent and each Lender shall hold all nonpublic information obtained pursuant to the requirements of this Agreement in accordance with Agent's and such Lender's customary procedures for handling confidential information of this nature and in accordance with safe and sound banking practices and in any event may make disclosure reasonably required by a prospective participant or assignee in connection with the contemplated participation or assignment or as required or requested by any governmental authority or representative thereof or pursuant to legal process and shall require any such participant or assignee to agree to comply with this Section 12.14.
12.15GOVERNING LAW; CONSENT TO FORUM.
THIS AGREEMENT HAS BEEN NEGOTIATED, EXECUTED AND DELIVERED IN AND SHALL BE DEEMED TO HAVE BEEN MADE IN CHICAGO, ILLINOIS.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS; PROVIDED, HOWEVER, THAT IF ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN ILLINOIS, THE LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR FORECLOSURE OF AGENT'S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF AGENT'S OTHER REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF ILLINOIS.  AS PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF ANY BORROWER, AGENT OR ANY LENDER, EACH BORROWER HEREBY CONSENTS AND AGREES THAT THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS, OR, AT AGENT'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY BORROWER ON THE ONE HAND AND AGENT OR ANY LENDER ON THE OTHER HAND PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT.  EACH BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH BORROWER HEREBY WAIVES ANY OBJECTION WHICH SUCH BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.  EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH BORROWER AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH BORROWER'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.  NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF AGENT OR ANY LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY AGENT OR ANY LENDER OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.
12.16WAIVERS BY BORROWERS.
EACH BORROWER WAIVES (i) THE RIGHT TO TRIAL BY JURY (WHICH AGENT AND EACH LENDER HEREBY ALSO WAIVE) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL; (ii) PRESENTMENT, DEMAND AND PROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS , CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY AGENT OR ANY LENDER ON WHICH SUCH BORROWER MAY IN ANY WAY BE 

37

LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVER AGENT OR ANY LENDER MAY DO IN THIS REGARD; (iii) NOTICE PRIOR TO AGENT'S TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING AGENT TO EXERCISE ANY OF AGENT'S REMEDIES; (iv) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS; (v) NOTICE OF ACCEPTANCE HEREOF AND (vi) EXCEPT AS PROHIBITED BY LAW, ANY RIGHT TO CLAIM OR RECOVER ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.  EACH BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO AGENT'S AND EACH LENDER'S ENTERING INTO THIS AGREEMENT AND THAT AGENT AND EACH LENDER IS RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH BORROWERS.  EACH BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL 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.
12.17Advertisement.
Each Borrower hereby authorizes Agent to publish the name of any Borrower and the amount of the credit facility provided hereunder in any “tombstone” or comparable advertisement which Agent elects to publish.
12.18Reimbursement.
The undertaking by Borrowers to repay the Obligations and each representation, warranty or covenant of each Borrower are and shall be joint and several.  To the extent that any Borrower shall be required to pay a portion of the Obligations which shall exceed the amount of loans, advances or other extensions of credit received by such Borrower and all interest, costs, fees and expenses attributable to such loans, advances or other extensions of credit, then such Borrower shall be reimbursed by the other Borrowers for the amount of such excess.  This Section 12.18 is intended only to define the relative rights of Borrowers, and nothing set forth in Section 12.18 is intended or shall impair the obligations of each Borrower, jointly and severally, to pay to Agent and Lenders the Obligations as and when the same shall become due and payable in accordance with the terms hereof.
12.19Effect of Amendment and Restatement.
a.This Agreement is an amendment and restatement of the terms and provisions of the 2006 Loan Agreement.  The indebtedness of the Borrowers outstanding under the 2006 Loan Agreement and the Notes outstanding thereunder immediately prior to the effectiveness hereof (“Restatement Effective Time”) is called the “Existing Indebtedness.”  Neither the execution and delivery of this Agreement by Borrowers, Agent or any Lender, nor any of the terms or provisions contained herein, shall be construed (i other than as specifically contemplated herein, to be a payment on or with respect to the Existing Indebtedness or any accrued interest thereon or (ii) to release, terminate or otherwise adversely affect all or any part of any lien, claim or right or security interest heretofore granted to or retained by Agent with respect to any Collateral.  Without limiting the foregoing, Borrowers and each of their Subsidiaries hereby ratifies and confirms each Loan Document to which such Person is a party and the grant of a security interest pursuant to, and all other terms and provisions of, the Security Documents.
b.Notwithstanding any provision of this Agreement to the contrary, all LIBOR Portions (as defined in the Original Loan Agreement) which are outstanding at the Restatement Effective Time (each an “Existing LIBOR Borrowing”) shall continue to be maintained by Lenders until the last day of the current Interest Period therefor (except to the extent prepaid or converted by Borrowers prior to such date).

(Signature Page Follows)

38

(Signature Page to Second Amended and Restated
Loan and Security Agreement)

IN WITNESS WHEREOF, this Agreement has been duly executed on the day and year specified at the beginning of this Agreement.
	
		
	 
	MFRI, INC.
By: /s/ Michael D. Bennett
Name: Michael D. Bennett
Title: Vice President

	 
	MIDWESCO FILTER RESOURCES, INC.
By: /s/ Michael D. Bennett
Name: Michael D. Bennett
Title: Vice President

	 
	PERMA‐PIPE, INC.
By:/s/ Michael D. Bennett
Name: Michael D. Bennett
Title: Vice President

	 
	THERMAL CARE, INC.
By: /s/ Michael D. Bennett
Name: Michael D. Bennett
Title: Vice President

	 
	TDC FILTER MANUFACTURING, INC.
By: /s/ Michael D. Bennett
Name: Michael D. Bennett
Title: Vice President

	 
	MIDWESCO MECHANICAL AND ENERGY, INC.
By: /s/ Michael D. Bennett
Name: Michael D. Bennett
Title: Vice President

	 
	PERMA-PIPE INTERNATIONAL 
COMPANY, LLC
By: /s/ Michael D. Bennett
Name: Michael D. Bennett
Title: Vice President

	 
	PERMA‐PIPE CANADA, INC.
By: /s/ Michael D. Bennett
Name: Michael D. Bennett
Title: Vice President

	 
	BANK OF AMERICA, N.A., as Agent and 
as a Lender
By: /s/ Brian Conole
Name: Brian Conole
Title: Senior Vice President

	 
	Revolving Loan Commitment:  up to $38,000,000 
Principal Amount of the Term Loan as of the Closing Date:  $964,285.66

39

APPENDIX A
GENERAL DEFINITIONS
When used in the Second Amended and Restated Loan and Security Agreement dated as of April 30, 2012, by and among Bank of America, N.A., individually and as Agent, the other financial institutions which are or become parties thereto and MFRI, INC., MIDWESCO FILTER RESOURCES, INC., PERMA‐PIPE, INC., THERMAL CARE, INC., TDC FILTER MANUFACTURING, INC., MIDWESCO MECHANICAL AND ENERGY, INC., PERMA-PIPE INTERNATIONAL COMPANY, LLC and PERMA‐PIPE CANADA, INC., (a) the terms Account, Certificated Security, Chattel Paper, Commercial Tort Claims, Deposit Account, Document, Electronic Chattel Paper, Equipment, Financial Asset, Fixture, General Intangibles, Goods, Instruments, Inventory, Investment Property, Letter-of-Credit Rights, Payment Intangibles, Proceeds, Security, Security Entitlement, Software, Supporting Obligations, Tangible Chattel Paper and Uncertificated Security have the respective meanings assigned thereto under the UCC; (b) all terms reflecting Collateral having the meanings assigned thereto under the UCC shall be deemed to mean such Property, whether now owned or hereafter created or acquired by any Borrower or in which any Borrower now has or hereafter acquires any interest; (c) capitalized terms which are not otherwise defined have the respective meanings assigned thereto in said Loan and Security Agreement; and (d) the following terms shall have the following meanings (terms defined in the singular to have the same meaning when used in the plural and vice versa):
2006 Loan Agreement - as defined in the first WHEREAS clause of this Agreement.
2010 Equipment Loan and Lease Agreement - as defined in clause (z) of the definition of Permitted Purchase Money Indebtedness.
Account Debtor - any Person who is or may become obligated under or on account of any Account, Contract Right, Chattel Paper or General Intangible.
Affiliate - a Person (other than a Subsidiary):  (i) which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, a Person; (ii) which beneficially owns or holds 5% or more of any class of the Voting Stock of a Person; or (iii) 5% or more of the Voting Stock (or in the case of a Person which is not a corporation, 5% or more of the equity interest) of which is beneficially owned or held by a Person or a Subsidiary of a Person.
Agent - Bank of America, N.A. in its capacity as agent for the Lenders under the Agreement and any successor in that capacity appointed pursuant to subsection 11.11 of the Agreement.
Agent Loans - as defined in subsection 1.1.4 of the Agreement.
Aggregate Percentage - with respect to each Lender, the percentage equal to the quotient of (i) such Lender's Loan Commitment divided by (ii) the aggregate of all Loan Commitments.
Agreement - the Second Amended and Restated Loan and Security Agreement referred to in the first sentence of this Appendix A, all Exhibits and Schedules thereto and this Appendix A, as each of the same may be amended from time to time.

APPENDIX1

Applicable Margin - from April 1, 2010 to, but not including, the first Adjustment Date (as hereinafter defined) the percentages set forth below with respect to the Base Rate Revolving Portion, the Base Rate Equipment Portion, the Base Rate Term Portion, the LIBOR Equipment Portions, the LIBOR Revolving Portions, the LIBOR Term Portions and the Unused Line Fee:

	
		
	Base Rate Revolving Portion
	0.5%

	Base Rate Term Portion
	0.75%

	LC Fees
	2.5%

	LIBOR Revolving Portions
	2.5%

	LIBOR Term Portions
	2.75%

	Unused Line Fee
	0.375%

The percentages set forth above with respect to the Base Rate Equipment Portion, Base Rate Revolving Portion, Base Rate Term Portion, LIBOR Revolving Portions, LIBOR Equipment Portions, LIBOR Term Portions and Unused Line Fee will be adjusted on the first day of the month following delivery by Borrowers to Agent of the financial statements required to be delivered pursuant to subsection 8.1.3(ii) of the Agreement for each April 30, July 31, October 31 and January 31 during the Term, commencing with the month ending July 31, 2010 (each such date an “Adjustment Date”), effective prospectively, by reference to the applicable “Financial Measurement” (as defined below) for the four quarters most recently ending in accordance with the following table.

	
								
	 
	Financial Measurement
	Base Rate Revolving Portion
	Base Rate Term Portion
	LC Fees
	LIBOR Revolving Portions
	LIBOR Term Portions
	Unused Line Fee

	 
	 
	 
	 
	 
	 
	 
	 

	Level I
	< 1.20 to 1
	0.75%
	1%
	2.75%
	2.75%
	3%
	0.375%

	Level II
	> 1.20 to 1, but < 1.40 to 1
	0.5%
	0.75%
	2.5%
	2.5%
	2.75%
	0.375%

	Level III
	> 1.40 to 1
	0.5%
	0.5%
	2.25%
	2.25%
	2.5%
	0.375%

provided that, (i) if MFRI's audited financial statements for any fiscal year delivered pursuant to subsection 8.1.3(i) of the Agreement reflect a Financial Measurement that yields a higher Applicable Margin than that yielded by the monthly financial statements previously delivered pursuant to subsection 8.1.3(ii) of the Agreement for the last month of such fiscal year, the Applicable Margin shall be readjusted retroactively for the period that was incorrectly calculated and (ii) if Borrowers fail to deliver the financial statements required to be delivered pursuant to subsection 8.1.3(i) or subsection 8.1.3(ii) of the Agreement on or before the due date thereof, including any applicable grace period, the interest rate shall automatically adjust to the highest interest rate set forth above, effective prospectively from such due date until the next Adjustment Date.  For purposes hereof, “Financial Measurement” shall mean the Fixed Charge Coverage Ratio (as such term is defined in Exhibit 8.3 to the Agreement).
Assignment and Acceptance Agreement - an assignment and acceptance agreement in form and content reasonably acceptable to Agent pursuant to which a Lender assigns to another Lender all or any portion of any of such Lender's Revolving Loan Commitment, as permitted pursuant to the terms of this Agreement.
Availability - the amount of additional money which Borrowers are entitled to borrow from time to time as Revolving Credit Loans, such amount being the difference derived when the sum of the principal amount of Revolving Credit Loans then outstanding (including any amounts which Agent or any Lender may have paid for the account of any Borrower pursuant to any of the Loan Documents and which have not been reimbursed by any Borrower), the LC Amount and any reserves is subtracted from the Borrowing Base.  If the amount outstanding is equal to or greater than the Borrowing Base, Availability is 0.
Bank - Bank of America, N.A.

APPENDIX2

Base Rate - the rate of interest announced or quoted by Bank from time to time as its prime rate for commercial loans, whether or not such rate is the lowest rate charged by Bank to its most preferred borrowers; and, if such prime rate for commercial loans is discontinued by Bank as a standard, a comparable reference rate designated by Bank as a substitute therefor shall be the Base Rate.
Base Rate Portion - the Base Rate Term Portion and/or the Base Rate Revolving Portion.
Base Rate Revolving Portion - that portion of the Revolving Credit Loans that is not subject to a LIBOR Option.
Base Rate Term Portion - that portion of the Term Loan that is not subject to a LIBOR Option.
Borrowing Base - as at any date of determination thereof, an amount equal to the lesser of:
(i)    the Revolving Credit Maximum Amount minus the unpaid principal balance of the Term Loan; or
(ii)    an amount equal to:
(x)    the sum of:
(a)    eighty five percent (85%) of the net amount of Eligible Accounts (other than Eligible Accounts arising from Short Term Projects) outstanding at such date; plus
(b)    the lesser of Seven Million Dollars ($7,000,000) or eighty five percent (85%) of the net amount of Eligible Accounts arising from Short Term Projects outstanding at such date; plus
(c)    the least of (1) Sixteen Million Dollars ($16,000,000), (2) fifty five percent (55%) of the value of Eligible Inventory at such date or (3) eighty five percent (85%) of the NOLV Percentage of the value of Eligible Inventory as of such date.
The limitations set forth in the immediately preceding sentence and each of the advance rates set forth above may be adjusted downward by Agent, as Agent shall deem necessary or appropriate in its reasonable credit judgment.  For purposes hereof, (1) the net amount of Eligible Accounts at any time shall be the face amount of such Eligible Accounts less any and all returns, rebates, discounts (which may, at Agent's option, be calculated on shortest terms), credits, allowances or excise taxes of any nature at any time issued, owing, claimed by Account Debtors, granted, outstanding or payable in connection with such Accounts at such time and (2) the amount of Eligible Inventory shall be determined on a first-in, first-out, lower of cost or market basis in accordance with GAAP.
Borrowing Base Certificate - a certificate by a responsible officer of MFRI, substantially in the form of Exhibit 8.1.4 (or another form acceptable to Agent) setting forth the calculation of the Borrowing Base, including a calculation of each component thereof, all in such detail as shall be satisfactory to Agent.  All calculations of the Borrowing Base in connection with the preparation of any Borrowing Base Certificate shall originally be made by MFRI and certified to Agent; provided, that Agent shall have the right to review and adjust, in the exercise of its sole judgment, any such calculation after giving notice thereof to MFRI, (1) to reflect its reasonable estimate of declines in value of any of the Collateral described therein, and (2) to the extent that Agent determines that such calculation is not in accordance with this Agreement.
Business Day - any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of Wisconsin or the State of Illinois or is a day on which banking institutions located in either of such states are closed.
Capital Expenditures - expenditures made or liabilities incurred for the acquisition of any fixed assets or improvements, replacements, substitutions or additions thereto which have a useful life of more than one year, including 

APPENDIX3

the total principal portion of Capitalized Lease Obligations.
Capitalized Lease Obligation - any Indebtedness represented by obligations under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP.
Change of Control ‐ means the occurrence of any of the following events:  (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, is or becomes the beneficial owner (as defined in Rules 13d‐3 and 13d‐5 under the Exchange Act, except that a person shall be deemed to have “beneficial ownership” of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than thirty percent (30%) of the total voting power of the Voting Stock of MFRI (or its successor by merger, consolidated or purchase of all or substantially all of its assets); and the Permitted Holders “beneficially own” (as defined in Rules 13d‐3 and 13d‐5 under the Exchange Act), directly or indirectly, in the aggregate a lesser percentage of the total voting power of the Voting Stock of MFRI (or its successor by merger, consolidated or purchase of all or substantially all of its assets) than such other person and do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority; of the board of directors of MFRI or such successor; or (ii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of MFRI (together with any new directors whose election by such Board of Directors or whose nomination for election by the shareholders of MFRI was approved by a vote of at least a majority of the directors of MFRI then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved or is a designee of the Permitted Holders or was nominated or elected by such Permitted Holders or any of their designees) cease for any reason to constitute a majority of the Board of Directors of MFRI then in office; or (iii) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of MFRI and the other Borrowers taken as a whole; or (iv) the adoption by the stockholders of MFRI of a plan for the liquidation or dissolution of MFRI.
Closing Date - the date on which all of the conditions precedent in Section 9 of the Agreement are satisfied or waived.
Collateral - all of the Property and interests in Property described in Section 5 of the Agreement, and all other Property and interests in Property that now or hereafter secure the payment and performance of any of the Obligations.
Compliance Certificate - as defined in subsection 8.1.3 of the Agreement.
Computer Hardware and Software - all of any Borrower's rights (including rights as licensee and lessee) with respect to (i) computer and other electronic data processing hardware, including all integrated computer systems, central processing units, memory units, display terminals, printers, computer elements, card readers, tape drives, hard and soft disk drives, cables, electrical supply hardware, generators, power equalizers, accessories, peripheral devices and other related computer hardware; (ii) all Software and all software programs designed for use on the computers and electronic data processing hardware described in clause (i) above, including all operating system software, utilities and application programs in any form (source code and object code in magnetic tape, disk or hard copy format or any other listings whatsoever); (iii) any firmware associated with any of the foregoing; and (iv) any documentation for hardware, Software and firmware described in clauses (i), (ii) and (iii) above, including flow charts, logic diagrams, manuals, specifications, training materials, charts and pseudo codes.
Computer Sale and Leaseback - a sale and leaseback transaction pursuant to which Borrowers shall sell and lease back certain of their computer Equipment; provided that the terms and conditions of such sale and leaseback transaction, including without limitation, the computer Equipment subject thereto and rental rates thereon, are acceptable to Agent in its discretion.
Consolidated - the consolidation in accordance with GAAP of the accounts or other items as to which such term applies.
Contract Right - any right of any Borrower to payment under a contract for the sale or lease of goods or the 

APPENDIX4

rendering of services, which right is at the time not yet earned by performance.
Current Assets - at any date means the amount at which all of the current assets of a Person would be properly classified as current assets shown on a balance sheet at such date in accordance with GAAP.
Default - an event or condition the occurrence of which would, with the lapse of time or the giving of notice, or both, become an Event of Default.
Default Rate - as defined in subsection 2.1.2 of the Agreement.
Derivative Obligations - every obligation of a Person under any forward contract, futures contract, exchange contract, swap, option or other financing agreement or arrangement (including, without limitation, caps, floors, collars and similar agreement), the value of which is dependent upon interest rates, currency exchange rates, commodities or other indices.
Distribution - in respect of any Person means and includes: (i) the payment of any dividends or other distributions on Securities (except distributions in such Securities) and (ii) the redemption or acquisition of Securities of such Person, as the case may be, unless made contemporaneously from the net proceeds of the sale of Securities.
Dominion Account - a special bank account or accounts of Agent established by Borrowers or any one of them pursuant to subsection 6.2.4 of the Agreement at banks selected by MFRI, but acceptable to Agent in its sole discretion, and over which Agent shall have sole and exclusive access and control for withdrawal purposes.
Eligible Account - an Account arising in the ordinary course of the business of any Borrower (other than Mechanical) from the sale of goods or rendition of services which Agent, in its sole judgment, exercised in a commercially reasonable manner, deems to be an Eligible Account.  Without limiting the generality of the foregoing, no Account shall be an Eligible Account if:
(i)it arises out of a sale made or services rendered by a Borrower to a Subsidiary of any Borrower or an Affiliate of any Borrower or to a Person controlled by an Affiliate of any Borrower; or
(ii)it remains unpaid more than 90 days after the original invoice date shown on the invoice; or
(iii)the total unpaid Accounts of the Account Debtor exceed 20% of the net amount of all Eligible Accounts, but only to the extent of such excess; or
(iv)any covenant, representation or warranty contained in the Agreement with respect to such Account has been breached; or
(v)the Account Debtor is also a creditor or supplier of a Borrower or any Subsidiary of any Borrower, or the Account Debtor has disputed liability with respect to such Account, or the Account Debtor has made any claim with respect to any other Account due from such Account Debtor to any Borrower or any Subsidiary of any Borrower, or the Account otherwise is or may become subject to right of setoff by the Account Debtor, provided, that any such Account shall be eligible to the extent such amount thereof exceeds such contract, dispute, claim, setoff or similar right; or
(vi)the Account Debtor has commenced a voluntary case under the federal bankruptcy laws, as now constituted or hereafter amended, or made an assignment for the benefit of creditors, or a decree or order for relief has been entered by a court having jurisdiction in the premises in respect of the Account Debtor in an involuntary case under the federal bankruptcy laws, as now constituted or hereafter amended, or any other petition or other application for relief under the federal bankruptcy laws, as now constituted or hereafter amended, has been filed against the Account Debtor, or if the Account Debtor has failed, suspended business, ceased to be Solvent, or consented to or suffered a receiver, trustee, liquidator or custodian to be appointed for it or for all or a significant portion of its assets or affairs; or
(vii)it arises from a sale made or services rendered to an Account Debtor outside the United States, unless the sale is either (1) to an Account Debtor located in Ontario or any other province of Canada in which the Personal Property Security Act has been adopted in substantially the same form as currently in effect in Ontario, (2) on letter of credit, foreign credit insurance (assigned to Agent), guaranty or acceptance terms, in each case acceptable to Agent in its sole judgment, exercised in a commercially reasonable manner or (3) the Account Debtor is Tamba B.V., a subsidiary of Royal Dutch Shell plc provided that the amount of Accounts deemed Eligible Accounts pursuant to this clause (3) shall not exceed $4,000,000; or 
(viii)(1) it arises from a sale to the Account Debtor on a guaranteed sale, sale-or-return, sale-on-approval, consignment, or any other repurchase or return basis; (2) it is subject to a reserve established by any Borrower for 

APPENDIX5

potential returns or refunds, to the extent of such reserve; or (3) it arises from a sale to the Account Debtor on a bill and hold basis unless (x) such Account Debtor has requested in writing that such sale be on a bill and hold basis, which writing shall contain an acknowledgment by such Account Debtor that it is obligated to pay for the subject Inventory, (y) such Inventory is delivered to the Account Debtor not later than 30 days after the original invoice date and (z) the aggregate of all such Accounts arising from bill and hold sales by all Borrowers, at any point in time, does not exceed One Million Five Hundred Thousand Dollars ($1,500,000); or
(ix)the Account Debtor is the United States of America or any department, agency or instrumentality thereof, unless Borrower assigns its right to payment of such Account to Agent, in a manner satisfactory to Agent, in its sole judgment, so as to comply with the Assignment of Claims Act of 1940 (31 U.S.C. §203 et seq., as amended); or
(x)it is not at all times subject to Agent's duly perfected, first priority security interest or is subject to a Lien that is not a Permitted Lien; or
(xi)the goods giving rise to such Account have not been delivered to and accepted by the Account Debtor or the services giving rise to such Account have not been performed by the applicable Borrower and accepted by the Account Debtor or the Account otherwise does not represent a final sale; or
(xii)the Account is evidenced by chattel paper or an instrument of any kind, or has been reduced to judgment; or
(xiii)any Borrower or a Subsidiary of any Borrower has made any agreement with the Account Debtor for any extension, compromise, settlement or modification of the Account or deduction therefrom, except for discounts or allowances which are made in the ordinary course of business for prompt payment and which discounts or allowances are reflected in the calculation of the face value of each invoice related to such Account; or
(xiv)25% or more of the Accounts owing from the Account Debtor are not Eligible Accounts hereunder or with respect to Accounts arising from Short Term Projects, 25% or more of the Accounts owing from the Account Debtor remain unpaid 60 days after the original invoice date shown on the invoice; or
(xv)any Borrower has made an agreement with the Account Debtor to extend the time of payment thereof; or
(xvi)it represents service charges, late fees or similar charges; or
(xvii)it is an Account of Perma Pipe that is subject to a performance bond or represents retention billings; or
(xviii)Accounts which represent retention payments; or
(xix)it is not otherwise acceptable to Agent in its sole judgment, exercised in a commercially reasonable manner.
Eligible Inventory - Inventory of any Borrower (other than work‐in‐process, packaging materials and supplies, tooling, samples and literature and Inventory of Mechanical) which Agent, in its sole judgment, exercised in a commercially reasonable manner, deems to be Eligible Inventory.  Without limiting the generality of the foregoing, no Inventory shall be Eligible Inventory if:
i.it is not raw materials or finished goods which meet the specifications of the purchase order or contract for such Inventory, if any; or
ii.it is not in good, new and saleable condition; or
iii.it is slow-moving, obsolete or unmerchantable; or
iv.it does not meet all standards imposed by any governmental agency or authority; or
v.it does not conform in all respects to any covenants, warranties and representations set forth in the Agreement; or
vi.it is not at all times subject to Agent's duly perfected, first priority security interest or is subject to a Lien that is not a Permitted Lien; or
vii.it is not situated at a location in compliance with the Agreement, provided that Inventory situated at a location not owned by a Borrower will be Eligible Inventory only if Agent has received a satisfactory landlord's agreement or bailee letter, as applicable, with respect to such location; or
viii.it is in transit; or
ix.it is not otherwise acceptable to Agent in its sole judgment, exercised in a commercially reasonable manner.

APPENDIX6

Environmental Laws - all federal, state and local laws, rules, regulations, ordinances, orders and consent decrees relating to health, safety and environmental matters.
ERISA - the Employee Retirement Income Security Act of 1974, as amended, and any successor statute, and all rules and regulations from time to time promulgated thereunder.
Event of Default - as defined in Section 10.1 of the Agreement.
Existing Mortgage Indebtedness - (i) Money Borrowed owed by Borrowers in the aggregate principal amount of approximately $360,000 for existing mortgages on properties of Borrowers in Niles, Illinois; Winchester, Virginia; Lebanon, Tennessee and Cicero, Illinois and Borrowers' foreign Subsidiaries in Assens, Denmark and Nakskov, Denmark, (ii) Money Borrowed owed by Borrowers in the aggregate principal amount of $3,543,094 (as of the Closing Date) in connection with the existing mortgage financing at MFRI's headquarters located at 7720 North Lehigh Avenue, Niles, Illinois 60714, (iii) Money Borrowed owed by Borrowers in the aggregate principal amount of $5,075,421 (as of the Closing Date) in connection with the existing mortgage financing at TDC's property located at 2 Territorial Court, Bolingbrook, Illinois and (iv) any refinancings thereof so long as the terms and conditions of any such refinancings are acceptable to Agent in the reasonable exercise of its discretion, the Liens securing such refinancing are limited to the fixed properties identified above and with respect to the refinancing of the Money Borrowed referred to in clause (i) above, the aggregate principal amount of such refinanced Money Borrowed does not exceed $6,000,000.
Fee Letter - as defined in Section 2.3 of the Agreement.
Final Billings Accounts - Accounts owed to Perma‐Pipe if arising out of projects for which ninety‐five percent (95%) or more of billings to be made on such project have occurred.
Foreign Subsidiary - a Subsidiary that is a “controlled foreign corporation” under Section 957 of the Internal Revenue 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 a material tax liability to a Borrower.
GAAP - generally accepted accounting principles in the United States of America in effect from time to time.
Indebtedness - as applied to a Person means, without duplication:
x.all items which in accordance with GAAP would be included in determining total liabilities as shown on the liability side of a balance sheet of such Person as at the date as of which Indebtedness is to be determined, including, without limitation, Capitalized Lease Obligations;
xi.all obligations of other Persons which such Person has guaranteed;
xii.all reimbursement obligations in connection with letters of credit or letter of credit guaranties issued for the account of such Person;
xiii.Derivative Obligations; and
xiv.in the case of Borrowers (without duplication), the Obligations.

Intellectual Property - means:  all past, present and future:  trade secrets, know-how and other proprietary information; trademarks, 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 the goodwill of the business relating thereto and all registrations or applications for registrations which have heretofore been or may hereafter be issued thereon throughout the world; copyrights (including copyrights for computer programs) and copyright registrations or applications for registrations which have heretofore been or may hereafter be issued throughout the world and all tangible property embodying the copyrights, unpatented inventions (whether or not patentable); patent applications and patents; 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, computer software, source codes, object codes, executable code, data, databases and other physical manifestations, embodiments or incorporations of any of the foregoing; the right to sue for all past, present and future infringements of any of the foregoing; all other intellectual property; and all common law and other rights throughout the world in and to all of the foregoing.
Intercreditor Agreement - that certain Intercreditor Agreement of even date hereof by and between Agent and the holders of the Term Notes, as the same may be amended or modified from time to time.

APPENDIX7

Interest Period - as applicable to any LIBOR Portion, a period commencing on the date such LIBOR Portion is advanced, continued or converted, and ending on the date which is one (1) month, two (2) months, three (3) months, or six (6) months later, as may then be requested by MFRI, on its own behalf and on behalf of all other Borrowers; provided that (i) any Interest Period which would otherwise end on a day which is not a Business Day shall end in the next preceding or succeeding Business Day as is Agent's custom in the market to which such LIBOR Portion relates; (ii) there remains a minimum of one (1) month, two (2) months, three (3) months or six (6) months (depending upon which Interest Period MFRI selects) in the Term, unless Borrowers and Lenders have agreed to an extension of the Term beyond the expiration of the Interest Period in question; and (iii) all Interest Periods of the same duration which commence on the same date shall end on the same date.
IRB Indebtedness - shall mean all Indebtedness outstanding with respect to (i) those certain Industrial Revenue Bonds Series 1995 (Perma‐Pipe) issued by the Industrial Board of Wilson County, Tennessee in the initial amount of Three Million One Hundred Fifty Thousand Dollars ($3,150,000) (ii) that certain Trust Indenture dated September 1, 1995 by and between The Industrial Board of Wilson County, Tennessee and Perma‐Pipe and (iii) all indentures, mortgages, security agreements, notes, loan agreements, schedules, exhibits, amendments, modifications and other documents related thereto (collectively, the “Tennessee IRB Indebtedness”).
Lebanon Refinancing - any Money Borrowed incurred by Borrowers secured by a Lien on Perma‐Pipe's real property located at 1310 Quarles Drive, Lebanon, Tennessee; provided that the terms and conditions of such Money Borrowed, including without limitation, interest rates, amortization schedules, and collateral therefor are acceptable to Agent in its sole discretion and if the proceeds of any such Money Borrowed are used to repay outstanding Revolving Credit Loans (subject to Borrowers' rights to reborrow such amounts in accordance with the terms of this Agreement).
LC Amount - at any time, the aggregate undrawn face amount of all Letters of Credit and LC Guaranties then outstanding.
LC Guaranty - any guaranty pursuant to which Agent or any Affiliate of Agent shall guaranty the payment or performance by Borrowers of their reimbursement obligation under any letter of credit.
LC Obligations - Any Obligations that arise from any draw against any Letter of Credit or against any Letter of Credit supported by an LC Guaranty.
Letter of Credit - any standby or documentary letter of credit issued by Agent or any Affiliate of Agent for the account of any Borrower.
LIBOR - as applicable to any LIBOR Portion, for the applicable Interest Period, the rate per annum (rounded upward, if necessary, to the nearest 1/8 of one percent) as determined on the basis of the offered rates for deposits in U.S. dollars, for a period of time comparable to such Interest Period which appears on the Telerate page 3750 as of 11:00 a.m. (London time) on the day that is two (2) London Banking Days preceding the first day of such Interest Period; provided, however, if the rate described above does not appear on the Telerate System on any applicable interest determination date, the LIBOR shall be the rate (rounded upwards as described above, if necessary) for deposits in U.S. dollars for a period substantially equal to the Interest Period on the Reuters Page “LIBO” (or such other page as may replace the LIBO Page on that service for the purpose of displaying such rates), as of 11:00 a.m. (London Time), on the day that is two (2) London Banking Days prior to the first day of such Interest Period.  If both the Telerate and Reuters systems are unavailable, then the rate for that date will be determined on the basis of the offered rates for deposits in U.S. dollars for a period of time comparable to such Interest Period which are offered by four (4) major banks in the London interbank market at approximately 11:00 a.m. (London time), on the day that is two (2) London Banking Days preceding the first day of such Interest Period as selected by Agent.  The principal London office of each of the major London banks so selected will be requested to provide a quotation of its U.S. dollar deposit offered rate.  If at least two (2) such quotations are provided, the rate for that date will be the arithmetic mean of the quotations.  If fewer than two quotations are provided as requested, the rate for that date will be determined on the basis of the rates quoted for loans in U.S. dollars to leading European banks for a period of time comparable to such Interest Period offered by major banks in New York City at approximately 11:00 a.m. (New York City time), on the day that is two (2) London Banking Days preceding the first day of such Interest Period.  In the event that Agent is unable to obtain any such quotation as provided above, it will be determined that LIBOR pursuant to a Interest Period cannot be determined.  In the event that the Board of Governors of the Federal Reserve System shall impose a Reserve Percentage with respect to LIBOR deposits of Bank then for any period during which such Reserve Percentage shall apply, LIBOR 

APPENDIX8

shall be equal to the amount determined above divided by an amount equal to 1 minus the Reserve Percentage.

LIBOR Interest Payment Date - the first day of each calendar month during and immediately following the applicable Interest Period.
LIBOR Option - the option granted pursuant to Section 3.1 of the Agreement to have the interest on all or any portion of the principal amount of the Revolving Credit Loans and the Term Loan based on the LIBOR.
LIBOR Portion - a LIBOR Revolving Portion and/or a LIBOR Term Portion.
LIBOR Request ‐ a notice in writing (or by telephone confirmed electronically or by telecopy or other facsimile transmission on the same day as the telephone request) from MFRI, on its own behalf and on behalf of all other Borrowers, to Agent requesting that interest on a Revolving Credit Loan, a portion of the LIBOR Equipment Portion or a portion of the Term Loan be based on LIBOR, specifying: (i) the first day of the Interest Period (which shall be a Business Day); (ii) the length of the Interest Period; (iii) whether the LIBOR Portion is a new Loan, a conversion of a Base Rate Portion, or a continuation of a LIBOR Portion, and (iv)the dollar amount of the LIBOR Revolving Portion, LIBOR Equipment Portion or LIBOR Term Portion, which shall be in an amount not less than One Million Dollars ($1,000,000) or an integral multiple of One Hundred Thousand Dollars ($100,000) in excess thereof.
LIBOR Revolving Portion - that portion of the Revolving Credit Loans specified in a LIBOR Request (including any portion of Revolving Credit Loans which is being borrowed by Borrower concurrently with such LIBOR Request) which, as of the date of the LIBOR Request specifying such LIBOR Revolving Portion, has met the conditions for basing interest on the LIBOR in Section 3.1 of the Agreement and the Interest Period of which has not terminated.
LIBOR Term Portion - that portion of the Term Loan specified in a LIBOR Request which, as of the date of the LIBOR Request specifying such LIBOR Term Portion, has met the conditions for basing interest on the LIBOR in Section 3.1 of the Agreement and the Interest Period of which has not terminated.
Lien - any interest in Property securing an obligation owed to, or a claim by, a Person other than the owner of the Property, whether such interest is based on common law, statute or contract.  The term “Lien” shall also include rights of seller under conditional sales contracts or title retention agreements, reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases and other title exceptions and encumbrances affecting Property.  For the purpose of the Agreement, a Borrower shall be deemed to be the owner of any Property which it has acquired or holds subject to a conditional sale agreement or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person for security purposes.
Loan Account - the loan account established on the books of Agent pursuant to Section 3.6 of the Agreement.
Loan Commitment - with respect to any Lender, the amount of such Lender's Revolving Loan Commitment plus such Lender's Term Loan.
Loan Documents - the Agreement, the Other Agreements and the Security Documents.
Loans - all loans and advances of any kind made by Agent, any Lender, or any Affiliate of Agent or any Lender, pursuant to the Agreement.
London Banking Day - any date on which commercial banks are open for business in London, England.
Majority Lenders - as of any date, Lenders holding 51% of the Term Loan and Revolving Loan Commitments determined on a combined basis and following the termination of the Revolving Loan Commitments, Lenders holding 51% or more of the outstanding Loans, LC Amounts and LC Obligations not yet reimbursed by Borrowers or funded with a Revolving Credit Loan; provided, that (i) in each case, if there are 2 or more Lenders with outstanding Loans, LC Amounts, unfunded and unreimbursed LC Obligations or Revolving Loan Commitments, at least 2 Lenders shall be required to constitute Majority Lenders; and (ii) prior to termination of the Revolving Loan Commitments, if any Lender breaches its obligation to fund any requested Revolving Credit Loan, for so long as such breach exists, its voting rights hereunder shall be calculated with reference to its outstanding Loans, LC Amounts and unfunded and unreimbursed LC Obligations, rather than its Revolving Loan Commitment.

APPENDIX9

Material Adverse Effect - (i) a material adverse effect on the business, financial condition, operation, performance or properties of Borrowers and their Subsidiaries taken as a whole, (ii) a material adverse effect on the rights and remedies of Agent or Lenders under the Loan Documents, or (iii) the material impairment of the ability of Borrowers or any of their Subsidiaries to perform their obligations hereunder or under any Loan Document.
Money Borrowed - means, (i) Indebtedness arising from the lending of money by any Person to any Borrower or any of its Subsidiaries; (ii) Indebtedness, whether or not in any such case arising from the lending by any Person of money to any Borrower or any of its Subsidiaries, (1) which is represented by notes payable or drafts accepted that evidence extensions of credit, (2) which constitutes obligations evidenced by bonds, debentures, notes or similar instruments, or (3) upon which interest charges are customarily paid (other than accounts payable) or that was issued or assumed as full or partial payment for Property; (iii) Indebtedness that constitutes a Capitalized Lease Obligation; (iv) reimbursement obligations with respect to letters of credit or guaranties of letters of credit and (v) Indebtedness of any Borrower or any of its Subsidiaries under any guaranty of obligations that would constitute Indebtedness for Money Borrowed under clauses (i) through (iii) hereof, if owed directly by such Borrower or any of its Subsidiaries.  Money Borrowed shall not include trade payables or accrued expenses.
Mortgage - the deed of trust executed by Perma‐Pipe pursuant to the 2006 Loan Agreement in favor of Agent, for the benefit of itself and Lenders, by which Perma‐Pipe has granted to Agent, as security for the Obligations, a Lien upon the real Property of Perma‐Pipe located at 1310 Quarles Drive, Lebanon, Tennessee, together with all mortgages, deeds of trust and comparable documents now or at any time hereafter securing the whole or any part of the Obligations.
Multiemployer Plan - has the meaning set forth in Section 4001(a)(3) of ERISA.
New Mortgages - as defined in Section 5.4 of the Agreement.
New South African Foreign Subsidiary - NordiC Midwesco (Pty) Ltd.
New UAE Foreign Subsidiary - Perma-Pipe Middle East FZE.
New VI Foreign Subsidiary - MFRI Holdings (B.V.I) Ltd.
NOLV Percentage - the net orderly liquidation value of Inventory, 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 Borrowers' Inventory performed by an appraiser and on terms satisfactory to Agent.
Notes - the Revolving Notes and the Term Notes.
Obligations - all Loans, all LC Obligations and all other advances, debts, liabilities, obligations, covenants and duties, together with all interest, fees and other charges thereon, owing, arising, due or payable from any Borrower or any Subsidiary of any Borrower to Agent, for its own benefit, from any Borrower or any Subsidiary of any Borrower to Agent for the benefit of any Lender, from any Borrower or any Subsidiary of any Borrower to any Lender or from any Borrower or any Subsidiary of any Borrower to Bank or any other Affiliate of Agent, of any kind or nature, present or future, whether or not evidenced by any note, guaranty or other instrument, whether arising under the Agreement or any of the other Loan Documents or otherwise, whether direct or indirect (including those acquired by assignment), absolute or contingent, primary or secondary, due or to become due, now existing or hereafter arising and however acquired, including without limitation any Product Obligations owing by any Borrower or any Subsidiary of any Borrower to Agent, any Lender, Bank or any Affiliate of Bank or Agent.  For purposes of clarity, Agent, Lenders and Borrowers agree that Indebtedness of any Subsidiary of any Borrower (which Subsidiary is not a Borrower hereunder) to Agent, Bank, any Lender or any Affiliate of Agent or Bank shall constitute Obligations and shall count against the borrowing limits contained in subsection 1.1.1 and the definition of Borrowing Base to the extent that (x) Agent has established a specific reserve with respect to any such Indebtedness or (y) such Indebtedness constitutes a Loan or a potential LC Obligation.

APPENDIX10

Organizational I.D. Number - with respect to any Person, the organizational identification number assigned to such Person by the applicable governmental unit or agency of the jurisdiction of organization of such Person.
Other Agreements - any and all agreements, instruments and documents (other than the Agreement and the Security Documents), heretofore, now or hereafter executed by any Borrower, any Subsidiary of any Borrower or any other third party and delivered to Agent or any Lender in respect of the transactions contemplated by the Agreement.
Overadvance - as defined in subsection 1.1.2 of the Agreement.
Patent Security Agreement - the Patent and Security Agreement executed by Borrowers in favor of Agent for its benefit and the ratable benefit of Lenders, as such Patent and License Agreement has been or will be amended from time to time.
Perma-Pipe Equipment Loan - Money Borrowed incurred by Perma‐Pipe in favor of General Electric Capital Corporation (or an affiliate thereof) in a principal amount not to exceed Nine Hundred Thousand Dollars ($900,000).
Permitted Holders - any Person, who as of the Closing Date, beneficially owns five percent (5%) or more (on a fully diluted basis) of the outstanding common stock of MFRI.
Permitted Liens - any Lien of a kind specified in subsection 8.2.5 of the Agreement.
Permitted Purchase Money Indebtedness - (x) Purchase Money Indebtedness of Borrowers incurred after the date hereof which is secured by a Purchase Money Lien and the principal amount of which, when aggregated with the principal amount of all other such Indebtedness and Capitalized Lease Obligations of Borrowers and their Subsidiaries at the time outstanding, does not exceed $1,500,000, (y) Purchase Money Indebtedness of Borrowers in an aggregate amount not to exceed $6,000,000 incurred after December 1, 2007 in connection with the acquisition and immediate improvements by TDC of a new facility in suburban Chicago which Purchase Money Indebtedness shall be secured by a Purchase Money Lien on such facility and the fixed assets located thereon so long as the other terms and conditions of such Purchase Money Indebtedness are acceptable to Agent in its reasonable discretion and (z) Purchase Money Indebtedness or other Indebtedness incurred pursuant to that certain master lease agreement and/or loan agreement (“2010 Equipment Loan and Lease Agreement”) dated on or about May 11, 2011, a copy of which, in substantial final form, has been delivered to Agent, by and between all or any Borrower and Banc of America Leasing & Capital, LLC (or its successor‐in‐interest); provided that the aggregate amount of Borrowers' Indebtedness under such 2010 Equipment Loan and Lease Agreement does not exceed $3,000,000 (plus actual or imputed interest), that the term of such 2010 Equipment Loan and Lease Agreement is forty‐eight (48) months or more and that such 2010 Equipment Loan and Lease Agreement is otherwise in form and substance reasonably acceptable to Agent.
Person - an individual, partnership, corporation, limited liability company, joint stock company, land trust, business trust, or unincorporated organization, or a government or agency or political subdivision thereof.
Plan- an employee benefit plan now or hereafter maintained for employees of any Borrower or any of its Subsidiaries that is covered by Title IV of ERISA.
Pledge Agreement - the Stock Pledge Agreement executed by MFRI pursuant to the 2006 Loan Agreement in favor of Agent for its benefit and the ratable benefit of Lenders, as such Stock Pledge Agreement has or will be amended from time to time.
Pledge Agreement (Subsidiaries) - the Stock Pledge Agreement executed by Midwesco pursuant to the 2006 Loan Agreement in favor of Agent for its benefit and the ratable benefit of Lenders, as such Stock Pledge Agreement has been or will be amended from time to time.
Product Obligations - every obligation of any Borrower under and in respect of any one or more of the following types of services or facilities extended to any Borrower by Bank, Agent, any Lender or any Affiliate of Bank or Agent:  (i) credit cards, (ii) cash management or related services including the automatic clearing house transfer of funds for 

APPENDIX11

the account of any Borrower pursuant to agreement or overdraft, (iii) cash management, including controlled disbursement services and (iv) Derivative Obligations.
Projections -MFRI's projected Consolidated and consolidating (i) balance sheets, (ii) profit and loss statements, (iii) cash flow statements, and (iv) capitalization statements, all prepared on a consistent basis with the historical financial statements of MFRI and its Subsidiaries, together with appropriate supporting details and a statement of underlying assumptions.
Property - any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.
Purchase Money Indebtedness - means and includes (i) Indebtedness (other than the Obligations) for the payment of all or any part of the purchase price of any fixed assets, (ii) any Indebtedness (other than the Obligations) incurred at the time of or within 10 days prior to or after the acquisition of any fixed assets for the purpose of financing all or any part of the purchase price thereof, and (iii) any renewals, extensions or refinancings thereof, but not any increases in the principal amounts thereof outstanding at the time.
Purchase Money Lien - a Lien upon fixed assets which secures Purchase Money Indebtedness, but only if such Lien shall at all times be confined solely to the fixed assets the purchase price of which was financed through the incurrence of the Purchase Money Indebtedness secured by such Lien.
Rentals - as defined in subsection 8.2.18 of the Agreement.
Reportable Event - any of the events set forth in Section 4043(c) of ERISA.
Reserve Percentage - the maximum aggregate reserve requirement (including all basic, supplemental, marginal and other reserves) which is imposed on member banks of the Federal Reserve System against “Euro-currency Liabilities” as defined in Regulation D.
Restricted Investment- any investment made in cash or by delivery of Property to any Person, whether by acquisition of stock, Indebtedness or other obligation or Security, or by loan, advance or capital contribution, or otherwise, or in any Property except the following:
i.investments by any Borrower, to the extent existing on the Closing Date, in one or more Subsidiaries of such Borrower;
ii.Property to be used in the ordinary course of business;
iii.Current Assets arising from the sale of goods and services in the ordinary course of business of any Borrower or any of its Subsidiaries;
iv.investments in direct obligations of the United States of America, or any agency thereof or obligations guaranteed by the United States of America, provided that such obligations mature within one year from the date of acquisition thereof;
v.investments in certificates of deposit maturing within one year from the date of acquisition and fully insured by the Federal Deposit Insurance Corporation;
vi.investments in commercial paper given the highest rating by a national credit rating agency and maturing not more than 270 days from the date of creation thereof; 
vii.investments in money market, mutual or similar funds having assets in excess of $100,000,000 and the investments of which are limited to investment grade securities;
viii.intercompany advances permitted under Section 8.2.2(v) of the Agreement;
ix.investments existing on the date hereof and listed on Exhibit 8.2.12 hereto; and
x.investments otherwise expressly permitted pursuant to the Agreement.
Revolving Credit Loan - a Loan made by any Lender pursuant to Section 1.1 of the Agreement.
Revolving Credit Maximum Amount - Thirty-Eight Million Dollars ($38,000,000); provided that upon three (3) Business Days' notice, Borrowers may reduce the Revolving Credit Maximum Amount by amounts not exceeding Two Million Dollars ($2,000,000) within any calendar year.  Any such reduction shall be n a minimum amount of One Million Dollars ($1,000,000) and shall be an integral multiple of One Million Dollars ($1,000,000). The Revolving 

APPENDIX12

Credit Maximum Amount may not, however, be reduced below Ten Million Dollars ($10,000,000).  Once the Revolving Credit Maximum Amount has been so reduced, it may not be subsequently increased.
Revolving Loan Commitment - with respect to any Lender, the amount of such Lender's Revolving Loan Commitment pursuant to subsection 1.1.1 of the Agreement, as set forth below such Lender's name on the signature page hereof or any Assignment and Acceptance Agreement executed by such Lender.
Revolving Loan Percentage - with respect to each Lender, the percentage equal to the quotient of such Lender's Revolving Loan Commitment divided by the aggregate of all Revolving Loan Commitments.
Revolving Notes - the amended and restated Secured Promissory Notes to be executed by Borrowers on or about the Closing Date in favor of each Lender to evidence the Revolving Credit Loans, which shall be in the form of Exhibit 1.1 to the Agreement, together with any replacement or successor notes therefor.
Security - all shares of stock, partnership interests, membership interests, membership units or other ownership interests in any other Person and all warrants, options or other rights to acquire the same.
Security Documents -the Guaranty Agreements, the Mortgages, any New Mortgage, the Patent Security Agreement, the Pledge Agreement, the Pledge Agreement (Subsidiaries), the Trademark Security Agreement, instruments and agreements now or at any time hereafter securing the whole or any part of the Obligations.
Short Term Projects - projects of Perma‐Pipe that are subject to a written contract between Perma‐Pipe and the applicable Account Debtor, which contract provides for multiple billings and requires the applicable Account Debtor to pay for interim shipments prior to final shipment and billing.
Solvent - as to any Person, that such Person (i) owns Property whose fair saleable value is greater than the amount required to pay all of such Person's Indebtedness (including contingent debts), (ii) is able to pay all of its Indebtedness as such Indebtedness matures and (iii) has capital sufficient to carry on its business and transactions and all business and transactions in which it is about to engage.
Subordinated Debt - Indebtedness of any Borrower or any Subsidiary of any Borrower that is subordinated to the Obligations in a manner satisfactory to Agent, and contains terms, including without limitation, payment terms, satisfactory to Agent.
Subsidiary - any Person of which another Person owns, directly or indirectly through one or more intermediaries, more than 50% of the Voting Stock at the time of determination.
Tennessee IRB Indebtedness - as defined in the definition of IRB Indebtedness.
Term - as defined in Section 4.1 of the Agreement.
Term Loan Commitment - with respect to any Lender, the amount of such Lender's Term Loan Commitment pursuant to subsection 1.3.1 of the Agreement, as set forth below such Lender's name on the signature pages hereof or any Assignment and Acceptance Agreement executed by such Lender, minus all Term Loan payments paid to such Lender.
Term Loan Notes - the Secured Promissory Notes executed by Borrowers on or about March 28, 2005 in favor of each applicable Lender to evidence its Term Loan, which shall be in the form of Exhibit 1.3A, together with any replacement or successor notes therefor.
Term Loan Percentage - with respect to each Lender, the percentage equal to the quotient of such Lender's Term Loan Commitment divided by the aggregate of all Term Loan Commitment.”
Total Credit Facility - Thirty‐Eight Million Dollars ($38,000,000), as reduced from time to time pursuant to the terms of the Agreement.

APPENDIX13

Trademark Security Agreement - the Trademark and License Security Agreement executed by Borrowers in favor of Agent of its benefit and the ratable benefit of Lenders, as such Trademark and License Security Agreement has been or will be amended from time to time.
Type of Organization - with respect to any Person, the kind or type of entity by which such Person is organized, such as a corporation or limited liability company.
UCC - the Uniform Commercial Code as in effect in the State of Illinois on the date of this Agreement, as it may be amended or otherwise modified.
Unused Line Fee - as defined in Section 2.5 of the Agreement.
Virginia IRB Indebtedness - as defined in the definition of IRB Indebtedness.
Voting Stock - Securities of any class or classes of a corporation, limited partnership or limited liability company or any other entity the holders of which are ordinarily, in the absence of contingencies, entitled to vote with respect to the election of corporate directors (or Persons performing similar functions).
Other Terms.  All other terms contained in the Agreement shall have, when the context so indicates, the meanings provided for by the UCC to the extent the same are used or defined therein.
Certain Matters of Construction.  The terms “herein”, “hereof” and “hereunder” and other words of similar import refer to the Agreement as a whole and not to any particular section, paragraph or subdivision.  Any pronoun used shall be deemed to cover all genders.  The section titles, table of contents and list of exhibits appear as a matter of convenience only and shall not affect the interpretation of the Agreement.  All references to statutes and related regulations shall include any amendments of same and any successor statutes and regulations.  All references to any of the Loan Documents shall include any and all modifications thereto and any and all extensions or renewals thereof.

APPENDIX14

LIST OF EXHIBITS AND SCHEDULES
	
		
	Exhibit 1.1
	Form of Revolving Note

	Exhibit 1.3
	Form of Term Note

	Exhibit 6.1.1
	Business Locations

	Exhibit 7.1.1
	Jurisdictions in which each Borrower and each Subsidiary is Authorized to do Business

	Exhibit 7.1.4
	Capital Structure of each Borrower and each Subsidiary

	Exhibit 7.1.5
	Names; Organization

	Exhibit 7.1.13
	Surety Obligations

	Exhibit 7.1.14
	Tax Identification Numbers of Subsidiaries

	Exhibit 7.1.15
	Brokers' Fees

	Exhibit 7.1.16
	Patents, Trademarks, Copyrights and Licenses

	Exhibit 7.1.19
	Contracts Restricting Right to Incur Debts

	Exhibit 7.1.20
	Litigation

	Exhibit 7.1.21
	Certain Defaults

	Exhibit 7.1.22
	Capitalized and Operating Leases

	Exhibit 7.1.23
	Pension Plans

	Exhibit 7.1.25
	Labor Relations

	Exhibit 8.1.3
	Form of Compliance Certificate

	Exhibit 8.1.4
	Form of Borrowing Base Certificate

	Exhibit 8.2.3
	Existing Indebtedness

	Exhibit 8.2.5
	Permitted Liens and Property Securing Perma-Pipe Equipment Loan

	Exhibit 8.2.12
	Permitted Investments

	Exhibit 8.3
	Financial Covenants

Exhibit1

Exhibit 1.1
FORM OF REVOLVING CREDIT NOTE
SECURED PROMISSORY NOTE
(AMENDED AND RESTATED)

	
		
	$38,000,000
	 _________ ___, 20__
Chicago, Illinois

FOR VALUE RECEIVED, the undersigned (individually a “Borrower” and collectively “Borrowers”) promises to pay to the order of Bank of America, N.A. (“Lender”), at the principal office of Bank of America, N.A., as agent for said Lender, or at such other place in the United States of America as the holder of this Note may designate from time to time in writing, in lawful money of the United States of America and in immediate available funds, the principal amount of Thirty-Eight Million Dollars ($38,000,000) or such lesser principal amount as may be outstanding pursuant to the Loan Agreement (as hereinafter defined) with respect to the Revolving Credit Loan, together with interest on the unpaid principal amount of this Note outstanding from time to time.
This Revolving Note (the “Note”) is one of the Revolving Notes referred to in, and is issued pursuant to, that certain Second Amended and Restated Loan and Security Agreement among Borrowers, the lender signatures thereto (including Lender) and Bank of America, N.A. (“B of A”) as agent for such lenders (B of A, in such capacity, “Agent”) dated as of April 30, 2012 (hereinafter, as amended from time to time, the “Loan Agreement”), and is entitled to all of the benefits and security of the Loan Agreement.  All of the terms, covenants and conditions of the Loan Agreement and the other Loan Documents are hereby made a part of this Note and are deemed incorporated herein in full.  All capitalized terms used herein, unless otherwise specifically defined in this Note, shall have the meanings ascribed to them in the Loan Agreement.
The rate of interest in effect hereunder shall be calculated with reference to the Base Rate or LIBOR, as applicable, as more specifically provided in the Loan Agreement.  The interest due shall be computed in the manner provided in the Loan Agreement.
Except as otherwise expressly provided in the Loan Agreement, if any payment on this Note becomes due and payable on a day other than a Business Day, the maturity there of shall be extended to the next succeeding Business Day, and with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension.  Notwithstanding the foregoing, if any portion of the Revolving Credit Loans evidenced by this promissory note is subject to a LIBOR Option, and an extension of the maturity of any payment hereon would cause the maturity thereof to occur during the next calendar month, then such payment shall mature on the next preceding Business Day.
This Note shall be subject to mandatory prepayment in accordance with the provisions of Section 3.3 of the Loan Agreement.  Borrowers may also terminate the Loan Agreement and, in connection with such termination, prepay this Note in the manner provided in Section 4 of the Loan Agreement.
Upon the occurrence and continuation of any one or more of the Events of Default specified in the Loan Agreement which have not been cured by Borrowers or waived by Lenders or Majority Lenders (as required by the Loan Agreement) may declare all Obligations evidenced hereby to be immediately due and payable (except with respect to any Event of Default set forth in subsection 10.1.8 of the Loan Agreement, in which case all Obligations evidenced hereby shall automatically become immediately due and payable without the necessity of any notice or other demand) without presentment, demand, protest or any other action or obligation of Majority Lenders or Agent.
Time is of the essence of this Note.  Each Borrower hereby waives presentment, demand, protest and notice of any kind.  No failure to exercise, and no delay in exercising, any rights hereunder on the part of the holder hereof shall operate as a waiver of such rights.
Wherever possible, each provision of this Note shall be interpreted in such manner as to be effective and valid 

Exhibit2

under applicable law, but if any provision of this Note shall be prohibited or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity without invalidating the remainder of such provision or remaining provisions of this Note.  No delay or failure on the part of Agent or Lenders in the exercise of any right or remedy hereunder shall operate as a waiver thereof, nor as an acquiescence in any default, nor shall any single or partial exercise by Agent or Lenders of any right or remedy preclude any other right or remedy.  Agent and/or Lenders, at its or their option, may enforce its or their rights against any collateral securing this Note without enforcing its or their rights against Borrowers, any guarantor of the indebtedness evidenced hereby or any other property or indebtedness due or to become due to Borrowers.  Each Borrower agrees that, without releasing or impairing such Borrower's liability hereunder, Agent and/or Lenders may at any time release, surrender, substitute or exchange any collateral securing this Note and may at any time release any party primarily or secondarily liable for the indebtedness evidenced by this Note.
The validity, interpretation and enforcement of this promissory note shall be governed by the internal laws of the state of Illinois without giving effect to the conflict of laws principles thereof.
(Signature Pages Follow)

Exhibit3

(Signature Page to Amended and Restated Revolving Credit Note)
	
		
	 
	BORROWERS:

	 
	MFRI, INC.
By: /s/ Michael D. Bennett
Name: Michael D. Bennett
Title: Vice President

	 
	MIDWESCO FILTER RESOURCES, INC.
By: /s/ Michael D. Bennett
Name: Michael D. Bennett
Title: Vice President

	 
	PERMA‐PIPE, INC.
By: /s/ Michael D. Bennett
Name: Michael D. Bennett
Title: Vice President

	 
	THERMAL CARE, INC.
By:/s/ Michael D. Bennett
Name: Michael D. Bennett
Title: Vice President

	 
	TDC FILTER MANUFACTURING, INC.
By: /s/ Michael D. Bennett
Name: Michael D. Bennett
Title: Vice President

	 
	MIDWESCO MECHANICAL AND ENERGY, INC.
By: /s/ Michael D. Bennett
Name: Michael D. Bennett
Title: Vice President

	 
	PERMA-PIPE INTERNATIONAL, LLC
By: /s/ Michael D. Bennett
Name: Michael D. Bennett
Title: Vice President

	 
	PERMA‐PIPE CANADA, INC.
By:/s/ Michael D. Bennett
Name: Michael D. Bennett
Title: Vice President

Exhibit4

EXHIBIT 1.3
FORM OF TERM LOAN NOTE
(secured promissory note)
	
		
	[Aggregate of $964,285.66 as of April 27 2012]
	______________ __, 20__
Chicago, Illinois

FOR VALUE RECEIVED, the undersigned (“Borrowers”), hereby jointly and severally promises to pay to the order of _______________________, a ________________ corporation (hereinafter “Lender”), or its registered assigns at the office of Bank of America, N.A., as agent for such Lender, or at such other place in the United States of America as the holder of this Note may designate from time to time in writing, in lawful money of the United States, in immediately available funds, at the time of payment, the principal sum of ______________________ Dollars ($_______________), together with interest from and after the date hereof on the unpaid principal balance outstanding from time to time.
This Secured Promissory Note (the “Note”) is one of the Term Loan Notes referred to in, and is issued pursuant to, that certain Second Amended and Restated Loan and Security Agreement dated as of April 30, 2012, by and among Borrowers, the lender signatories thereto (including Lender), and Bank of America, N.A. (“Bank of America”) as Agent for said lenders (Bank of America in such capacity “Agent”) (hereinafter, as amended from time to time, the “Loan Agreement”), and is entitled to all of the benefits and security of the Loan Agreement.  All of the terms, covenants and conditions of the Loan Agreement and the Security Documents are hereby made a part of this Note and are deemed incorporated herein in full.  All capitalized terms used herein, unless otherwise specifically defined in this Note, shall have the meanings ascribed to them in the Loan Agreement.
For so long as no Event of Default shall have occurred and be continuing, the principal amount and accrued interest of this Note shall be due and payable on the dates and in the manner hereinafter set forth:
(a)    interest on the unpaid principal balance outstanding from time to time shall be paid at such interest rates and at such times as are specified in the Loan Agreement;
(b)    principal shall be due and payable quarterly commencing on [June 1, 2005] and continuing on each [September 1, December 1, March 1 and June 1] thereafter in installments equal to $________________ [aggregate amount of quarterly installments to all Lenders equal to $215,000]; and
(c)    the entire remaining principal amount then outstanding, together with any and all other amounts due hereunder, shall be due and payable on the last day of the Term.
Notwithstanding the foregoing, the entire unpaid principal balance and accrued interest on this Note shall be due and payable immediately upon any termination of the Loan Agreement pursuant to Section 4 thereof.
This Note shall be subject to mandatory prepayment in accordance with the provisions of Section 3.3 of the Loan Agreement.  Borrowers may also prepay this Note in the manner provided in subsection 3.3.5 or Section 4 of the Loan Agreement.
Upon the occurrence, and during the continuation, of an Event of Default, this Note shall or may, as provided in the Loan Agreement, become or be declared immediately due and payable.
The right to receive principal of, and stated interest on, this Note may only be transferred in accordance with the provisions of the Loan Agreement.
Demand, presentment, protest and notice of nonpayment and protest are hereby waived by Borrowers.
This Note shall be governed by, and construed and enforced in accordance with, the laws of the State of Illinois.
(Signature Pages Follow)

Exhibit5

(Signature Page to Term Loan Note) 

	
		
	 
	MFRI, INC.
By: /s/ Michael D. Bennett
Name: Michael D. Bennett
Title: Vice President

	 
	MIDWESCO FILTER RESOURCES, INC.
By: /s/ Michael D. Bennett
Name: Michael D. Bennett
Title: Vice President

	 
	PERMA‐PIPE, INC.
By: /s/ Michael D. Bennett
Name: Michael D. Bennett
Title: Vice President

	 
	THERMAL CARE, INC.
By: /s/ Michael D. Bennett
Name: Michael D. Bennett
Title: Vice President

	 
	TDC FILTER MANUFACTURING, INC.
By: /s/ Michael D. Bennett
Name: Michael D. Bennett
Title: Vice President

	 
	MIDWESCO MECHANICAL AND ENERGY, INC.
By: /s/ Michael D. Bennett
Name: Michael D. Bennett
Title: Vice President

	
		
	 
	PERMA-PIPE INTERNATIONAL, LLC
By: /s/ Michael D. Bennett
Name: Michael D. Bennett
Title: Vice President

	 
	PERMA‐PIPE CANADA, INC.
By: /s/ Michael D. Bennett
Name: Michael D. Bennett
Title: Vice President

Exhibit6

EXHIBIT 6.1.1
BUSINESS LOCATIONS
		
	1.
	Each Borrower currently has the following business locations, and no others:

Chief Executive Office:
Other Locations:
		
	2.
	Each Borrower maintains its books and records relating to Accounts and General Intangibles at:

		
	3.
	Each Borrower has had no office, place of business or agent for process located in any county other than as set forth above, except:

		
	4.
	Each Subsidiary currently has the following business locations, and no others:

Chief Executive Office:
Other Locations:
		
	5.
	Each Subsidiary maintains its books and records relating to Accounts and General Intangibles at:

		
	6.
	Each Subsidiary has had no office, place of business or agent for process located in any county other than as set forth above, except:

		
	7.
	The following bailees, warehouseman, similar parties and consignees hold Inventory of each Borrower or one of its Subsidiaries:

	
				
	Name and Address of Party
	Nature of Relationship
	Amount of Inventory
	Owner of Inventory

	 
	 
	 
	 

	 
	 
	 
	 

	
				
	Name and Address of Party
	Nature of Relationship
	Amount of Inventory
	Owner of Inventory

	 
	 
	 
	 

	 
	 
	 
	 

Exhibit7

EXHIBIT 7.1.1
JURISDICTIONS IN WHICH EACH BORROWER
AND ITS SUBSIDIARIES
ARE AUTHORIZED TO DO BUSINESS
	
		
	Name of Entity
	Jurisdiction

Exhibit8

EXHIBIT 7.1.4
CAPITAL STRUCTURE
		
	8.
	The classes and the number of authorized and issued Securities of each Borrower and each of its Subsidiaries and the record owner of such Securities of each Borrower are as follows:

Each Borrower:
	
				
	Class of Securities
	Number of Securities Issued and Outstanding
	Record Owners
	Number of Securities Authorized but Unissued

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

Subsidiaries:
	
				
	Class of Securities
	Number of Securities Issued and Outstanding
	Record Owners
	Number of Securities Authorized but Unissued

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

		
	9.
	The number, nature and holder of all other outstanding Securities of each Borrower and each Subsidiary are as follows:

		
	10.
	The correct name and jurisdiction of incorporation or organization of each Subsidiary of each Borrower and the percentage of its issued and outstanding Voting Stock owned by each Borrower are as follows:

Exhibit9

	
			
	Name
	Jurisdiction of Incorporation/Organization
	Percentage of Voting 
Stock Owned by Each Borrower 

	 
	 
	 

	 
	 
	 

	 
	 
	 

		
	11.
	The name of each of each Borrower's and each Subsidiary's corporate or joint venture Affiliates and the nature of the affiliation are as follows:

		
	12.
	The agreements or instruments binding upon the partners, members or shareholders of each Borrower or any of its Subsidiaries and relating to the ownership of its Securities, are as follows:

Exhibit10

EXHIBIT 7.1.5
NAMES; ORGANIZATION
		
	13.
	Each Borrower's correct name, as registered with the Secretary of State of the State of ____________________ is:

		
	14.
	In the conduct of its business, each Borrower has used the following names:

		
	15.
	Each Subsidiary's correct name, as registered with the Secretary of State of the State of its incorporation or formation, is:

		
	16.
	In the conduct of its business, each Subsidiary has used the following names:

		
	17.
	Each Borrower's Organizational I.D. Number is:

		
	18.
	Each Subsidiary's Organizational I.D. Number is:

		
	19.
	Each Borrower's Type of Organization is:

		
	20.
	Each Subsidiary's Type of Organization is:

		
	21.
	Each Borrower has not been the surviving entity of a merger or consolidation nor has it acquired substantially all the assets of any person.

		
	22.
	No Subsidiary has been the surviving entity of a merger or consolidation nor has it acquired substantially all the assets of any person.

Exhibit11

EXHIBIT 7.1.13
SURETY OBLIGATIONS

Exhibit12

EXHIBIT 7.1.14
TAX IDENTIFICATION NUMBERS OF EACH BORROWER (OTHER THAN MFRI) AND SUBSIDIARIES
	
		
	Subsidiary
	Number

 

Exhibit13

EXHIBIT 7.1.15
BROKERS' FEES

Exhibit14

EXHIBIT 7.1.16
PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES
		
	23.
	Each Borrower's and its Subsidiaries' patents:

	
					
	Patent
	Owner
	Status in
Patent Office 
	Federal Registration Number
	Registration Date 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

		
	24.
	Each Borrower's and its Subsidiaries' trademarks:

	
					
	Patent
	Owner
	Status in
Patent Office 
	Federal Registration Number
	Registration Date 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

		
	25.
	Each Borrower's and its Subsidiaries' copyrights:

	
					
	Patent
	Owner
	Status in
Patent Office 
	Federal Registration Number
	Registration Date 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

		
	26.
	Each Borrower's and its Subsidiaries' licenses (other than routine business licenses, authorizing them to transact business in local jurisdictions):

Exhibit15

	
				
	Name of License
	Nature of License
	Licensor
	Term of License

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

		
	27.
	Infringement Activities:

		
	28.
	Unregistered material trademarks, service marks and copyrights:

		
	29.
	Material license agreements that do not permit assignment or limit the use of license after default:

Exhibit16

EXHIBIT 7.1.19
CONTRACTS RESTRICTING RIGHT TO INCUR DEBT
Contracts that restrict the right of any Borrower or any of its Subsidiaries to incur Indebtedness:
	
				
	Title of Contract
	Identity of Parties
	Nature of Restriction
	Term of Contract

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

Exhibit17

EXHIBIT 7.1.20
LITIGATION
		
	30.
	Actions, suits, proceedings and investigations pending against any Borrower or any Subsidiary:

	
				
	Title of Action
	Nature of Action
	Complaining Parties
	Jurisdiction or Tribunal

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

		
	31.
	The only threatened actions, suits, proceedings or investigations of which any Borrower or any Subsidiary is aware are as follows:

Exhibit18

EXHIBIT 7.1.22
CAPITALIZED AND OPERATING LEASES
Each Borrower and its Subsidiaries have the following capitalized and operating leases:
	
				
	Lessee
	Lessor
	Term of Lease
	Property Covered

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

 

Exhibit19

EXHIBIT 7.1.23
PENSION PLANS
Each Borrower and its Subsidiaries have the following Plans:
	
		
	Party
	Type of Plan

	Borrowers
	 

	 
	 

	Subsidiaries
	 

	 
	 

Exhibit20

EXHIBIT 7.1.25
COLLECTIVE BARGAINING AGREEMENTS; LABOR CONTROVERSIES
		
	32.
	Each Borrower and its Subsidiaries are parties to the following collective bargaining agreements:

	
			
	Type of Agreement
	Parties
	Term of Agreement

	 
	 
	 

	 
	 
	 

	 
	 
	 

		
	33.
	Material grievances, disputes of controversies with employees of any Borrower or any of its Subsidiaries are as follows:

	
		
	Parties Involved
	Nature of Grievance, Dispute or Controversy

	 
	 

	 
	 

	 
	 

		
	34.
	Threatened strikes, work stoppages and asserted pending demands for collective bargaining with respect to any Borrower or any of its Subsidiaries are as follows:

	
		
	Parties Involved
	Nature of Matter

	 
	 

	 
	 

	 
	 

Exhibit21

EXHIBIT 8.1.3
COMPLIANCE CERTIFICATE
[________________________]
__________________, ___
Bank of America, N.A.
20975 Swenson Drive, Suite 200
Waukesha, Wisconsin  53186
The undersigned, the chief financial officer of MFRI, Inc. (“MFRI”), gives this certificate to Bank of America, N.A., in its capacity as Agent (“Agent”) in accordance with the requirements of subsection 8.1.3 of that certain Second Amended and Restated Loan and Security Agreement dated March __, 2012 among MFRI, Midwesco Filter Resources, Inc., Perma‐Pipe, Inc., Thermal Care, Inc., TDC Filter, Inc., Midwesco Mechanical and Energy, Inc., Perma-Pipe International, LLC, Perma‐Pipe Canada, Inc., Agent and the Lenders party thereto (“Loan Agreement”).  Capitalized terms used in this Certificate, unless otherwise defined herein, shall have the meanings ascribed to them in the Loan Agreement.
1.    Based upon my review of the balance sheets and statements of income of MFRI and its Subsidiaries for the [__________] period ending _______________, ____, copies of which are attached hereto, I hereby certify that:
(i)    Fixed Charge Coverage Ratio for the ______ month period ended _______________ is to 1;
2.    No Default exists on the date hereof, other than: __________________ ________________________________________________ [if none, so state]; and
3.    No Event of Default exists on the date hereof, other than __________ ____________________________________________________ [if none, so state].
Very truly yours,

_______________________________
Chief Financial Officer

 

Exhibit22

EXHIBIT 8.1.4
FORM OF BORROWING BASE CERTIFICATE
[to come]

Exhibit23

EXHIBIT 8.2.3
EXISTING INDEBTEDNESS
	
				
	Applicable Borrower
	Lender
	Amount
	Maturity

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

Exhibit24

EXHIBIT 8.2.5
PERMITTED LIENS AND EQUIPMENT SECURING PERMA-PIPE EQUIPMENT LOAN
	
			
	Secured Party
	Applicable Borrower
	Nature of Lien

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

Exhibit25

EXHIBIT 8.2.12
PERMITTED INVESTMENTS
 

Exhibit26

EXHIBIT 8.3
FINANCIAL COVENANTS
DEFINITIONS
Availability Threshold - for each period within the Term commencing each on June 1 with respect to 2012 and May 1 with respect to all other years and ending each January 31, $5,000,000.  For each period within the Term commencing each February 1 and ending each May 31 with respect to 2012 and April 30 with respect to subsequent years, $3,500,000.
Cash Flow - with respect to any fiscal period, EBITDA for such period minus (i) Capital Expenditures (excluding, however, Capital Expenditures financed by third party financing) made within such period, (ii) income taxes paid in cash in such period, (iii) Interest Expense paid in cash within such period and (iv) principal payments of Money Borrowed (other than Revolving Credit Loans) made within such period.
Consolidated Net Income (Loss) - with respect to any fiscal period, the net income (or loss) of MFRI determined in accordance with GAAP on a Consolidated basis; provided, however, Consolidated Net Income shall not include:  (a) the income (or loss) of any Person (other than a Subsidiary of any Borrower) in which a Borrower or any of its wholly‐owned subsidiaries has an ownership interest unless received in a cash distribution or requiring the payment of cash; (b) the income (or loss) of any Person accrued prior to the date it became a Subsidiary of a Borrower or is merged into or consolidated with a Borrower; (c) all amounts included in determining net income (or loss) in respect of the write‐up of assets on or after the Closing Date, including the subsequent amortization or expensing of the written‐up portion of the assets; (d) extraordinary gains as defined under GAAP; and (e) gains from asset dispositions (other than sales of inventory); and any increase or decrease in expenses resulting from the implementation of FASB 146.
EBITDA ‐ with respect to any fiscal period, the sum of Consolidated Net Income (Loss) before Interest Expense, income taxes, depreciation and amortization for such period (but excluding any extraordinary gains for such period), plus the amount of any expenses or charges deducted from Consolidated Net Income for the applicable period in connection with the closure and write down of TDC's facility at 1331 South 55th Court, Cicero, Illinois; provided that the aggregate amount of add backs to EBITDA as a result of any such charges or expenses shall not exceed $2,500,000, plus the amount of any expenses or charges deducted from Consolidated Net Income for the applicable periods ending on or prior to January 31, 2012 in connection with the closure and write down of Midwesco's South African Subsidiary; provided that the aggregate amount of add backs to EBITDA as a result of any such charges or expenses shall not exceed $500,000; plus the amount of any non cash expenses or charges deducted from Consolidated Net Income related to management, director or employee equity incentive plans; provided that, to the extent any Borrower incurs any cash expense, charge or expenditure related to such equity incentive plans or repurchases any Security issued under any such equity incentive plan, the amount of such expense, charge, expenditure or repurchase price, to the extent not already deducted from Consolidated Net Income, shall be subtracted from the applicable period's EBITDA, plus, to the extent included in the determination of Consolidated Net Income (Loss), any excise taxes paid in or to India (or any political subdivision thereof) resulting from the repatriation of cash to the United States), all as determined for Borrowers and their Subsidiaries on a Consolidated basis and in accordance with GAAP.
Fixed Charge Coverage Ratio - with respect to any fiscal period, the ratio of (i) EBITDA for such period minus Capital Expenditures (excluding, however, (a) Capital Expenditures financed by third party financing and (b) up to $6,000,000 of Capital Expenditures incurred within the applicable period and prior to January 31, 2012 with respect to the start up of Perma Pipe's Saudi Arabian Subsidiary) minus income taxes paid in cash in such period to (ii) the sum of Interest Expense paid in cash within such period plus principal payments of Money Borrowed (other than Revolving Credit Loans) made within such period.
Interest Coverage Ratio - with respect to any fiscal period, the ratio of (i) EBITDA for such period to (ii) Interest Expense paid in cash in such period, all as defined for MFRI and its subsidiaries on a Consolidated basis in accordance with GAAP.

Exhibit27

Interest Expense - with respect to any fiscal period, interest expense paid or accrued for such period, including without limitation the interest portion of Capitalized Lease Obligations, plus the Letter of Credit and LC Guaranty fees owing for such period, all as determined for MFRI and its Subsidiaries on a Consolidated basis and in accordance with GAAP.
May 12, 2012 Availability Threshold - for the period from May 1, 2012 to May 31, 2012, $3,500,000 provided that for not more than four days within such period (no more than two of which can be consecutive), the May 2012 Availability Threshold shall be $2,000,000.
Measurement Period - the most recently ended one month period ending February 28, 2010, two month period ending March 31, 2010, three month period ending April 30, 2010, four month period ending May 31, 2010, five month period ending June 30, 2010, six month period ending July 31, 2010, seven month period ending August 31, 2010, eight month period ending September 30, 2010, nine month period ending October 31, 2010, ten month period ending November 30, 2010, eleven month period ending December 31, 2010 and twelve month period ending January 31, 2011 and the last day of each month thereafter.
COVENANTS
Minimum Fixed Charge Coverage Ratio.  Other than with respect to the period from May 1, 2012 to May 31, 2012, if at any time Availability is less than the Availability Threshold, then Borrowers shall not permit Fixed Charge Coverage Ratio for the most recently ended Measurement Period to be less than 1.00 to 1, provided that Agent and Lenders waive compliance with this covenant with respect to the Measurement Period ended March 31, 2012.  This waiver shall only apply to the Measurement Period ended March 31, 2012.  In order to induce Agent and Lender to agree to such waiver, Borrowers agree to pay to Agent, for the ratable benefit of Lenders a waiver fee equal to $35,000.  Said waiver fee shall be due and payable and deemed fully earned on April 30, 2012.  With respect to the period from May 1, 2012 to May 31, 2012, if at any time within such month Availability is less than the May 2012 Availability Threshold, then Borrower shall not permit the Fixed Charge Coverage Ratio for the Measurement Period ending April 30, 2012 to be less than 1.00 to 1.

Exhibit28ex10_1.htm

Exhibit 10.1

 

 

Published CUSIP Numbers:  25674QAD6

25674QAE4

 

Execution Copy

$750,000,000

 

CREDIT AGREEMENT

 

Dated as of June 6, 2012

 

among

 

DOLLAR TREE STORES, INC.

 

as Borrower,

 

DOLLAR TREE, INC.,

 

as the Parent,

 

THE PARENT AND CERTAIN OF THE DOMESTIC SUBSIDIARIES

 

OF THE PARENT FROM TIME TO TIME PARTIES HERETO,

 

as Guarantors,

 

THE LENDERS PARTIES HERETO,

 

and

 

WELLS FARGO BANK, NATIONAL ASSOCIATION

 

as Administrative Agent

 

JPMORGAN CHASE BANK, N.A. and U.S. BANK NATIONAL ASSOCIATION,

 

as Co-Syndication Agents

 

and

 

BANK OF AMERICA, N.A., PNC BANK, NATIONAL ASSOCIATION

 

and ROYAL BANK OF CANADA,

 

as Co-Documentation Agents

 

WELLS FARGO SECURITIES, LLC, J.P. MORGAN SECURITIES LLC and

U.S. BANK NATIONAL ASSOCIATION

as Joint Lead Arrangers and Joint Bookrunners

 

 

 

 

  

 

  

 

	 TABLE OF CONTENTS
	 	 	 Page
	 	 	 
	ARTICLE I	 DEFINITIONS	 1
	 	 	 
	     Section 1.1	     Defined Terms 	 1
	 	 	 
	     Section 1.2	     Other Definitional Provisions 	 25
	 	 	 
	     Section 1.3	     Accounting Terms 	 25
	 	 	 
	 ARTICLE II	 THE LOANS; AMOUNT AND TERMS	 26
	 	 	 
	     Section 2.1	     Revolving Loans 	 26
	 	 	 
	     Section 2.2	     [Reserved] 	 29
	 	 	 
	     Section 2.3	     Letter of Credit Subfacility	 29
	 	 	 
	     Section 2.4	     Fees	 33
	 	 	 
	     Section 2.5	     Reduction of the Revolving Commitments	 34
	 	 	 
	     Section 2.6	     Repayments 	 34
	 	 	 
	     Section 2.7	     Minimum Borrowing Amounts and Principal Amounts of Tranches 	 35
	 	 	 
	     Section 2.8	     Interest Payments; Default Interest; Interest Payment Dates	 36
	 	 	 
	     Section 2.9	     Conversion Options	 36
	 	 	 
	     Section 2.10	     Computation of Interest and Fees	 37
	 	 	 
	     Section 2.11	     Pro Rata Treatment and Payments	 38
	 	 	 
	     Section 2.12	     Non-Receipt of Funds by the Administrative Agent	 40
	 	 	 
	     Section 2.13	     Inability to Determine Interest Rate	 41
	 	 	 
	     Section 2.14	     Illegality	 41
	 	 	 
	     Section 2.15	     Yield Protection	 42
	 	 	 
	     Section 2.16	     Indemnity	 43
	 	 	 
	     Section 2.17	     Taxes	 44
	 	 	 
	     Section 2.18	     Indemnification; Nature of Issuing Lender's Duties	 46
	 	 	 
	     Section 2.19	     Waiver of Notice	 47
	 	 	 
	     Section 2.20	     [Reserved]	 48
	 	 	 
	     Section 2.21	     Replacement of Lenders	 48
	 	 	 
	     Section 2.22	     Extension of Maturity Date in respect of Revolving Commitments	 49
	 	 	 
	     Section 2.23	     Increase in Revolving Commitments	 50
	 	 	 
	     Section 2.24	     Cash Collateral	 52
	 	 	 
	     Section 2.25	     Defaulting Lenders	 53

 

 

 

i

  

 

 

	TABLE OF CONTENTS
	 (continued)
	 	 	 Page
	 	 	 
	 ARTICLE III	 REPRESENTATIONS AND WARRANTIES	 56
	 	 	 
	     Section 3.1	     Financial Condition	 56
	 	 	 
	     Section 3.2	     No Change	 56
	 	 	 
	     Section 3.3	     Corporate Existence; Compliance with Law	 56
	 	 	 
	     Section 3.4	     Corporate Power; Authorization; Enforceable Obligations	 57
	 	 	 
	     Section 3.5	     No Legal Bar; No Default	 57
	 	 	 
	     Section 3.6	     No Material Litigation	 57
	 	 	 
	     Section 3.7	     Investment Company Act	 57
	 	 	 
	     Section 3.8	     Margin Regulations	 58
	 	 	 
	     Section 3.9	     ERISA	 58
	 	 	 
	     Section 3.10	     Environmental Matters	 58
	 	 	 
	     Section 3.11	     Purpose of Loans	 59
	 	 	 
	     Section 3.12	     Subsidiaries	 59
	 	 	 
	     Section 3.13	     Ownership	 60
	 	 	 
	     Section 3.14	     Indebtedness	 60
	 	 	 
	     Section 3.15	     Taxes	 60
	 	 	 
	     Section 3.16	     Intellectual Property	 60
	 	 	 
	     Section 3.17	     Solvency	 60
	 	 	 
	     Section 3.18	     Investments	 61
	 	 	 
	     Section 3.19	     No Burdensome Restrictions	 61
	 	 	 
	     Section 3.20	     Brokers' Fees	 61
	 	 	 
	     Section 3.21	     Labor Matters	 61
	 	 	 
	     Section 3.22	     Accuracy and Completeness of Information	 61
	 	 	 
	     Section 3.23	     Anti-Terrorism Laws	 61
	 	 	 
	 ARTICLE IV	 CONDITIONS PRECEDENT	 62
	 	 	 
	     Section 4.1	     Conditions to Closing Date and Initial Revolving Loans	 62
	 	 	 
	     Section 4.2	     Conditions to All Extensions of Credit	 65
	 	 	 
	 ARTICLE V	 AFFIRMATIVE COVENANTS	 66
	 	 	 
	     Section 5.1	     Financial Statements	 66
	 	 	 
	     Section 5.2	     Certificates; Other Information	 67

 

 

 

ii

 

 

 

	 TABLE OF CONTENTS
	 (continued)
	 	 	 Page
	 	 	 
	     Section 5.3	     Payment of Obligations	 68
	 	 	 
	     Section 5.4	     Conduct of Business and Maintenance of Existence	 68
	 	 	 
	     Section 5.5	     Maintenance of Property; Insurance	 68
	 	 	 
	     Section 5.6	     Inspection of Property; Books and Records; Discussions	 68
	 	 	 
	     Section 5.7	     Notices	 69
	 	 	 
	     Section 5.8	     Environmental Laws	 71
	 	 	 
	     Section 5.9	     Financial Covenants	 71
	 	 	 
	     Section 5.10	     Obligations Regarding Subsidiaries; Additional Subsidiary Guarantors	 72
	 	 	 
	     Section 5.11	     Compliance with Laws	 72
	 	 	 
	     Section 5.12	     Additional Credit Parties	72 
	 	 	 
	     Section 5.13	     Post Closing Covenant	 72
	 	 	 
	 ARTICLE VI	 NEGATIVE COVENANTS	 73
	 	 	 
	     Section 6.1	     Indebtedness	 73
	 	 	 
	     Section 6.2	     Liens	 74
	 	 	 
	     Section 6.3	     Nature of Business	 74
	 	 	 
	     Section 6.4	     Consolidation, Merger, Sale or Purchase of Assets, etc	 74
	 	 	 
	     Section 6.5	     Advances, Investments and Loans	 76
	 	 	 
	     Section 6.6	     Transactions with Affiliates	 76
	 	 	 
	     Section 6.7	     Ownership of Subsidiaries; Restrictions	 76
	 	 	 
	     Section 6.8	     Fiscal Year, Organizational Documents; Material Contracts	 76
	 	 	 
	     Section 6.9	     Limitation on Actions	 77
	 	 	 
	     Section 6.10	     Restricted Payments	 78
	 	 	 
	     Section 6.11	     Repayments of Indebtedness, etc	 78
	 	 	 
	     Section 6.12	     Sale Leasebacks	 78
	 	 	 
	     Section 6.13	     Use of Proceeds	 79
	 	 	 
	 ARTICLE VII	 EVENTS OF DEFAULT	 79
	 	 	 
	     Section 7.1	     Events of Default	 79
	 	 	 
	     Section 7.2	     Accelerations; Remedies	 81
	 	 	 
	 ARTICLE VIII	 THE AGENT	 82

 

 

 

iii

 

 

  

 

	 TABLES OF CONTENTS
	 (continued)
	 	 	 Page
	 	 	 
	     Section 8.1	     Appointment and Authority	 82
	 	 	 
	     Section 8.2	     Rights as a Lender	 82
	 	 	 
	     Section 8.3	     Exculpatory Provisions	 82
	 	 	 
	     Section 8.4	     Reliance by Administrative Agent	 83
	 	 	 
	     Section 8.5	     Delegation of Duties	 84
	 	 	 
	     Section 8.6	     Resignation of Administrative Agent	 84
	 	 	 
	     Section 8.7	     Indemnification	 85
	 	 	 
	     Section 8.8	     No Other Duties, etc	 86
	 	 	 
	 ARTICLE IX	 MISCELLANEOUS	 86
	 	 	 
	     Section 9.1	     Amendments, Etc.; Non-Consenting Lenders	 86
	 	 	 
	     Section 9.2	     Notices	 89
	 	 	 
	     Section 9.3	     No Waiver; Cumulative Remedies	 90
	 	 	 
	     Section 9.4	     Survival of Representations and Warranties	 90
	 	 	 
	     Section 9.5	     Payment of Expenses and Taxes	 90
	 	 	 
	     Section 9.6	     Successors and Assigns	 91
	 	 	 
	     Section 9.7	     Adjustments; Set-off	 95
	 	 	 
	     Section 9.8	     Table of Contents and Section Headings	 96
	 	 	 
	     Section 9.9	     Counterparts	 97
	 	 	 
	     Section 9.10	     Effectiveness	 97
	 	 	 
	     Section 9.11	     Severability	 97
	 	 	 
	     Section 9.12	     Integration	 97
	 	 	 
	     Section 9.13	     Governing Law	 97
	 	 	 
	     Section 9.14	     Consent to Jurisdiction and Service of Process	 97
	 	 	 
	     Section 9.15	     Arbitration	 98
	 	 	 
	     Section 9.16	     Confidentiality	 99
	 	 	 
	     Section 9.17	     Acknowledgments	 100
	 	 	 
	     Section 9.18	     Waivers of Jury Trial	 100
	 	 	 
	     Section 9.19	     No Advisory or Fiduciary Responsibility	 100
	 	 	 
	     Section 9.20	     USA Patriot Act	 101
	 	 	 
	 ARTICLE X	 GUARANTY	 102

 

 

 

iv

 

 

  

 

	 TABLE OF CONTENTS
	 (continued)
	 	 	 Page
	 	 	 
	     Section 10.1	     The Guaranty	 102
	 	 	 
	     Section 10.2	     Bankruptcy	 102
	 	 	 
	     Section 10.3	     Nature of Liability	 103
	 	 	 
	     Section 10.4	     Independent Obligation	 103
	 	 	 
	     Section 10.5	     Authorization	 103
	 	 	 
	     Section 10.6	     Reliance	 104
	 	 	 
	     Section 10.7	     Waiver	 104
	 	 	 
	     Section 10.8	     Limitation on Enforcement	 105
	 	 	 
	     Section 10.9	     Confirmation of Payment	 105
	 	 	 
	 	 	 
	 Schedules	 	 
	 	 	 
	 Schedule 1.1(a)	     Account Designation Letter	 
	 Schedule 1.1(b)	     Investments	 
	 Schedule 1.1(c)	     Liens	 
	 Schedule 1.1(d)	     Existing Letters of Credit	 
	 Schedule 2.1(a)	     Lenders and Commitments	 
	 Schedule 2.1(b)(i)	     Form of Notice of Borrowing	 
	 Schedule 2.1(d)	     Form of Revolving Note	 
	 Schedule 2.1(h)	     Form of Swingline Note	 
	 Schedule 2.9	     Form of Notice of Conversion/Extension	 
	 Schedule 3.12	     Subsidiaries	 
	 Schedule 4.1(b)	
     Form of Secretary's Certificate

	 
	 Schedule 4.1(g)	     Form of Solvency Certificate	 
	 Schedule 5.12	     Form of Joinder Agreement	 
	 Schedule 6.1(b)	     Indebtedness	 
	 Schedule 9.2	     Lenders' Lending Offices	 
	 Schedule 9.6(c)	     Form of Assignment and Assumption	 

 

  

v

  

CREDIT AGREEMENT, dated as of June 6, 2012, among DOLLAR TREE STORES, INC., a Virginia corporation (the “Borrower”), DOLLAR TREE, INC., a Virginia corporation (the “Parent”), each Domestic Subsidiary of the Parent identified as a “Guarantor” on the signature pages hereto and such other Domestic Subsidiaries of the Parent as may from time to time become a party hereto (collectively, the
“Subsidiary Guarantors” and, together with the Parent, collectively the “Guarantors”), the several banks and other financial institutions as may from time to time become parties to this Agreement (collectively, the “Lenders”; and individually, a “Lender”) and WELLS FARGO BANK, NATIONAL ASSOCIATION, as administrative agent for the Lenders hereunder (in such capacity, the “Administrative Agent” or the
“Agent”).

 

W I T N E S S E T H:

 

WHEREAS, the Borrower has requested that the Lenders make loans and other financial accommodations to the Borrower as more particularly described herein;

 

WHEREAS, the Lenders have agreed to make such loans and other financial accommodations to the Borrower on the terms and conditions contained herein;

 

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

 

ARTICLE I

 

DEFINITIONS

 

Section 1.1 Defined Terms.

 

As used in this Agreement, terms defined in the preamble to this Agreement have the meanings therein indicated, and the following terms have the following meanings:

 

“ABR Swingline Loans” shall mean Swingline Loans that bear interest at an interest rate based on the Alternate Base Rate.

 

“Account Designation Letter” shall mean the Notice of Account Designation Letter dated the Closing Date from the Borrower to the Administrative Agent substantially in the form attached hereto as Schedule 1.1(a).

 

“Additional Commitment Lender” shall have the meaning set forth in Section 2.22(d).

 

“Additional Credit Party” shall mean each Person that becomes a Guarantor by execution of a Joinder Agreement in accordance with Section 5.12.

 

“Adjusted Leverage Ratio” shall mean, with respect to the Parent and its Subsidiaries on a consolidated basis for the twelve month period ending on the last day of any fiscal quarter, the ratio of (a) the sum of (i) Total Debt calculated on the last day of such period plus (ii) Consolidated Rental Expense for such period multiplied by six (6) to (b) Consolidated EBITDAR for such period.

 

  

 

  

“Administrative Agent” shall have the meaning set forth in the first paragraph of this Agreement and any successors in such capacity.

 

“Administrative Questionnaire” shall mean an Administrative Questionnaire in a form supplied by the Administrative Agent.

 

“Affiliate” shall mean as to any Person, any other Person (excluding any Subsidiary) which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, a Person shall be deemed to be “controlled by” a Person if such Person possesses, directly or indirectly, power either (a) to vote 10% or more of the securities having ordinary voting power for the election of directors of such Person or (b) to direct or cause the direction of the management and policies of such Person whether by contract or otherwise.

 

“Agreement” shall mean this Credit Agreement, as amended, modified or supplemented from time to time in accordance with its terms.

 

“Alternate Base Rate” shall mean, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1% and (c) the Index Rate in effect on such day plus 1%.  For purposes hereof: “Prime Rate” shall mean, at any time, the rate of interest per annum publicly announced from time to time by Wells Fargo at its principal office in Charlotte, North Carolina as its prime rate.  Each change in the Prime Rate shall be effective as of the opening of
business on the day such change in the Prime Rate occurs.  The parties hereto acknowledge that the rate announced publicly by Wells Fargo as its Prime Rate is an index or base rate and shall not necessarily be its lowest or best rate charged to its customers or other banks; and “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 on the next succeeding Business Day, the average of the quotations for the day of such transactions received by the Administrative Agent from three federal funds brokers of recognized standing
selected by it.  If for any reason the Administrative Agent shall have determined (which determination shall be conclusive in the absence of manifest error) that it is unable to ascertain the Federal Funds Effective Rate, for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms thereof, the Alternate Base Rate shall be determined without regard to clause (b) of the first sentence of this definition, as appropriate, until the circumstances giving rise to such inability no longer exist.  Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective on the opening of business on the date of such change.

 

“Alternate Base Rate Loans” shall mean Revolving Loans that bear interest at an interest rate based on the Alternate Base Rate.

 

“Anti-Terrorism Order” shall mean that certain Executive Order 13224 signed into law on September 23, 2001.

 

  

2

  

“Applicable Margin” shall mean, for any day, the rate per annum set forth below opposite the applicable Level then in effect based on the Pricing Grid Leverage Ratio, it being understood that the Applicable Margin for (i) Revolving Loans which are Alternate Base Rate Loans and ABR Swingline Loans shall be the percentage set forth under the column “Alternate Base Rate Margin for Revolving Loans and ABR Swingline Loans”, (ii) Revolving Loans which are LIBOR Rate Loans, Index Rate Loans, Index Rate Swingline Loans and Standby Letter of Credit Fees shall be the percentage set forth under the column “LIBOR Rate Margin
for Revolving Loans, Index Rate Swingline Loans and Standby Letter of Credit Fees”, (iii) the Trade Letter of Credit Fees shall be the percentage set forth under the column “Trade Letter of Credit Fees” and (iv) the Facility Fee shall be the percentage set forth under the column “Facility Fee”:

 

	
Level

	
Pricing Grid Leverage Ratio

	
Alternate

Base Rate

Margin for

Revolving Loans and ABR Swingline Loans

	
LIBOR Rate Margin for Revolving Loans, Index Rate Swingline Loans and Standby Letter of Credit Fees

	
Trade Letter of Credit Fees

	
Facility

Fee

	
I

	
< 1.00 to 1.0

	
0.000%

	
0.900%

	
0.400%

	
0.100%

	
II

	
3 1.00 to 1.0 but < 1.25 to 1.0

	
0.125%

	
1.125%

	
0.500%

	
0.125%

	
III

	
3 1.25 to 1.0 but < 1.50 to 1.0

	
0.325%

	
1.325%

	
0.600%

	
0.175%

	
IV

	
> 1.50 to 1.0

	
0.550%

	
1.550%

	
0.700%

	
0.200%

The Applicable Margin shall, in each case, be determined and adjusted quarterly on the date five (5) Business Days after the date on which the Parent is required to provide to the Administrative Agent the quarterly financial information and certifications in accordance with the provisions of Sections 5.1(a) and (b) and 5.2(c) (each an “Interest Determination Date”).  Such Applicable Margin shall be effective from such Interest Determination Date until the next such Interest Determination Date.  The initial Applicable Margins shall be based on Level I until the first Interest Determination Date occurring
after the Closing Date.  After the Closing Date, if the Parent shall fail to provide the quarterly financial information and certifications in accordance with the provisions of Sections 5.1(a) and (b) and 5.2(c), the Applicable Margin from such Interest Determination Date shall, on the date five (5) Business Days after the date by which the Parent was so required to provide such financial information and certifications to the Administrative Agent and the Lenders, be based on Level IV until such time as such information and certifications are provided, whereupon the Level shall be determined by the then current Pricing Grid Leverage Ratio.  In the event that any financial statement
or certification delivered pursuant to Sections 5.1 or 5.2 is shown to be inaccurate (so long as such inaccuracy is discovered earlier than the date that is one (1) year following the termination of this Agreement and the Commitments hereunder), and such inaccuracy, if corrected, would have led to the application of a higher Applicable Margin for any period (an “Applicable Period”) than the Applicable Margin applied for such Applicable Period, the Borrower shall immediately (a) deliver to the Administrative Agent a corrected compliance certificate for such Applicable Period, (b) determine the Applicable Margin for such Applicable Period based upon the corrected compliance certificate, and (c) immediately pay to the Administrative Agent for the benefit of the Lenders the accrued additional
interest and other fees owing as a result of such increased Applicable Margin for such Applicable Period, which payment shall be promptly distributed by the Administrative Agent to the Lenders entitled thereto.  It is acknowledged and agreed that nothing contained herein shall limit the rights of the Administrative Agent and the Lenders under the Credit Documents, including their rights under Sections 2.8 and 7.1.

  

3

  

“Applicable Percentage” shall mean, with respect to any Lender, the percentage of the total Revolving Commitments represented by such Lender’s Revolving Commitment.  If the Revolving Commitments have terminated or expired, the Applicable Percentage shall be determined based on the Revolving Commitments most recently in effect, giving effect to any assignments.

“Approved Fund” shall mean any Fund that is administered, managed or underwritten 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 Wells Fargo Securities, LLC, J.P. Morgan Securities LLC and U.S. Bank National Association.

 

“Assignment and Assumption” shall mean an Assignment and Assumption, substantially in the form of Schedule 9.6(c) hereto.

 

“Bankruptcy Code” shall mean the Bankruptcy Code in Title 11 of the United States Code, as amended, modified, succeeded or replaced from time to time.

 

“Basel III” shall mean the “International Convergence of Capital Measurement and Capital Standards, a Revised Framework” published by the Basel Committee on Banking Supervision in June 2004 in the form existing on the Closing Date.

“Borrower” shall have the meaning set forth in the first paragraph of this Agreement.

 

“Borrowing Date” shall mean, in respect of any Loan, the date such Loan is made.

 

“Business” shall have the meaning set forth in Section 3.10.

 

“Business Day” shall mean a day other than a Saturday, Sunday or other day on which commercial banks in Charlotte, North Carolina, New York, New York or Norfolk, Virginia are authorized or required by law to close; provided, however, that when used in connection with a rate determination, borrowing or payment in respect of a LIBOR Rate Loan, Index Rate Loan or an Index Rate Swingline Loan, the term “Business Day” shall also exclude any day on which banks in London, England are not open for dealings
in Dollar deposits in the London interbank market.

 

“Capital Lease” shall mean any lease of property, real or personal, the obligations with respect to which are required to be capitalized on a balance sheet of the lessee in accordance with GAAP.

 

  

4

  

“Capital Lease Obligations” shall mean the capitalized lease obligations relating to a Capital Lease determined in accordance with GAAP.

 

“Capital Stock” shall mean (i) in the case of a corporation, capital stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of capital stock, (iii) in the case of a partnership, partnership interests (whether general or limited), (iv) in the case of a limited liability company, membership interests and (v) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

 

“Cash Collateralize” shall mean to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the Administrative Agent, the Issuing Lender or Swingline Lender (as applicable) and the Lenders, as collateral for LOC Obligations, obligations in respect of Swingline Loans, or obligations of Lenders to fund participations in respect of either thereof (as the context may require), cash or deposit account balances or, if the Issuing Lender or Swingline Lender benefiting from such collateral shall agree in its sole discretion, other credit support, in each case pursuant to documentation in form and substance satisfactory
to (a) the Administrative Agent and (b) the Issuing Lender or the Swingline Lender.  “Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.

 

“Cash Equivalents” shall mean (i) securities issued directly or fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof) having maturities of not more than twelve months from the date of acquisition (“Government Obligations”), (ii) U.S. dollar denominated (or foreign currency fully hedged) time deposits, certificates of deposit, eurodollar time deposits and eurodollar certificates of deposit of (y) any domestic
commercial bank of recognized standing having capital and surplus in excess of $250,000,000 or (z) any bank whose short-term commercial paper rating from S&P is at least A-1 or the equivalent thereof or from Moody’s is at least P-1 or the equivalent thereof (any such bank being an “Approved Bank”), in each case with maturities of not more than one year from the date of acquisition, (iii) commercial paper and variable or fixed rate notes issued by any Approved Bank (or by the parent company thereof) or any commercial paper or variable rate notes issued by, or guaranteed by any domestic corporation rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the equivalent thereof) or better by Moody’s and maturing within nine months of the date of acquisition, (iv) repurchase agreements
with a bank or trust company (including a Lender) or a recognized securities dealer having capital and surplus in excess of $500,000,000 for direct obligations issued by or fully guaranteed by the United States of America, (v) obligations of any state of the United States or any political subdivision thereof rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the equivalent thereof) or better by Moody’s having maturities of not more than one year or having a “put” feature of less than one year, and (vi) auction preferred stock rated in the highest short-term credit rating category by S&P or Moody’s.

 

                “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, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all
requests, rules, guidelines or directives 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.

  

5

  

“Change of Control” shall mean (a) any Person or two or more Persons acting in concert shall have acquired “beneficial ownership,” directly or indirectly, of, or shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation, will result in its or their acquisition of, control over, Voting Stock of the Parent (or other securities convertible into such Voting Stock) representing 35% or more of the combined voting power of all Voting Stock of the Parent, (b) during any period of up to 25 consecutive months, commencing after the Closing Date, individuals who at the
beginning of such 25 month period were directors of the Parent (together with any new director whose election by the Parent’s Board of Directors or whose nomination for election by the Parent’s shareholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the directors of the Parent then in office or (c) the Parent shall fail to own all of the Capital Stock of the other Credit Parties.  As used herein, “beneficial ownership” shall have the meaning provided in Rule 13d-3 of the Securities and Exchange Commission under the Securities Act of 1934.

 

“Closing Date” shall mean the date of this Agreement.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

 

“Commitment” shall mean the Revolving Commitment, the LOC Commitment and the Swingline Commitment, individually or collectively, as appropriate.

 

“Commitment Percentage” shall mean the Revolving Commitment Percentage and/or the LOC Commitment Percentage, as appropriate.

 

“Commitment Period” shall mean the period from and including the Closing Date to but not including the Maturity Date.

 

“Committed Funded Exposure” shall mean, as to any Lender at any time, the aggregate principal amount at such time of its outstanding Loans, LOC Obligations and Participation Interests at such time.

 

“Commonly Controlled Entity” shall mean an entity, whether or not incorporated, which is under common control with the Borrower within the meaning of Section 4001 of ERISA or is part of a group which includes the Borrower and which is treated as a single employer under Section 414 of the Code.

 

  

6

  

“Consolidated Assets” shall mean, as of any date of determination, the consolidated assets of the Credit Parties and their Subsidiaries at such date, as determined in accordance with GAAP.

 

“Consolidated EBITDA” shall mean, for any period, the sum of (i) Consolidated Net Income for such period, plus (ii) an amount which, in the determination of Consolidated Net Income for such period, has been deducted for (A) Consolidated Interest Expense, (B) total federal, state, local and foreign income taxes and (C) depreciation, amortization expense and other non-cash charges, minus (iii) extraordinary gains of the Parent and its Subsidiaries
for such period.  Except as otherwise provided herein, the applicable period shall be for the four consecutive quarters ending as of the date of computation.

 

“Consolidated EBITDAR” shall mean, for any period, the sum of (a) Consolidated EBITDA for such period plus (b) Consolidated Rental Expense for such period.

 

“Consolidated Fixed Charges” shall mean, for any period, the sum of (i) Consolidated Interest Expense for such period plus (ii) Consolidated Rental Expense for such period of the Parent and its Subsidiaries on a consolidated basis determined in accordance with GAAP, applied on a consistent basis.  The applicable period shall be for the four consecutive quarters ending as of the date of computation.

 

“Consolidated Interest Expense” shall mean, for any period, all interest expense (net of interest income) of the Parent and its Subsidiaries, including the interest component under Capital Leases, as determined in accordance with GAAP.  Except as otherwise provided herein, the applicable period shall be for the four consecutive quarters ending as of the date of computation.

 

“Consolidated Net Income” shall mean, for any period, net income (excluding extraordinary items) after taxes for such period of the Parent and its Subsidiaries on a consolidated basis, as determined in accordance with GAAP.  Except as otherwise provided herein, the applicable period shall be for the four consecutive quarters ending as of the date of computation.

 

“Consolidated Net Worth” shall mean total shareholders’ equity (or its equivalent) of the Parent and its Subsidiaries on a consolidated basis, determined in accordance with GAAP applied on a consistent basis.

 

“Consolidated Rental Expense” shall mean, for any applicable period of computation, the sum of all real property rental expense of the Parent and its Subsidiaries on a consolidated basis for such period, determined in accordance with GAAP.

 

“Contractual Obligation” shall mean, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or undertaking to which such Person is a party or by which it or any of its property is bound.

 

 “Credit Documents” shall mean this Agreement, each of the Notes, any Joinder Agreement, the Letters of Credit and the LOC Documents.

 

“Credit Party” shall mean any of the Borrower or the Guarantors.

 

  

7

  

“Credit Party Obligations” shall mean, without duplication, (i) all of the obligations of the Credit Parties to the Lenders (including the Issuing Lenders) and the Administrative Agent, whenever arising, under this Agreement, the Notes or any of the other Credit Documents (including, but not limited to, any interest accruing after the occurrence of a filing of a petition of bankruptcy under the Bankruptcy Code with respect to any Credit Party, regardless of whether such interest is an allowed claim under the Bankruptcy Code) and (ii) all liabilities and obligations, whenever arising, owing from any Credit Party to any Lender, or any
Affiliate of a Lender, arising under any Hedging Agreement.

 

“Debt” shall mean, with respect to any Person, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, or upon which interest payments are customarily made, (c) all obligations of such Person under conditional sale or other title retention agreements relating to assets purchased by such Person (other than customary reservations or retentions of title under agreements with suppliers entered into in the ordinary course of business), (d) all obligations of such Person issued or assumed as the deferred purchase price of assets
or services purchased by such Person (other than trade debt incurred in the ordinary course of business and due within six months of the incurrence thereof) which would appear as liabilities on a balance sheet of such Person, (e) the principal portion of all obligations of such Person under Capital Leases, (f) the maximum amount of all standby letters of credit issued or bankers’ acceptances facilities created for the account of such Person and, without duplication, all drafts drawn thereunder (to the extent unreimbursed), (g) all preferred Capital Stock issued by such Person and which by the terms thereof could be (at the request of the holders thereof or otherwise) subject to mandatory sinking fund payments, redemption or other acceleration, (h) the principal balance outstanding under any synthetic lease, tax retention operating lease, accounts receivable securitization program,
off-balance sheet loan or similar off-balance sheet financing product, (i) all Debt of others of the type referred to in clauses (a) through (h) above secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on, or payable out of the proceeds of production from, property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, (j) all Guaranty Obligations of such Person with respect to Debt of the type referred to in clauses (a) through (h) above of another Person and (k) Debt of the type referred to in clauses (a) through (h) above of any partnership or unincorporated joint venture in which such Person is legally obligated or has a reasonable expectation of being liable with respect thereto.

 

“Debtor Relief Laws” shall mean the Bankruptcy Code 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 7.1, whether or not any requirement for the giving of notice or the lapse of time, or both, or any other condition, has been satisfied.

 

“Defaulting Lender” shall mean, subject to Section 2.25(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 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, any Issuing Lender, the Swingline
Lender or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit or Swingline Loans) within two Business Days of the date when due,  (b) has notified the Borrower, the Administrative Agent or any Issuing Lender or the Swingline Lender in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, 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 the Borrower, to confirm in writing to the Administrative Agent and the 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 the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, 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 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 ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by 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 2.25(b)) upon delivery of written notice of such determination to the Borrower, each Issuing Lender, the
Swingline Lender and each Lender.

 

  

8

  

“Dollars” and “$” shall mean dollars in lawful currency of the United States of America.

 

“Domestic Lending Office” shall mean, initially, the office of each Lender designated as such Lender’s Domestic Lending Office shown in its Administrative Questionnaire; and thereafter, such other office of such Lender as such Lender may from time to time specify to the Administrative Agent and the Borrower as the office of such Lender at which Alternate Base Rate Loans and Index Rate Loans of such Lender are to be made.

 

“Domestic Subsidiary” shall mean any Subsidiary that is organized and existing under the laws of the United States or any state or commonwealth thereof or under the laws of the District of Columbia.

 

  

9

  

“Eligible Assignee” shall mean (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund, and (d) any other Person (other than a natural person) approved by (i) the Administrative Agent, (ii) in the case of any assignment of a Revolving Commitment, the Issuing Lender, and (iii) unless an Event of Default has occurred and is continuing, the Borrower (each such approval not to be unreasonably withheld or delayed); provided that notwithstanding the foregoing, “Eligible
Assignee” shall not include (A) the Borrower or any of the Borrower’s Affiliates or Subsidiaries or (B) any Defaulting Lender.

 

“Environmental Claim” shall mean, with respect to any Person, any written or oral notice, claim, demand or other communication (collectively, a “claim”) by any other Person alleging or asserting such Person’s liability for investigatory costs, cleanup costs, governmental response costs, damages to natural resources or other Property, personal injuries, fines or penalties arising out of, based on or resulting from (a) the presence, or release into the environment, of any Hazardous Material at any location, whether or not owned by such Person, or (b) circumstances forming the basis of any violation, or alleged violation,
of any Environmental Law.  The term “Environmental Claim” shall include, without limitation, any claim by any Governmental Authority for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law, and any claim by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from the presence of Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment.

 

“Environmental Laws” shall mean any and all applicable foreign, Federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental Authority or other Requirement of Law (including common law) regulating, relating to or imposing liability or standards of conduct concerning protection of human health or the environment, as now or may at any time be in effect during the term of this Agreement.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.

 

“ERISA Affiliate” shall mean any corporation or trade or business that is a member of any group of organizations (i) described in Section 414(b) or (c) of the Code of which any Credit Party or any of its Subsidiaries is a member, (ii) solely for purposes of potential liability under Section 302(c)(11) of ERISA and Section 4l2(c)(l1) of the Code and the lien created under Section 302(f) of ERISA and Section 412(n) of the Code, described in Section 414(m) or (o) of the Code of which any Credit Party or any of its Subsidiaries is a member and (iii) which are under common control
with any Credit Party or any of its Subsidiaries within the meaning of Section 4001(a)(14) of ERISA.

 

“ERISA Reorganization” shall mean, with respect to any Multiemployer Plan, the condition that such Plan is in reorganization within the meaning of such term as used in Section 4241 of ERISA.

 

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

 

  

10

  

“Event of Default” shall mean any of the events specified in Section 7.1; provided, however, that any requirement for the giving of notice or the lapse of time, or both, or any other condition, has been satisfied.

 

“Excluded Disposition” shall mean the sale, transfer, or other disposition of (a) any motor vehicles or other equipment no longer used or useful in the business of the Parent or any of its Subsidiaries, (b) any inventory in the ordinary course of business and on ordinary business terms, (c) Permitted Investments described in clause (a) of the definition thereof and (d) “margin stock” within the meaning of Regulation U.

 

“Existing Credit Agreement” shall mean that certain Credit Agreement dated as of February 20, 2008, as amended, among the Borrower, the Guarantors party thereto, the lenders party thereto and Wells Fargo Bank, National Association (successor-by-merger to Wachovia Bank, National Association) as Administrative Agent.

 

“Existing Letter of Credit” shall mean each of the letters of credit described by applicant, date of issuance, letter of credit number, amount, beneficiary and the date of expiry on Schedule 1.1(d) hereto.

 

“Existing Maturity Date” shall have the meaning set forth in Section 2.22(a).

 

“Extension of Credit” shall mean, as to any Lender, the making of a Loan by such Lender or the issuance of, or participation in, a Letter of Credit or Swingline Loan by such Lender.

 

“Extension Request” shall have the meaning set forth in Section 2.22(a).

 

“Facility Fee” shall have the meaning set forth in Section 2.4(a).

 

“Federal Funds Effective Rate” shall have the meaning set forth in the definition of “Alternate Base Rate”.

 

“Fee Letters” shall mean (a) the Wells Fargo Fee Letter, (b) the letter agreement dated May 8, 2012, addressed to the Borrower from JPMorgan Chase Bank, N.A. and J.P. Morgan Securities LLC and (c) the letter agreement dated May 8, 2012, addressed to the Borrower from U.S. Bank National Association, in each case as amended, modified, extended, restated, replaced, or supplemented from time to time.

 

“Fixed Charge Coverage Ratio” shall mean, with respect to the Parent and its Subsidiaries on a consolidated basis for the twelve month period ending on the last day of any fiscal quarter of the Parent, the ratio of (i) Consolidated EBITDAR to (ii) Consolidated Fixed Charges.

 

“Foreign Subsidiary” shall mean any Subsidiary that is not a Domestic Subsidiary.

 

  

11

  

“Fronting Exposure” shall mean, at any time there is a Defaulting Lender, (a) with respect to any Issuing Lender, such Defaulting Lender’s Applicable Percentage of the outstanding LOC Obligations with respect to Letters of Credit issued by such Issuing Lender other than LOC Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof, and (b) with respect to the Swingline Lender, such Defaulting Lender’s Applicable Percentage of outstanding Swingline Loans made by the Swingline Lender other than Swingline Loans
as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof.

 

“Fronting Fee” shall have the meaning set forth in Section 2.4(b).

 

“GAAP” shall mean generally accepted accounting principles in effect in the United States of America applied on a consistent basis, subject, however, in the case of determination of compliance with the financial covenants set out in Section 5.9 to the provisions of Section 1.3.

 

“Government Acts” shall have the meaning set forth in Section 2.18.

 

“Governmental Authority” shall mean any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank) and any group or body charged with setting financial accounting or regulatory capital rules or standards (including, without limitation, the Financial Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision or any successor or similar authority to any
of the foregoing).

 

“Guarantor” shall mean any of the Parent, the Domestic Subsidiaries identified as a “Guarantor” on the signature pages hereto and the Additional Credit Parties which execute a Joinder Agreement, together with their successors and permitted assigns.

 

“Guaranty” shall mean the guaranty of the Guarantors set forth in Article X.

 

“Guaranty Obligations” shall mean, with respect to any Person, without duplication, any obligations of such Person (other than endorsements in the ordinary course of business of negotiable instruments for deposit or collection) guaranteeing or intended to guarantee any Indebtedness of any other Person in any manner, whether direct or indirect, and including without limitation any obligation, whether or not contingent, (i) to purchase any such Indebtedness or any property constituting security therefor, (ii) to advance or provide funds or other support for the payment or purchase of any such Indebtedness or to maintain working capital,
solvency or other balance sheet condition of such other Person (including without limitation keep well agreements, maintenance agreements, comfort letters or similar agreements or arrangements) for the benefit of any holder of Indebtedness of such other Person, (iii) to lease or purchase assets, securities or services primarily for the purpose of assuring the holder of such Indebtedness, or (iv) to otherwise assure or hold harmless the holder of such Indebtedness against loss in respect thereof.  The amount of any Guaranty Obligation hereunder shall (subject to any limitations set forth therein) be deemed to be an amount equal to the outstanding principal amount (or maximum principal amount, if larger) of the Indebtedness in respect of which such Guaranty Obligation is made.

 

  

12

  

“Hazardous Material” shall mean, collectively, (a) any petroleum or petroleum products, flammable materials, explosives, radioactive materials, asbestos, urea formaldehyde foam insulation, and transformers or other equipment that contain polychlorinated biphenyls (“PCB’s”), (b) any chemicals or other materials or substances that are now or hereafter become defined as or included in the definition of “hazardous substances”, “hazardous wastes”, “hazardous materials”, “extremely hazardous wastes”,
“restricted hazardous wastes”, “toxic substances”, “toxic pollutants”, “contaminants”, “pollutants” or words of similar import under any Environmental Law and (c) any other chemical or other material or substance, exposure to which is now or hereafter prohibited, limited or regulated under any Environmental Law.

 

“Hedging Agreements” shall mean, with respect to any Person, any agreement entered into to protect such Person against fluctuations in interest rates, or currency or raw materials values, including, without limitation, any interest rate swap, cap or collar agreement or similar arrangement between such Person and one or more counterparties, any foreign currency exchange agreement, currency protection agreements, commodity purchase or option agreements or other interest or exchange rate hedging agreements.

 

“Indebtedness” shall mean, with respect to any Person, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, or upon which interest payments are customarily made, (c) all obligations of such Person under conditional sale or other title retention agreements relating to assets purchased by such Person (other than customary reservations or retentions of title under agreements with suppliers entered into in the ordinary course of business), (d) all obligations of such Person issued or assumed as the deferred purchase price
of assets or services purchased by such Person (other than trade debt incurred in the ordinary course of business and due within six months of the incurrence thereof) which would appear as liabilities on a balance sheet of such Person, (e) all obligations of such Person under take-or-pay or similar arrangements, (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on, or payable out of the proceeds of production from, assets owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, (g) all Guaranty Obligations of such Person with respect to Indebtedness of another Person, (h) the principal portion of all obligations of such Person under Capital Leases, (i) all obligations of such Person under Hedging Agreements, (j) the maximum amount of
all standby letters of credit issued or bankers’ acceptances facilities created for the account of such Person and, without duplication, all drafts drawn thereunder (to the extent unreimbursed), (k) all preferred Capital Stock issued by such Person and which by the terms thereof could be (at the request of the holders thereof or otherwise) subject to mandatory sinking fund payments, redemption or other acceleration, (l) the principal balance outstanding under any synthetic lease, tax retention operating lease, accounts receivable securitization program, off-balance sheet loan or similar off-balance sheet financing product, and (m) the Indebtedness of any partnership or unincorporated joint venture in which such Person is a general partner or a joint venturer.

 

  

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“Index Rate” shall mean, for any day, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the London interbank offered rate for one (1) month Dollar deposits appearing on Reuters Screen LIBOR01 Page (or any successor page) at approximately 11:00 A.M. (London time), on such day, or if such day is not a Business Day, then the immediately preceding Business Day (or if not so reported, then as determined by the Administrative Agent from another recognized source or interbank quotation).

 

“Index Rate Loan” shall mean Revolving Loans the rate of interest applicable to which is based on the Index Rate.

 

“Index Rate Swingline Loan” shall mean Swingline Loans the rate of interest applicable to which is based on the Index Rate.

 

“Insolvency” shall mean, with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of such term as used in Section 4245 of ERISA.

 

“Insolvent” shall mean being in a condition of Insolvency.

 

“Intellectual Property” shall have the meaning set forth in Section 3.16.

 

“Interest Payment Date” shall mean (a) as to any Alternate Base Rate Loan, Index Rate Loan or any Swingline Loan, the last day of each March, June, September and December and on the applicable Maturity Date, (b) as to any LIBOR Rate Loan having an Interest Period of three months or less, the last day of such Interest Period, and (c) as to any LIBOR Rate Loan having an Interest Period longer than three months, the day which is three months after the first day of such Interest Period and the last day of such Interest Period.

 

“Interest Period” shall mean, with respect to any LIBOR Rate Loan,

 

(i)           initially, the period commencing on the Borrowing Date or conversion date, as the case may be, with respect to such LIBOR Rate Loan and ending (a) fourteen days or (b) one, two, three or six months thereafter, as selected by the Borrower in the Notice of Borrowing or Notice of Conversion given with respect thereto; and

 

(ii)           thereafter, each period commencing on the last day of the immediately preceding Interest Period applicable to such LIBOR Rate Loan and ending (a) fourteen days or (b) one, two, three or six months thereafter, as selected by the Borrower by irrevocable notice to the Administrative Agent not less than three Business Days prior to the last day of the then current Interest Period with respect thereto;

 

provided that the foregoing provisions are subject to the following:

 

(A)           if any Interest Period pertaining to a LIBOR Rate Loan would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day;

 

  

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(B)           any Interest Period (other than a 14-day Interest Period) pertaining to a LIBOR Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the relevant calendar month;

 

(C)           if the Borrower shall fail to give notice as provided above, the Borrower shall be deemed to have selected an Alternate Base Rate Loan to replace the affected LIBOR Rate Loan;

 

(D)           no Interest Period shall extend beyond the Maturity Date; and

 

(E)           no more than six (6) LIBOR Rate Loans may be in effect at any time.  For purposes hereof, LIBOR Rate Loans with different Interest Periods shall be considered as separate LIBOR Rate Loans, even if they shall begin on the same date and have the same duration, although borrowings, extensions and conversions may, in accordance with the provisions hereof, be combined at the end of existing Interest Periods to constitute a new LIBOR Rate Loan with a single Interest Period.

 

“Issuing Lender” shall mean, as the context may require, (a) with respect to any Existing Letter of Credit, Wells Fargo and (b) with respect to all other Letters of Credit, (i) Wells Fargo or (ii) such other Lender reasonably acceptable to the Administrative Agent selected by the Borrower (with the consent of such Lender) from time to time to issue a Letter of Credit.

 

“Issuing Lender Fees” shall have the meaning set forth in Section 2.4(c).

 

“Joinder Agreement” shall mean a Joinder Agreement substantially in the form of Schedule 5.12, executed and delivered by an Additional Credit Party in accordance with the provisions of Section 5.12.

 

“Lender” shall have the meaning set forth in the first paragraph of this Agreement.

 

“Letters of Credit” shall mean (a) any letter of credit issued by an Issuing Lender pursuant to the terms hereof, as such Letters of Credit may be amended, modified, extended, renewed or replaced from time to time in accordance with the terms of this Agreement and (b) any Existing Letter of Credit, in each case as such Letter of Credit may be amended, modified, extended, renewed or replaced from time to time in accordance with the terms of this Agreement.

 

“LIBOR” shall mean, for any LIBOR Rate Loan for any Interest Period therefor, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBOR01 Page (or any successor page) as the London interbank offered rate for deposits in Dollars at approximately 11:00 A.M. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period.  If, for any reason, such rate is not available, then “LIBOR” shall mean the rate per annum at which, as determined by
the Administrative Agent, Dollars in an amount comparable to the Loans then requested are being offered to leading banks at approximately 11:00 A.M. London time, two (2) Business Days prior to the commencement of the applicable Interest Period for settlement in immediately available funds by leading banks in the London interbank market for a period equal to the Interest Period selected.  Notwithstanding the foregoing, for any LIBOR Rate Loan having an Interest Period of fourteen days, LIBOR shall be determined for such Loan as if such Loan had an Interest Period of one-month.

 

  

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“LIBOR Lending Office” shall mean, initially, the office of each Lender designated as such Lender’s LIBOR Lending Office shown in its Administrative Questionnaire; and thereafter, such other office of such Lender as such Lender may from time to time specify to the Administrative Agent and the Borrower as the office of such Lender at which the LIBOR Rate Loans of such Lender are to be made.

 

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

 

      

 

	 LIBOR Rate	 =	 LIBOR
	 	 	 1.00 - Eurodollar Reserve Percentage

 

“LIBOR Rate Loan” shall mean Revolving Loans the rate of interest applicable to which is based on the LIBOR Rate.

 

“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, without limitation, any conditional sale or other title retention agreement and any Capital Lease having substantially the same economic effect as any of the foregoing).

 

“Loan” shall mean a Revolving Loan, or a portion of any Revolving Loan or a Swingline Loan, as applicable.

 

“LOC Commitment” shall mean the commitment of the Issuing Lender(s) to issue Letters of Credit and with respect to each Lender, the commitment of such Lender to purchase participation interests in the Letters of Credit up to such Lender’s LOC Committed Amount as specified in Schedule 2.1(a), as such amount may be reduced from time to time in accordance with the provisions hereof.

 

“LOC Commitment Percentage” shall mean, for each Lender, the percentage identified as its LOC Commitment Percentage on Schedule 2.1(a), as such percentage may be modified in connection with any assignment made in accordance with the provisions of Section 9.6(b).

 

“LOC Committed Amount” shall mean, collectively, the aggregate amount of all of the LOC Commitments of the Lenders to issue and participate in Letters of Credit as referenced in Section 2.3 and, individually, the amount of each Lender’s LOC Commitment as specified in Schedule 2.1(a).

 

“LOC Documents” shall mean, with respect to any Letter of Credit, such Letter of Credit, any amendments thereto, any documents delivered in connection therewith, any application therefor, and any agreements, instruments, guarantees or other documents (whether general in application or applicable only to such Letter of Credit) governing or providing for (i) the rights and obligations of the parties concerned or (ii) any collateral security for such obligations.

 

  

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“LOC Obligations” shall mean, at any time, the sum of (i) the maximum amount which is, or at any time thereafter may become, available to be drawn under Letters of Credit then outstanding, assuming compliance with all requirements for drawings referred to in such Letters of Credit plus (ii) the aggregate amount of all drawings under Letters of Credit honored by the Issuing Lender(s) but not theretofore reimbursed.

 

“Mandatory Borrowing” shall have the meaning set forth in Section 2.3(e) or 2.1(f)(ii), as the context may require.

 

“Material Adverse Effect” shall mean a material adverse effect on (a) the business, condition (financial or otherwise), assets, liabilities or operations of the Parent and its Subsidiaries taken as a whole, which has caused or could reasonably be expected to cause the Consolidated Net Worth of the Parent and its Subsidiaries to decrease by ten percent (10%) or more from the then current Consolidated Net Worth of the Parent and its Subsidiaries, (b) the ability of the Borrower or any Guarantor to perform its obligations, when such obligations are required to be performed, under this Agreement, any of the Notes or any other Credit Document
or (c) the validity or enforceability of this Agreement, any of the Notes or any of the other Credit Documents or the rights or remedies of the Administrative Agent or the Lenders hereunder or thereunder.

 

“Material Contract” shall mean any contract or other arrangement, whether written or oral, to which the Parent or any of its Subsidiaries is a party as to which the breach, nonperformance, cancellation or failure to renew by any party thereto could reasonably be expected to have a Material Adverse Effect.

 

“Maturity Date” shall mean the date which is five (5) years from the Closing Date, subject to the provisions of Section 2.22.

 

“Material Domestic Subsidiary” shall mean any Domestic Subsidiary of the Parent that, together with its Subsidiaries, (a) generates revenues greater than or equal to 10% of the consolidated revenues of the Parent and its Subsidiaries, in each case as determined for the fiscal quarter period most recently ended for which financial statements have been delivered pursuant to Section 5.1 or (b) owns assets greater than or equal to 10% of the Consolidated Assets as of the fiscal quarter period most recently ended for which financial statements have been delivered pursuant to Section 5.1;
provided, however, that if at any time there are Domestic Subsidiaries which are not classified as “Material Domestic Subsidiaries” but which collectively (i) generate more than 10% of consolidated revenues of the Parent and its Subsidiaries, in each case as determined for the fiscal quarter period most recently ended for which financial statements have been delivered pursuant to Section 5.1 or (ii) own more than 10% of the Consolidated Assets as of the fiscal quarter period most recently ended for which financial statements have been delivered pursuant to Section 5.1, then the Borrower shall promptly designate one or more of such Domestic Subsidiaries as Material Domestic Subsidiaries and cause any such Domestic Subsidiaries to comply
with the provisions of Section 5.10 such that, after such Domestic Subsidiaries become Guarantors hereunder, the Domestic Subsidiaries that are not Guarantors shall (A) generate less than 10% of the consolidated revenues of the Parent and its Subsidiaries, in each case as determined for the fiscal quarter period most recently ended for which financial statements have been delivered pursuant to Section 5.1 and (B) own less than 10% of the Consolidated Assets as of the fiscal quarter period most recently ended for which financial statements have been delivered pursuant to Section 5.1.

 

  

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“Moody’s” shall mean Moody’s Investors Service, Inc.

 

“Multiemployer Plan” shall mean a Plan which is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

 

“Non-Consenting Lender” shall have the meaning set forth in Section 9.1.

 

“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 set forth in Section 2.22(b).

 

“Note” or “Notes” shall mean the Revolving Notes and the Swingline Note, collectively, separately or individually, as appropriate.

 

“Notice Date” shall have the meaning set forth in Section 2.22(b).

 

“Notice of Borrowing” shall mean the written notice of borrowing as referenced and defined in Section 2.1(b)(i).

 

“Notice of Conversion” shall mean the written notice of extension or conversion as referenced and defined in Section 2.9.

 

“Obligations” shall mean, collectively, Loans and LOC Obligations.

 

“Parent” shall have the meaning set forth in the first paragraph of this Agreement.

 

“Participant” shall have the meaning set forth in Section 9.6(d).

 

“Participant Register” shall have the meaning set forth in Section 9.6(d).

 

“Participation Interest” shall mean the purchase by a Lender of a participation interest in Letters of Credit as provided in Section 2.3 or in Swingline Loans as provided in Section 2.1(f).

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA.

 

“Permitted Acquisition” shall mean an acquisition by any Credit Party which (i) is an acquisition of a Person or assets of a Person in a line of business permitted pursuant to Section 6.3, (ii) is approved by the Board of Directors or the requisite shareholders of the Person being acquired or Person transferring the assets being acquired, (iii) if an acquisition of Capital Stock of a Person, all issued and outstanding Capital Stock of such Person is acquired except (solely with respect to Foreign Subsidiaries) as permitted by Section 6.7, (iv) after giving effect to such acquisition on a Pro Forma Basis, the Credit Parties shall be
in compliance with each of the financial covenants set forth in Section 5.9 and (v) both before and after giving effect to such acquisition, no Default or Event of Default shall have occurred and be continuing.

 

  

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“Permitted Investments” shall mean:

 

(a)           cash or Cash Equivalents;

 

(b)           investments outstanding as of the Closing Date and identified in Schedule 1.1(b);

 

(c)           investments of any Subsidiary of the Parent in any Credit Party or investments of any Credit Party in any other Credit Party;

 

(d)           Permitted Acquisitions;

 

(e)           operating deposit accounts with depository institutions;

 

(f)           Hedging Agreements;

 

(g)           investments permitted under Section 6.4(b) hereof;

 

(h)           investments by the Parent and its Subsidiaries in the Capital Stock of their Subsidiaries to the extent outstanding as of the Closing Date;

 

(i)           loans and advances to employees in the ordinary course of business not exceeding $1,000,000 in the aggregate;

 

(j)           deposits to secure bids, tenders, utilities, vendors, leases, licenses, statutory obligations, surety and appeal bonds and other deposits of like nature arising in the ordinary course of business; and

 

(k)           additional investments up to but not exceeding $100,000,000 in the aggregate during each fiscal year.

 

As used herein, “investment” shall mean all investments, in cash or by delivery of assets made, directly or indirectly in, to or from any Person, whether by acquisition of shares of Capital Stock, property, assets, indebtedness or other obligations or securities or by loan advance, capital contribution or otherwise.

 

“Permitted Liens” shall mean:

 

(a)           Liens created by or otherwise existing, under or in connection with this Agreement or the other Credit Documents in favor of the Lenders;

 

(b)           Liens in existence on the Closing Date and listed on Schedule 1.1(c) and any renewals or extensions thereof; provided that the scope of any such Lien shall not be increased, or otherwise expanded, to cover any additional property or type of asset, as applicable, beyond that in existence on the Closing Date, except for products and proceeds of the foregoing;

 

  

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(c)           Liens imposed by any Governmental Authority for taxes, assessments or charges not yet delinquent or that are being contested in good faith and by appropriate proceedings if, unless the amount thereof is not material with respect to it or its financial condition, adequate reserves with respect thereto are maintained on the books of the Parent or the affected Subsidiaries, as the case may be, in accordance with GAAP;

 

(d)           carriers’, warehousemen’s, mechanics’, materialmen’s, landlord’s, repairmen’s or other like Liens arising in the ordinary course of business that are not overdue for a period of more than 30 days or that are being contested in good faith and by appropriate proceedings;

 

(e)           Liens securing judgments but only to the extent for an amount and for a period not resulting in an Event of Default under Section 7.1(f) hereof;

 

(f)           pledges or deposits under worker’s compensation, unemployment insurance and other social security legislation;

 

(g)           deposits or pledges to secure the performance of bids, trade contracts (other than for Indebtedness), leases, licenses, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

 

(h)           easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business and encumbrances consisting of zoning restrictions, easements, licenses, restrictions on the use of Property or minor imperfections in title thereto that, in the aggregate, are not material in amount, and that do not in any case materially detract from the value of the Property subject thereto or interfere with the ordinary conduct of the business of the Parent or any of its Subsidiaries;

 

(i)           Liens upon assets of the Parent or any of its Subsidiaries acquired after the Closing Date securing Indebtedness permitted by Section 6.1(c) hereof; provided that (A) no such Lien shall extend to or cover any assets of the Parent or such Subsidiary other than the assets so acquired, (B) the principal amount of Indebtedness secured by any such Lien shall at no time exceed the fair market value (as determined in good faith by a Responsible Officer of the Parent) of such assets at the time they were acquired, and (C) any such Lien shall attach within 60 days of the date such assets
were acquired;

 

(j)           Liens upon real Property heretofore leased or leased after the date hereof (under operating or Capital Leases) in the ordinary course of business by the Parent or any of its Subsidiaries in favor of the lessor created at the inception of the lease transaction, securing obligations of the Parent or any of its Subsidiaries under or in respect of such lease and extending to or covering only the Property subject to such lease and improvements thereon;

 

  

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(k)           protective Uniform Commercial Code filings with respect to personal Property leased by, or consigned to, any of the Parent or its Subsidiaries; and

 

(l)           Liens (excluding blanket Liens on accounts, inventory, equipment or general intangibles) securing Indebtedness permitted to be incurred pursuant to Section 6.1(e).

 

“Person” shall mean an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.

 

“Plan” shall mean, at any particular time, any employee benefit plan which is covered by Title IV of ERISA and in respect of which the Borrower or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

 

“Pricing Grid Leverage Ratio” shall mean, with respect to the Parent and its Subsidiaries on a consolidated basis for the twelve month period ending on the last day of any fiscal quarter, the ratio of (a) Total Debt, calculated on the last day of such period to (b) Consolidated EBITDA for such period.

 

“Prime Rate” shall have the meaning set forth in the definition of Alternate Base Rate.

 

“Pro Forma Basis” shall mean, with respect to any Permitted Acquisition, asset sale, incurrence of indebtedness or sale-leaseback transaction permitted hereunder or dividend made pursuant to Section 6.10(e), that such Permitted Acquisition, asset sale, incurrence of indebtedness, sale-leaseback transaction or dividend shall be deemed to have occurred or been made, as applicable, as of the first day of the four fiscal-quarter period ending as of the most recent fiscal quarter end preceding the date such Permitted Acquisition, asset sale, incurrence of indebtedness or sale-leaseback transaction occurred or such dividend was
made.

 

“Property” shall mean any tangible property or assets, whether real or personal.

 

“Real Properties” shall have the meaning set forth in Section 3.10(a).

 

“Recipient” shall mean (a) the Administrative Agent, (b) any Lender and (c) any Issuing Lender, as applicable.

 

“Recovery Event” shall mean the receipt by the Parent or any of its Subsidiaries of any cash insurance proceeds or condemnation award payable by reason of theft, loss, physical destruction or damage, taking or similar event with respect to any of their respective property or assets.

 

“Register” shall have the meaning set forth in Section 9.6(c).

 

“Reimbursement Obligation” shall mean the obligation of the Borrower to reimburse the Issuing Lender pursuant to Section 2.3(d) for amounts drawn under Letters of Credit.

  

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“Related Parties” shall mean, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.

“Replacement Assets” shall mean marketable securities, real property, tangible personal property used or useful in Borrower’s line of business, or non-marketable securities of companies whose assets consisting primarily of real property or tangible personal property used or useful in Borrower’s line of business.

“Reportable Event” shall mean any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the thirty-day notice period is waived under PBGC Reg. §4043.

 

“Required Lenders” shall mean Lenders holding in the aggregate greater than 50% of (A) the Revolving Commitments (and Participation Interests therein) or (B) if the Revolving Commitments have been terminated, the outstanding Revolving Loans and Participation Interests (including the Participation Interests of the Issuing Lender in any Letters of Credit and of the Swingline Lender in Swingline Loans); provided, however, that if any Lender shall be a Defaulting Lender at such time, then there shall be excluded
from the determination of Required Lenders, all Loans and LOC Obligations (including Participation Interests) owing to such Defaulting Lender and such Defaulting Lender’s Commitments, or after termination of the Commitments, the principal balance of the Loans and LOC Obligations owing to such Defaulting Lender.

 

“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 each 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.

 

“Responsible Officer” of any Person shall mean the President, the Chief Executive Officer, the Chief Financial Officer or the Vice President/Treasurer of such Person.

 

“Restricted Payment” shall mean (a) any dividend or other distribution, direct or indirect, on account of any shares of any class of Capital Stock of the Parent or any of its Subsidiaries, now or hereafter outstanding, (b) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of Capital Stock of the Parent or any of its Subsidiaries, now or hereafter outstanding, or (c) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of Capital Stock of the Parent or any
of its Subsidiaries, now or hereafter outstanding.

 

“Revolving Commitment” shall mean, with respect to each Lender, the commitment of such Lender to make Revolving Loans in an aggregate principal amount at any time outstanding up to such Lender’s Revolving Commitment Percentage of the Revolving Committed Amount as specified in Schedule 2.1(a), as such amount may be increased or reduced from time to time in accordance with the provisions hereof or in connection with any assignment made in accordance with the provisions of Section 9.6(d).

 

  

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“Revolving Commitment Percentage” shall mean, for each Lender, the percentage identified as its Revolving Commitment Percentage on Schedule 2.1(a), as such percentage may be reduced in connection with any assignment made in accordance with the provisions of Section 9.6(d).

 

“Revolving Committed Amount” shall have the meaning set forth in Section 2.1(a).

 

“Revolving Credit Increase Effective Date” shall have the meaning set forth in Section 2.23(d).

 

“Revolving Loan” shall have the meaning set forth in Section 2.1(a).

 

“Revolving Note” or “Revolving Notes” shall mean the promissory notes of the Borrower in favor of each of the Lenders evidencing the Revolving Loans provided pursuant to Section 2.1(d), individually or collectively, as appropriate, as such promissory notes may be amended, modified, supplemented, extended, renewed or replaced from time to time.

 

“S&P” shall mean Standard & Poor’s Ratings Group.

 

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

 

“Single Employer Plan” shall mean any Plan which is not a Multiemployer Plan.

 

“Standby Letter of Credit Fee” shall have the meaning set forth in Section 2.4(b).

 

“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.  Unless otherwise qualified, all references to
a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of the Parent and shall include the Subsidiary Guarantors, and, if the Parent is no longer the Borrower, the Borrower.

 

“Subsidiary Guarantors” shall have the meaning set forth in the first paragraph of this Agreement.

 

“Swingline Commitment” shall mean the commitment of the Swingline Lender to make Swingline Loans in an aggregate principal amount at any time outstanding up to the Swingline Committed Amount, and the commitment of the Lenders to purchase Participation Interests in the Swingline Loans as provided in Section 2.1(f)(ii), as such amounts may be reduced from time to time in accordance with the provisions hereof.

 

  

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“Swingline Committed Amount” shall mean the amount of the Swingline Lender’s Swingline Commitment as specified in Section 2.1(e).

 

“Swingline Exposure” means, with respect to any Lender, an amount equal to the Applicable Percentage of such Lender multiplied by the principal amount of outstanding Swingline Loans.

 

“Swingline Lender” shall mean Wells Fargo and any successor swingline lender.

 

“Swingline Loan” or “Swingline Loans” shall have the meaning set forth in Section 2.1(e).

 

“Swingline Note” shall mean the promissory note of the Borrower in favor of the Swingline Lender evidencing the Swingline Loans provided pursuant to Section 2.1(h), as such promissory note may be amended, modified, supplemented, extended, renewed or replaced from time to time.

 

“Taxes” shall have the meaning set forth in Section 2.17.

 

“Total Debt” shall mean, as of any date of calculation, all Debt of the Parent and its Subsidiaries, on a consolidated basis.

 

“Trade Letter of Credit Fee” shall have the meaning set forth in Section 2.4(b).

 

“Tranche” shall mean the collective reference to (a) LIBOR Rate Loans whose Interest Periods begin and end on the same day and (b) Alternate Base Rate Loans made on the same day.  A Tranche with respect to LIBOR Rate Loans may sometimes be referred to as a “LIBOR Tranche”.

 

“Transactions” shall mean the closing of this Agreement and the other Credit Documents and the other transactions contemplated hereby and pursuant to the other Credit Documents (including, without limitation, the initial borrowings under the Credit Documents and the payment of fees and expenses in connection with all of the foregoing).

 

“Type” shall mean, as to any Revolving Loan, its nature as an Alternate Base Rate Loan, Index Rate Loan or LIBOR Rate Loan, as the case may be.

 

“Voting Stock” shall mean, with respect to any Person, Capital Stock issued by such Person the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though the right so to vote has been suspended by the happening of such a contingency.

 

“Wells Fargo” shall mean Wells Fargo Bank, National Association, a national banking association, together with its successors and/or assigns.

 

“Wells Fargo Fee Letter” shall mean the letter agreement dated May 8, 2012, addressed to the Borrower from Wells Fargo and WFS, as amended, modified, extended, restated, replaced, or supplemented from time to time.

 

  

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“WFS” shall mean Wells Fargo Securities, LLC, together with its successors and assigns.

 

Section 1.2 Other Definitional Provisions.

 

(a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the Notes or other Credit Documents or any certificate or other document made or delivered pursuant hereto.

 

(b) The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, subsection, Schedule and Exhibit references are to this Agreement unless otherwise specified.

 

(c) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

 

Section 1.3 Accounting Terms.

 

Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with GAAP applied on a basis consistent with the most recent audited consolidated financial statements of the Parent delivered to the Lenders.

 

The Borrower shall deliver to the Administrative Agent and each Lender at the same time as the delivery of any annual or quarterly financial statements given in accordance with the provisions of Section 5.1, (i) a description in reasonable detail of any material change in the application of accounting principles employed in the preparation of such financial statements from those applied in the most recently preceding quarterly or annual financial statements as to which no objection shall have been made in accordance with the provisions above and (ii) a reasonable estimate of the effect on the financial statements on account of such changes in application.

 

If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Credit Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall, at no cost to the Borrower (other than payment obligations arising pursuant to Section 9.5), negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio
or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.

 

  

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ARTICLE II

 

THE LOANS; AMOUNT AND TERMS

 

Section 2.1 Revolving Loans.

 

(a) Revolving Loans and Revolving Commitment.  During the Commitment Period, subject to the terms and conditions hereof, each Lender severally agrees to make revolving credit loans (“Revolving Loans”) to the Borrower from time to time for the purposes hereinafter set forth; provided, however, that (i) with regard to each Lender
individually, the sum of such Lender’s outstanding Revolving Loans plus such Lender’s LOC Commitment Percentage of LOC Obligations shall not exceed such Lender’s Revolving Commitment Percentage of the Revolving Committed Amount and (ii) with regard to the Lenders collectively, the sum of the aggregate amount of outstanding Revolving Loans plus outstanding Swingline Loans plus LOC Obligations shall not exceed the Revolving Committed Amount.  For purposes hereof, the aggregate amount available under this Section 2.1(a) shall be SEVEN HUNDRED FIFTY MILLION
DOLLARS ($750,000,000) (as such aggregate maximum amount may be reduced from time to time as provided in Section 2.5 or increased from time to time as provided in Section 2.23, the “Revolving Committed Amount”).  Revolving Loans may consist of Alternate Base Rate Loans, Index Rate Loans or LIBOR Rate Loans, or a combination thereof, as the Borrower may request, and may be repaid and reborrowed in accordance with the provisions hereof; provided, however, the Revolving Loans made on the Closing Date or any of the three (3) Business Days following the Closing Date, may only consist of Alternate Base Rate Loans
unless the Borrower delivers a funding indemnity letter, in form and substance reasonably acceptable to the Administrative Agent, not less than three (3) Business Days prior to the Closing Date.  LIBOR Rate Loans shall be made by each Lender at its LIBOR Lending Office and Alternate Base Rate Loans and Index Rate Loans at its Domestic Lending Office.

 

(b) Revolving Loan Borrowings.

 

(i) Notice of Borrowing.  The Borrower shall request a Revolving Loan borrowing by written notice (or telephone notice promptly confirmed in writing which confirmation may be by fax) to the Administrative Agent not later than 11:00 A.M. (Charlotte, North Carolina time) on the date of requested borrowing in the case of Alternate Base Rate Loans and Index Rate Loans, and on the third Business Day prior to the date of the requested borrowing in the case of LIBOR Rate Loans.  Each such request for borrowing shall be irrevocable
and shall specify (A) that a Revolving Loan is requested, (B) the date of the requested borrowing (which shall be a Business Day), (C) the aggregate principal amount to be borrowed, (D) whether the borrowing shall be comprised of Alternate Base Rate Loans, Index Rate Loans or LIBOR Rate Loans or a combination thereof, and if LIBOR Rate Loans are requested, the Interest Period(s) therefor.  A form of Notice of Borrowing (a “Notice of Borrowing”) is attached as Schedule 2.1(b)(i).  If the Borrower shall fail to specify in any such Notice of Borrowing (I) an applicable Interest Period in the case of a LIBOR Rate Loan, then such notice shall be deemed to be a request for an Interest Period of one month, or (II) the Type of
Revolving Loan requested, then such notice shall be deemed to be a request for an Alternate Base Rate Loan hereunder.  The Administrative Agent shall give notice to each Lender promptly upon receipt of each Notice of Borrowing, the contents thereof and each such Lender’s share thereof.  LIBOR Rate Loans shall not be available hereunder until three (3) Business Days after the Closing Date.  Revolving Loans made on the Closing Date may only consist of Alternate Base Rate Loans or Index Rate Loans.

 

  

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(ii) Advances.  Each Lender will make its Revolving Commitment Percentage of each Revolving Loan borrowing available to the Administrative Agent for the account of the Borrower at the office of the Administrative Agent specified in Schedule 9.2, or at such other office as the Administrative Agent may designate in writing, by 1:00 P.M. (Charlotte, North Carolina time) on the date specified in the applicable Notice of Borrowing in Dollars and in funds immediately available
to the Administrative Agent.  Such borrowing will then be made available to the Borrower by the Administrative Agent by crediting the account of the Borrower on the books of such office with the aggregate of the amounts made available to the Administrative Agent by the Lenders and in like funds as received by the Administrative Agent.

 

(c) Repayment.  The principal amount of all Revolving Loans shall be due and payable in full on the Maturity Date (as such term may be modified pursuant to the provisions of Section 2.22).

 

(d) Revolving Notes.  Each Lender’s Revolving Commitment Percentage of the Revolving Loans shall be evidenced by a duly executed promissory note of the Borrower to such Lender in substantially the form of Schedule 2.1(d), if requested by such Lender.

 

(e) Swingline Loans and Swingline Commitment.  During the Commitment Period, subject to the terms and conditions hereof, the Swingline Lender, in its individual capacity, agrees to make certain revolving credit loans to the Borrower (each a “Swingline Loan” and, collectively, the “Swingline Loans”) for the purposes hereinafter set forth;
provided, however, (i) the aggregate amount of Swingline Loans outstanding at any time shall not exceed FIFTY MILLION DOLLARS ($50,000,000) (the “Swingline Committed Amount”), and (ii) the sum of the outstanding Revolving Loans plus outstanding Swingline Loans plus LOC Obligations shall not exceed the Revolving Committed Amount.  Swingline Loans hereunder may be repaid and reborrowed in accordance with the provisions hereof.

 

(f) Swingline Loan Borrowings.

 

(i) Notice of Borrowing and Disbursement.  The Swingline Lender will make Swingline Loans available to the Borrower on any Business Day upon request made by the Borrower not later than 11:00 A.M. (Charlotte, North Carolina time) on such Business Day.  A notice of request for Swingline Loan borrowing shall be made in the form of Schedule 2.1(b)(i) with appropriate modifications.  Swingline Loan borrowings hereunder shall be made in minimum amounts of
$100,000 and in integral amounts of $100,000 in excess thereof.

 

  

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(ii) Repayment of Swingline Loans.  Each Swingline Loan borrowing shall have such maturity date as the Swingline Lender and the Borrower shall agree upon receipt by the Swingline Lender of the relevant Notice of Borrowing from the Borrower, but in no event shall the maturity of any Swingline Loan extend beyond the Maturity Date.  The Swingline Lender may, at any time, in its sole discretion, by written notice to the Borrower and the Administrative Agent, demand repayment of its Swingline Loans by way of a Revolving Loan
borrowing, in which case the Borrower shall be deemed to have requested a Revolving Loan borrowing comprised entirely of Index Rate Loans in the amount of such Swingline Loans; provided, however, that, in the following circumstances, any such demand shall also be deemed to have been given one Business Day prior to each of (i) the Maturity Date, (ii) the occurrence of any Event of Default described in Section 7.1(e), (iii) upon acceleration of the Credit Party Obligations hereunder, whether on account of an Event of Default described in Section 7.1(e) or any other Event of Default, and (iv) the exercise of remedies in accordance with the provisions of Section 7.2 hereof (each such Revolving Loan borrowing made on account of any such deemed request therefor as
provided herein being hereinafter referred to as “Mandatory Borrowing”).  Each Lender severally hereby irrevocably agrees to make its Commitment Percentage of such Revolving Loans promptly upon any such request or deemed request on account of each Mandatory Borrowing in the amount and in the manner specified in the preceding sentence and on the same such date notwithstanding (I) the amount of Mandatory Borrowing may not comply with the minimum amount for borrowings of Revolving Loans otherwise required hereunder, (II) whether any conditions specified in Section 4.2 are then satisfied, (III) whether a Default or an Event of Default then exists, (IV) failure of any such request or deemed request for Revolving Loans to be made by the time
otherwise required in Section 2.1(b)(i), (V) the date of such Mandatory Borrowing, or (VI) any reduction in the Revolving Committed Amount or termination of the Revolving Commitments immediately prior to such Mandatory Borrowing or contemporaneously therewith.  In the event that any Mandatory Borrowing cannot for any reason be made on the date otherwise required above (including as a result of the commencement of a proceeding under the Bankruptcy Code), then each Lender hereby agrees that it shall forthwith purchase (as of the date the Mandatory Borrowing would otherwise have occurred, but adjusted for any payments received from the Borrowers on or after such date and prior to such purchase) from  the Swingline Lender such participations in the outstanding Swingline Loans as shall be necessary to cause each such Lender to share in such Swingline Loans ratably based
upon its respective Revolving Commitment Percentage (determined before giving effect to any termination of the Commitments pursuant to Section 7.2), provided that (A) all interest payable on the Swingline Loans shall be for the account of the Swingline Lender until the date as of which the respective participation is purchased, and (B) at the time any purchase of participations pursuant to this sentence is actually made, the purchasing Lender shall be required to pay to the Swingline Lender interest on the principal amount of such participation purchased for each day from and including the day upon which the Mandatory Borrowing would otherwise have occurred to but excluding the date of payment for such participation, at the rate equal to, if paid within two (2) Business Days of the date of the Mandatory Borrowing, the
Federal Funds Effective Rate, and thereafter at a rate equal to the Alternate Base Rate.

 

  

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(g) Interest on Swingline Loans.  Subject to the provisions of Section 2.8, at the Borrower’s election, Swingline Loans shall bear interest at a per annum rate equal to (i) the Alternate Base Rate plus the Applicable Margin for ABR Swingline Loans or (ii) Index Rate plus the Applicable Margin for Index Rate Swingline Loans.  Interest on Swingline Loans shall be payable in arrears on each
Interest Payment Date.

 

(h) Swingline Note.  The Swingline Loans shall be evidenced by a duly executed promissory note of the Borrower to the Swingline Lender in the original amount of the Swingline Committed Amount and substantially in the form of Schedule 2.1(h).

 

(i) Cash Collateral.  At any point in time in which there is a Defaulting Lender, the Swingline Lender may require the Borrower to Cash Collateralize the outstanding Swingline Loans to the extent required pursuant to Section 2.25.

 

Section 2.2 [Reserved].

 

Section 2.3 Letter of Credit Subfacility.

 

(a) Issuance.  In reliance upon the other Lenders’ obligation to participate therein, and subject to the terms and conditions hereof and of the LOC Documents, if any, and any other terms and conditions which the applicable Issuing Lender may reasonably require, during the Commitment Period the applicable Issuing Lender shall issue, and the Lenders shall participate in, Letters of Credit for the account of the Borrower from time to time upon request in a form acceptable to the applicable Issuing Lender;
provided, however, that (i) the aggregate amount of LOC Obligations shall not at any time exceed the lesser of (A) TWO HUNDRED TWENTY-FIVE MILLION DOLLARS ($225,000,000) and (B) the Revolving Committed Amount (the “LOC Committed Amount”), (ii) the sum of the aggregate amount of Revolving Loans plus outstanding Swingline Loans plus LOC Obligations shall not at any time exceed the Revolving Committed Amount, (iii) all Letters of Credit shall be denominated in Dollars and (iv) Letters of Credit shall be
issued for lawful corporate purposes and may be issued as standby letters of credit, including in connection with workers’ compensation and other insurance programs, and trade letters of credit.  Except as otherwise expressly agreed upon by the applicable Issuing Lender and the Administrative Agent, no Letter of Credit shall have an original expiry date beyond one-year; provided, however, so long as no Default or Event of Default has occurred and is continuing and subject to the other terms and conditions to the issuance of Letters of Credit hereunder, the expiry dates of Letters of Credit may be extended periodically from time to time on the request of the Borrower or by operation of the
terms of the applicable Letter of Credit; provided, further, that no Letter of Credit, as originally issued or as extended, shall have an expiry date extending beyond the Maturity Date unless the Borrower shall have established a cash collateral account in favor of the Agent for the benefit of the Lenders and deposited therein cash and Cash Equivalents in a sufficient amount to adequately secure the LOC Obligations which extend beyond the Maturity Date.  Each Letter of Credit shall comply with the related LOC Documents.  The issuance and expiry date of each Letter of Credit shall be a Business Day.  Any Letters of Credit issued hereunder shall be in a minimum original face amount of $100,000.  The Borrower’s
Reimbursement Obligations in respect of each Existing Letter of Credit, and each Lender’s participation obligations in connection therewith, shall be governed by the terms of this Agreement.  Wells Fargo (or such other Lender reasonably acceptable to the Administrative Agent selected by the Borrower from time to time to issue a Letter of Credit) shall be the Issuing Lender on all Letters of Credit issued after the Closing Date.  The Existing Letters of Credit shall, as of the Closing Date, be deemed to have been issued as Letters of Credit hereunder and subject to and governed by the terms of this Agreement.

 

  

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(b) Notice and Reports.  The request for the issuance of a Letter of Credit shall be submitted to the applicable Issuing Lender at least five (5) Business Days prior to the requested date of issuance.  Each Issuing Lender will promptly upon request provide to the Administrative Agent for dissemination to the Lenders a detailed report specifying the Letters of Credit issued by such Issuing Lender which are then issued and outstanding and any activity with respect thereto which may have occurred since the date of any prior
report, and including therein, among other things, the account party, the beneficiary, the face amount, expiry date as well as any payments or expirations which may have occurred.  Each Issuing Lender will further provide to the Administrative Agent promptly upon request copies of the Letters of Credit issued by such Issuing Lender.  Each Issuing Lender will provide to the Administrative Agent promptly upon request a summary report of the nature and extent of LOC Obligations of such Issuing Lender then outstanding.

 

(c) Participations.  Each Lender, (i) on the Closing Date with respect to each Existing Letter of Credit and (ii) upon issuance of a Letter of Credit shall be deemed to have purchased without recourse a risk participation from the applicable Issuing Lender in such Letter of Credit and the obligations arising thereunder and any collateral relating thereto, in each case in an amount equal to its LOC Commitment Percentage of the obligations under such Letter of Credit and shall absolutely, unconditionally and irrevocably assume, as primary
obligor and not as surety, and be obligated to pay to the applicable Issuing Lender therefor and discharge when due, its LOC Commitment Percentage of the obligations arising under such Letter of Credit.  Without limiting the scope and nature of each Lender’s participation in any Letter of Credit, to the extent that an Issuing Lender has not been reimbursed as required hereunder or under any LOC Document, each such Lender shall pay to such Issuing Lender its LOC Commitment Percentage of such unreimbursed drawing in same day funds on the day of notification by such Issuing Lender of an unreimbursed drawing pursuant to the provisions of subsection (d) below if such notice is received at or before 2:00 P.M. (Charlotte, North Carolina time), otherwise such payment shall be made at or before 12:00 Noon (Charlotte, North Carolina time) on the Business Day next succeeding the
day such notice is received.  The obligation of each Lender to so reimburse the applicable Issuing Lender shall be absolute and unconditional and shall not be affected by the occurrence of a Default, an Event of Default or any other occurrence or event.  Any such reimbursement shall not relieve or otherwise impair the obligation of the Borrower to reimburse the applicable Issuing Lender under any Letter of Credit, together with interest as hereinafter provided.

 

  

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(d) Reimbursement.  In the event of any drawing under any Letter of Credit, the applicable Issuing Lender will promptly notify the Borrower and the Administrative Agent.  The Borrower shall reimburse the applicable Issuing Lender on the day of drawing under any Letter of Credit (with the proceeds of a Revolving Loan obtained hereunder or otherwise) in same day funds as provided herein or in the LOC Documents.  If the Borrower shall fail to reimburse the applicable Issuing Lender as provided herein, the unreimbursed
amount of such drawing shall bear interest at a per annum rate equal to the Alternate Base Rate plus the Applicable Margin.  Unless the Borrower shall immediately notify the applicable Issuing Lender and the Administrative Agent of its intent to otherwise reimburse the applicable Issuing Lender, the Borrower shall be deemed to have requested a Revolving Loan in the amount of the drawing as provided in subsection (e) below, the proceeds of which will be used to satisfy the reimbursement obligations.  The Borrower’s reimbursement obligations hereunder shall be absolute and unconditional under all circumstances irrespective of any rights of set-off, counterclaim or defense to payment the Borrower may claim or have against the applicable Issuing Lender, the Administrative Agent, the Lenders, the beneficiary of the Letter of Credit drawn upon or any other Person,
including without limitation any defense based on any failure of the Borrower to receive consideration or the legality, validity, regularity or unenforceability of the Letter of Credit.  The applicable Issuing Lender will promptly notify the other Lenders of the amount of any unreimbursed drawing and each Lender shall promptly pay to the Administrative Agent for the account of the applicable Issuing Lender in Dollars and in immediately available funds, the amount of such Lender’s LOC Commitment Percentage of such unreimbursed drawing.  Such payment shall be made on the day such notice is received by such Lender from the applicable Issuing Lender if such notice is received at or before 2:00 P.M. (Charlotte, North Carolina time), otherwise such payment shall be made at or before 12:00 Noon (Charlotte, North Carolina time) on the Business Day next succeeding the
day such notice is received.  If such Lender does not pay such amount to the applicable Issuing Lender in full upon such request, such Lender shall, on demand, pay to the Administrative Agent for the account of the applicable Issuing Lender interest on the unpaid amount during the period from the date of such drawing until such Lender pays such amount to the applicable Issuing Lender in full at a rate per annum equal to, if paid within two (2) Business Days of the date of drawing, the Federal Funds Effective Rate and thereafter at a rate equal to the Alternate Base Rate.  Each Lender’s obligation to make such payment to the applicable Issuing Lender, and the right of the applicable Issuing Lender to receive the same, shall be absolute and unconditional, shall not be affected by any circumstance whatsoever and without regard to the termination of this Agreement
or the Commitments hereunder, the existence of a Default or Event of Default or the acceleration of the Credit Party Obligations hereunder and shall be made without any offset, abatement, withholding or reduction whatsoever.

 

  

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(e) Repayment with Revolving Loans.  On any day on which the Borrower shall have requested, or been deemed to have requested a Revolving Loan to reimburse a drawing under a Letter of Credit, the Administrative Agent shall give notice to the Lenders that a Revolving Loan has been requested or deemed requested in connection with a drawing under a Letter of Credit, in which case a Revolving Loan borrowing comprised entirely of Alternate Base Rate Loans (each such borrowing, a
“Mandatory Borrowing”) shall be immediately made (without giving effect to any termination of the Commitments pursuant to Section 7.2) pro rata based on each Lender’s respective Revolving Commitment Percentage (determined before giving effect to any termination of the Commitments pursuant to Section 7.2) and in the case of both clauses (i) and (ii) the proceeds thereof shall be paid directly to the applicable Issuing Lender for application to the respective LOC Obligations.  Each Lender hereby irrevocably agrees to make such Revolving Loans immediately upon any such request or deemed request on account of each Mandatory Borrowing in the amount and in the manner
specified in the preceding sentence and on the same such date notwithstanding (i) the amount of Mandatory Borrowing may not comply with the minimum amount for borrowings of Revolving Loans otherwise required hereunder, (ii) whether any conditions specified in Section 4.2 are then satisfied, (iii) whether a Default or an Event of Default then exists, (iv) failure for any such request or deemed request for Revolving Loan to be made by the time otherwise required in Section 2.1(b), (v) the date of such Mandatory Borrowing, or (vi) any reduction in the Revolving Committed Amount after any such Letter of Credit may have been drawn upon; provided, however, that in the event any such Mandatory
Borrowing should be less than the minimum amount for borrowings of Revolving Loans otherwise provided in Section 2.1(b)(ii), the Borrower shall pay to the Administrative Agent for its own account an administrative fee of $500.  In the event that any Mandatory Borrowing cannot for any reason be made on the date otherwise required above (including, without limitation, as a result of the commencement of a proceeding under the Bankruptcy Code with respect to the Borrower), then each such Lender hereby agrees that it shall forthwith fund (as of the date the Mandatory Borrowing would otherwise have occurred, but adjusted for any payments received from the Borrower on or after such date and prior to such purchase) its Participation Interests in the outstanding LOC Obligations; provided,
further, that in the event any Lender shall fail to fund its Participation Interest on the day the Mandatory Borrowing would otherwise have occurred, then the amount of such Lender’s unfunded Participation Interest therein shall bear interest payable to the applicable Issuing Lender upon demand, at the rate equal to, if paid within two (2) Business Days of such date, the Federal Funds Effective Rate, and thereafter at a rate equal to the Alternate Base Rate.

 

(f) Designation of Subsidiaries as Account Parties.  Notwithstanding anything to the contrary set forth in this Agreement, including without limitation Section 2.3(a), a Letter of Credit issued hereunder may contain a statement to the effect that such Letter of Credit is issued for the account of a Subsidiary or the Parent, provided that notwithstanding such statement, the Borrower shall be the actual account party for all purposes of this Agreement for such Letter of Credit and such statement shall not affect the Borrower’s
reimbursement obligations hereunder with respect to such Letter of Credit.

 

  

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(g) Modification, Extension.  The issuance of any supplement, modification, amendment, renewal, or extension to any Letter of Credit shall, for purposes hereof, be treated in all respects the same as the issuance of a new Letter of Credit hereunder.

 

(h) Uniform Customs and Practices/International Standby Practices 1998.  The Letters of Credit shall be subject to The Uniform Customs and Practice for Documentary Credits (the “UCP”) or the International Standby Practices 1998 (the “ISP98”), in either case as published as of the date of issue by the International Chamber of Commerce, in which case the UCP or ISP98, as applicable, may
be incorporated therein and deemed in all respects to be a part thereof.

 

(i) Conflict with LOC Documents.  In the event of any conflict between this Agreement and any LOC Document (including any letter of credit application and any LOC Documents relating to the Existing Letters of Credit), this Agreement shall control.

 

(j) Cash Collateral.  At any point in time in which there is a Defaulting Lender, the Issuing Lender may require the Borrower to Cash Collateralize the LOC Obligations to the extent required pursuant to Section 2.25.

 

Section 2.4 Fees.

 

(a) Facility Fee.  Subject to Section 2.25, in consideration of the Revolving Commitments, the Borrower agrees to pay to the Administrative Agent for the ratable benefit of the Lenders a facility fee (the “Facility Fee”) in an amount equal to the Applicable Margin per annum on the Revolving Committed Amount, regardless of usage.  The Facility Fee shall be payable quarterly in arrears on the 15th day following the last day of each calendar quarter for
the prior calendar quarter and upon termination of the applicable Commitments.

 

(b) Letter of Credit Fees. Subject to Section 2.25, in consideration of issuance of standby Letters of Credit hereunder, the Borrower agrees to pay to the applicable Issuing Lender (i) a fee (the “Standby Letter of Credit Fee”) on such Lender’s Revolving Commitment Percentage of the average daily maximum amount available to be drawn under each such standby Letter of Credit computed at a per annum rate for each day from the date of issuance to the date of expiration
equal to the Applicable Margin, (ii) a fee (the “Trade Letter of Credit Fee”) on such Lender’s Revolving Commitment Percentage of the average daily maximum amount available to be drawn under each such trade Letter of Credit computed at a per annum rate for each day from the date of issuance to the date of expiration equal to the Applicable Margin and (iii) an additional fronting fee (the “Fronting Fee”) of one-eighth of one percent (0.125%) per annum on the average daily maximum amount available to be drawn under each standby Letter of Credit issued by it (such fronting fee shall be for the account of the applicable Issuing Lender without sharing by the other Lenders).  The applicable Issuing Lender shall promptly pay
over to the Administrative Agent for the ratable benefit of the Lenders (including the applicable Issuing Lender) the Standby Letter of Credit Fee and the Trade Letter of Credit Fee.  The Standby Letter of Credit Fee, the Trade Letter of Credit Fee and the Fronting Fee shall be payable quarterly in arrears on the 15th day following the last day of each calendar quarter for the prior calendar quarter.

 

  

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(c) Issuing Lender Fees.  In addition to the Standby Letter of Credit Fees and Trade Letter of Credit Fees payable pursuant to subsection (b) above, the Borrower shall pay to the applicable Issuing Lender for its own account without sharing by the other Lenders the reasonable and customary charges from time to time of the applicable Issuing Lender with respect to the amendment, transfer, administration, cancellation and conversion of, and drawings under, such Letters of Credit (collectively, the
“Issuing Lender Fees”).

 

(d) Administrative Fee.  The Borrower agrees to pay to the Administrative Agent the annual administrative fee as described in the Wells Fargo Fee Letter.

 

Section 2.5 Reduction of the Revolving Commitments.

 

(a) Voluntary Reductions.  The Borrower shall have the right to terminate or permanently reduce the unused portion of the Revolving Committed Amount at any time or from time to time upon not less than five Business Days’ prior notice to the Administrative Agent (which shall notify the Lenders thereof as soon as practicable) of each such termination or reduction, which notice shall specify the effective date thereof and the amount of any such reduction which shall be in a minimum amount of $3,000,000 or a whole multiple of
$1,000,000 in excess thereof and shall be irrevocable and effective upon receipt by the Administrative Agent, provided that no such reduction or termination shall be permitted if after giving effect thereto, and to any repayments of the Loans made on the effective date thereof, the sum of the then outstanding aggregate principal amount of the Revolving Loans plus outstanding Swingline Loans plus LOC Obligations would exceed the Revolving Committed Amount after such proposed reduction.

 

(b) LOC Committed Amount.  If the Revolving Committed Amount is reduced below the then current LOC Committed Amount, the LOC Committed Amount shall automatically be reduced by an amount such that the LOC Committed Amount equals the Revolving Committed Amount.

 

(c) Maturity Date.  The Revolving Commitments, the LOC Commitments and the Swingline Commitment shall automatically terminate on the Maturity Date; subject to the provisions of Section 2.22.

 

Section 2.6 Repayments.

 

(a) Optional Repayments.  The Borrower shall have the right to repay the Revolving Loans in whole or in part from time to time; provided, however, that (i) each partial repayment of Alternate Base Rate Loans or LIBOR Rate Loans shall be in a minimum principal amount of $500,000 and integral multiples of $250,000 in excess thereof and (ii) each
partial repayment of Index Rate Loans or Swingline Loans shall be in a minimum principal amount of $100,000 and integral multiples of $100,000 in excess thereof.  The Borrower shall give irrevocable written notice (or telephone notice promptly confirmed in writing which confirmation may be by fax) to the Administrative Agent (which shall notify the Lenders thereof as soon as practicable) not later than 11:00 A.M. (Charlotte, North Carolina time) on the date of the requested repayment in the case of Alternate Base Rate Loans, Index Rate Loans or Swingline Loans, and on the third Business Day prior to the date of the requested repayment in the case of LIBOR Rate Loans.  Subject to the foregoing terms, amounts repaid under this Section 2.6(a) shall
be applied as the Borrower may elect.  Within the parameters of the applications to Loans set forth above, repayments shall be applied first to Alternate Base Rate Loans, second to Index Rate Loans and then to LIBOR Rate Loans in direct order of Interest Period maturities.  All repayments under this Section 2.6(a) shall be subject to Section 2.16, but otherwise without premium or penalty.  Interest on the principal amount repaid shall be payable (a) at the time of such repayment with respect to LIBOR Rate Loans, along with any costs then due and payable under Section 2.16, and (b) with respect to Alternate Base Rate Loans, Index Rate Loans and Swingline Loans, on the next occurring Interest Payment Date that would have occurred had such loan not been repaid or, at the request of the Administrative Agent, interest on the principal amount of any Alternate
Base Rate Loans, Index Rate Loans or Swingline Loans repaid shall be payable on any date that a repayment is made hereunder to the date of repayment.  Amounts repaid on the Revolving Loans and Swingline Loans may be reborrowed in accordance with the terms hereof.

 

  

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(b) Mandatory Repayments.  If at any time after the Closing Date, the sum of the aggregate principal amount of outstanding Revolving Loans plus outstanding Swingline Loans plus LOC Obligations shall exceed the Revolving Committed Amount, the Borrower immediately shall repay the Revolving Loans and (after all Revolving Loans and Swingline Loans have been repaid) Cash Collateralize the LOC Obligations, in an
amount sufficient to eliminate such excess.  Such repayments shall be applied first to Swingline Loans, second to Revolving Loans that are Alternate Base Rate Loans, third to Revolving Loans that are Index Rate Loans and fourth to Revolving Loans that are LIBOR Rate Loans in direct order of Interest Period maturities.  All repayments under this Section 2.6(b) shall be subject to Section 2.16 and be accompanied by interest on the principal amount repaid to the date of repayment.  Amounts repaid on Revolving Loans and Swingline Loans may be reborrowed in accordance with the terms hereof.

 

Section 2.7 Minimum Borrowing Amounts and Principal Amounts of Tranches.

 

(a) Each Alternate Base Rate Loan borrowing and each LIBOR Rate Loan borrowing shall be in a minimum amount of $500,000 and whole multiples of $250,000 in excess thereof.

 

(b) Each Swingline Loan borrowing and each Index Rate Loan borrowing shall be in a minimum amount of $100,000 and whole multiples of $100,000 in excess thereof.

 

(c) All borrowings, payments and repayments in respect of Revolving Loans shall be in such amounts and be made pursuant to such elections so that after giving effect thereto the aggregate principal amount of the Revolving Loans comprising any LIBOR Tranche shall either be zero or shall not be less than $500,000 or a whole multiple of $250,000 in excess thereof.

 

  

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Section 2.8 Interest Payments; Default Interest; Interest Payment Dates.

 

(a) Interest Payments.  Subject to the provisions of Section 2.8(b), all Loans shall bear interest as follows:

 

(i) Alternate Base Rate Loans.  During such periods as any Loans shall be comprised of Alternate Base Rate Loans, each such Alternate Base Rate Loan shall bear interest at a per annum rate equal to the sum of the Alternate Base Rate plus the Applicable Margin;

 

(ii) Index Rate Loans.  During such periods as any Loans shall be comprised of Index Rate Loans, each such Index Rate Loan shall bear interest at a per annum rate equal to the sum of the Index Rate plus the Applicable Margin; and

 

(iii) LIBOR Rate Loans.  During such periods as any Loans shall be comprised of LIBOR Rate Loans, each such LIBOR Rate Loan shall bear interest at a per annum rate equal to the sum of the LIBOR Rate plus the Applicable Margin.

 

(b) Default Interest.  Upon the occurrence, and during the continuance, of a Default or an Event of Default, the principal of and, to the extent permitted by law, interest on the Loans and any other amounts owing hereunder or under the other Credit Documents shall (at the option of the Administrative Agent) bear interest, payable on demand, at a per annum rate 2% greater than the applicable rate then in effect or, if no rate is then in effect, at a per annum rate 2% greater than the Alternate Base Rate.  Upon and during the
continuance of an Event of Default, all LIBOR Rate Loans shall be automatically converted to Alternate Base Rate Loans on the last day of the applicable Interest Period for any such LIBOR Rate Loans, all Index Rate Loans shall be automatically converted to Alternate Base Rate Loans to take effect immediately, and all Index Rate Swingline Loans shall be automatically converted to ABR Swingline Loans to take effect immediately.

 

(c) Interest Payment Date.  Interest on Loans shall be payable in arrears on each Interest Payment Date, subject to Section 2.11.

 

Section 2.9 Conversion Options.

 

(a) The Borrower may elect from time to time to convert Alternate Base Rate Loans or Index Rate Loans to LIBOR Rate Loans by giving irrevocable written notice (or telephone notice promptly confirmed in writing which confirmation may be by fax) to the Administrative Agent not later than 11:00 A.M. (Charlotte, North Carolina time) on the third Business Day prior to the date of the requested conversion.  A form of Notice of Conversion/ Extension is attached as Schedule 2.9.  If the date upon which an Alternate Base Rate Loan or
Index Rate Loan is to be converted to a LIBOR Rate Loan is not a Business Day, then such conversion shall be made on the next succeeding Business Day and during the period from such last day of an Interest Period to such succeeding Business Day such Loan shall bear interest as if it were an Alternate Base Rate Loan or Index Rate Loan, as applicable.  All or any part of outstanding Alternate Base Rate Loans or Index Rate Loans may be converted as provided herein, provided that (i) no Loan may be converted into a LIBOR Rate Loan when any Default or Event of Default has occurred and is continuing and (ii) partial conversions shall be in an aggregate principal amount of $3,000,000 or a whole multiple of $1,000,000 in excess thereof.

 

  

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(b) Any LIBOR Rate Loans may be continued as such upon the expiration of an Interest Period with respect thereto by compliance by the Borrower with the notice provisions contained in Section 2.9(a); provided, that no LIBOR Rate Loan may be continued as such when any Default or Event of Default has occurred and is continuing, in which case such Loan shall be automatically converted to an Alternate Base Rate Loan at the end of the applicable Interest Period with respect thereto.  If the Borrower shall fail to give timely notice of an
election to continue a LIBOR Rate Loan, or the continuation of LIBOR Rate Loans is not permitted hereunder, such LIBOR Rate Loans shall be automatically converted to Alternate Base Rate Loans at the end of the applicable Interest Period with respect thereto.

 

Section 2.10 Computation of Interest and Fees.

 

(a) Interest payable hereunder with respect to Alternate Base Rate Loans based on the Prime Rate shall be calculated on the basis of a year of 365 days (or 366 days, as applicable) for the actual days elapsed.  All other interest and fees and all other interest amounts payable hereunder shall be calculated on the basis of a 360 day year for the actual days elapsed.  The Administrative Agent shall as soon as practicable notify the Borrower and the Lenders of each determination of a LIBOR Rate on the Business Day of the determination thereof.  Any change in the interest rate on a
Loan resulting from a change in the Alternate Base Rate shall become effective as of the opening of business on the day on which such change in the Alternate Base Rate shall become effective.  Any change in the interest rate on an Index Rate Loan or Index Rate Swingline Loan resulting from a change in the Index Rate shall become effective as of the opening of business on the day on which such change in the Index Rate shall become effective.  The Administrative Agent shall as soon as practicable notify the Borrower and the Lenders of the effective date and the amount of each such change.

 

(b) Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the absence of manifest error.  The Administrative Agent shall, at the request of the Borrower, deliver to the Borrower a statement showing the computations used by the Administrative Agent in determining any interest rate.

 

(c) It is the intent of the Lenders and the Credit Parties to conform to and contract in strict compliance with applicable usury law from time to time in effect.  All agreements between the Lenders and the Credit Parties are hereby limited by the provisions of this paragraph which shall override and control all such agreements, whether now existing or hereafter arising and whether written or oral.  In no way, nor in any event or contingency (including but not limited to repayment or acceleration of the maturity of any obligation), shall the interest taken, reserved, contracted for, charged,
or received under this Credit Agreement, under the Notes or otherwise, exceed the maximum nonusurious amount permissible under applicable law.  If, from any possible construction of any of the Credit Documents or any other document, interest would otherwise be payable in excess of the maximum nonusurious amount, any such construction shall be subject to the provisions of this paragraph and such interest shall be automatically reduced to the maximum nonusurious amount permitted under applicable law, without the necessity of execution of any amendment or new document.  If any Lender shall ever receive anything of value which is characterized as interest on the Loans under applicable law and which would, apart from this provision, be in excess of the maximum nonusurious amount, an amount equal to the amount which would have been excessive interest shall, without
penalty, be applied to the reduction of the principal amount owing on the Loans and not to the payment of interest, or refunded to the Borrower or the other payor thereof if and to the extent such amount which would have been excessive exceeds such unpaid principal amount of the Loans.  The right to demand payment of the Loans or any other Indebtedness evidenced by any of the Credit Documents does not include the right to receive any interest which has not otherwise accrued on the date of such demand, and the Lenders do not intend to charge or receive any unearned interest in the event of such demand.  All interest paid or agreed to be paid to the Lenders with respect to the Loans shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term (including any renewal or extension) of the Loans so that the
amount of interest on account of such indebtedness does not exceed the maximum nonusurious amount permitted by applicable law.

 

  

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Section 2.11 Pro Rata Treatment and Payments.

 

(a) Payments Generally and Pro Rata Treatment.  Each borrowing of Revolving Loans and any reduction of the Revolving Commitments shall be made pro rata according to the respective Commitment Percentages of the Lenders.  Subject to Section 2.11(b) hereof, each payment under this Agreement or any Note shall be applied, first, to any fees then due and owing by the Borrower pursuant to Section 2.4,
second, to interest then due and owing in respect of the Notes of the Borrower and, third, to principal then due and owing hereunder and under the Notes of the Borrower.  Each payment on account of any fees pursuant to Section 2.4 shall be made pro rata in accordance with the respective amounts due and owing (except as to the portion of the Standby Letter of Credit Fee or Trade Letter of Credit Fee retained by the applicable Issuing Lender, the Issuing Lender Fees, the Fronting Fee and fees payable to the Administrative Agent).  Each payment by the Borrower on account of principal of and interest on the Swingline Loans shall be made to the Swingline Lender.  Each payment (other than repayments) by the Borrower on account of
principal of and interest on the Revolving Loans shall be made pro rata according to the respective amounts due and owing in accordance with Section 2.6(a) hereof.  Each optional repayment on account of principal of the Revolving Loans shall be applied in accordance with Section 2.6(a) (to be applied pro rata among the Lenders); provided, that repayments made pursuant to Section 2.14 shall be applied in accordance with such section.  Each mandatory repayment on account of principal of the Revolving Loans shall be applied in accordance with Section
2.6(b).  All payments (including repayments) to be made by the Borrower on account of principal, interest and fees shall be made without defense, set-off or counterclaim (except as provided in Section 2.17(b)) and shall be made to the Administrative Agent for the account of the Lenders at the Administrative Agent’s office specified on Schedule 9.2 in Dollars and in immediately available funds not later than 1:00 P.M. (Charlotte, North Carolina time) on the date when due.  The Administrative Agent shall distribute such payments to the Lenders entitled thereto promptly upon receipt in like funds as received.  If any payment hereunder (other than payments on the LIBOR Rate Loans) becomes due and payable on a day other than a Business Day, such payment shall be extended to the next
succeeding Business Day, and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension.  If any payment on a LIBOR Rate Loan becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Business Day.

 

  

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(b) Allocation of Payments After Acceleration.  Notwithstanding any other provisions of this Credit Agreement to the contrary, after the acceleration of the Credit Party Obligations pursuant to Section 7.2, all amounts collected or received by the Administrative Agent or any Lender on account of the Credit Party Obligations or any other amounts outstanding under any of the Credit Documents shall be paid over or delivered to the Administrative Agent and applied as follows:

 

FIRST, to the payment of all reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees) of the Administrative Agent in connection with enforcing the rights of the Lenders under the Credit Documents and any protective advances made by the Administrative Agent;

 

SECOND, to payment of any fees owed to the Administrative Agent and the Issuing Lender;

 

THIRD, to the payment of all reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees) of each of the Lenders in connection with enforcing its rights under the Credit Documents or otherwise with respect to the Credit Party Obligations owing to such Lender;

 

FOURTH, to the payment of all outstanding Swingline Loans and accrued interest thereon;

 

FIFTH, to the payment of all of the Credit Party Obligations consisting of accrued fees and interest;

 

  

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SIXTH, to the payment of the outstanding principal amount of the Credit Party Obligations (including the payment or cash collateralization of the outstanding LOC Obligations);

 

SEVENTH, to all other Credit Party Obligations and other obligations that shall have become due and payable under the Credit Documents or otherwise and not repaid pursuant to clauses “FIRST” through “SIXTH” above; and

 

EIGHTH, to the payment of the surplus, if any, to whomever may be lawfully entitled to receive such surplus.

 

In carrying out the foregoing, (i) amounts received shall be applied in the numerical order provided until exhausted prior to application to the next succeeding category; (ii) each of the Lenders shall receive an amount equal to its pro rata share (based on the proportion that the then outstanding Loans and LOC Obligations held by such Lender bears to the aggregate then outstanding Loans and LOC Obligations) of amounts available to be applied pursuant to clauses “THIRD”, “FOURTH”, “FIFTH”, “SIXTH” and “SEVENTH” above; and (iii) to the extent that any amounts available for distribution pursuant to clause “SIXTH” above are attributable to the
issued but undrawn amount of outstanding Letters of Credit, such amounts shall be held by the Administrative Agent in a cash collateral account and applied (A) first, to reimburse the Issuing Lender from time to time for any drawings under such Letters of Credit and (B) then, following the expiration of all Letters of Credit, to all other obligations of the types described in clauses “SIXTH” and “SEVENTH” above in the manner provided in this Section 2.11(b).

 

Section 2.12 Non-Receipt of Funds by the Administrative Agent.

 

(a) Unless the Administrative Agent shall have been notified in writing by a Lender prior to the date a Loan is to be made by such Lender (which notice shall be effective upon receipt) that such Lender does not intend to make the proceeds of such Loan available to the Administrative Agent, the Administrative Agent may assume that such Lender has made such proceeds available to the Administrative Agent on such date, and the Administrative Agent may in reliance upon such assumption (but shall not be required to) make available to the Borrower a corresponding amount.  If such corresponding amount is not
in fact made available to the Administrative Agent, the Administrative Agent shall be able to recover such corresponding amount from such Lender.  If such Lender does not pay such corresponding amount forthwith upon the Administrative Agent’s demand therefor, the Administrative Agent will promptly notify the Borrower, and the Borrower shall immediately pay such corresponding amount to the Administrative Agent.  The Administrative Agent shall also be entitled to recover from the Lender or the Borrower, as the case may be, interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by the Administrative Agent to the Borrower to the date such corresponding amount is recovered by the Administrative Agent at a per annum rate equal to (i) from the Borrower at the applicable rate for the applicable borrowing
pursuant to the Notice of Borrowing and (ii) from a Lender at the Federal Funds Effective Rate.

 

  

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(b) Unless the Administrative Agent shall have been notified in writing by the Borrower, prior to the date on which any payment is due from it hereunder (which notice shall be effective upon receipt) that the Borrower does not intend to make such payment, the Administrative Agent may assume that the Borrower has made such payment when due, and the Administrative Agent may in reliance upon such assumption (but shall not be required to) make available to each Lender on such payment date an amount equal to the portion of such assumed payment to which such Lender is entitled hereunder, and if the Borrower has not
in fact made such payment to the Administrative Agent, such Lender shall, on demand, repay to the Administrative Agent the amount made available to such Lender.  If such amount is repaid to the Administrative Agent on a date after the date such amount was made available to such Lender, such Lender shall pay to the Administrative Agent on demand interest on such amount in respect of each day from the date such amount was made available by the Administrative Agent to such Lender to the date such amount is recovered by the Administrative Agent at a per annum rate equal to the Federal Funds Effective Rate.

 

(c) A certificate of the Administrative Agent submitted to the Borrower or any Lender with respect to any amount owing under this Section 2.12 shall be conclusive in the absence of manifest error.

 

Section 2.13 Inability to Determine Interest Rate.

 

Notwithstanding any other provision of this Agreement, if (i) the Administrative Agent shall reasonably determine (which determination shall be conclusive and binding absent manifest error) that, by reason of circumstances affecting the relevant market, reasonable and adequate means do not exist for ascertaining LIBOR for an Interest Period, or (ii) the Required Lenders shall reasonably determine (which determination shall be conclusive and binding absent manifest error) that the LIBOR Rate does not adequately and fairly reflect the cost to such Lenders of funding LIBOR Rate Loans that the Borrower has requested be outstanding as a LIBOR Tranche during an Interest Period, the Administrative Agent shall forthwith
give telephone notice of such determination, confirmed in writing, to the Borrower, and the Lenders at least two Business Days prior to the first day of such Interest Period.  Unless the Borrower shall have notified the Administrative Agent upon receipt of such telephone notice that it wishes to rescind or modify its request regarding such LIBOR Rate Loans, any Loans that were requested to be made as LIBOR Rate Loans shall be made as Alternate Base Rate Loans and any Loans that were requested to be converted into or continued as LIBOR Rate Loans shall be converted into Alternate Base Rate Loans.  Until any such notice has been withdrawn by the Administrative Agent, no further Loans shall be made as, continued as, or converted into, LIBOR Rate Loans for the Interest Periods so affected.

 

Section 2.14 Illegality.

 

Notwithstanding any other provision of this Agreement, if the adoption of or any change in any Requirement of Law or in the interpretation or application thereof by the relevant Governmental Authority to any Lender shall make it unlawful for such Lender or its LIBOR Lending Office to make or maintain LIBOR Rate Loans as contemplated by this Agreement or to obtain in the interbank eurodollar market through its LIBOR Lending Office the funds with which to make such Loans, (a) such Lender shall promptly notify the Administrative Agent and the Borrower thereof, (b) the commitment of such Lender hereunder to make LIBOR Rate Loans or continue LIBOR Rate Loans as such shall forthwith be suspended until the
Administrative Agent shall give notice that the condition or situation which gave rise to the suspension shall no longer exist, and (c) such Lender’s Loans then outstanding as LIBOR Rate Loans, if any, shall be converted on the last day of the Interest Period for such Loans or within such earlier period as required by law as Alternate Base Rate Loans.  The Borrower hereby agrees promptly to pay any Lender, upon its demand, any additional amounts necessary to compensate such Lender for actual and direct costs (but not including anticipated profits) reasonably incurred by such Lender in making any repayment in accordance with this Section including, but not limited to, any interest or fees payable by such Lender to lenders of funds obtained by it in order to make or maintain its LIBOR Rate Loans hereunder.  A certificate as to any additional amounts payable
pursuant to this Section submitted by such Lender, through the Administrative Agent, to the Borrower shall be conclusive in the absence of manifest error.  Each Lender agrees to use reasonable efforts (including reasonable efforts to change its LIBOR Lending Office) to avoid or to minimize any amounts which may otherwise be payable pursuant to this Section; provided, however, that such efforts shall not cause the imposition on such Lender of any additional costs or legal or regulatory burdens deemed by such Lender in its sole discretion to be material.

 

  

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Section 2.15 Yield Protection.

 

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

 

(i) subject such Lender to any tax of any kind whatsoever with respect to any Letter of Credit or any application relating thereto, any Loan made by it, or change in the basis of taxation of payments to such Lender in respect thereof (except for changes in the rate of tax on the overall net income of such Lender);

 

(ii) impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender which is not otherwise included in the determination of the LIBOR Rate hereunder; or

 

(iii) impose on any Lender or the Issuing Lender or the London interbank market any other condition, cost or expense affecting this agreement or Loans made by such Lender or any Letter of Credit or participation therein;

 

and the result of any of the foregoing is to increase the cost to such Lender or such other Recipient of making, converting to, continuing or maintaining Loans or the Letters of Credit or to reduce any amount receivable hereunder or under any Note, then, in any such case, the Borrower shall promptly pay such Lender, upon its demand, any additional amounts necessary to compensate such Lender for such additional cost or reduced amount receivable which such Lender reasonably deems to be material as determined by such Lender with respect to its Loans or Letters of Credit.  A certificate as to any additional amounts payable pursuant to this Section submitted by such Lender, through the Administrative Agent,
to the Borrower shall be conclusive in the absence of manifest error.  Each Lender agrees to use reasonable efforts (including reasonable efforts to change its Domestic Lending Office or LIBOR Lending Office, as the case may be) to avoid or to minimize any amounts which might otherwise be payable pursuant to this paragraph of this Section; provided, however, that such efforts shall not cause the imposition on such Lender of any additional costs or legal or regulatory burdens deemed by such Lender in its sole discretion to be material.

 

  

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(b) If any Lender shall have reasonably determined in good faith that the adoption of or any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Lender or any corporation controlling such Lender with any request or directive regarding capital adequacy (whether or not having the force of law) from any central bank or Governmental Authority made subsequent to the date hereof does or shall have the effect of reducing the rate of return on such Lender’s or such corporation’s capital as a consequence of its obligations
hereunder to a level below that which such Lender or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Lender’s or such corporation’s policies with respect to capital adequacy) by an amount reasonably deemed by such Lender to be material, then from time to time, within fifteen (15) days after demand by such Lender, the Borrower shall pay to such Lender such additional amount as shall be certified by such Lender as being required to compensate it for such reduction.  Such a certificate as to any additional amounts payable under this Section submitted by a Lender (which certificate shall include a description of the basis for the computation), through the Administrative Agent, to the Borrower shall be conclusive absent manifest error.  In determining such amount, such Lender may use any method
of averaging and attribution that it shall reasonably deem applicable.

 

(c) The agreements in this Section 2.15 shall survive the termination of this Agreement and payment of the Notes and all other amounts payable hereunder.

 

(d) Failure or delay on the part of any Lender or the Issuing Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or the Issuing Lender’s right to demand such compensation, provided that the Borrower shall not be required to compensate a Lender or the Issuing Lender pursuant to this Section for any increased costs incurred or reductions suffered more than six (6) months prior to the date such Lender or Issuing Lender, as the case may be, notifies the Borrower of the Change in Law giving
rise to such increased costs or reductions, and of such Lender’s or Issuing Lender’s intention to claim compensation therefore (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the six-month period referred to above shall be extended to include the period of retroactive effect thereof).

 

Section 2.16 Indemnity.

 

The Borrower hereby agrees to indemnify each Lender and to hold such Lender harmless from any funding loss or expense which such Lender may sustain or incur as a consequence of (a) default by the Borrower in payment of the principal amount of or interest on any Loan by such Lender in accordance with the terms hereof, (b) default by the Borrower in accepting a borrowing after the Borrower has given a notice in accordance with the terms hereof, (c) default by the Borrower in making any repayment after the Borrower has given a notice in accordance with the terms hereof, (d) any assignment of a LIBOR Rate Loan on a day other than the last day of the Interest Period therefore as a result of a request by the Borrower
pursuant to Section 2.21 and/or (e) the making by the Borrower of any payment or repayment of a Loan, or the conversion thereof, on a day which is not the last day of the Interest Period with respect thereto, in each case including, but not limited to, any such loss or expense arising from interest or fees payable by such Lender to lenders of funds obtained by it in order to maintain its Loans hereunder.  A certificate as to any additional amounts payable pursuant to this Section submitted by any Lender, through the Administrative Agent, to the Borrower (which certificate must be delivered to the Administrative Agent within thirty days following such default, repayment or conversion) shall be conclusive in the absence of manifest error.  The agreements in this Section shall survive termination of this Agreement and payment of the Notes and all other amounts payable
hereunder.

 

  

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Section 2.17 Taxes.

 

(a) All payments made by the Borrower hereunder or under any Note will be, except as provided in Section 2.17(b), made free and clear of, and without deduction or withholding for, any present or future taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature now or hereafter imposed by any Governmental Authority or by any political subdivision or taxing authority thereof or therein with respect to such payments (but excluding any tax imposed on or measured by the net income or profits of a Lender) and all interest, penalties or similar liabilities with respect thereto (all such
non-excluded taxes, levies, imposts, duties, fees, assessments or other charges being referred to collectively as “Taxes”).  If any Taxes are so levied or imposed, the Borrower agrees to pay the full amount of such Taxes, and such additional amounts as may be necessary so that every payment of all amounts due under this Agreement or under any Note, after withholding or deduction for or on account of any Taxes, will not be less than the amount provided for herein or in such Note.  The Borrower will furnish to the Administrative Agent as soon as practicable after the date the payment of any Taxes is due pursuant to applicable law certified copies (to the extent reasonably available and required by law) of tax receipts evidencing such payment by the Borrower.  The Borrower agrees to
indemnify and hold harmless each Lender, and reimburse such Lender upon its written request, for the amount of any Taxes so levied or imposed and paid by such Lender but excluding any interest or penalties caused by such Lender’s failure to pay any such taxes when due.

 

(b) Each Lender that is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) agrees to deliver to the Borrower and the Administrative Agent on or prior to the Closing Date, or in the case of a Lender that is an assignee or transferee of an interest under this Agreement pursuant to Section 9.6(c) (unless the respective Lender was already a Lender hereunder immediately prior to such assignment or transfer), on the date of such assignment or transfer to such Lender, two accurate and complete original signed copies of Internal Revenue Service Form W-8 BEN, W-8 ECI or W-8 IMY, as
applicable (or successor forms) certifying such Lender’s entitlement to a complete exemption from United States withholding tax with respect to payments to be made under this Agreement and under any Note.  In addition, each Lender agrees that it will deliver upon the Borrower’s request updated versions of the foregoing, as applicable, whenever the previous certification has become obsolete or inaccurate in any material respect, together with such other forms as may be required in order to confirm or establish the entitlement of such Lender to a continued exemption from or reduction in United States withholding tax with respect to payments under this Agreement and any Note.  Notwithstanding anything to the contrary contained in Section 2.17(a), but subject to the immediately succeeding sentence, (x) the Borrower shall be entitled, to the extent it is
required to do so by law, to deduct or withhold Taxes imposed by the United States (or any political subdivision or taxing authority thereof or therein) from interest, fees or other amounts payable hereunder for the account of any Lender which is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax purposes to the extent that such Lender has not provided to the Borrower U.S. Internal Revenue Service Forms that establish a complete exemption from such deduction or withholding and (y) the Borrower shall not be obligated pursuant to Section 2.17(a) hereof to gross-up payments to be made to a Lender in respect of Taxes imposed by the United States if such Lender has not provided to the Borrower the Internal Revenue Service Forms required to be provided to the Borrower pursuant to this Section 2.17(b).  Notwithstanding
anything to the contrary contained in the preceding sentence or elsewhere in this Section 2.17, the Borrower agrees to pay additional amounts and to indemnify each Lender in the manner set forth in Section 2.17(a) (without regard to the identity of the jurisdiction requiring the deduction or withholding) in respect of any amounts deducted or withheld by it as described in the immediately preceding sentence as a result of any changes after the Closing Date in any applicable law, treaty, governmental rule, regulation, guideline or order, or in the interpretation thereof, relating to the deducting or withholding of Taxes.

 

  

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(c) Each Lender agrees to use reasonable efforts (including reasonable efforts to change its Domestic Lending Office or LIBOR Lending Office, as the case may be) to avoid or to minimize any amounts which might otherwise be payable pursuant to this Section; provided, however, that such efforts shall not cause the imposition on such Lender of any additional costs or legal or regulatory burdens deemed by such Lender in its sole discretion to be material.

 

(d) If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.17 (including additional amounts pursuant to this Section 2.17), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with
respect to such refund).  Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (d) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority.  Notwithstanding anything to the contrary in this paragraph (d), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (d) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the indemnification payments or additional amounts giving rise to such refund had never been paid.  This paragraph shall not be construed to
require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person

 

  

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(e) The agreements in this Section 2.17 shall survive the termination of this Agreement and the payment of the Notes and all other amounts payable hereunder.

 

Section 2.18 Indemnification; Nature of Issuing Lender’s Duties.

 

(a) In addition to its other obligations under Section 2.3, the Borrower hereby agrees to protect, indemnify, pay and save the applicable Issuing Lender harmless from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable attorneys’ fees) that the applicable Issuing Lender may incur or be subject to as a consequence, direct or indirect, of (i) the issuance of any Letter of Credit or (ii) the failure of the applicable Issuing Lender to honor a drawing under a Letter of Credit as a result of any act or omission, whether rightful or wrongful,
of any present or future de jure or de facto government or governmental authority (all such acts or omissions, herein called “Government Acts”).

 

(b) As between the Borrower and the applicable Issuing Lender, the Borrower shall assume all risks of the acts, omissions or misuse of any Letter of Credit by the beneficiary thereof.  The applicable Issuing Lender shall not be responsible:  (i) for the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for and issuance of any Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, that may prove to be invalid or ineffective for any reason; (iii) for failure of the beneficiary of a Letter of Credit to comply fully with conditions required in order to draw upon a Letter of Credit; (iv) for errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) for errors in interpretation of technical terms; (vi) for any loss or delay in the transmission or otherwise of any document required in order to make a drawing under a Letter of Credit or of the proceeds thereof; and (vii) for any consequences arising from causes beyond the control of the applicable Issuing Lender, including, without
limitation, any Government Acts.  None of the above shall affect, impair, or prevent the vesting of the applicable Issuing Lender’s rights or powers hereunder.

 

(c) In furtherance and extension and not in limitation of the specific provisions hereinabove set forth, any action taken or omitted by the applicable Issuing Lender, under or in connection with any Letter of Credit or the related certificates, if taken or omitted in good faith, shall not put such applicable Issuing Lender under any resulting liability to the Borrower.  It is the intention of the parties that this Agreement shall be construed and applied to protect and indemnify the applicable Issuing Lender against any and all risks involved in the issuance of the Letters of Credit, all of which
risks are hereby assumed by the Borrower, including, without limitation, any and all risks of the acts or omissions, whether rightful or wrongful, of any Government Authority.  The applicable Issuing Lender shall not, in any way, be liable for any failure by the applicable Issuing Lender or anyone else to pay any drawing under any Letter of Credit as a result of any Government Acts or any other cause beyond the control of the applicable Issuing Lender.

 

  

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(d) Nothing in this Section 2.18 is intended to limit the reimbursement obligation of the Borrower contained in Section 2.3(d) hereof.  The obligations of the Borrower under this Section 2.18 shall survive the termination of this Agreement.  No act or omissions of any current or prior beneficiary of a Letter of Credit shall in any way affect or impair the rights of the applicable Issuing Lender to enforce any right, power or benefit under this Agreement.

 

(e) Notwithstanding anything to the contrary contained in this Section 2.18, the Borrower shall have no obligation to indemnify the applicable Issuing Lender in respect of any liability incurred by the applicable Issuing Lender arising out of the gross negligence or willful misconduct of the applicable Issuing Lender (including action not taken by the applicable Issuing Lender), as determined by a court of competent jurisdiction.

 

Section 2.19 Waiver of Notice.

 

(a) Except as otherwise expressly provided herein, the Borrower hereby waives notice of occurrence of any Default or Event of Default (except to the extent notice is expressly required to be given pursuant to the terms of this Credit Agreement), or of any demand for any payment under this Credit Agreement, notice of any action at any time taken or omitted by the Administrative Agent or the Lenders under or in respect of any of the Credit Party Obligations hereunder, any requirement of diligence and, generally, all demands, notices and other formalities of every kind in connection with this Credit
Agreement.  The Borrower hereby assents to, and waives notice of, any extension or postponement of the time for the payment of any of the Credit Party Obligations hereunder, the acceptance of any partial payment thereon, any waiver, consent or other action or acquiescence by the Administrative Agent or the Lenders at any time or times in respect of any default by the Borrower in the performance or satisfaction of any term, covenant, condition or provision of this Credit Agreement or any other Credit Document, any and all other indulgences whatsoever by the Administrative Agent or the Lenders in respect of any of the Credit Party Obligations hereunder, and the taking, addition, substitution or release, in whole or in part, at any time or times, of any security for any of such Credit Party Obligations or the addition, substitution or release, in whole or in part, of any
Borrower.  Without limiting the generality of the foregoing, the Borrower assents to any other action or delay in acting or any failure to act on the part of the Administrative Agent or the Lenders, including, without limitation, any failure strictly or diligently to assert any right or to pursue any remedy or to comply fully with applicable laws or regulations thereunder which might, but for the provisions of this Section 2.19, afford grounds for terminating, discharging or relieving the Borrower, in whole or in part, from any of its obligations under this Agreement, it being the intention of the Borrower that, so long as any of the Credit Party Obligations remain unsatisfied, the obligations of the Borrower under this Agreement shall not be discharged except by performance and then only to the extent of such performance.  The obligations of the Borrower under this
Agreement shall not be diminished or rendered unenforceable by any winding up, reorganization, arrangement, liquidation, reconstruction or similar proceeding with respect to any reconstruction or similar proceeding with respect to the Borrower or any Lender.

 

  

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(b) The provisions of this Section 2.19 are made for the benefit of the Administrative Agent and the Lenders and their respective successors and assigns, and may be enforced by any such Person from time to time against the Borrower as often as occasion therefor may arise and without requirement on the part of any Lender first to marshal any of its claims or to resort to any other source or means of obtaining payment of any of the Credit Party Obligations or to elect any other remedy.  Without limiting the generality of the foregoing, the Borrower hereby specifically waives the benefits of N.C. Gen.
Stat. §§26-7 through 26-9, inclusive, to the extent applicable.  The provisions of this Section 2.19 shall remain in effect until all the Credit Party Obligations hereunder shall have been paid in full or otherwise fully satisfied.  If at any time, any payment, or any part thereof, made in respect of any of the Credit Party Obligations, is rescinded or must otherwise be restored or returned by the Lenders upon the insolvency, bankruptcy or reorganization of the Borrower, or otherwise, the provisions of this Section 2.19 will forthwith be reinstated and in effect as though such payment had not been made.

 

(c) Notwithstanding any provision to the contrary contained herein or in any other of the Credit Documents or Hedging Agreements, the obligations of the Borrower hereunder shall be limited to an aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance under Section 548 of the Bankruptcy Code or any comparable provisions of any applicable state law.

 

Section 2.20 [Reserved].

 

Section 2.21 Replacement of Lenders.

 

If any Lender shall become affected by any of the changes or events described in Sections 2.13, 2.14, 2.15 or 2.17 and shall petition the Borrower for any increased cost or amounts thereunder or if any Lender is a Defaulting Lender (any such Lender being hereinafter referred to as a “Replaced Lender”), then in such case, the Borrower may, upon at least five (5) Business Days’ notice to the Administrative Agent and such Replaced Lender, designate a replacement lender (a “Replacement Lender”) acceptable to the Administrative Agent in its reasonable
discretion, to which such Replaced Lender shall, subject to its receipt (unless a later date for the remittance thereof shall be agreed upon by the Borrower and the Replaced Lender) of all amounts owed to such Replaced Lender under Sections 2.13, 2.14, 2.15 or 2.17 assign all (but not less than all) of its rights, obligations, Loans and Commitments hereunder; provided, that all amounts owed to such Replaced Lender by the Borrower (except liabilities which by the terms hereof survive the payment in full of the Loans and termination of this Agreement) shall be paid in full as of the date of such assignment.  Upon any assignment by any Lender pursuant to this Section 2.21 becoming effective, the Replacement Lender shall thereupon be deemed to be a “Lender” for all purposes of this Agreement and
such Replaced Lender shall thereupon cease to be a “Lender” for all purposes of this Agreement and shall have no further rights or obligations hereunder (other than pursuant to Sections 2.13, 2.14, 2.15, 2.17 and 9.5 while such Replaced Lender was a Lender).

 

  

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Notwithstanding any Replaced Lender’s failure or refusal to assign its rights, obligations, Loans and Commitments under this Section 2.21, the Replaced Lender shall cease to be a “Lender” for all purposes of this Agreement and the Replacement Lender substituted therefor upon payment to the Replaced Lender by the Replacement Lender of all amounts set forth in this Section 2.21 without any further action of the Replaced Lender.

 

Each Replacement Lender shall be an Eligible Assignee, and no Lender shall be obligated to act as a Replacement Lender except to the extent agreed to by such Lender in its sole discretion.

 

Section 2.22 Extension of Maturity Date in respect of Revolving Commitments.

 

(a) Requests for Extension.  The Borrower may, pursuant to this Section 2.22, with respect to the Revolving Commitments only, request up to two one-year extensions of the Maturity Date.  The Borrower may at any time, but not later than the date that is 45 days prior to the Maturity Date then in effect hereunder in respect of the Revolving Commitments (the “Existing Maturity Date”), by notice to the Administrative Agent (who shall promptly notify the
Lenders), request that each Lender extend such Lender’s Maturity Date in respect of the Revolving Commitments  (an “Extension Request”) for an additional 365 days from the Existing Maturity Date; provided, however, in no event shall the Maturity Date of the Revolving Commitments be extended under this Section 2.22 beyond the seventh anniversary of the Closing Date of this Agreement.

 

(b) Lender Elections to Extend.  Each Lender, acting in its sole and individual discretion, shall, by notice to the Administrative Agent given not later than the date (the “Notice Date”) that is 30 days following the date of the delivery of the applicable Extension Request to the Administrative Agent, advise the Administrative Agent whether or not such Lender agrees to such extension (and each Lender that determines not to so extend its Maturity Date (a
“Non-Extending Lender”) shall notify the Administrative Agent of such fact promptly after such determination (but in any event no later than the Notice Date) and any Lender that does not so advise the Administrative Agent on or before the Notice 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 so agree.

 

(c) Notification by Administrative Agent.  The Administrative Agent shall notify the Borrower of each Lender’s determination under this Section no later than the date that is 10 days following the Notice Date (or, if such date is not a Business Day, on the next preceding Business Day).

 

  

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(d) Additional Commitment Lenders.  The Borrower shall have the right on or before the Existing Maturity Date to replace each Non-Extending Lender with, and add as “Lenders” under this Agreement in place thereof, one or more Eligible Assignees (each, an “Additional Commitment Lender”) as provided in Section 2.21, each of which Additional Commitment Lenders shall have entered into an Assignment and Assumption pursuant to which such Additional
Commitment Lender shall, effective as of the Existing Maturity Date, undertake a Revolving Commitment (and, if any such Additional Commitment Lender is already a Lender, its Revolving Commitment shall be in addition to any other Commitment of such Lender hereunder on such date).

 

(e) Minimum Extension Requirement.  If (and only if) the total of the Revolving Commitments of the Lenders that have agreed so to extend their Maturity Date and the additional Revolving Commitments of the Additional Commitment Lenders shall be more than 50% of the aggregate amount of the Revolving Commitments in effect immediately prior to the Existing Maturity Date, then, effective as of the date of such agreement by such Lenders, the Maturity Date in respect of the Revolving Commitments of each Extending Lender and of each Additional
Commitment Lender shall be extended to the date falling 365 days after the Existing Maturity Date (except that, if such date is not a Business Day, such Maturity Date as so extended shall be the next preceding Business Day) and each Additional Commitment Lender shall thereupon become a “Lender” for all purposes of this Agreement.

 

(f) Conditions to Effectiveness of Extensions.  Notwithstanding the foregoing, the extension of the Maturity Date pursuant to this Section shall not be effective with respect to any Lender unless:

 

(i) no Default shall have occurred and be continuing on the date of such extension and after giving effect thereto;

 

(ii) the representations and warranties contained in this Agreement are true and correct on and as of the date of such extension and after giving effect thereto, as though made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date); and

 

(iii) on the Maturity Date of loans by each Non-Extending Lender, the Borrower shall repay any Revolving Loans outstanding on such date (and pay any additional amounts required pursuant to Section 2.16) to the extent necessary to keep outstanding Revolving Loans ratable with any revised Revolving Commitment Percentages of the respective Lenders effective as of such date.

 

(g) Conflicting Provisions.  This Section shall supersede any provisions in Section 2.11 or 9.1 to the contrary.

 

Section 2.23 Increase in Revolving Commitments.

 

(a) Request for Increase.  Provided there exists no Default, upon notice to the Administrative Agent (which shall promptly notify the Lenders), the Borrower may from time to time, request an increase in the Revolving Commitments by an amount (for all such requests in the aggregate) not exceeding TWO HUNDRED FIFTY MILLION DOLLARS ($250,000,000.00); provided that (i) any such request for an increase
shall be in a minimum amount of $50,000,000 and in integral multiples of $5,000,000, and (ii) the Borrower may make a maximum of two such requests.  At the time of sending such notice, the Borrower (in consultation with the Administrative Agent) shall specify the time period within which each Lender is requested to respond (which shall in no event be less than ten Business Days from the date of delivery of such notice to the Lenders).

 

  

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(b) Lender Elections to Increase.  Each Lender, acting in its sole and individual discretion, shall notify the Administrative Agent within such time period whether or not it agrees to increase its Revolving Commitment and, if so, whether by an amount equal to, greater than, or less than its Revolving Commitment Percentage of such requested increase.  Any Lender not responding within such time period shall be deemed to have declined to increase its Revolving Commitment.  No Lender shall be
obligated to provide all or any portion of an increase in the Revolving Commitments pursuant to this Section 2.23.

 

(c) Notification by Administrative Agent; Additional Lenders.  The Administrative Agent shall notify the Borrower and each Lender of the Lenders’ responses to each request made hereunder.  To achieve the full amount of a requested increase, and subject to the approval of the Administrative Agent, the Issuing Lender and the Swingline Lender (which approvals shall not be unreasonably withheld), the Borrower may also invite additional Eligible Assignees to become Lenders pursuant to a joinder agreement
in form and substance satisfactory to the Administrative Agent and its counsel.

 

(d) Effective Date and Allocations.  If the Revolving Commitments are increased in accordance with this Section, the Administrative Agent and the Borrower shall determine the effective date (the “Revolving Credit Increase Effective Date”) and the final allocation of such increase.  The Administrative Agent shall promptly notify the Borrower and the Lenders of the final allocation of such increase and the Revolving Credit Increase
Effective Date.

 

(e) Conditions to Effectiveness of Increase.  As a condition precedent to such increase, the Borrower shall deliver to the Administrative Agent a certificate of each Credit Party dated as of the Revolving Credit Increase Effective Date (in sufficient copies for each Lender) signed by a Responsible Officer of such Credit Party (i) certifying and attaching the resolutions adopted by such Credit Party approving or consenting to such increase, and (ii) in the case of the Borrower, certifying that, before and after giving
effect to such increase, (A) the representations and warranties contained in Article III and the other Credit Documents are true and correct on and as of the Revolving Credit Increase Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date, and except that for purposes of this Section 2.23, the representations and warranties contained in Section 3.1 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 5.1, and (B) no Default exists.  The Borrower shall repay any Revolving Loans outstanding on the Revolving Credit Increase Effective Date (and pay any additional amounts required pursuant to Section 2.16) to the extent necessary to keep the outstanding Revolving Loans ratable with any
revised Revolving Commitment Percentages arising from any nonratable increase in the Revolving Commitments under this Section.

 

  

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(f) Conflicting Provisions.  This Section shall supersede any provisions in Section 2.11 or 9.1 to the contrary.

 

Section 2.24 Cash Collateral.

 

(a) Cash Collateral.  At any time that there shall exist a Defaulting Lender, within one (1) Business Day following the written request of the Administrative Agent, the Issuing Lender (with a copy to the Administrative Agent) or the Swingline Lender (with a copy to the Administrative Agent), the Borrower shall Cash Collateralize all Fronting Exposure of the Issuing Lender and the Swingline Lender with respect to such Defaulting Lender (determined after giving effect to Section 2.25(b) and any Cash Collateral provided
by the Defaulting Lender).

 

(b) Grant of Security Interest.  The Borrower, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby grants to the Administrative Agent, for the benefit of the Administrative Agent, the Issuing Lenders and the Lenders (including the Swingline Lender), and agrees to maintain, a first priority security interest in all such Cash Collateral as security for the Defaulting Lenders’ obligations to which such Cash Collateral may be applied pursuant to clause (c) below.  If at any time the
Administrative Agent, Issuing Lender or Swingline Lender determines that Cash Collateral is subject to any right or claim of any Person other than the Administrative Agent as herein provided, or that the total amount of such Cash Collateral is less than the applicable Fronting Exposure, the Borrower will, promptly upon demand by the Administrative Agent, Issuing Lender or Swingline Lender pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency (after giving effect to any Cash Collateral provided by the Defaulting Lender).

 

(c) Application.  Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under any of this Section or Section 2.25  in respect of Letters of Credit or Swingline Loans, shall be held and applied to the satisfaction of the specific LOC Obligations, Swingline Loans, obligations to fund participations therein (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) and other obligations for which the Cash Collateral was so provided, prior to
any other application of such property as may be provided for herein.

 

(d) Termination of Requirement.  Cash Collateral (or the appropriate portion thereof) provided to reduce Fronting Exposure or other obligations shall no longer be required to be held as Cash Collateral pursuant to this Section 2.25 following (i) the elimination of the applicable Fronting Exposure or other obligations giving rise thereto (including by the termination of Defaulting Lender status of the applicable Lender), or (ii) the determination by the Administrative Agent, each Issuing Lender and the Swingline Lender that there exists
excess Cash Collateral; provided that, subject to Section 2.25, the Person providing Cash Collateral and each Issuing Lender and the Swingline Lender may agree that Cash Collateral shall be held to support future anticipated Fronting Exposure or other obligations.

 

  

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Section 2.25 Defaulting Lenders.

 

(a) Defaulting Lender Adjustments.  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)           Waivers and Amendments.  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 and Section 9.1.

 

(ii)           Defaulting Lender Waterfall. 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 Article VII or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 9.7 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing
by such Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to any Issuing Lender or Swingline Lender hereunder; third, to Cash Collateralize the Issuing Lender’s or Swingline Lender’s Fronting Exposure in accordance with Section 2.24; fourth, as the 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; fifth, if so determined by the Administrative Agent and
the Borrower, to be held in a non-interest bearing deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement and (y) Cash Collateralize the Issuing Lender’s and the Swingline Lender’s future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement in accordance with Section 2.24; sixth, to the payment of any amounts owing to the Lenders, the Issuing Lenders or Swingline Lender as a result of any judgment of a court of competent jurisdiction obtained by any Lender, the Issuing Lenders or Swingline Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement;
seventh, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (A) such payment is a payment of the principal amount of any Loans or LOC Obligations in respect of which such Defaulting Lender has not fully funded its appropriate share and (B) such Loans were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 4.2 were satisfied or waived, such payment
shall be applied solely to pay the Loans of, and LOC Obligations owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or LOC Obligations owed to, such Defaulting Lender until such time as all Loans and funded and unfunded participations in LOC Obligations and Swingline Loans are held by the Lenders pro rata in accordance with the Commitments under the applicable facility without giving effect to Section 2.25(a)(iv). Any payments, repayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 2.25(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

 

  

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(iii)           Certain Fees.

 

	
  

	
(A)

	
Facility Fees.  Each Defaulting Lender shall be entitled to receive a Facility Fee for any period during which that Lender is a Defaulting Lender only to the extent allocable to the sum of (1) the outstanding principal amount of the Revolving Loans funded by it, and (2) its Applicable Percentage of the stated amount of Letters of Credit for which it has provided Cash Collateral pursuant to Section 2.25.

 

	
  

	
(B)

	
Letter of Credit Fees.  Each Defaulting Lender shall be entitled to receive Standby Letter of Credit Fees or Trade Letter of Credit Fees for any period during which that Lender is a Defaulting Lender only to the extent allocable to its Applicable Percentage of the stated amount of Letters of Credit for which it has provided Cash Collateral pursuant Section 2.25.

 

	
  

	
(C)

	
Reallocation of Fees.  With respect to any Standby Letter of Credit Fee or Trade Letter of Credit Fee not required to be paid to any Defaulting Lender pursuant to clause (A) or (B) above, the Borrower shall (x) pay to each Non-Defaulting Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in LOC Obligations or Swingline Loans that has been reallocated to such Non-Defaulting Lender pursuant to clause (iv) below, (y) pay to each Issuing Lender and Swingline Lender, as applicable, the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to such Issuing Lender’s or Swingline Lender’s
Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such fee.

 

  

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(iv)

	
Reallocation of Participations to Reduce Fronting Exposure.  All or any part of such Defaulting Lender’s participation in LOC Obligations and Swingline Loans shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Applicable Percentages (calculated without regard to such Defaulting Lender’s Revolving Commitment) but only to the extent that (x) the conditions set forth in Section 4.2 are satisfied at the time of such reallocation (and, unless the Borrower shall have otherwise notified the Administrative Agent at such time, the Borrower shall be deemed to have represented and warranted that such conditions are satisfied at such time) and (y) such reallocation does not cause
the aggregate Committed Funded Exposure of any Non-Defaulting Lender to exceed such Non-Defaulting Lender’s Revolving Commitment.  No reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation.

 

	
  

	
(v)

	
Cash Collateral, Repayment of Swingline Loans.  If the reallocation described in clause (iv) above cannot, or can only partially, be effected, the Borrower shall, without prejudice to any right or remedy available to it hereunder or under law, (x) first, prepay Swingline Loans in an amount equal to the Swingline Lender’s Fronting Exposure and (y) second, Cash Collateralize the Issuing Lender’s Fronting Exposure in accordance with the procedures set forth in Section 2.24.

 

(b)           Defaulting Lender Cure.  If the Borrower, the Administrative Agent and each Swingline Lender and Issuing Lender 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 (which may include arrangements with respect to any Cash Collateral), 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 and funded and unfunded participations in Letters of Credit and Swingline Loans to be held on a pro rata basis by the Lenders in accordance with their Applicable Percentages (without giving effect to Section 2.25(a)(iv)), 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 the Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

 

(c)           New Swingline Loans/Letters of Credit.  So long as any Lender is a Defaulting Lender, (i) the Swingline Lender shall not be required to fund any Swingline Loans unless it is satisfied that it will have no Fronting Exposure after giving effect to such Swingline Loan and (ii) no Issuing Lender shall be required to issue, extend, renew or increase any Letter of Credit unless it is satisfied that it will have no Fronting Exposure after giving effect thereto.

 

  

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ARTICLE III 

 

REPRESENTATIONS AND WARRANTIES

 

To induce the Lenders to enter into this Agreement and to make the Extensions of Credit herein provided for, the Credit Parties hereby represent and warrant to the Administrative Agent and to each Lender that:

 

Section 3.1 Financial Condition.

 

The audited consolidated balance sheets and the related statements of income, retained earnings and cash flows of the Parent and its Subsidiaries for the fiscal years ending February 3, 2010, 2011 and 2012 and the unaudited condensed consolidated balance sheets and the related condensed statements of income and cash flows of the Parent and its Subsidiaries for the fiscal quarter ending April 28, 2012 are complete and correct and present fairly, in all material respects, the financial condition of, and the results of operations for, such Persons as of such dates.  All such financial statements have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as
disclosed therein).  None of the Parent nor its Subsidiaries have on the date hereof any material contingent liabilities, liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable commitments, except as referred to or reflected or provided for in the balance sheets referred to above.

 

Section 3.2 No Change.

 

Since January 28, 2012 (and after delivery of annual audited financial statements in accordance with Section 5.1(a), from the date of the most recently delivered annual audited financial statements) there has been no development or event which has had or could reasonably be expected to have a Material Adverse Effect.

 

Section 3.3 Corporate Existence; Compliance with Law.

 

Each Credit Party and its Subsidiaries (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has the requisite power and authority and the legal right to own and operate all its material property, to lease the material property it operates as lessee and to conduct the business in which it is currently engaged, (c) is duly qualified to conduct business and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification except to the extent that the failure to so qualify or be in good standing could not, in the aggregate, reasonably be expected to
have a Material Adverse Effect and (d) is in compliance with all Requirements of Law except to the extent that the failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

  

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Section 3.4 Corporate Power; Authorization; Enforceable Obligations.

 

Each of the Credit Parties has full power and authority and the legal right to make, deliver and perform the Credit Documents to which it is party and has taken all necessary action to authorize the execution, delivery and performance by it of the Credit Documents to which it is party.  No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required in connection with the borrowings hereunder or with the execution, delivery or performance of any Credit Document by any Credit Party (other than those which have been obtained) or with the validity or enforceability of any Credit Document against any Credit Party (except
such filings as are necessary in connection with the perfection of the Liens, if any, created by such Credit Documents).  Each Credit Document to which any Credit Party is a party has been duly executed and delivered by such Credit Party.  Each Credit Document to which any Credit Party is a party constitutes a legal, valid and binding obligation of such Credit Party, enforceable against such Credit Party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).

 

Section 3.5 No Legal Bar; No Default.

 

The execution, delivery and performance of the Credit Documents, the borrowings thereunder and the use of the proceeds of the Loans will not violate any Requirement of Law or any Contractual Obligation of the Credit Parties or their Subsidiaries (except those as to which waivers or consents have been obtained), and will not result in, or require, the creation or imposition of any Lien on any of its or their respective properties or revenues pursuant to any Requirement of Law or Contractual Obligation other than the Liens arising under or contemplated in connection with the Credit Documents.  No Credit Party nor any of its Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which could reasonably be expected to have a Material Adverse Effect.  No Default or Event of Default has occurred and is continuing.

 

Section 3.6 No Material Litigation.

 

No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the best knowledge of the Credit Parties, threatened by or against any Credit Party or any of its Subsidiaries or against any of its or their respective properties or revenues (a) with respect to the Credit Documents or any Loan or any of the transactions contemplated hereby, or (b) which, if adversely determined, could reasonably be expected to have a Material Adverse Effect.

 

Section 3.7 Investment Company Act.

 

No Credit Party nor any of its Subsidiaries is an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended.

 

  

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Section 3.8 Margin Regulations.

 

No part of the proceeds of any Loan hereunder will be used directly or indirectly for any purpose which violates, or which would be inconsistent with, the provisions of Regulation T, U or X of the Board of Governors of the Federal Reserve System as now and from time to time hereafter in effect.  The aggregate value of all “margin stock” owned by the Credit Parties and their Subsidiaries taken as a group does not exceed 25% of the value of their assets.

 

Section 3.9 ERISA.

 

Except as could not reasonably be expected to have a Material Adverse Effect,

 

(a) neither a Reportable Event nor an “accumulated funding deficiency” (within the meaning of Section 412 of the Code or Section 302 of ERISA) has occurred during the five-year period prior to the date on which this representation is made or deemed made with respect to any Plan, and each Plan has complied in all material respects with the applicable provisions of ERISA and the Code;

 

(b) no termination of a Single Employer Plan has occurred resulting in any liability that has remained underfunded, and no Lien in favor of the PBGC or a Plan has arisen, during such five-year period;

 

(c) the present value of all accrued benefits under each Single Employer Plan (based on those assumptions used to fund such Plans) did not, as of the last annual valuation date prior to the date on which this representation is made or deemed made, exceed the value of the assets of such Plan allocable to such accrued benefits; and

 

(d) no Credit Party, nor any of its Subsidiaries, nor any Commonly Controlled Entity is currently subject to any liability for a complete or partial withdrawal from a Multiemployer Plan.

 

Section 3.10 Environmental Matters.

 

Except as to matters which could not reasonably be expected to have a Material Adverse Effect:

 

(a) the facilities and properties owned, leased or operated by the Credit Parties or any of their Subsidiaries (the “Real Properties”) do not contain any Hazardous Materials in amounts or concentrations which (i) constitute a violation of, or (ii) could give rise to liability under, any Environmental Law;

 

(b) the Real Properties and all operations of the Credit Parties and/or their Subsidiaries at the Real Properties are in compliance, and have in the last five years been in compliance, in all material respects with all applicable Environmental Laws, and there is no contamination at, under or about the Real Properties or violation of any Environmental Law with respect to the Real Properties or the business operated by the Credit Parties or any of their Subsidiaries (the “Business”);

 

  

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(c) no Credit Party nor any of its Subsidiaries has received any written or actual notice of violation, alleged violation, non-compliance, liability or potential liability regarding environmental matters or compliance with Environmental Laws with regard to any of the Real Properties or the Business, nor does any Credit Party or any of its Subsidiaries have knowledge or reason to believe that any such notice will be received or is being threatened;

 

(d) Hazardous Materials have not been transported or disposed of from the Real Properties in violation of, or in a manner or to a location which could give rise to liability under any Environmental Law, nor have any Hazardous Materials been generated, treated, stored or disposed of at, on or under any of the Real Properties in violation of, or in a manner that could give rise to liability under, any applicable Environmental Law;

 

(e) no judicial proceeding or governmental or administrative action is pending or, to the knowledge of the Credit Parties, threatened, under any Environmental Law to which any Credit Party or any Subsidiary is or will be named as a party with respect to the Real Properties or the Business, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any Environmental Law with respect to the Real Properties or the Business; and

 

(f) there has been no release or threat of release of Hazardous Materials at or from the Real Properties, or arising from or related to the operations of any Credit Party or any Subsidiary in connection with the Real Properties or otherwise in connection with the Business, in violation of or in amounts or in a manner that could give rise to liability under Environmental Laws.

 

Section 3.11 Purpose of Loans.

 

The proceeds of the Loans hereunder shall be used solely by the Borrower to (i) refinance existing Indebtedness, (ii) pay fees, commissions and expenses in connection with this Credit Agreement and (iii) provide for working capital and other general corporate purposes, including Permitted Acquisitions, repurchases of Capital Stock of the Parent, and the payment of dividends in accordance with the terms of this Agreement.  The Letters of Credit shall be used for general corporate purposes.

 

Section 3.12 Subsidiaries.

 

Set forth on Schedule 3.12 is a complete and accurate list of all Subsidiaries of the Parent.  Information on the attached Schedule includes state of incorporation; the number of shares of each class of Capital Stock or other equity interests outstanding; the number and percentage of outstanding shares of each class of stock owned by Parent or its Subsidiaries; and the number and effect, if exercised, of all outstanding options, warrants, rights of conversion or purchase and similar rights.  The outstanding Capital Stock and other equity interests of all such Subsidiaries is validly issued, fully paid and non-assessable and is
owned, free and clear of all Liens.

 

  

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Section 3.13 Ownership.

 

Each Credit Party and its Subsidiaries (a) is the owner of, and has good and marketable title to, all of its respective assets, except as may be permitted pursuant to Section 6.12 hereof, and none of such assets is subject to any Lien other than Permitted Liens and (b) enjoys peaceful and undisturbed possession of all leased and owned Real Properties that are necessary for the operation and conduct of its business.

 

Section 3.14 Indebtedness.

 

Except as otherwise permitted under Section 6.1, the Credit Parties and their Subsidiaries have no Indebtedness.

 

Section 3.15 Taxes.

 

Each of the Credit Party and their Subsidiaries has filed, or caused to be filed, all tax returns (federal, state, local and foreign) required to be filed and paid (a) all amounts of taxes shown thereon to be due (including interest and penalties) and (b) all other taxes, fees, assessments and other governmental charges (including mortgage recording taxes, documentary stamp taxes and intangibles taxes) owing by it, except for such taxes (i) which are not yet delinquent or (ii) that are being contested in good faith and by proper proceedings, and against which adequate reserves are being maintained in accordance with GAAP or (iii) the failure to file and pay such taxes could not reasonably be expected to have a
Material Adverse Effect.  No Credit Party nor any of its Subsidiaries is aware of any proposed tax assessments against it or any of its Subsidiaries which could reasonably be expected to have a Material Adverse Effect.

 

Section 3.16 Intellectual Property.

 

Each of the Credit Parties and their Subsidiaries owns, or has the legal right to use, all trademarks, tradenames, patents, copyrights, technology, know-how and processes (collectively, the “Intellectual Property”) necessary for each of them to conduct its business as currently conducted.  No claim has been asserted and is pending by any Person challenging or questioning the use of any such Intellectual Property or the validity or effectiveness of any such Intellectual Property, nor does any Credit Party or any of its Subsidiaries know of any such claim, and, to the knowledge of the Credit Parties, the use of such Intellectual
Property by any Credit Party or any of their Subsidiaries does not infringe on the rights of any Person, except for such claims and infringements that in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

Section 3.17 Solvency.

 

The fair saleable value of each Credit Party’s assets, measured on a going concern basis, exceeds all probable liabilities, including those to be incurred pursuant to this Credit Agreement. None of the Credit Parties (a) has unreasonably small capital in relation to the business in which it is or proposes to be engaged or (b) has incurred, or believes that it will incur after giving effect to the transactions contemplated by this Credit Agreement, Indebtedness beyond its ability to pay such Indebtedness as it becomes due.

 

  

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Section 3.18 Investments.

 

All Investments of each of the Credit Parties and their Subsidiaries are Permitted Investments.

 

Section 3.19 No Burdensome Restrictions.

 

No Credit Party nor any of their Subsidiaries is a party to any agreement or instrument or subject to any other obligation or any charter or corporate restriction or any provision of any applicable law, rule or regulation which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

Section 3.20 Brokers’ Fees.

 

No Credit Party nor any of their Subsidiaries has any obligation to any Person in respect of any finder’s, broker’s, investment banking or other similar fee in connection with any of the transactions contemplated under the Credit Documents other than the closing and other fees payable pursuant to this Credit Agreement and the Fee Letters.

 

Section 3.21 Labor Matters.

 

No Credit Party nor any of their Subsidiaries (i) has suffered any strikes, walkouts, work stoppages or other material labor difficulty within the last five years or (ii) has knowledge of any potential or pending strike, walkout or work stoppage.

 

Section 3.22 Accuracy and Completeness of Information.

 

All factual information heretofore, contemporaneously or hereafter furnished by or on behalf of the Credit Parties or any of their Subsidiaries to the Administrative Agent or any Lender for purposes of or in connection with this Agreement or any other Credit Document, or any transaction contemplated hereby or thereby, is or will be true and accurate in all material respects and not incomplete by omitting to state any material fact necessary to make such information not misleading.  There is no fact now known to any Credit Party or any of its Subsidiaries which has, or could reasonably be expected to have, a Material Adverse Effect which fact has not been set forth herein, in the financial statements of
the Parent and its Subsidiaries furnished to the Administrative Agent and/or the Lenders, or in any certificate, opinion or other written statement made or furnished by the Parent or any of its Subsidiaries to the Administrative Agent and/or the Lenders.

 

Section 3.23 Anti-Terrorism Laws.

 

Neither any Credit Party nor any of its Subsidiaries is an “enemy” or an “ally of the enemy” within the meaning of Section 2 of the Trading with the Enemy Act of the United States of America (50 U.S.C. App. §§ 1 et seq.) (the “Trading with the Enemy Act”), as amended.  Neither any Credit Party nor any or its Subsidiaries is in violation of (a) the Trading with the Enemy Act, as amended, (b) any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto or (c) the Patriot Act.  None of the Credit Parties (i) is a blocked person described in Section 1 of the Anti-Terrorism Order or (ii) to the best of its knowledge, engages in any dealings or transactions, or is otherwise associated, with any such blocked person.

  

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ARTICLE IV 

 

CONDITIONS PRECEDENT

 

Section 4.1 Conditions to Closing Date and Initial Revolving Loans.

 

This Agreement shall become effective upon, and the obligation of each Lender to make the initial Extensions of Credit on the Closing Date is subject to, the satisfaction of the following conditions precedent:

 

(a) Execution of Agreement.  The Administrative Agent shall have received (i) counterparts of this Agreement, executed by a duly authorized officer of each party hereto, (ii) for the account of each Lender that requests a Revolving Note, a Revolving Note and (iii) for the account of the Swingline Lender, the Swingline Note, in each case conforming to the requirements of this Agreement and executed by a duly authorized officer of the Borrower.

 

(b) Authority Documents.  The Administrative Agent shall have received a secretary’s certificate substantially in the form of Schedule 4.1(b) with respect to the following:

 

(i) Charter Documents.  Copies of the articles of incorporation or other organizational documents, as applicable, of each Credit Party and each corporate general partner or managing member of a Credit Party certified to be true and complete as of a recent date by the appropriate Governmental Authority of the state of its organization.

 

(ii) Resolutions.  Copies of resolutions or certificate of authorization of the board of directors, general partner or managing member of each Credit Party approving and adopting the Credit Documents, the transactions contemplated therein and authorizing execution and delivery thereof, certified by an officer, general partner or managing member of such Credit Party as of the Closing Date to be true and correct and in force and effect as of such date.

 

(iii) Bylaws; Operating Agreements; Etc..  A copy of the bylaws, operating agreement or other governing document of each Credit Party and each corporate general partner or managing member of a Credit Party certified by an officer of such Credit Party or corporate general partner or managing member as of the Closing Date to be true and correct and in force and effect as of such date.

 

(iv) Good Standing.  Copies of certificates of good standing, existence or its equivalent with respect to each Credit Party certified as of a recent date by the appropriate Governmental Authorities of the state of incorporation and each other state in which the failure to so qualify and be in good standing could reasonably be expected to have a Material Adverse Effect on the business or operations of the Credit Party and their Subsidiaries, taken as a whole.

 

  

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(v) Incumbency.  An incumbency certificate of each Credit Party and each corporate general partner or managing member of a Credit Party certified by a secretary or assistant secretary to be true and correct as of the Closing Date.

 

(c) Legal Opinions of Counsel.  The Administrative Agent shall have received an opinion of legal counsel for the Credit Parties, dated the Closing Date and addressed to the Administrative Agent and the Lenders, in form and substance acceptable to the Administrative Agent.

 

(d) Liability and Casualty Insurance.  The Administrative Agent shall have received copies of insurance policies or certificates of insurance evidencing liability and casualty insurance meeting the requirements set forth herein.

 

(e) Fees and Expenses.  The Borrower shall have paid all fees and expenses owed by it to the Lenders and the Administrative Agent, including, without limitation, payment to the Administrative Agent of the fees owing pursuant to the Fee Letters and Section 2.4.

 

(f) Litigation. There shall not exist any pending litigation or investigation affecting or relating to the Credit Parties or any of their Subsidiaries, this Agreement and the other Credit Documents that in the reasonable judgment of the Administrative Agent could reasonably be expected to have a Material Adverse Effect on the Parent or any of its Subsidiaries, this Agreement and the other Credit Documents, that has not been settled, dismissed, vacated, discharged or terminated prior to the Closing Date.

 

(g) Solvency Evidence.  The Administrative Agent shall have received an officer’s certificate for the Credit Parties prepared by the chief financial officer or treasurer of the Borrower as to the financial condition, solvency and related matters of the Credit Parties taken as a whole, after giving effect to the initial borrowings under the Credit Documents, in substantially the form of Schedule 4.1(g) hereto.

 

(h) Account Designation Letter.  The Administrative Agent shall have received the executed Account Designation Letter in the form of Schedule 1.1(a) hereto.

 

(i) Corporate Structure.  The corporate capital and ownership structure of the Parent and its Subsidiaries shall be as described in Schedule 3.12.

 

(j) Consents.  The Administrative Agent shall have received evidence that all governmental, shareholder and material third party consents and approvals necessary in connection with the financings and other transactions contemplated hereby have been obtained and all applicable waiting periods have expired without any action being taken by any authority that could restrain, prevent or impose any material adverse conditions on such transactions or that could seek or threaten any of the foregoing.

 

  

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(k) Compliance with Laws.  The financings and other transactions contemplated hereby shall be in compliance with all applicable laws and regulations (including Environmental Laws and all applicable securities and banking laws, rules and regulations).

 

(l) Bankruptcy.  There shall be no bankruptcy or insolvency proceedings with respect to the Parent or any of its Subsidiaries.

 

(m) Financial Statements.  The Administrative Agent shall have received copies of the financial statements referred to in Section 3.1 hereof.

 

(n) Material Adverse Change.  Since January 28, 2012, there shall not have occurred any change or event which could reasonably be expected to have a Material Adverse Effect on the business, assets, liabilities (actual or contingent), operations or condition (financial or otherwise) of the Parent and its Subsidiaries taken as a whole, or the facts and information regarding such entities as represented to date.

 

(o) Officer’s Certificate.  The Administrative Agent shall have received a certificate executed by the chief financial officer or treasurer of the Borrower on behalf of the Credit Parties as of the Closing Date stating that (A) the Credit Parties and each of their Subsidiaries are in compliance with all existing material financial obligations, (B) all governmental, shareholder and third party consents and approvals, if any, with respect to the Credit Documents and the transactions contemplated thereby have been obtained, (C) no
action, suit, investigation or proceeding is pending or threatened in any court or before any arbitrator or governmental instrumentality that purports to affect a Credit Party, any of the Credit Parties’ Subsidiaries or any transaction contemplated by the Credit Documents, if such action, suit, investigation or proceeding would have or be reasonably expected to have a Material Adverse Effect, and (D) immediately after giving effect to this Credit Agreement, the other Credit Documents and all the transactions contemplated therein to occur on such date, (1) no Default or Event of Default exists, (2) all representations and warranties contained herein and in the other Credit Documents are true and correct in all material respects, and (3) the Credit Parties are in compliance with each of the financial covenants set forth in Section 5.9.

 

(p) Projections.  The Administrative Agent shall have received the five year financial and operational projections for the Parent and its Subsidiaries for the fiscal years 2012 through 2017 (which will be quarterly for the first year after the Closing Date and annually thereafter for the term of the Credit Agreement) together with a detailed explanation of all management assumptions contained therein, which projections shall be in form and substance satisfactory to the Administrative Agent.

 

(q) Repayment of Debt, Etc.  The Borrower shall have terminated the commitments and repaid all outstanding loans under the Existing Credit Agreement.

 

(r) Sources and Uses; Payment Instructions.  The Administrative Agent shall have received (a) a statement of sources and uses of funds covering all payments reasonably expected to be made by the Borrower in connection with the transactions contemplated by the Credit Documents to be consummated on the Closing Date, including an itemized estimate of all fees, expenses and other closing costs and (b) payment instructions with respect to each wire transfer to be made by the Administrative Agent on behalf of the Lenders or the Borrower on the
Closing Date setting forth the amount of such transfer, the purpose of such transfer, the name and number of the account to which such transfer is to be made, the name and ABA number of the bank or other financial institution where such account is located and the name and telephone number of an individual that can be contacted to confirm receipt of such transfer.

 

  

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(s) Additional Matters.  All other documents and legal matters in connection with the transactions contemplated by this Agreement shall be reasonably satisfactory in form and substance to the Administrative Agent and its counsel.

 

(t) “Know Your Customer” Information.  The Borrower shall have provided the documentation and other information to the Lenders that is required by regulatory authorities under applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the Patriot Act.

 

Section 4.2 Conditions to All Extensions of Credit.

 

The obligation of each Lender to make any Extension of Credit hereunder is subject to the satisfaction of the following conditions precedent on the date of making such Extension of Credit:

 

(a) Representations and Warranties.  The representations and warranties made by the Credit Parties herein or which are contained in any certificate furnished at any time under or in connection herewith shall be true and correct in all material respects on and as of the date of such Extension of Credit as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).

 

(b) No Default or Event of Default.  No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the Extension of Credit to be made on such date unless such Default or Event of Default shall have been waived in accordance with this Agreement.

 

(c) Compliance with Commitments.  Immediately after giving effect to the making of any such Extension of Credit (and the application of the proceeds thereof), (i) the sum of the aggregate principal amount of outstanding Revolving Loans plus outstanding Swingline Loans plus LOC Obligations shall not exceed the Revolving Committed Amount, (ii) the LOC Obligations shall not exceed the LOC Committed Amount
and (iii) the outstanding Swingline Loans shall not exceed the Swingline Committed Amount.

 

(d) Additional Conditions to Revolving Loans.  If such Loan is a Revolving Loan made pursuant to Section 2.1, all applicable conditions set forth in such Section shall have been satisfied.

 

  

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(e) Additional Conditions to Swingline Loans.  If a Swingline Loan is requested, all applicable conditions set forth in Section 2.1 shall have been satisfied.

 

(f) Additional Conditions to Letters of Credit.  If such Extension of Credit is made pursuant to Section 2.3, all conditions set forth in such Section shall have been satisfied.

 

Each request for an Extension of Credit and each acceptance by the Borrower of any such Extension of Credit shall be deemed to constitute a representation and warranty by the Borrower as of the date of such Extension of Credit that the applicable conditions in paragraphs (a) through (f) of this Section have been satisfied.

 

ARTICLE V

 

AFFIRMATIVE COVENANTS

 

The Credit Parties hereby covenant and agree that on the Closing Date, and thereafter for so long as this Agreement is in effect and until the Commitments have terminated, no Note remains outstanding and unpaid and the Credit Party Obligations, together with interest, the Facility Fee and all other amounts owing to the Administrative Agent, any Issuing Lender or any Lender hereunder, are paid in full, the Credit Parties shall, and shall cause each of their respective Subsidiaries to:

 

Section 5.1 Financial Statements.

 

Furnish to the Administrative Agent and each of the Lenders:

 

(a) Annual Financial Statements.  As soon as available and in any event within 90 days after the end of each fiscal year of the Parent (i) consolidated statements of income, stockholders’ equity and cash flows of the Parent and its Subsidiaries for such fiscal year and (ii) the related consolidated balance sheet of the Parent and its Subsidiaries as at the end of such fiscal year, setting forth in each case in comparative form the corresponding consolidated figures for the preceding fiscal year, and accompanied by an unqualified
opinion thereon of independent certified public accountants of recognized national standing, which opinion shall state that such consolidated financial statements fairly present the consolidated financial condition and results of operations of the Parent and its Subsidiaries, as at the end of, and for, such fiscal year in accordance with GAAP, and a certificate of such accountants stating that, in making the examination necessary for their opinion, they obtained no knowledge, except as specifically stated, of any Default or Event of Default; and

 

(b) Quarterly Financial Statements.  As soon as available and in any event within 45 days after the end of each of the first three quarterly fiscal periods of each fiscal year of the Parent, (i) consolidated statements of income and cash flows of the Parent and its Subsidiaries and (ii) the related consolidated balance sheet of the Parent and its Subsidiaries, in each case for such period and for the period from the beginning of the respective fiscal year to the end of such period, setting forth in each case in comparative form the
corresponding consolidated figures for the corresponding periods in the preceding fiscal year, accompanied by a certificate of a Responsible Officer of the Parent and, if the Parent is no longer the Borrower, the Borrower, which certificate shall state that such consolidated financial statements fairly present the consolidated financial condition and results of operations of the Parent and its Subsidiaries, in accordance with GAAP consistently applied, as at the end of, and for, such period (subject to normal year-end audit adjustments); and

 

  

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all such financial statements to be accompanied by a description of, and an estimation of the effect on the financial statements on account of, a change, if any, in the application of accounting principles as provided in Section 1.3.

 

Notwithstanding the foregoing, financial statements and reports required to be delivered pursuant to the foregoing provisions of this Section (to the extent any such reports are included in materials otherwise filed with the SEC) may be delivered electronically and if so, shall be deemed to have been delivered on the date on which (i) the Administrative Agent receives such reports from the Borrower through electronic mail or (ii) the Parent posts such documents on the internet at www.dollartree.com; provided that, upon the Administrative Agent’s request, the Borrower shall provide paper copies of any documents required hereby to the
Administrative Agent.

 

Section 5.2 Certificates; Other Information.

 

Furnish to the Administrative Agent and each of the Lenders:

 

(a) promptly upon their becoming available, copies of all registration statements and regular periodic reports, if any, that the Parent or any Subsidiary shall have filed with the SEC or any national securities exchange;

 

(b) promptly upon mailing thereof to the shareholders of the Parent generally, copies of all financial statements, reports and proxy statements so mailed;

 

(c) at the time it furnishes each set of financial statements pursuant to Sections 5.1(a) and 5.1(b) above, a certificate of a Responsible Officer of the Parent (i) certifying that (A) each of the Credit Parties during such period observed or performed in all material respects all of its covenants and other agreements, and satisfied in all material respects every condition contained in this Agreement to be observed, performed or satisfied by it, and (B) no Default or Event of Default has occurred and is continuing (or, if any Default or Event of Default has occurred and is continuing, describing the same in
reasonable detail and describing the action that the Parent, or, if the Parent is no longer the Borrower, the Borrower has taken or proposes to take with respect thereto) and (ii) setting forth in reasonable detail the computations necessary to determine whether the Credit Parties are in compliance with Section 5.9 hereof as of the end of the respective quarterly fiscal period or fiscal year;

 

(d) from time to time such other information regarding the financial condition, operations, business or prospects of the Parent or any of its Subsidiaries (including, without limitation, any Plan or Multiemployer Plan and any reports or other information required to be filed under ERISA) as any Lender or the Administrative Agent may reasonably request.

 

  

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Section 5.3 Payment of Obligations.

 

Pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, in accordance with industry practice (subject, where applicable, to specified grace periods) all of its material obligations of whatever nature and any additional costs that are imposed as a result of any failure to so pay, discharge or otherwise satisfy such obligations, except when the amount or validity of such obligations and costs is currently being contested in good faith by appropriate proceedings and reserves, if applicable, in conformity with GAAP with respect thereto have been provided on the books of the Parent or its Subsidiaries, as the case may be, or failure to pay could not reasonably be
expected to have a Material Adverse Effect.

 

Section 5.4 Conduct of Business and Maintenance of Existence.

 

(a) Preserve and maintain its legal existence and all of its material rights, privileges, licenses and franchises (provided that nothing in this Section 5.4 shall prohibit any transaction expressly permitted under Section 6.4 hereof).

 

(b) Pay and discharge all taxes, assessments and governmental charges or levies imposed on it or on its income or profits or on any of its assets prior to the date on which penalties attach thereto, except for any such tax, assessment, charge or levy the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained or where failure to pay any such tax, assessment, charge or levy could not reasonably be expected to have a Material Adverse Effect.

 

Section 5.5 Maintenance of Property; Insurance.

 

(a) Keep all property used or useful in its business in good working order and condition (ordinary wear and tear and obsolescence excepted) except to the extent failure to do so could not reasonably be expected to have a Material Adverse Effect.

 

(b) Maintain insurance with financially sound and reputable insurance companies, and with respect to Property and risks of a character usually maintained by corporations engaged in the same or similar business similarly situated, against loss, damage and liability of the kinds and in the amounts customarily maintained by such corporations, including self-insurance.

 

Section 5.6 Inspection of Property; Books and Records; Discussions.

 

(a) Keep adequate records and books of account in which complete entries in accordance with GAAP consistently applied and all Requirements of Law shall be made of all dealings and transactions in relation to its businesses and activities.

 

  

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(b) Upon reasonable prior notice, permit representatives of any Lender or the Administrative Agent, during normal business hours, to examine, copy and make extracts from its books and records, to inspect any of its Real Properties, and to discuss its business and affairs with its officers, all to the extent reasonably requested by such Lender or the Administrative Agent (as the case may be).

 

Section 5.7 Notices.

 

Give prompt notice in writing to the Administrative Agent (which shall promptly transmit such notice to each Lender) of:

 

(a) within five Business Days after any Credit Party knows or has reason to know thereof, the occurrence of any Default or Event of Default;

 

(b) within five Business Days after any Credit Party knows or has reason to know thereof, any default or event of default under any Contractual Obligation of the Credit Parties or any of their Subsidiaries which could reasonably be expected to have a Material Adverse Effect;

 

(c) within five Business Days after any Credit Party knows or has reason to know thereof, any legal or arbitral proceedings before any Governmental Authority and any material development in respect of such legal or arbitral proceedings affecting the Credit Parties or any of their Subsidiaries, except proceedings that, if adversely determined, would not (either individually or in the aggregate) have a Material Adverse Effect;

 

(d) as soon as possible, and in any event within ten days after any Credit Party or any of its Subsidiaries knows or has reason to believe that any of the events or conditions specified below with respect to any Plan or Multiemployer Plan has occurred or exists, a statement signed by a Responsible Officer of the Parent or such Credit Party setting forth details respecting such event or condition and the action, if any, that the Parent, any Credit Party or any ERISA Affiliate proposes to take with respect thereto (and a copy of any report or notice required to be filed with or given to PBGC by the Parent, any
other Credit Party or any ERISA Affiliate with respect to such event or condition):

 

(i) any Reportable Event with respect to a Plan, as to which PBGC has not by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event (provided that a failure to meet the minimum funding standard of Section 412 of the Code or Section 302 of ERISA, including, without limitation, the failure to make on or before its due date a required installment under Section 412(m) of the Code or Section 302(e) of ERISA, shall be a reportable event regardless of the issuance of any
waivers in accordance with Section 412(d) of the Code) and any request for a waiver under Section 412(d) of the Code for any Plan;

 

  

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(ii) the distribution under Section 4041 of ERISA of a notice of intent to terminate any Plan or any action taken by any Credit Party or any of its Subsidiaries or any ERISA Affiliate to terminate any Plan;

 

(iii) the institution by PBGC of proceedings under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by any Credit Party or any of its Subsidiaries or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by PBGC with respect to such Multiemployer Plan;

 

(iv) the complete or partial withdrawal from a Multiemployer Plan by any Credit Party or any of its Subsidiaries or any ERISA Affiliate that results in liability under Section 4201 or 4204 of ERISA (including the obligation to satisfy secondary liability as a result of a purchaser default) or the receipt by any Credit Party or any of its Subsidiaries or any ERISA Affiliate of notice from a Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends to terminate or has terminated under Section 4041A of ERISA;

 

(v) the institution of a proceeding by a fiduciary of any Multiemployer Plan against any Credit Party or any of its Subsidiaries or any ERISA Affiliate to enforce Section 515 of ERISA, which proceeding is not dismissed within 30 days; and

 

(vi) the adoption of an amendment to any Plan that, pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA, would result in the loss of tax-exempt status of the trust of which such Plan is a part if any Credit Party or any of its Subsidiaries or any ERISA Affiliate fails to timely provide security to the Plan in accordance with the provisions of said Sections;

 

(e) within five Business Days after any Credit Party knows or has reason to know thereof, any assertion of any Environmental Claim by any Person against, or with respect to the activities of, the Parent or any of its Subsidiaries and notice of any alleged violation of or non-compliance with any Environmental Laws or any permits, licenses or authorizations, other than any Environmental Claim or alleged violation that, if adversely determined, would not (either individually or in the aggregate) have a Material Adverse Effect; and

 

(f) within five Business Days after any Credit Party knows or has reason to know thereof, any other development or event which could reasonably be expected to have a Material Adverse Effect.

 

Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action the Parent or the Borrower proposes to take with respect thereto.  In the case of any notice of a Default or Event of Default, the Parent or the Borrower, as applicable, shall specify that such notice is a Default or Event of Default notice on the face thereof.

 

  

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Section 5.8 Environmental Laws.

 

Without limiting the general terms set forth in Section 5.11:

 

(a) 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 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 except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect;

 

(b) Conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions required under Environmental Laws and promptly comply in all material respects with all lawful orders and directives of all Governmental Authorities regarding Environmental Laws except to the extent that the same are being contested in good faith by appropriate proceedings and the pendency of such proceedings could not reasonably be expected to have a Material Adverse Effect; and

 

(c) Defend, indemnify and hold harmless the Administrative Agent and the Lenders, and their respective employees, agents, officers and directors, from and against any and all claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature known or unknown, contingent or otherwise, arising out of, or in any way relating to the violation of, noncompliance with or liability under, any Environmental Law applicable to the operations of the Parent or any of its Subsidiaries or the Real Properties, or any orders, requirements or demands of Governmental Authorities
related thereto, including, without limitation, reasonable attorney’s and consultant’s fees, investigation and laboratory fees, response costs, court costs and litigation expenses, except to the extent that any of the foregoing arise out of the gross negligence or willful misconduct of the party seeking indemnification therefor.  The agreements in this paragraph shall survive repayment of the Notes and all other amounts payable hereunder.

 

Section 5.9 Financial Covenants.

 

Commencing on the day immediately following the Closing Date, the Parent shall, and shall cause each of its Subsidiaries to, comply with the following financial covenants:

 

(a) Adjusted Leverage Ratio.  The Adjusted Leverage Ratio, as of the last day of each fiscal quarter of the Parent and its Subsidiaries, shall be less than or equal to 3.50 to 1.0.

 

(b) Fixed Charge Coverage Ratio.  The Fixed Charge Coverage Ratio, as of the last day of each fiscal quarter of the Parent and its Subsidiaries, shall be greater than or equal to 2.00 to 1.0.

 

  

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Section 5.10 Obligations Regarding Subsidiaries; Additional Subsidiary Guarantors.

 

(a) Except as permitted by Section 6.4, the Parent or the Borrower, as the case may be, will, and will cause each of its Subsidiaries to take such action from time to time as shall be necessary to ensure that each of its Subsidiaries remains a Subsidiary at all times.

 

(b) The Credit Parties will cause each of their Material Domestic Subsidiaries, whether newly formed, after acquired or otherwise existing, to promptly become a Guarantor hereunder by way of execution of a Joinder Agreement and take such other action as may be required pursuant to the terms of Section 5.12.

 

Section 5.11 Compliance with Law.

 

Each Credit Party will, and will cause each of its Subsidiaries to, comply with all laws, rules, regulations and orders, and all applicable restrictions imposed by all Governmental Authorities, applicable to it and its assets if noncompliance with any such law, rule, regulation, order or restriction could reasonably be expected to have a Material Adverse Effect.

 

Section 5.12 Additional Credit Parties.

 

As soon as practicable and in any event within 30 days after any Person (whether newly formed, acquired or otherwise) becomes a Material Domestic Subsidiary of any Credit Party (or such longer period of time as agreed to by the Administrative Agent in its reasonable discretion), the Borrower shall provide the Administrative Agent with written notice thereof and shall (a) if such Person is a Material Domestic Subsidiary of a Credit Party, cause such Person to execute a Joinder Agreement in substantially the same form as Schedule 5.12, and
(b) deliver such other documentation as the Administrative Agent may reasonably request in connection with the foregoing, including, without limitation, certified resolutions and other organizational and authorizing documents of such Person and favorable opinions of counsel to such Person (which shall cover, among other things, the legality, validity, binding effect and enforceability of the documentation referred to above).

 

Section 5.13 Post Closing Covenant.

 

Within thirty (30) days after the Closing Date (or such longer period of time as agreed to by the Administrative Agent in its sole discretion), the Administrative Agent shall have received evidence satisfactory to the Administrative Agent that Dollar Tree Stores, Inc. is in good standing in the State of Tennessee.

 

  

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ARTICLE VI

 

NEGATIVE COVENANTS

 

The Credit Parties hereby covenant and agree that on the Closing Date, and thereafter for so long as this Agreement is in effect and until the Commitments have terminated, no Note remains outstanding and unpaid and the Credit Party Obligations, together with interest, the Facility Fee and all other amounts owing to the Administrative Agent or any Lender hereunder, are paid in full, the Credit Parties shall, and shall cause each of their respective Subsidiaries, to act in accordance with the following:

 

Section 6.1 Indebtedness.

 

The Credit Parties will not, nor will it permit any Subsidiary to, contract, create, incur, assume or permit to exist any Indebtedness, except:

 

(a) Indebtedness arising or existing under this Agreement and the other Credit Documents;

 

(b) Indebtedness of the Parent and its Subsidiaries existing as of the Closing Date as referenced in the financial statements referenced in Section 3.1 (and set out more specifically in Schedule 6.1(b)) hereto and renewals, refinancings or extensions thereof in a principal amount not in excess of that outstanding as of the date of such renewal, refinancing or extension;

 

(c) Indebtedness (including Capital Lease Obligations) incurred to finance the purchase of equipment, and other Capital Lease Obligations (other than in connection with sale leaseback transactions permitted under Section 6.12), not to exceed, when added to Indebtedness outstanding pursuant to Section 6.1(e) hereof, 20% of Consolidated Net Worth in the aggregate outstanding at any time; provided that (i) such Indebtedness when incurred shall not exceed the purchase price or cost of construction of such asset and (ii) no such Indebtedness shall be refinanced for a principal amount in excess of the principal
balance outstanding thereon at the time of such refinancing;

 

(d) intercompany Indebtedness of one Credit Party to another Credit Party;

 

(e) additional Indebtedness of the Credit Parties up to but not exceeding, when added to Indebtedness outstanding pursuant to Section 6.1(c) hereof, 20% of Consolidated Net Worth in the aggregate outstanding at any time; provided, that after giving effect to such Indebtedness on a Pro Forma Basis, (i) no Default or Event of Default exists and (ii) the Credit Parties are in compliance with each of the financial covenants set forth in Section 5.9;

 

(f) Indebtedness in respect of Hedging Agreements to the extent permitted hereunder; and

 

(g) additional unsecured Indebtedness (including Indebtedness in connection with sale leaseback transactions permitted under Section 6.12) of the Credit Parties; provided, that after giving effect to such Indebtedness on a Pro Forma Basis, (i) no Default or Event of Default exists and (ii) the Credit Parties are in compliance with each of the financial covenants set forth in Section 5.9.

 

  

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Section 6.2 Liens.

 

The Credit Parties will not, nor will they permit any Subsidiary to, contract, create, incur, assume or permit to exist any Lien with respect to any of its assets (other than “margin stock” within the meaning of Regulation U), whether now owned or hereafter acquired, except for Permitted Liens.

 

Section 6.3 Nature of Business.

 

Neither the Parent nor any of its Subsidiaries will engage in any line or lines of business activity other than those conducted as of the Closing Date and business activities reasonably related or complementary thereto, except for lines of business which generate less than 5% of the gross revenues of the Parent and its Subsidiaries on a consolidated basis.

 

Section 6.4 Consolidation, Merger, Sale or Purchase of Assets, etc.

 

The Credit Parties will not, nor will they permit any Subsidiary to,

 

(a) except as provided in Section 6.4(d) below, enter into any transaction of merger or consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution);

 

(b) acquire any business or assets from, or Capital Stock of, or be a party to any acquisition of, any Person except:

 

(i) for purchases of inventory and other assets to be sold or used in the ordinary course of business; and

 

(ii) Investments permitted under Section 6.5 hereof;

 

(c) convey, sell, lease, transfer or otherwise dispose of, in one transaction or a series of transactions, any part of its business or assets, whether now owned or hereafter acquired (including, without limitation, receivables and leasehold interests), but excluding:

 

(i) any Excluded Disposition;

 

(ii) obsolete or worn-out Property, tools or equipment no longer used or useful in its business (other than any Excluded Disposition) or real Property no longer used or useful in its business;

 

(iii) any sale, lease or transfer of assets from a Credit Party to another Credit Party; and

 

  

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(iv) other assets provided that the aggregate current market value of all assets so sold or transferred (in each case determined at the time of such sale or transfer) shall not at any time exceed, when added to the assets sold or transferred pursuant to Section 6.12 hereof (without duplication), 25% of the current market value of the total assets of the Parent and its Subsidiaries and immediately after giving effect to such transaction, the Parent and its Subsidiaries shall be in compliance with the financial covenants set forth in Section 5.9
hereof on a Pro Forma Basis and both before and after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing;

 

provided, that in each case with respect to subsection (iv) above at least 75% of the consideration received therefor by a Credit Party or any such Subsidiary is in the form of cash or Cash Equivalents or Replacement Assets; and

 

(d) Notwithstanding the foregoing provisions of this Section 6.4, so long as no Default or Event of Default shall have occurred and be continuing, and after giving effect to any of the succeeding transactions, no Default or Event of Default would exist hereunder:

 

(i) (A) any Credit Party may be merged or consolidated with or into another Credit Party; provided, that, subject to clause (D) immediately below, if one of the parties to such merger or consolidation is the Borrower, the Borrower shall be the continuing or surviving corporation, (B) any Subsidiary may be merged or consolidated with or into another Credit Party so long as the surviving party is either (x) a Credit Party or (y) an Additional Credit Party; provided, that, subject to clause (D) immediately below, if one of the parties to such merger or consolidation is the Borrower, the Borrower shall be the
continuing or surviving corporation, (C) any of the Parent or any Subsidiary may merge or consolidate with or into any Person that is not a Credit Party, provided that the applicable conditions set forth in Section 6.4(b) regarding acquisitions are complied with in connection with any such acquisition by merger, the Parent or any such Subsidiary shall be the continuing or surviving corporation and immediately after giving effect to such transaction, the Parent and its Subsidiaries shall be in compliance with the financial covenants set forth in Section 5.9 hereof on a Pro Forma Basis and (D) the Borrower may merge or consolidate with or into any Credit Party or with any Person wholly-owned and controlled by a Credit Party, provided that if the
Borrower is not the continuing or surviving entity, the surviving entity shall have assumed all obligations of the Borrower under the Credit Documents and immediately after giving effect to such transaction, the Parent and its Subsidiaries shall be in compliance with the financial covenants set forth in Section 5.9 hereof on a Pro Forma Basis and the ownership of the properties and assets of the Credit Parties as a whole shall remain unchanged; and

 

(ii) any Subsidiary of the Parent (other than, if the Parent is no longer the Borrower, the Borrower) may sell, lease, transfer or otherwise dispose of any or all of its assets (upon voluntary liquidation or otherwise) to any Credit Party.

 

  

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The Borrower shall provide the Administrative Agent with prior written notice of any transaction described in this Section 6.4(d) and take such other action as may be required pursuant to the terms of Section 5.12.

 

Section 6.5 Advances, Investments and Loans.

 

The Credit Parties will not, nor will they permit any Subsidiary to, lend money or extend credit or make advances to any Person (other than extensions of credit to vendors and suppliers in the form of indemnification obligations owed by such Persons to the Parent or any of its Subsidiaries under vendor/supply contracts entered into in the ordinary course of business), or purchase or acquire any stock, obligations or securities of, or any other interest in, or make any capital contribution to, any Person except for Permitted Investments.

 

Section 6.6 Transactions with Affiliates.

 

Except as expressly permitted by this Agreement, the Credit Parties will not, nor will they permit any of their Subsidiaries to, directly or indirectly: (a) make any investment in an Affiliate other than Permitted Investments; (b) transfer, sell, lease, assign or otherwise dispose of any assets to an Affiliate; (c) merge into or consolidate with or purchase or acquire assets from an Affiliate other than Permitted Acquisitions; or (d) enter into any other transaction directly or indirectly with or for the benefit of an Affiliate (including, without limitation, guarantees and assumptions of obligations of an Affiliate); provided that (i) any Affiliate
who is an individual may serve as a director, officer or employee of the Parent or any of its Subsidiaries and receive reasonable compensation for his or her services in such capacity and (ii) the Parent and its Subsidiaries may enter into transactions (other than extensions of credit by the Parent or any of its Subsidiaries to an Affiliate) if the monetary or business consideration arising therefrom would be substantially as advantageous to the Parent and its Subsidiaries as the monetary or business consideration that would be obtained in a comparable transaction with a Person not an Affiliate.

 

Section 6.7 Ownership of Subsidiaries; Restrictions.

 

The Credit Parties will not, nor will they permit any Subsidiary to, create, form or acquire any Subsidiaries, except for (a) wholly-owned Domestic Subsidiaries which are joined as Additional Credit Parties to the extent required by the terms hereof and (b) wholly-owned (or, if not wholly owned, owned to the maximum extent permitted under applicable law) Foreign Subsidiaries approved in writing by the Agent, which approval shall not be unreasonably withheld.  The Credit Parties will not, nor will they permit their Subsidiaries to, sell, transfer, pledge or otherwise dispose of any Capital Stock or other equity interests in any of its Subsidiaries, nor will it permit any of its Subsidiaries to issue,
sell, transfer, pledge or otherwise dispose of any of its Capital Stock or other equity interests, except in a transaction permitted by Section 6.4.

 

Section 6.8 Fiscal Year; Organizational Documents; Material Contracts.

 

The Credit Parties will not, nor will they permit any of their Subsidiaries to, change their fiscal year, except to adopt a retail fiscal year end which is no more than 65 days from December 31.  The Borrower will promptly notify the Agent of such change in fiscal year.  The Credit Parties will not, nor will they permit any Subsidiary to, amend, modify or change their articles of incorporation (or corporate charter or other similar organizational document) or bylaws (or other similar document) in any manner that could adversely affect the rights of the Lenders hereunder.  The Credit Parties will not, nor will it permit any of their Subsidiaries to, without the prior written consent
of the Administrative Agent, amend, modify, cancel or terminate or fail to renew or extend or permit the amendment, modification, cancellation or termination of any of the Material Contracts, except in the event that such amendments, modifications, cancellations or terminations could not reasonably be expected to have a Material Adverse Effect.

 

  

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Section 6.9 Limitation on Actions.

 

(a) The Credit Parties will not, nor will they permit any Subsidiary to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any such Person to (a) pay dividends or make any other distributions to any Credit Party on its Capital Stock or with respect to any other interest or participation in, or measured by, its profits, (b) pay any Indebtedness or other obligation owed to any Credit Party, (c) make loans or advances to any Credit Party, (d) sell, lease or transfer any of its properties or assets to any Credit Party, or (e)
act as a Guarantor pursuant to the Credit Documents or any renewals, refinancings, exchanges, refundings or extension thereof, except (in respect of any of the matters referred to in clauses (a)-(d) above) for such encumbrances or restrictions existing under or by reason of (i) this Agreement and the other Credit Documents, (ii) applicable law, (iii) any document or instrument governing Indebtedness incurred pursuant to Section 6.1(c), provided that any such restriction contained therein relates only to the asset or assets constructed or acquired in connection therewith, or (iv) any Permitted Lien or any document or instrument governing any Permitted Lien, provided that any such restriction contained therein relates only to the asset or assets subject to
such Permitted Lien.

 

(b) The Credit Parties will not, nor will they permit any Subsidiary to, enter into, assume or become subject to any agreement prohibiting or otherwise restricting the creation or assumption of any Lien upon its properties or assets, whether now owned or hereafter acquired, or requiring the grant of any security for such obligation if security is given for some other obligation except (i) pursuant to this Agreement and the other Credit Documents, (ii) pursuant to applicable law, (iii) pursuant to any document or instrument governing Indebtedness incurred pursuant to Section 6.1(c),
provided that in the case of Section 6.1(c) any such restriction contained therein relates only to the asset or assets constructed or acquired in connection therewith, (iv) customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary or assets pending such sale, provided such restrictions and conditions apply only to the Subsidiary or assets that are to be sold and such sale is permitted hereunder, (v) restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the assets securing such Indebtedness, (vi) customary provisions in leases and other contracts restricting the assignment thereof, (vii) restrictions in any
document or instrument governing any Permitted Lien, provided that any such restriction contained therein relates only to the asset or assets subject to such Permitted Lien and (viii) any indenture agreement, instrument or other arrangement relating to the assets or business of any Subsidiary and existing prior to the consummation of the Permitted Acquisition in which such Subsidiary was acquired.

 

  

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Section 6.10 Restricted Payments.

 

The Credit Parties will not, nor will they permit any Subsidiary to, directly or indirectly, declare, order, make or set apart any sum for or pay any Restricted Payment, except (a) to make dividends payable solely in the same class of Capital Stock of such Person, (b) to make dividends or other distributions payable to any Credit Party (directly or indirectly through Subsidiaries), (c) as permitted by Section 6.11, (d) to make dividends to or repurchases from the Parent or the parent of such Subsidiary (provided that such parent company is a Credit Party) the proceeds of which shall be used to pay taxes that are then due and payable, and (e) the Parent may pay dividends or repurchase shares of its Capital Stock
so long as no Default or Event of Default shall have occurred and be continuing or be directly or indirectly caused as a result thereof and after giving effect to such payments or repurchases, the Parent and its Subsidiaries shall be in compliance with the financial covenants set forth in Section 5.9 hereof on a Pro Forma Basis, determined at the time of any such payment or repurchase.

 

Section 6.11 Repayments of Indebtedness, etc.

 

(a) The Credit Parties will not, nor will they permit any of its Subsidiaries to, amend or modify (or permit the amendment or modification of) any of the terms of the documents evidencing its or their Indebtedness if such amendment or modification would add or change any terms in a manner adverse to the issuer of such Indebtedness, or shorten the final maturity or average life to maturity or require any payment to be made sooner than originally scheduled or increase the interest rate applicable thereto or change any subordination provision thereof.

 

(b) The Borrower will furnish to the Administrative Agent a copy of each modification, supplement or waiver of any provisions of any agreement, instrument or other document evidencing or relating to the charter or bylaws of the Parent or any of its Subsidiaries promptly upon the effectiveness thereof (and the Administrative Agent will promptly furnish a copy thereof to each Lender).

 

Section 6.12 Sale Leasebacks.

 

The Credit Parties will not, nor will they permit any Subsidiary to, directly or indirectly, enter into any arrangement, directly or indirectly, whereby the Parent or any Subsidiary shall sell or transfer any property owned by it to a Person (other than the Parent or any Subsidiary) in order then or thereafter to lease such property or lease other property which the Parent or any Subsidiary intends to use for substantially the same purpose as the property being sold or transferred.  Notwithstanding the foregoing provisions of this Section 6.12, the Parent or any Subsidiary may sell or transfer any property owned by it as described in the preceding sentence
provided that the aggregate current market value of all assets so sold or transferred (in each case determined at the time of such sale or transfer) shall not at any time exceed, when added to the assets sold or transferred pursuant to Section 6.4(c)(iv) hereof (without duplication), 25% of the current market value of the total assets of the Parent and its Subsidiaries and immediately after giving effect to such transaction, the Parent and its Subsidiaries shall be in compliance with the financial covenants set forth in Section 5.9 hereof on a Pro Forma Basis.

 

  

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Section 6.13 Use of Proceeds.

 

The Borrower will not use the proceeds of the Loans and Letters of Credit in a manner inconsistent with the uses permitted under Section 3.11 hereof.

 

ARTICLE VII

 

EVENTS OF DEFAULT

 

Section 7.1 Events of Default.

 

An Event of Default shall exist upon the occurrence of any of the following specified events (each an “Event of Default”):

 

(a) (i) The Borrower shall fail to pay any principal on any Note when due in accordance with the terms thereof or hereof; or (ii) the Borrower shall fail to reimburse the applicable Issuing Lender for any LOC Obligations when due in accordance with the terms hereof; or (iii) the Borrower shall fail to pay any interest on any Note or any fee or other amount payable hereunder when due in accordance with the terms thereof or hereof and any such failure shall continue unremedied for three (3) Business Days; or (iv) any Guarantor shall fail to pay on the
Guaranty in respect of any of the foregoing or in respect of any other Guaranty Obligations thereunder; or

 

(b) Any representation or warranty made or deemed made herein or in any of the other Credit Documents or which is contained in any certificate, document or financial or other statement furnished at any time under or in connection with this Agreement shall prove to have been incorrect, false or misleading in any material respect on or as of the date made or deemed made; or

 

(c) (i) Any Credit Party shall fail to perform, comply with or observe any term, covenant or agreement applicable to it contained in Sections 5.4(a), 5.6(b), 5.7(a) or 5.9 or Article VI hereof; or (ii) any Credit Party shall fail to comply with any other covenant, contained in this Credit Agreement or the other Credit Documents or any other agreement, document or instrument among any Credit Party, the Administrative Agent and the Lenders or executed by any Credit Party in favor of the Administrative Agent or the Lenders (other than as described in Sections 7.1(a) or 7.1(c)(i) above), and in the event any such
breach or failure to comply is capable of cure, is not cured within thirty (30) days of its occurrence; or

 

(d) The Credit Parties or any of their Subsidiaries shall (i) default in any payment of principal of or interest on any Indebtedness (other than the Notes) in a principal amount outstanding of at least $25,000,000 in the aggregate for the Parent and any of its Subsidiaries beyond the period of grace (not to exceed 30 days), if any, provided in the instrument or agreement under which such Indebtedness was created; or (ii) default in the observance or performance of any other agreement or condition relating to any Indebtedness in a principal amount outstanding of at least $25,000,000 in the aggregate for the
Parent and its Subsidiaries or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to become due prior to its stated maturity; or

 

  

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(e) (i) The Credit Parties or any of their Subsidiaries shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar
official for it or for all or any substantial part of its assets, or the Parent or any Subsidiary shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against the Parent or any Subsidiary any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced against the Parent or any Subsidiary any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the
entry thereof; or (iv) the Parent or any Subsidiary shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) the Parent or any Subsidiary shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or

 

(f) One or more judgments or decrees shall be entered against any Credit Party or any of its Subsidiaries involving in the aggregate a liability (to the extent not paid when due or covered by insurance) of $25,000,000 or more and all such judgments or decrees shall not have been paid and satisfied, vacated, discharged, stayed or bonded pending appeal within 30 days from the entry thereof; or

 

(g) (i) Any Person shall engage in any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any “accumulated funding deficiency” (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan or any Lien in favor of the PBGC or a Plan (other than a Permitted Lien) shall arise on the assets of the Parent, any of its Subsidiaries or any Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall
be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a Trustee is, in the reasonable opinion of the Required Lenders, likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the Parent, any of its Subsidiaries or any Commonly Controlled Entity shall, or in the reasonable opinion of the Required Lenders is likely to, incur any liability in connection with a withdrawal from, or the Insolvency or ERISA Reorganization of, any Multiemployer Plan or (vi) any other similar event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) through (vi) above, such event or condition, together with all other such events or conditions, if any, could have a Material
Adverse Effect; or

 

  

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(h) A reasonable basis shall exist for the assertion against any Credit Party or any of its Subsidiaries, or any predecessor in interest of any Credit Parties or any of its Subsidiaries, of (or there shall have been asserted against any Credit Party or any of its Subsidiaries) an Environmental Claim that, in the judgment of the Required Lenders, is reasonably likely to be determined adversely to any Credit Party or any of its Subsidiaries, and the amount thereof (either individually or in the aggregate) is reasonably likely to have a Material Adverse Effect (insofar as such amount is payable by any Credit Party
or any of its Subsidiaries but after deducting any portion thereof that is reasonably expected to be paid by other creditworthy Persons jointly and severally liable therefor); or

 

(i) A Change of Control shall occur; or

 

(j) The Guaranty or any material provision thereof shall cease to be in full force and effect or any Guarantor or any Person acting by or on behalf of any Guarantor shall deny or disaffirm any Guarantor’s obligations under the Guaranty; or

 

(k) Any other Credit Document shall fail to be in full force and effect or to give the Administrative Agent and/or the Lenders the security interests, liens, rights, powers and privileges purported to be created thereby (except as such documents may be terminated or no longer in force and effect in accordance with the terms thereof, other than those indemnities and provisions which by their terms shall survive).

 

Section 7.2 Acceleration; Remedies.

 

Upon the occurrence and continuation of an Event of Default, then, and in any such event, (a) if such event is an Event of Default specified in Section 7.1(e) above, automatically the Commitments shall immediately terminate and the Loans (with accrued interest thereon), and all other amounts under the Credit Documents (including without limitation the maximum amount of all contingent liabilities under Letters of Credit) shall immediately become due and payable, the Administrative Agent shall have the right to enforce any and all other rights and interests created and existing under the Credit Documents, including, without limitation, all rights and remedies against a Guarantor and all rights of set-off, and the
Administrative Agent shall have the right to enforce any and all other rights and remedies of a creditor under applicable law, and (b) if such event is any other Event of Default, with the written consent of the Required Lenders, the Administrative Agent may, or upon the written request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower, take any or all of the following actions: (i) declare the Commitments to be terminated forthwith, whereupon the Commitments shall immediately terminate; (ii) declare the Loans (with accrued interest thereon) and all other amounts owing under this Agreement and the Notes to be due and payable forthwith and direct the Borrower to pay to the Administrative Agent cash collateral as security for the LOC Obligations for subsequent drawings under then outstanding Letters of Credit in an amount equal to the maximum amount of
which may be drawn under Letters of Credit then outstanding, whereupon the same shall immediately become due and payable; (iii) enforce any and all other rights and interests created and existing under the Credit Documents, including, without limitation, all rights and remedies against a Guarantor and all rights of set-off; and (iv) enforce any and all other rights and remedies of a creditor under applicable law.  Except as expressly provided above in this Section 7.2, presentment, demand, protest and all other notices of any kind are hereby expressly waived.

 

  

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ARTICLE VIII

 

THE AGENT

 

Section 8.1 Appointment and Authority.  Each of the Lenders and the Issuing Lender hereby irrevocably appoints Wells Fargo to act on its behalf as the Administrative Agent hereunder and under the other Credit Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto.  The provisions of
this Article are solely for the benefit of the Administrative Agent, the Lenders and the Issuing Lender, and neither the Borrower nor any other Credit Party 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 Credit 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.

 

Section 8.2 Rights as a Lender.  The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context
otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity.  Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.

 

Section 8.3 Exculpatory Provisions.  The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Credit Documents, and its obligations hereunder shall be administrative in nature.  Without limiting the generality of the foregoing, the Administrative Agent:

 

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

 

  

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(b) 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 Credit 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 Credit 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 Credit 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

 

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

 

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 9.1 and 7.2) 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 by the Borrower, a Lender or the Issuing Lender.

 

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 Credit 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 Credit Document or any other agreement, instrument or document or (v) the
satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

 

Section 8.4 Reliance by Administrative Agent.  The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person.  The Administrative Agent also may rely upon
any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon.  In determining compliance with any condition hereunder to the making of a Loan, or the issuance, extension, renewal or increase of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the Issuing Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender or the Issuing Lender unless the Administrative Agent shall have received notice to the contrary from such Lender or the Issuing Lender prior to the making of such Loan or the issuance of such Letter of Credit.  The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

 

  

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Section 8.5 Delegation of Duties.  The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Credit Document by or through any one or more sub-agents appointed by the Administrative Agent.  The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties.  The exculpatory provisions of this Article shall apply to
any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.

 

Section 8.6 Resignation of Administrative Agent.

 

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

 

(b) If the Person serving as Administrative Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof, the Required Lenders may, to the extent permitted by applicable law, by notice in writing to the Borrower and such Person remove such Person as Administrative Agent and, in consultation with the Borrower, appoint a successor.  If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed by the Required Lenders) (the
“Removal Effective Date”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.

 

  

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(c) With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (i) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Credit Documents and (ii) 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 and the Issuing Lender directly, until such time as the Required Lenders appoint a successor Administrative Agent as provided for above in this paragraph.  Upon the acceptance of a successor’s
appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring or removed Administrative Agent, and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Credit Documents (if not already discharged therefrom as provided above in this paragraph).  The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor.  After the retiring Administrative Agent’s resignation or removal hereunder and under the other Credit Documents, the provisions of this Article and Section 9.5 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its
sub agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.

 

(d) Any resignation by Wells Fargo Bank, as Administrative Agent pursuant to this Section shall also constitute its resignation as Issuing Lender and Swingline Lender.  Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, (i) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Issuing Lender and Swingline Lender, (ii) the retiring Issuing Lender and Swingline Lender shall be discharged from all of their respective duties and obligations hereunder or under the other Credit Documents, and (iii) the
successor Issuing Lender shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the retiring Issuing Lender to effectively assume the obligations of the retiring Issuing Lender with respect to such Letters of Credit.

 

Section 8.7 Indemnification.  The Lenders agree to indemnify the Administrative Agent, the Issuing Lender, and the Swingline Lender in their capacities hereunder and their Affiliates and their respective officers, directors, agents and employees (to the extent not reimbursed by the Credit Parties and without limiting the obligation of the Credit Parties to do so), ratably according to their respective Commitment Percentages in effect on the date on which indemnification is sought under this Section,
from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including, without limitation, at any time following the payment of the Credit Party Obligations) be imposed on, incurred by or asserted against any such indemnitee in any way relating to or arising out of any Credit Document or any documents contemplated by or referred to herein or therein or the Transactions or any action taken or omitted by any such indemnitee under or in connection with any of the foregoing; provided, however, that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements to the extent resulting from such indemnitee’s gross negligence or willful misconduct, as determined by a court of competent jurisdiction.  The agreements in this Section shall survive the termination of this Agreement and payment of the Notes, any Reimbursement Obligation and all other amounts payable hereunder.

 

  

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Section 8.8 No Other Duties, etc.  Anything herein to the contrary notwithstanding, none of the Bookrunners, Agents (other than the Administrative Agent) or Arrangers, as applicable, listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Credit Documents, except in its capacity, as applicable, as the Administrative Agent, a Lender or the Issuing Lender hereunder.

 

ARTICLE IX

 

MISCELLANEOUS

 

Section 9.1 Amendments, Etc.; Non-Consenting Lenders.

 

Neither this Credit Agreement, nor any of the Notes, nor any of the other Credit Documents, nor any terms hereof or thereof may be amended, supplemented, waived or modified except in accordance with the provisions of this Section nor may the Borrower or any Guarantor be released except in accordance with the provisions of this Section 9.1.  The Required Lenders may, or, with the written consent of the Required Lenders, the Administrative Agent may, from time to time, (a) enter into with the Borrower or any other Credit Party written amendments, supplements or modifications hereto and to the other Credit Documents for the purpose of adding any provisions to this Credit Agreement or the other Credit
Documents or changing in any manner the rights of the Lenders or of the Borrower or any other Credit Party hereunder or thereunder or (b) waive, on such terms and conditions as the Required Lenders may specify in such instrument, any of the requirements of this Credit Agreement or the other Credit Documents or any Default or Event of Default and its consequences; provided, however, that no such waiver and no such amendment, waiver, supplement, modification or release shall:

 

(i) reduce the amount or extend the scheduled date of maturity of any Loan or Note or any installment thereon, or reduce the stated rate of any interest or fee payable hereunder (except in connection with a waiver of interest at the increased post-default rate set forth in Section 2.8(b) which shall be determined by a vote of the Required Lenders) or extend the scheduled date of any payment thereof or forgive any principal, interest or fee payable hereunder, or extend the expiration date of any Lender’s Commitment, in each case without the written consent of each Lender directly affected thereby;
or

 

(ii) increase the amount of any Lender’s Commitment without the written consent of such Lender; or

 

(iii) amend, modify or waive any provision of this Section 9.1 or reduce the percentage specified in the definition of Required Lenders, without the written consent of all Lenders; or

 

  

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(iv) amend, modify or waive any provision of Article VIII without the written consent of the Administrative Agent; or

 

(v) release the Borrower or a substantial portion of the Guarantors from their obligations hereunder or under the Guaranty, without the written consent of all Lenders; or

 

(vi) permit the Borrower to assign or transfer any of its rights or obligations under this Credit Agreement or other Credit Documents without the written consent of all Lenders; or

 

(vii) amend, modify or waive any provision of the Credit Documents requiring consent, approval or request of the Required Lenders or all Lenders without the written consent of all of the Required Lenders or Lenders as appropriate; or

 

(viii) amend, modify or waive the order in which Credit Party Obligations are paid in Section 2.11(b) without the written consent of each Lender directly affected thereby; or

 

(ix) amend or modify the definition of Credit Party Obligations to delete or exclude any obligation or liability described therein without the written consent of each Lender directly affected thereby;

 

provided, further, that no amendment, waiver or consent affecting the rights or duties of the Administrative Agent, the Issuing Lender or the Swingline Lender under any Credit Document shall in any event be effective, unless in writing and signed by the Administrative Agent, the Issuing Lender and/or the Swingline Lender, as applicable, in addition to the Lenders required hereinabove to take such action.

 

In the event that any Lender (a “Non-Consenting Lender”) fails to consent to any proposed amendment, modification, termination, waiver or consent with respect to any provision hereof or of any other Credit Document that requires the unanimous approval of all of the Lenders or the approval of all of the Lenders directly affected thereby, in each case in accordance with the terms of this Section 9.1, the Borrower shall be permitted to replace such Non-Consenting Lender with a replacement financial institution satisfactory to the Administrative Agent, so long as the consent of the Required Lenders shall have been obtained with respect to
such amendment, modification, termination, waiver or consent; provided that (i) such replacement does not conflict with any applicable law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, (ii) the replacement financial institution shall purchase, at par, all Loans and other amounts owing to the Non-Consenting Lender pursuant to the Credit Documents on or prior to the date of replacement, (iii) the replacement financial institution shall approve the proposed amendment, modification, termination, waiver or consent, (iv) the Borrower shall be liable to the Non-Consenting Lender under Section 2.16 if any LIBOR Rate Loan owing to the Non-Consenting Lender shall be purchased other than on the last day of the Interest Period relating thereto, (v) the
Non-Consenting Lender shall be obligated to make such replacement in accordance with the provisions of Section 9.6(c) (provided that the Borrower shall be obligated to pay the registration and processing fee referred to therein), (vi) until such time as such replacement shall be consummated, the Borrower shall pay to the Non-Consenting Lender all additional amounts (if any) required pursuant to Section 2.14, 2.15, 2.16 or 2.17, as the case may be, (vii) the Borrower provides at least three (3) Business Days’ prior notice to the Non-Consenting Lender, and (viii) any such replacement shall not be deemed to be a waiver of any rights that the Borrower, the Administrative Agent or any other Lender shall have against the Non-Consenting Lender.  In the event any Non-Consenting Lender fails to execute the
agreements required under Section 9.6 in connection with an assignment pursuant to this Section 9.1, the Borrower may, upon two (2) Business Days’ prior notice to the Non-Consenting Lender, execute such agreements on behalf of the Non-Consenting Lender.

 

  

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Any such waiver, any such amendment, supplement or modification and any such release shall apply equally to each of the Lenders and shall be binding upon the Borrower, the other Credit Parties, the Lenders, the Administrative Agent and all future holders of the Notes.  In the case of any waiver, the Borrower, the other Credit Parties, the Lenders and the Administrative Agent shall be restored to their former position and rights hereunder and under the outstanding Loans and Notes and other Credit Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right
consequent thereon.

 

Notwithstanding any of the foregoing to the contrary, the consent of the Credit Parties shall not be required for any amendment, modification or waiver of the provisions of Article VIII (other than the provisions of Section 8.6); provided, however, that the Administrative Agent will provide written notice to the Borrower of any such amendment, modification or waiver.  In addition, the Borrower and the Lenders hereby authorize the Administrative Agent to modify this Credit Agreement by unilaterally amending or supplementing
Schedule 2.1(a) from time to time in the manner requested by the Borrower, the Administrative Agent or any Lender in order to reflect any assignments or transfers of the Loans as provided for hereunder; provided that the Administrative Agent shall promptly deliver a copy of any such modification to the Borrower and each Lender.

 

Notwithstanding any of the foregoing to the contrary, the Credit Parties and the Administrative Agent, without the consent of any Lender, may enter into any amendment, modification or waiver of any Credit Document, or enter into any new agreement or instrument, to correct any obvious error or omission of a technical nature, in each case that is immaterial (as determined by the Administrative Agent), in any provision of any Credit Document, if the same is not objected to in writing by the Required Lenders within five (5) Business Days following receipt of notice thereof.

 

Notwithstanding the fact that the consent of all the Lenders is required in certain circumstances as set forth above, (x) each Lender is entitled to vote as such Lender sees fit on any bankruptcy reorganization plan that affects the Loans, and each Lender acknowledges that the provisions of Section 1126(c) of the Bankruptcy Code supersede the unanimous consent provisions set forth herein, (y) the Required Lenders may consent to allow a Credit Party to use cash collateral in the context of a bankruptcy or insolvency proceeding and (z) no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except (i) that the Commitment of such Lender may not be increased or
extended without the consent of such Lender and (ii) to the extent such amendment, waiver or consent impacts such Defaulting Lender more than the other Lenders.

 

  

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Section 9.2 Notices.

 

Except as otherwise provided in Article II, all notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by telecopy), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made (a) when delivered by hand, (b) when transmitted via telecopy (or other facsimile device) to the number set out herein, (c) the day following the day on which the same has been delivered prepaid or pursuant to an invoice arrangement to a reputable national overnight air courier service, or (d) the fifth Business Day following the day on which the same is sent by certified or registered mail, postage prepaid, in each case, addressed as
follows in the case of the Borrower, the other Credit Parties and the Administrative Agent, and as set forth on Schedule 9.2 in the case of the Lenders, or to such other address as may be hereafter notified by the respective parties hereto and any future holders of the Notes:

 

	
The Borrower and the

other Credit Parties:

	
Dollar Tree Stores, Inc.

500 Volvo Parkway

Chesapeake, Virginia  23320

Attention:  Corporate Secretary

Telecopier:  (757) 321-5111

Telephone:  (757) 321-5000

 

with a copy to:

 

Attention:  Corporate Treasurer

Telecopier:  (757) 321-5111

Telephone:  (757) 321-5000

 

	
The Administrative

Agent:

	
Wells Fargo Bank, National Association, as Administrative Agent

1525 W.T. Harris Blvd.

Mail Code NC 0680

Charlotte, North Carolina 28262

Attention:  Syndication Agency Services

 

with a copy to:

 

Wells Fargo Bank, National Association

7000 Central Parkway, Suite 600

Atlanta, Georgia 30328

Attention:   Ekta Patel

Telephone:   (770) 551-4657

 

  

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Section 9.3 No Waiver; Cumulative Remedies.

 

No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Lender, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

 

Section 9.4 Survival of Representations and Warranties.

 

All representations and warranties made hereunder and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the Notes and the making of the Loans, provided that all such representations and warranties shall terminate on the date upon which the Commitments have been terminated and all amounts owing hereunder and under any Notes have been paid in full.

 

Section 9.5 Payment of Expenses and Taxes.

 

(a) The Credit Parties agree (1) to pay or reimburse the Administrative Agent and WFS for all their reasonable out-of-pocket costs and expenses incurred in connection with the development, preparation, negotiation, printing and execution of, and any amendment, supplement or modification to, this Agreement and the other Credit Documents and any other documents prepared in connection herewith or therewith, and the consummation and administration of the transactions contemplated hereby and thereby, together with the reasonable fees and disbursements of counsel to the Administrative Agent, (2) to pay or reimburse
each Lender, WFS and the Administrative Agent for all its costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement, the Notes and any such other documents, including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent and to the Lenders (including reasonable allocated costs of in-house legal counsel), (3) on demand, to pay, indemnify, and hold each Lender and the Administrative Agent harmless from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other similar taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, the Credit Documents and any such other documents, and (4) to pay, indemnify, and hold each Lender, WFS and the Administrative Agent and their Affiliates harmless from and against, any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to (i) the execution, delivery, enforcement, performance and administration of the Credit Documents and any such other documents and the use, or proposed use, of proceeds of the Loans and (ii) any actual or alleged presence or release of Materials of Environmental Concern on or from any property owned or operated by any Credit Party or any of its Subsidiaries, or any liability under Environmental Law related in any way to any Credit Party or any of its Subsidiaries, and whether or not
the Administrative Agent, the relevant Lenders and their Affiliates are parties to the claim, demand, action, cause of action or proceeding from which any of the aforementioned arises (all of the foregoing, collectively, the “indemnified liabilities”); provided, however, that the Borrower shall not have any obligation hereunder to the Administrative Agent or any Lender with respect to indemnified liabilities arising from the gross negligence or willful misconduct of the Administrative Agent or any such Lender, as determined by court of competent jurisdiction by final and non-appealable judgment.  The agreements in this Section 9.5(a) shall survive repayment or assignment of
the Loans, Notes and all other amounts payable hereunder.

 

  

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(b) To the extent that the Credit Parties for any reason fail to indefeasibly pay any amount required under this Section 9.5 to be paid by it to the Administrative Agent (or any sub-agent thereof), the Issuing Lender, Swingline Lender or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), the Issuing Lender, Swingline Lender or such Related Party, as the case may be, such Lender’s Commitment Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount,
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), the Issuing Lender or Swingline Lender 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), Issuing Lender or Swingline Lender in connection with such capacity.

 

Section 9.6 Successors and Assigns.

 

(a) Successors and Assigns Generally.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that neither the Borrower nor any other Credit Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender, and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in
accordance with the provisions of paragraph (b) of this Section, (ii) by way of participation in accordance with the provisions of paragraph (d) of this Section or (iii) by way of pledge or assignment of a security interest subject to the restrictions of paragraph (f) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void).  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in paragraph (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

 

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

 

  

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(i) Minimum Amounts.

 

       (A)           in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and

 

       (B)           in any case not described in paragraph (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if
“Trade Date” is specified in the Assignment and Assumption, as of the Trade Date) shall not be less than $5,000,000, in the case of any assignment in respect of a Revolving Commitment, unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); provided that, in connection with simultaneous assignments to two or more related Approved Funds, such Approved Funds shall be treated as one assignee for purposes of determining compliance with the minimum assignment amount referred to above.

 

(ii) Proportionate Amounts.  Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loans or the Commitments assigned.

 

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

 

       (A)           the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (x) an Event of Default has occurred and is continuing at the time of such assignment or (y) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund;

 

       (B)           the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for assignments in respect of Revolving Commitments if such assignment is to a Person that is not a Lender with a Commitment in respect of such facility, an Affiliate of such Lender or an Approved Fund with respect to such Lender;

 

  

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       (C)           the consent of the Issuing Lender (such consent not to be unreasonably withheld or delayed) shall be required for any assignment that increases the obligation of the assignee to participate in exposure under one or more Letters of Credit (whether or not then outstanding); and

 

       (D)           the consent of the Swingline Lender (such consent not to be unreasonably withheld or delayed) shall be required for any assignment in respect of the Revolving Commitments.

 

(iv) Assignment and Assumption.  The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500; provided that in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no such fee shall be required, and the assignee, if it is not a Lender, shall deliver to the Administrative Agent
an Administrative Questionnaire.

 

(v) No Assignment to Certain Persons.  No such assignment shall be made to any Person that is not an Eligible Assignee.

 

(vi) Certain Additional Payments.  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 the 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 (A) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent or any Lender hereunder (and interest accrued thereon), and (B) acquire (and fund as appropriate) its full pro rata share of all Loans and participations in Letters of Credit and Swingline Loans in accordance with its Applicable Percentage.  Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable Law without compliance with the provisions of this paragraph, then the assignee of such
interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

 

Subject to acceptance and recording thereof by the Administrative Agent pursuant to paragraph (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender
shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 2.16 and 9.5 with respect to facts and circumstances occurring prior to the effective date of such assignment.  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (d) of this Section.

 

  

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(c) Register.  The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at its address referred to in Section 9.2 a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in
the Register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

 

(d) Participations.  Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural person or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it);
provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent and the Lenders, the Issuing Lender and the Swingline Lender shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.  For the avoidance of doubt, each Lender shall be responsible for the indemnity under Section 9.5(b) with respect to any payments made by such Lender to its Participant(s).

 

Each Lender that sells a participation shall, acting solely for this purpose as an 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 Credit 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, letters of credit or its other obligations under any Credit Document) except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations.  The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.

 

  

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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 described in clauses (iv), (vi), (viii), (ix), (x) (in connection with the written consent of all Lenders only) and (xiii) that affects such
Participant.  Subject to paragraph (e) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.16 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section.  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.7 as though it were a Lender, provided such Participant agrees to be subject to Section 9.7 as though it were a Lender.

 

(e) Limitations upon Participant Rights.  A Participant shall not be entitled to receive any greater payment under Sections 2.15 and 2.17 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent.  A Participant that is not a United States person (as such term is defined in Section
7701(a)(30) of the Code) shall not be entitled to the benefits of Section 2.17 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.17(a) as though it were a Lender.

 

(f) Certain Pledges.  Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.  Each Credit Party
(and each Lender and the Issuing Lender, and each Related Party of any of the foregoing Persons) agrees to cooperate with the Administrative Agent and the Lenders in connection with any pledge or assignment or any Participation and/or securities created pursuant to this Section, including delivery of any documentation reasonably requested by the Administrative Agent or a Lender in connection therewith.

 

Section 9.7 Adjustments; Set-off.

 

(a) Each Lender agrees that if any Lender (a “benefited Lender”) shall at any time receive any payment of all or part of its Loans, or interest thereon, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 7.1(e), or otherwise) in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect of such other Lender’s Loans, or interest thereon, such benefited Lender shall
purchase for cash from the other Lenders a participating interest in such portion of each such other Lender’s Loans, or shall provide such other Lenders with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such benefited Lender to share the excess payment or benefits of such collateral or proceeds ratably with each of the Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest.  The Borrower agrees that each Lender so purchasing a portion of another Lender’s Loans may exercise
all rights of payment (including, without limitation, rights of set-off) with respect to such portion as fully as if such Lender were the direct holder of such portion.

 

  

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(b) In addition to any rights and remedies of the Lenders provided by law (including, without limitation, other rights of set-off), each Lender shall have the right, without prior notice to the Borrower, any such notice being expressly waived by the Borrower to the extent permitted by applicable law, upon the occurrence of any Event of Default, to setoff and appropriate and apply any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured
or unmatured, at any time held or owing by such Lender or any branch or agency thereof to or for the credit or the account of the Borrower, or any part thereof in such amounts as such Lender may elect, against and on account of the obligations and liabilities of the Borrower to such Lender hereunder and claims of every nature and description of such Lender against the Borrower, in any currency, whether arising hereunder, under the Notes or under any documents contemplated by or referred to herein or therein, as such Lender may elect, whether or not such Lender has made any demand for payment and although such obligations, liabilities and claims may be contingent or unmatured.  The aforesaid right of set-off may be exercised by such Lender against the Borrower or against any trustee in bankruptcy, debtor in possession, assignee for the benefit of creditors, receiver or
execution, judgment or attachment creditor of the Borrower, or against anyone else claiming through or against the Borrower or any such trustee in bankruptcy, debtor in possession, assignee for the benefit of creditors, receiver, or execution, judgment or attachment creditor, notwithstanding the fact that such right of set-off shall not have been exercised by such Lender prior to the occurrence of any Event of Default.  Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such set-off and application made by such Lender; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application.

 

Section 9.8 Table of Contents and Section Headings.

 

The table of contents and the Section and subsection headings herein are intended for convenience only and shall be ignored in construing this Agreement.

 

  

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Section 9.9 Counterparts.

 

This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.  A set of the copies of this Agreement signed by all the parties shall be lodged with the Borrower and the Administrative Agent.

 

Section 9.10 Effectiveness.

 

This Credit Agreement shall become effective on the date on which all of the parties have signed a copy hereof (whether the same or different copies) and shall have delivered the same to the Administrative Agent pursuant to Section 9.2 or, in the case of the Lenders, shall have given to the Administrative Agent written, telecopied or telex notice (actually received) at such office that the same has been signed and mailed to it.

 

Section 9.11 Severability.

 

Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

Section 9.12 Integration.

 

This Agreement, the Notes and the other Credit Documents represent the agreement of the Borrower, the Guarantors, 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, the Borrower, the Guarantors or any Lender relative to the subject matter hereof not expressly set forth or referred to herein or in the Notes.

 

Section 9.13 Governing Law.

 

THIS AGREEMENT AND THE NOTES AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA, WITHOUT REFERENCE TO ANY OTHER CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF.  THE PARTIES HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM OR ACTION ARISING OUT OF THIS AGREEMENT AND THE NOTES.

 

Section 9.14 Consent to Jurisdiction and Service of Process.

 

All judicial proceedings brought against the Borrower and/or any other Credit Party with respect to this Agreement, any Note or any of the other Credit Documents may be brought in the U.S. District Court for the Western District of North Carolina or, if such court does not have subject matter jurisdiction, in any state court located in Mecklenburg County, and, by execution and delivery of this Agreement, the Borrower and the other Credit Parties accepts, for itself and in connection with its properties, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts and irrevocably agrees to be bound by any final judgment rendered thereby in connection with this Agreement from which no
appeal has been taken or is available.  The Borrower and the other Credit Parties, the Administrative Agent and the Lenders each irrevocably waives any objection, including, without limitation, any objection to the laying of venue or based on the grounds of forum non conveniens which it may now or hereafter have to the bringing of any such action or proceeding in any such jurisdiction.  Nothing herein shall affect the right to serve process in any other manner permitted by law or shall limit the right of any Lender to bring proceedings against the Borrower or the other Credit Parties in the court of any other jurisdiction.

 

  

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Section 9.15 Arbitration.

 

(a) Notwithstanding the provisions of Section 9.14 to the contrary, upon demand of any party hereto, whether made before or within three (3) months after institution of any judicial proceeding, any dispute, claim or controversy arising out of, connected with or relating to this Agreement and other Credit Documents (“Disputes”) between or among parties to this Agreement shall be resolved by binding arbitration as provided herein.  Institution of a judicial proceeding
by a party does not waive the right of that party to demand arbitration hereunder.  Disputes may include, without limitation, tort claims, counterclaims, disputes as to whether a matter is subject to arbitration, claims brought as class actions, claims arising from Credit Documents executed in the future, or claims arising out of or connected with the transaction reflected by this Agreement.

 

Arbitration shall be conducted under and governed by the Commercial Arbitration Rules (the “Arbitration Rules”) of the American Arbitration Association (the “AAA”) and Title 9 of the U.S. Code.  All arbitration hearings shall be conducted in Charlotte, North Carolina.  A hearing shall begin within 90 days of demand for arbitration and all hearings shall be concluded within 120 days of demand for arbitration.  These time limitations may not be extended unless a party shows cause for extension and then no more than a total extension
of 60 days.  The expedited procedures set forth in Rule 51 et seq. of the Arbitration Rules shall be applicable to claims of less than $1,000,000.  All applicable statutes of limitation shall apply to any Dispute.  A judgment upon the award may be entered in any court having jurisdiction.  Arbitrators shall be licensed attorneys selected from the Commercial Financial Dispute Arbitration Panel of the AAA.  The parties hereto do not waive applicable Federal or state substantive law except as provided herein.  Notwithstanding the foregoing, this arbitration provision does not apply to disputes under or related to Hedging Agreements.

 

(b) Notwithstanding the preceding binding arbitration provisions, the Administrative Agent, the Lenders, the Borrower and the other Credit Parties agree to preserve, without diminution, certain remedies that the Administrative Agent on behalf of the Lenders may employ or exercise freely, independently or in connection with an arbitration proceeding or after an arbitration action is brought.  The Administrative Agent on behalf of the Lenders shall have the right to proceed in any court of proper jurisdiction or by self-help to exercise or prosecute the following remedies, as applicable (i) all rights
to foreclose against any real or personal property or other security by exercising a power of sale granted under Credit Documents or under applicable law or by judicial foreclosure and sale, including a proceeding to confirm the sale; (ii) all rights of self-help including peaceful occupation of real property and collection of rents, set-off, and peaceful possession of personal property; and (iii) obtaining provisional or ancillary remedies including injunctive relief, sequestration, garnishment, attachment, appointment of receiver and filing an involuntary bankruptcy proceeding.  Preservation of these remedies does not limit the power of an arbitrator to grant similar remedies that may be requested by a party in a Dispute.

 

  

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(c) The parties hereto agree that they shall not have a remedy of punitive or exemplary damages against the other in any Dispute and hereby waive any right or claim to punitive or exemplary damages they have now or which may arise in the future in connection with any Dispute whether the Dispute is resolved by arbitration or judicially.

 

(d) By execution and delivery of this Agreement, each of the parties hereto accepts, for itself and in connection with its properties, generally and unconditionally, the non-exclusive jurisdiction relating to any arbitration proceedings conducted under the Arbitration Rules in Charlotte, North Carolina and irrevocably agrees to be bound by any final judgment rendered thereby in connection with this Agreement from which no appeal has been taken or is available.

 

Section 9.16 Confidentiality.

 

Each of the Administrative Agent, the Lenders and the Issuing Lender agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, advisors and other representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential); (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of
Insurance Commissioners); (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process; (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder, under any other Credit Document or Hedging Agreement or any action or proceeding relating to this Agreement, any other Credit Document or Hedging Agreement or the enforcement of rights hereunder or thereunder; (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations; (g) subject to each such Person
being informed of the confidential nature of the Information and to their agreement to keep such Information confidential on substantially the same terms as required by this Section, to (i) an investor or prospective investor in securities issued by an Approved Fund that also agrees that Information shall be used solely for the purpose of evaluating an investment in such securities issued by the Approved Fund, (ii) a trustee, collateral manager, servicer, backup servicer, noteholder or secured party in securities issued by an Approved Fund in connection with the administration, servicing and reporting on the assets serving as collateral for securities issued by an Approved Fund, or (iii) a nationally recognized rating agency that requires access to information regarding the Credit Parties, the Loans and Credit Documents in connection with ratings issued in respect of
securities issued by an Approved Fund; (h) with the consent of the Borrower; or (i) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent, any Lender, the Issuing Lender or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower.

 

  

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For purposes of this Section, “Information” shall mean all information received in writing from the Borrower or any of its Subsidiaries relating to the Borrower or any of its Subsidiaries or any of their respective businesses, other than any such information that is available to the Administrative Agent, any Lender or the Issuing Lender on a nonconfidential basis prior to disclosure by the Borrower or any of its Subsidiaries.  Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same
degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

 

Section 9.17 Acknowledgments.

 

The Borrower and the other Credit Parties each hereby acknowledge that:

 

(a) it has been advised by counsel in the negotiation, execution and delivery of each Credit Document;

 

(b) neither the Administrative Agent nor any Lender has any fiduciary relationship with or duty to the Borrower or any other Credit Party arising out of or in connection with this Agreement and the relationship between Administrative Agent and Lenders, on one hand, and the Borrower and the other Credit Parties, on the other hand, in connection herewith is solely that of debtor and creditor; and

 

(c) no joint venture exists among the Lenders or among the Borrower or the other Credit Parties and the Lenders.

 

Section 9.18 Waivers of Jury Trial.

 

THE BORROWER, THE OTHER CREDIT PARTIES, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

Section 9.19 No Advisory or Fiduciary Responsibility.

 

In connection with all aspects of each Transaction, each of the Credit Parties acknowledges and agrees, and acknowledges its Affiliates’ understanding, that:  (a) the credit facility provided for hereunder and any related arranging or other services in connection therewith (including in connection with any amendment, waiver or other modification hereof or of any other Credit Document) are an arm’s-length commercial transaction between the Credit Parties and their Affiliates, on the one hand, and the Administrative Agent and WFS, on the other hand, and the Credit Parties are capable of evaluating and understanding and understands and accepts the
terms, risks and conditions of the Transactions and by the other Credit Documents (including any amendment, waiver or other modification hereof or thereof); (b) in connection with the process leading to such transaction, the Administrative Agent and WFS each is and has been acting solely as a principal and is not the financial advisor, agent or fiduciary, for any Credit Party or any of their Affiliates, stockholders, creditors or employees or any other Person; (c) neither the Administrative Agent nor WFS has assumed or will assume an advisory, agency or fiduciary responsibility in favor of any Credit Party with respect to any of the Transactions or the process leading thereto, including with respect to any amendment, waiver or other modification hereof or of any other Credit Document (irrespective of whether the Administrative Agent or WFS has advised or is currently advising any Credit
Party or any of its Affiliates on other matters) and neither the Administrative Agent nor WFS has any obligation to any Credit Party or any of their Affiliates with respect to the Transactions except those obligations expressly set forth herein and in the other Credit Documents; (d) the Administrative Agent and WFS and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Credit Parties and their Affiliates, and neither the Administrative Agent nor WFS has any obligation to disclose any of such interests by virtue of any advisory, agency or fiduciary relationship; and (e) the Administrative Agent and WFS have not provided and will not provide any legal, accounting, regulatory or tax advice with respect to any of the Transactions (including any amendment, waiver or other modification hereof or of any other Credit
Document) and the Credit Parties have consulted their own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate.  Each of the Credit Parties hereby waives and releases, to the fullest extent permitted by law, any claims that it may have against the Administrative Agent or WFS with respect to any breach or alleged breach of agency or fiduciary duty.

 

  

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Section 9.20 USA Patriot Act.

 

Each Lender that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower in accordance with the Act.  The Borrower shall, promptly following a request by the
Administrative Agent or any Lender, provide all documentation and other information that the Administrative Agent or such Lender requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Act.

 

  

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ARTICLE X

 

GUARANTY

 

Section 10.1 The Guaranty.

 

In order to induce the Lenders to enter into this Agreement and to extend credit hereunder and in recognition of the direct benefits to be received by the Guarantors from the Extensions of Credit hereunder, each of the Guarantors hereby agrees with the Administrative Agent and the Lenders as follows:  each Guarantor hereby unconditionally and irrevocably jointly and severally guarantees as primary obligor and not merely as surety the full and prompt payment when due, whether upon maturity, by acceleration or otherwise, of any and all indebtedness of the Borrower to the Administrative Agent and the Lenders.  If any or all of the indebtedness of the Borrower to the Administrative Agent and the
Lenders becomes due and payable hereunder, each Guarantor unconditionally promises to pay such indebtedness to the Administrative Agent and the Lenders, on order, on demand, together with any and all reasonable expenses which may be incurred by the Administrative Agent or the Lenders in collecting any of the indebtedness.  The word “indebtedness” is used in this Article X in its most comprehensive sense and includes any and all advances, debts, obligations and liabilities of the Borrower arising in connection with this Agreement, in each case, heretofore, now, or hereafter made, incurred or created, whether voluntarily or involuntarily, absolute or contingent, liquidated or unliquidated, determined or undetermined, whether or not such indebtedness is from time to time reduced, or extinguished and thereafter increased or incurred, whether the Borrower may be liable
individually or jointly with others, whether or not recovery upon such indebtedness may be or hereafter become barred by any statute of limitations, and whether or not such indebtedness may be or hereafter become otherwise unenforceable.

 

Notwithstanding any provision to the contrary contained herein or in any other of the Credit Documents, to the extent the obligations of a Guarantor shall be adjudicated to be invalid or unenforceable for any reason (including, without limitation, because of any applicable state or federal law relating to fraudulent conveyances or transfers) then the obligations of each such Guarantor hereunder shall be limited to the maximum amount that is permissible under applicable law (whether federal or state and including, without limitation, the Bankruptcy Code).

 

Section 10.2 Bankruptcy.

 

Additionally, each of the Guarantors unconditionally and irrevocably guarantees jointly and severally the payment of any and all indebtedness of the Borrower to the Lenders whether or not due or payable by the Borrower upon the occurrence of any of the events specified in Section 7.1(e), and unconditionally promises to pay such indebtedness to the Administrative Agent for the account of the Lenders, or order, on demand, in lawful money of the United States.  Each of the Guarantors further agrees that to the extent that the Borrower or a Guarantor shall make a payment or a transfer of an interest in any property to the Administrative Agent or any Lender, which payment or transfer or any part thereof
is subsequently invalidated, declared to be fraudulent or preferential, or otherwise is avoided, and/or required to be repaid to the Borrower or a Guarantor, the estate of the Borrower or a Guarantor, a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then to the extent of such avoidance or repayment, the obligation or part thereof intended to be satisfied shall be revived and continued in full force and effect as if said payment had not been made.

 

  

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Section 10.3 Nature of Liability.

 

The liability of each Guarantor hereunder is exclusive and independent of any security for or other guaranty of the indebtedness of the Borrower whether executed by any such Guarantor, any other guarantor or by any other party, and no Guarantor’s liability hereunder shall be affected or impaired by (a) any direction as to application of payment by the Borrower or by any other party, or (b) any other continuing or other guaranty, undertaking or maximum liability of a guarantor or of any other party as to the indebtedness of the Borrower, or (c) any payment on or in reduction of any such other guaranty or undertaking, or (d) any dissolution, termination or increase, decrease or change in personnel by the
Borrower, or (e) any payment made to the Administrative Agent or the Lenders on the indebtedness which the Administrative Agent or such Lenders repay the Borrower pursuant to court order in any bankruptcy, reorganization, arrangement, moratorium or other debtor relief proceeding, and each of the Guarantors waives any right to the deferral or modification of its obligations hereunder by reason of any such proceeding.  The obligations of the Guarantors hereunder are absolute and unconditional, irrespective of the value, genuineness, validity, regularity or enforceability of any of the Credit Documents or any other agreement or instrument referred to therein, to the fullest extent permitted by applicable law, irrespective of any other circumstance whatsoever which might otherwise constitute a legal or equitable discharge or defense of a surety or a guarantor.

 

Section 10.4 Independent Obligation.

 

The obligations of each Guarantor hereunder are independent of the obligations of any other Guarantor or the Borrower, and a separate action or actions may be brought and prosecuted against each Guarantor whether or not action is brought against any other Guarantor or the Borrower and whether or not any other Guarantor or the Borrower is joined in any such action or actions.

 

Section 10.5 Authorization.

 

Each of the Guarantors authorizes the Administrative Agent and each Lender without notice or demand (except as shall be required by applicable statute and cannot be waived), and without affecting or impairing its liability hereunder, from time to time to (a) renew, compromise, extend, increase, accelerate or otherwise change the time for payment of, or otherwise change the terms of the indebtedness or any part thereof in accordance with this Agreement, including any increase or decrease of the rate of interest thereon, (b) take and hold security from any Guarantor or any other party for the payment of this Guaranty or the indebtedness and exchange, enforce, waive and release any such security, (c) apply such
security and direct the order or manner of sale thereof as the Administrative Agent and the Lenders in their discretion may determine and (d) release or substitute any one or more endorsers, guarantors, the Borrower or other obligors.

 

  

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Section 10.6 Reliance.

 

It is not necessary for the Administrative Agent or the Lenders to inquire into the capacity or powers of the Borrower or the officers, directors, partners or agents acting or purporting to act on their behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder.

 

Section 10.7 Waiver.

 

(a) Each of the Guarantors waives any right (except as shall be required by applicable statute and cannot be waived) to require the Administrative Agent or any Lender to (i) proceed against the Borrower, any other guarantor or any other party, (ii) proceed against or exhaust any security held from the Borrower, any other guarantor or any other party, or (iii) pursue any other remedy in the Administrative Agent’s or any Lender’s power whatsoever.  Each of the Guarantors waives any defense based on or arising out of any defense of the Borrower, any other Guarantor or any other party other
than payment in full of the indebtedness, including without limitation any defense based on or arising out of the disability of the Borrower, any other guarantor or any other party, or the unenforceability of the indebtedness or any part thereof from any cause, or the cessation from any cause of the liability of the Borrower other than payment in full of the indebtedness.  Without limiting the generality of the provisions of this Article X, each of the Guarantors hereby specifically waives the benefits of N.C. Gen. Stat. § 26-7 through 26-9, inclusive.  The Administrative Agent or any of the Lenders may, at their election, foreclose on any security held by the Administrative Agent or a Lender by one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable (to the extent such sale is permitted by applicable
law), or exercise any other right or remedy the Administrative Agent and any Lender may have against the Borrower or any other party, or any security, without affecting or impairing in any way the liability of any Guarantor hereunder except to the extent the indebtedness has been paid.  Each of the Guarantors waives any defense arising out of any such election by the Administrative Agent and each of the Lenders, even though such election operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of the Guarantors against the Borrower or any other party or any security.

 

(b) Each of the Guarantors waives all presentments, demands for performance, protests and notices of nonperformance, notices of amendments or modifications to this Agreement or any of the other Credit Documents, notice of protest, notices of dishonor, notices of acceptance of this Guaranty, and notices of the existence, creation or incurring of new or additional indebtedness.  Each Guarantor assumes all responsibility for being and keeping itself informed of the Borrower’s financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the indebtedness and
the nature, scope and extent of the risks which such Guarantor assumes and incurs hereunder, and agrees that neither the Administrative Agent nor any Lender shall have any duty to advise such Guarantor of information known to it regarding such circumstances or risks.

 

  

104

  

(c) Each of the Guarantors hereby agrees it will not exercise any rights of subrogation which it may at any time otherwise have as a result of this Guaranty (whether contractual, under Section 509 of the U.S. Bankruptcy Code, or otherwise) to the claims of the Lenders against the Borrower or any other guarantor of the indebtedness of the Borrower owing to the Lenders (collectively, the “Other Parties”) and all contractual, statutory or common law rights of reimbursement, contribution or indemnity from any Other Party which it may at
any time otherwise have as a result of this Guaranty until such time as the Loans hereunder shall have been paid and the Commitments have been terminated.  Each of the Guarantors hereby further agrees not to exercise any right to enforce any other remedy which the Administrative Agent and the Lenders now have or may hereafter have against any Other Party, any endorser or any other guarantor of all or any part of the indebtedness of the Borrower and any benefit of, and any right to participate in, any security or collateral given to or for the benefit of the Lenders to secure payment of the indebtedness of the Borrower until such time as the Loans hereunder shall have been paid and the Commitments have been terminated.

 

Section 10.8 Limitation on Enforcement.

 

The Lenders agree that this Guaranty may be enforced only by the action of the Administrative Agent acting upon the instructions of the Required Lenders and that no Lender shall have any right individually to seek to enforce or to enforce this Guaranty, it being understood and agreed that such rights and remedies may be exercised by the Administrative Agent for the benefit of the Lenders upon the terms of this Agreement.  The Lenders further agree that this Guaranty may not be enforced against any director, officer, employee or stockholder of the Guarantors.

 

Section 10.9 Confirmation of Payment.

 

The Administrative Agent and the Lenders will, upon request after payment of the indebtedness and obligations which are the subject of this Guaranty and termination of the commitments relating thereto, confirm to the Borrower, the Guarantors or any other Person that such indebtedness and obligations have been paid and the commitments relating thereto terminated, subject to the provisions of Section 10.2.

 

  

105

DOLLAR TREE STORES, INC.

CREDIT AGREEMENT

IN WITNESS WHEREOF, each of the parties hereto have caused this Agreement to be duly executed and delivered by its proper and duly authorized officers as of the day and year first above written.

 

 

	 BORROWER:	 DOLLAR TREE STORES, INC.,
	 	 a Virginia corporation
	 	 
	 	 By:  /s/ Kevin S. Wampler
	 	 Name:  Kevin Wampler
	 	 Title:  Chief Financial Officer
	 	 
	 	 
	 PARENT:	 DOLLAR TREE, INC.,
	 	 a Virginia corporation
	 	 
	 	 By:  /s/ Kevin S. Wampler
	 	 Name:  Kevin Wampler
	 	 Title:  Chief Financial Officer
	 	 
	 	 
	 GUARANTORS:	 DOLLAR TREE MANAGEMENT, INC.
	 	 a Virginia corporation
	 	 
	 	 By:  /s/ Kevin S. Wampler
	 	 Name:  Kevin Wampler
	 	 Title:  Vice President
	 	 
	 	 
	 	 DOLLAR TREE DISTRIBUTION, INC.,
	 	 a Virginia corporation
	 	 
	 	 By:  /s/ Kevin S. Wampler
	 	 Name:  Kevin Wampler
	 	 Title:  Vice President
	 	 
	 	 
	 	 GREENBRIER INTERNATIONAL, INC.,
	 	 a Delaware corporation
	 	 
	 	 By:  /s/ Kevin W. Wampler
	 	 Name:  Kevin Wampler
	 	 Title:  Vice President

 

 

 

  

 

DOLLAR TREE STORES, INC.  

CREDIT AGREEMENT

 

 

	 	 DOLLAR TREE AIR, INC.
	 	 a Virginia corporation
	 	 
	 	 By:  /s/ Kevin S. Wampler
	 	 Name:  Kevin Wampler
	 	 Title:  Vice President
	 	 
	 	 
	 	 DOLLAR TREE OLLIE'S, LLC,
	 	 a Virginia limited liability company
	 	 
	 	 By:  /s/ Kevin S. Wampler
	 	 Name:  Kevin Wampler
	 	 Title:  Manager
	 	 
	 	 
	 	 DOLLAR TREE PROPERTIES, INC.,
	 	 a Virginia corporation
	 	 
	 	 By:  /s/ Kevin S. Wampler
	 	 Name:  Kevin Wampler
	 	 Title:  President
	 	 
	 	 
	 	 DTD TENNESEE, INC.,
	 	 a Delaware corporation
	 	 
	 	 By:  /s/ Kevin S. Wampler
	 	 Name:  Kevin Wampler
	 	 Title:  Chief Financial Officer
	 	 
	 	 
	 	 DOLLAR TREE SOURCING COMPANY, LLC,
	 	 a Virginia limited liability company
	 	 
	 	 By:  /s/ Kevin S. Wampler
	 	 Name:  Kevin Wampler
	 	 Title:  Manager

 

 

 

  

 

DOLLAR TREE STORES, INC.  

CREDIT AGREEMENT

 

 

	 	 DT REALTY, LLC,
	 	 a Virginia limited liability company
	 	 
	 	 By:  /s/ Kevin S. Wampler
	 	 Name:  Kevin Wampler
	 	 Title:  Manager
	 	 
	 	 
	 	 DT RETAIL PROPERTIES, LLC,
	 	 a Virginia limited liability company
	 	 
	 	 By:  /s/ Kevin S. Wampler
	 	 Name:  Kevin Wampler
	 	 Title:  Manager

 

 

 

  

 

  

 

 

 

	 AGENT AND LENDERS:	 WELLS FARGO BANK, NATIONAL ASSOCIATION,
	 	 as Administrative Agent and a Lender
	 	 
	 	 By:  /s/ Andrew G. Payne
	 	 Name:  Andrew G. Payne
	 	 Title:  Director

 

                                                                             

 

DOLLAR TREE STORES, INC.

CREDIT AGREEMENT

  

 

  

 

 

 

	 	 Bank of America, N.A.,
	 	 as a Lender
	 	 
	 	 By:  /s/ Thomas Kainamura
	 	 Name:  Thomas Kainamura
	 	 Title:  Vice President

 

 

 DOLLAR TREE STORES, INC.

CREDIT AGREEMENT

  

 

  

 

 

 

	 	 Citizens Bank of Pennsylvania
	 	 as a Lender
	 	 
	 	 By:  /s/ Peggy Sanders
	 	 Name:  Peggy Sanders
	 	 Title:  Senior Vice President

 

 

 

DOLLAR TREE STORES, INC.

CREDIT AGREEMENT

  

 

  

 

 

 

 

	 	 Branch Banking and Trust Company,
	 	 as a Lender
	 	 
	 	 By:  /s/ Jack M. Frost
	 	 Name:  Jack M. Frost
	 	 Title:  Senior Vice President

 

 DOLLAR TREE STORES, INC.

CREDIT AGREEMENT

  

 

  

 

 

 

 

	 	 FIFTH THIRD BANK, an Ohio banking corporation,
	 	 as a Lender
	 	 
	 	 By:  /s/ Mary Ramsey
	 	 Name:  Mary Ramsey
	 	 Title:  Vice President

 

 

 

 Credit Agreement

  

 

  

 

 

 

 

	 	 HSBC Bank USA, N.A.,
	 	 as a Lender
	 	 
	 	 By:  /s/ Dean Lochrie
	 	 Name:  Dean Lochrie
	 	 Title:  Vice President

 

                                                                           

 

 

 DOLLAR TREE STORES, INC.

CREDIT AGREEMENT

  

 

  

 

 

 

 

	 	 JPMorgan Chase Bank, N.A.,
	 	 as a Lender
	 	 
	 	 By:  /s/ Sarah Freedman
	 	 Name:  Sarah Freedman
	 	 Title:  Executive Director

 

 

 

 

 

 DOLLAR TREE STORES, INC.

CREDIT AGREEMENT

  

 

  

 

 

 

	 	 PNC Bank, National Association,
	 	 as a Lender
	 	 
	 	 By:  /s/ Matthew Sawyer
	 	 Name:  Matthew Sawyer
	 	 Title:  Senior Vice President

 

                                                                              

 

 DOLLAR TREE STORES, INC.

CREDIT AGREEMENT

  

 

  

 

 

 

	 	 REGIONS BANK,
	 	 as a Lender
	 	 
	 	 By:  /s/ Paul Stephen Phillippi
	 	 Name:  Paul Stephen Phillippi
	 	 Title:  Senior Vice President

 

                                                              

 

 DOLLAR TREE STORES, INC.

CREDIT AGREEMENT

  

 

  

 

 

 

	 	 ROYAL BANK OF CANADA,
	 	 as a Lender
	 	 
	 	 By:  /s/ Gordon MacArthur
	 	 Name:  Gordon MacArthur
	 	 Title:  Authorized Signatory

 

                                                                       

 

 DOLLAR TREE STORES, INC.

CREDIT AGREEMENT

  

 

  

 

 

 

	 	 SunTrust Bank,
	 	 as a Lender
	 	 
	 	 By:  /s/ Daniel L. Nichols
	 	 Name:  Daniel L. Nichols
	 	 Title:  Vice President

 

 

 

 

 

 

 

 DOLLAR TREE STORES, INC.

CREDIT AGREEMENT

  

 

  

 

 

 

 

	 	 U.S. Bank National Association,
	 	 as a Lender
	 	 
	 	 By:  /s/ Frances W. Josephic
	 	 Name:  Frances W. Josephic
	 	 Title:  Vice President

 

 

 

 DOLLAR TREE STORES, INC.

CREDIT AGREEMENT

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