Document:

Exhibit 10.2 - 8-K dated 08/07/15

Exhibit 10.2

FIRSTENERGY CORP.
2015 Incentive Compensation Plan
Performance-Earned Cash Award Agreement
THIS PERFORMANCE-EARNED CASH AWARD AGREEMENT (the “Agreement”), effective as of August 10th, 2015 (the “Effective Date”), is entered into by and between FirstEnergy Corp., an Ohio corporation, and its successors (the “Company”), and James H. Lash (the “Grantee”). 
		
	1.
	Definitions.  Unless otherwise specified in this Agreement, capitalized terms shall have the meanings attributed to them under the FirstEnergy Corp. 2015 Incentive Compensation Plan, as amended from time to time (the “Plan”). 

		
	2.
	Cash Award.   Subject to the terms and conditions set forth in this Agreement, the Grantee shall be entitled to receive a cash payment equal to $580,000, less any applicable withholdings or deductions (the “Cash Award”), if the following two conditions (the “Vesting Conditions”) are both satisfied: (i) the Company achieves the performance goal set forth on Exhibit A attached hereto by December 31, 2016 as certified by the Compensation Committee in writing (the “Performance Condition”) and (ii) the Grantee remains in the continuous employ of the Company or any Subsidiary until July 1, 2017. 

		
	3.
	Forfeiture.   Except as otherwise provided in Sections 5 and 6 below, the Grantee will forfeit any and all interests in the Cash Award if either of the Vesting Conditions set forth in Section 4 is not satisfied.

		
	4.
	Payment.  Except as provided in Section 5 below, if both Vesting Conditions are satisfied and the Cash Award becomes payable, the Company shall pay the Grantee the Cash Award as soon as administratively practicable after July 1, 2017, but in no event later than March 15, 2018.

		
	5.
	Certain Events. Notwithstanding any provision in this Agreement to the contrary,

		
	a.
	Death or Disability.   If the Grantee dies or incurs a Disability (as defined in the Plan) while an employee of the Company or any of its Subsidiaries and prior to July 1, 2017, the Grantee (or the Grantee’s estate) shall become entitled to receive the full Cash Award, which will be paid to the Grantee (or the Grantee’s estate) no later than sixty (60) days after the Grantee’s death or Disability.

		
	b.
	Termination without Cause.  If the Performance Condition is achieved and the Grantee’s employment is terminated without Cause by the Company or any of its Subsidiaries at any time prior to July 1, 2017, then the Grantee shall become entitled to a prorated amount of the Cash Award, if earned; provided that the Grantee executes and delivers to the Company (and does 

    

not revoke) a general waiver and release of claims in a form approved by the Company (the “Release”), which becomes effective and irrevocable no later than sixty (60) days following the date of his termination of employment. The prorated amount, if earned, will be calculated by multiplying $580,000 by a fraction, in which the numerator is the number of full months the Grantee remained in the employ of the Company or any of its Subsidiaries from the Effective Date until the date of his termination and the denominator is the number of full months from the Effective Date to July 1, 2017.  For the avoidance of doubt, if the Grantee’s termination of employment without Cause occurs prior to the achievement of the Performance Condition, then the prorated portion of the Cash Award will not vest and become payable unless and until such Performance Condition is achieved prior to December 31, 2016.  If the Grantee’s employment terminates before the Performance Condition is achieved, payment made pursuant to this Section 5(b) shall be made as soon as administratively practicable after the Performance Condition is achieved; provided that the Release is effective and irrevocable. If the Grantee’s employment terminates after the Performance Condition has been achieved, the payment under this Section 5(b) shall be made as soon as administratively practicable after the Release is effective and irrevocable.  Notwithstanding the foregoing, in no event shall the payment be made more than two and half months following the year in which the payment vests and becomes payable.

6.Change in Control.  If a Change in Control (as defined in the Plan) occurs, the Cash Award shall generally become subject to the terms and conditions of Article 16 of the Plan; provided that if this Agreement is not replaced with a Replacement Award (as defined in the Plan), then the Grantee shall become entitled to receive the full amount of the Cash Award no later than thirty (30) days following the date of the consummation of the Change in Control.

7.Continuous Employment. So long as the Grantee continues to be an employee of the Company or any of its Subsidiaries, he or she shall not be considered to have experienced a break in continuous employment because of: (i) any temporary leave of absence approved in writing by the Company or such Subsidiary; or (ii) any change of duties or position (including transfer from one Subsidiary to another). 

8.Withholding.  The Company shall withhold an amount sufficient to satisfy all federal, state, and local taxes required by law to be withheld in connection with payment of the Cash Award granted under this Agreement, but in no event shall such amount exceed the minimum statutory withholding requirements. 

9.Recoupment.  If the Grantee is or has been deemed to be, or becomes, an “insider” for purposes of Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), this Agreement will be administered in compliance with Section 10D of the Exchange Act, any applicable rules or regulations promulgated by the Securities and Exchange Commission or any national securities exchange or national securities association on which the Company’s common 

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stock may be traded, and subject to the Company’s Executive Compensation Recoupment Policy, as amended from time to time, or any other Company policy adopted pursuant to such law, rules, or regulations and may be amended to further such purpose without the consent of the Grantee.

10.Termination of Agreement.   This Agreement will terminate on the earliest of: (i) the date of the Grantee’s termination of employment with the Company or any of its Subsidiaries prior to July 1, 2107, except if such termination is due to death or Disability or a termination by the Company without Cause, or (ii) the date any earned Cash Award is paid to the Grantee. If the Company fails to achieve the Performance Condition prior to December 31, 2016, this Agreement will terminate as of December 31, 2016. Any terms or conditions of this Agreement that the Company determines are reasonably necessary to effectuate its purposes will survive the termination of this Agreement. 

		
	11.
	Miscellaneous Provisions.

(a)Successors and Legal Representatives.   This Agreement will bind and inure to the benefit of the Company and the Grantee, and their respective successors, assigns and legal representatives. 

(b)Integration.  This Agreement, together with the Plan, constitutes the entire agreement between the Grantee and the Company with respect to the subject matter hereof, and may not be modified, amended, renewed or terminated, nor may any term, condition or breach of any term or condition be waived, except pursuant to the terms of the Plan or by a writing signed by the person or persons sought to be bound by such modification, amendment, renewal, termination or waiver. Any waiver of any term, condition or breach thereof will not be a waiver of any other term or condition or of the same term or condition for the future, or of any subsequent breach.  

(c)Notice.   Any notice relating to this grant must be in writing, which may include an electronic writing. 

(d)No Employment Right Created.   Nothing in this Agreement will be construed to confer upon the Grantee the right to continue in the employment or service of the Company or any of its Subsidiaries, or to be employed or serve in any particular position therewith, or affect any right which the Company or any of its Subsidiaries may have to terminate the Grantee’s employment or service with or without cause. 

(e)Separability.  In the event of the invalidity of any part or provision of this Agreement, such invalidity will not affect the enforceability of any other part or provision of this Agreement. 

(f)Section Headings.  The section headings of this Agreement are for convenience and reference only and are not intended to define, extend or limit the contents of the sections. 

(g)Amendment.  The terms and conditions of this Award may be modified by the Compensation Committee:

		
	(i)
	in any case permitted by the terms of the Plan or this Agreement;

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	(ii)
	with the written consent of the Grantee; or

		
	(iii)
	 without the consent of the Grantee if the amendment is either not materially adverse to the interests of the Grantee or is necessary or appropriate in the view of the Compensation Committee to conform with, or to take into account, applicable law, including either exemption from or compliance with any applicable tax law. 

(h)Plan Administration.   The Plan is administered by the Compensation Committee, which has sole and exclusive power and discretion to interpret, administer, implement and construe the Plan and this Agreement. All interpretations, determinations and decisions made by the Compensation Committee, the Board of Directors, or any of their delegates as to the provisions of this Award Agreement and the Plan shall be final, conclusive, and binding on all persons and the Grantee agrees to be bound by such interpretations, determinations and decisions.

(i)Governing Law.  Except as may otherwise be provided in the Plan, this Agreement will be governed by, construed and enforced in accordance with the internal laws of the State of Ohio, without giving effect to its principles of conflict of laws.  By accepting this Award, the Grantee agrees to the exclusive jurisdiction of the courts of the United States District Court for the Northern District of Ohio to adjudicate any and all claims brought with respect to the Award.

(j)Internal Revenue Code Section 409A.  Notwithstanding anything in the Plan or this Agreement to the contrary, the award of Cash Award hereunder is intended to meet any applicable requirements for exclusion from coverage under, or comply with, Section 409A of the Internal Revenue Code (the “Code”) and this Agreement shall be construed and administered accordingly.  However, notwithstanding anything in this Agreement to the contrary, the Company makes no representations or warranties as to the tax effects of payments made to the Grantee (or any of the Grantee’s beneficiaries) pursuant to this Agreement, and any and all tax consequences incident to such shall solely be the responsibility of the Grantee or any beneficiary.

(k)Signatures. This Agreement may be executed electronically and in counterparts, each of which shall be deemed to be an original, and when taken together shall constitute one binding agreement.
[SIGNATURE ON FOLLOWING PAGE]

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The Grantee acknowledges receipt of this Performance-Earned Cash Award Agreement and accepts and agrees with the terms and conditions stated above.  

	
				
	 
	 
	 
	 

	 
	 
	 
	(Signature of the Grantee)

	(Date)
	 
	 
	 

        

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EXHIBIT A
Performance Goals
The Company must achieve a threshold level of $73 million in cash flow improvements at FirstEnergy Generation, as determined by Compensation Committee, by December 31, 2016.  Failure to meet the threshold level will result in forfeiture of the cash award granted under the Agreement.

6entl-ex102_265.htm

 

Exhibit 10.2

 

THIRD AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

THIS THIRD AMENDMENT to Amended and Restated Loan and Security Agreement (this “Amendment”) is entered into as of May 19, 2015 (the “Amendment Date”), by and among OXFORD FINANCE LLC, a Delaware limited liability company with an office located at 133 North Fairfax Street, Alexandria, Virginia 22314 (in its individual capacity, “Oxford”; and in its capacity as Collateral Agent, “Collateral Agent”), the Lenders listed on Schedule 1.1 thereof  from time to time including Oxford in its capacity as a Lender (each a “Lender” and collectively, the “Lenders”) and Entellus Medical, Inc., a Delaware corporation with offices located at 3600 Holly Lane North, Suite 40, Plymouth, MN 55447 (“Borrower”). 

WHEREAS, Collateral Agent, Borrower and Lenders party thereto from time to time have entered into that certain Amended and Restated Loan and Security Agreement, dated as of December 20, 2013 (as amended, supplemented or otherwise modified from time to time, the “Loan Agreement”) pursuant to which Lenders have provided to Borrower certain loans in accordance with the terms and conditions thereof; and

WHEREAS, Borrower, Lenders and Collateral Agent desire to amend certain provisions of the Loan Agreement as provided herein and subject to the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the promises, covenants and agreements contained herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Borrower, Lenders and Collateral Agent hereby agree as follows:

	
1.
	
Capitalized terms used herein but not otherwise defined shall have the respective meanings given to them in the Loan Agreement.

 

	
2.
	
Section 6.6(c) of the Loan Agreement is hereby amended and restated in its entirety as follows:

 

(c)Neither Borrower nor any of its Subsidiaries shall maintain any Collateral Accounts except Collateral Accounts maintained in accordance with Sections 6.6(a) and (b); provided, however, any Foreign Subsidiary may maintain Collateral Accounts that do not comply with Sections 6.6(a) and (b), if the aggregate amount of cash and Cash Equivalents maintained in all of the Collateral Accounts of any Foreign Subsidiary does not exceed One Million Dollars ($1,000,000.00) at any given time; provided, further, that the aggregate amount of cash or Cash Equivalents in all of the Collateral Accounts of all Foreign Subsidiaries may not exceed Four Million Dollars ($4,000,000) at any given time. 

 

	
3.
	
Section 6.12 of the Loan Agreement is hereby amended and restated in its entirety as follows:

 

6.12 Creation/Acquisition of Subsidiaries. In the event Borrower, or any of its Subsidiaries creates or acquires any Subsidiary, Borrower shall provide prior written notice to Collateral Agent and each Lender of the creation or acquisition of such new Subsidiary and take all such action as may be reasonably required by Collateral Agent or any Lender to cause each such Subsidiary to become a co-Borrower hereunder or to guarantee the Obligations of Borrower under the Loan Documents and, in each case, grant a continuing pledge and security interest in and to the assets of such Subsidiary (substantially as described on Exhibit A hereto); and Borrower (or its Subsidiary, as applicable) shall grant and pledge to Collateral Agent, for the ratable benefit of the Lenders, a perfected security interest in the stock, units or other evidence of ownership of each such newly created Subsidiary; provided, however, that solely in the circumstance in which Borrower or any Subsidiary creates or acquires a Foreign Subsidiary in an acquisition permitted by Section 7.3 hereof or otherwise approved by the Required Lenders, (i) such Foreign Subsidiary shall not be required to guarantee the Obligations of Borrower under the Loan Documents and grant a continuing pledge and security interest in and to the assets of such Foreign Subsidiary, and (ii) Borrower shall not be required to grant and pledge to Collateral Agent, for the ratable benefit of Lenders, a perfected security interest in more than sixty five percent (65%) of the stock, units or other evidence of ownership of such Foreign Subsidiary, if Borrower demonstrates to the reasonable satisfaction of Collateral Agent that such 

 

 

Foreign Subsidiary providing such guarantee or pledge and security interest or Borrower providing a perfected security interest in more than sixty five percent (65%) of the stock, units or other evidence of ownership would create a present and existing adverse tax consequence to Borrower under the U.S. Internal Revenue Code. 

 

	
4.
	
Section 7 of the Loan Agreement is hereby amended by adding the following Section 7.12 thereto:

 

7.12Foreign Subsidiary. Permit or authorize any Foreign Subsidiary to (i) have cash or Cash Equivalents in excess of One Million Dollars ($1,000,000) at any given time (provided, however, that the aggregate amount of cash or Cash Equivalents held by all Foreign Subsidiaries may not exceed Four Million Dollars ($4,000,000) at any given time) or (ii) incur any Indebtedness other than Indebtedness described in clause (h) of the definition of Permitted Indebtedness. 

 

	
5.
	
Section 13.1 of the Loan Agreement is hereby amended by amending and restating the following definitions therein as set forth below:

 

“Permitted Indebtedness” is:

(a)Borrower’s Indebtedness to the Lenders and Collateral Agent under this Agreement and the other Loan Documents;

(b)Indebtedness existing on the Effective Date and disclosed on the Perfection Certificate(s);

(c)unsecured Indebtedness under the Borrower’s American Express Corporate Card of an aggregate amount of up to One Hundred Thousand Dollars ($100,000.00) which, for the purposes of clarity, shall include (and not be in addition to) the amount of Fifty Thousand Dollars ($50,000.00) set forth in Section 5a of the Perfection Certificate;

(d)Subordinated Debt;

(e)unsecured Indebtedness to trade creditors incurred in the ordinary course of business;

(f)Indebtedness consisting of capitalized lease obligations and purchase money Indebtedness, in each case incurred by Borrower or any of its Subsidiaries to finance the acquisition, repair, improvement or construction of fixed or capital assets of such person, provided that (i) the aggregate outstanding principal amount of all such Indebtedness does not exceed One Hundred Fifty Thousand Dollars ($150,000.00) at any time and (ii) the principal amount of such Indebtedness does not exceed the lower of the cost or fair market value of the property so acquired or built or of such repairs or improvements financed with such Indebtedness (each measured at the time of such acquisition, repair, improvement or construction is made);

(g)Indebtedness incurred as a result of endorsing negotiable instruments received in the ordinary course of Borrower’s business; 

(h)Any Foreign Subsidiary’s Indebtedness to Borrower for intercompany loans made pursuant to clause (i) of the definition of Permitted Investments; and

(i)extensions, refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness (a) through (f) above, provided that the principal amount thereof is not increased or the terms thereof are not modified to impose materially more burdensome terms upon Borrower, or its Subsidiary, as the case may be.

“Permitted Investments” are:

(a)Investments disclosed on the Perfection Certificate(s) and existing on the Effective Date; 

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(b)(i) Investments consisting of cash and Cash Equivalents, and (ii) any Investments permitted by Borrower’s investment policy, as amended from time to time, provided that such investment policy (and any such amendment thereto) has been approved in writing by Collateral Agent;

(c)Investments consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of Borrower;

(d)Investments consisting of Deposit Accounts in which Collateral Agent has a perfected security interest;

(e)Investments in connection with Transfers permitted by Section 7.1;

(f)Investments consisting of (i) travel advances and employee relocation loans and other employee loans and advances in the ordinary course of business, and (ii) loans to employees, officers or directors relating to the purchase of equity securities of Borrower or its Subsidiaries pursuant to employee stock purchase plans or agreements approved by Borrower’s Board of Directors; not to exceed Fifty Thousand Dollars ($50,000) in the aggregate for (i) and (ii) in any fiscal year;

(g)Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of business;

(h)Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not Affiliates, in the ordinary course of business; provided that this paragraph shall not apply to Investments of Borrower in any Subsidiary; 

(i)Investments by Borrower in any Foreign Subsidiary, not exceeding in the aggregate One Million Dollars ($1,000,000) of cash and Cash Equivalents with respect to each such Foreign Subsidiary in any given financial year of Borrower, in the form of intercompany loans and/or equity investments; provided, however, that the aggregate Investments by Borrower in all Foreign Subsidiaries may not exceed Four Million Dollars ($4,000,000) of cash and Cash Equivalents in any given financial year of Borrower; and

(j)non-cash Investments in joint ventures or strategic alliances in the ordinary course of Borrower’s business consisting of the non‐exclusive licensing of technology, the development of technology or the providing of technical support.

	
6.
	
Exhibit A of the Loan Agreement is hereby amended and restated in its entirety in the form of Exhibit A hereto. 

 

	
7.
	
Limitation of Amendment.

 

	
a.
	
The amendments and waivers set forth in Sections 2 through 6 above are effective for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) be a consent to any amendment, waiver or modification of any other term or condition of any Loan Document, or (b) otherwise prejudice any right, remedy or obligation which Lenders or Borrower may now have or may have in the future under or in connection with any Loan Document, as amended hereby.

 

	
b.
	
This Amendment shall be construed in connection with and as part of the Loan Documents and all terms, conditions, representations, warranties, covenants and agreements set forth in the Loan Documents, except as herein amended, are hereby ratified and confirmed and shall remain in full force and effect.

 

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8.
	
To induce Collateral Agent and Lenders to enter into this Amendment, Borrower hereby represents and warrants to Collateral Agent and Lenders as follows: 

 

	
a.
	
Immediately after giving effect to this Amendment (a) the representations and warranties contained in the Loan Documents are true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct as of such date), and (b) no Event of Default has occurred and is continuing;

 

	
b.
	
Borrower has the power and due authority to execute and deliver this Amendment and to perform its obligations under the Loan Agreement, as amended by this Amendment; 

 

	
c.
	
The organizational documents of Borrower delivered to Collateral Agent on the Effective Date, and updated pursuant to subsequent deliveries by the Borrower to the Collateral Agent, remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect; 

 

	
d.
	
The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not and will not contravene (i) any law or regulation binding on or affecting Borrower, (ii) any contractual restriction with a Person binding on Borrower, (iii) any order, judgment or decree of any court or other governmental or public body or authority, or subdivision thereof, binding on Borrower, or (iv) the organizational documents of Borrower; 

 

	
e.
	
The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not require any order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by any governmental or public body or authority, or subdivision thereof, binding on Borrower, except as already has been obtained or made; and 

 

	
f.
	
This Amendment has been duly executed and delivered by Borrower and is the binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors’ rights. 

 

	
9.
	
Except as expressly set forth herein, the Loan Agreement shall continue in full force and effect without alteration or amendment.  This Amendment and the Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements.

 

	
10.
	
This Amendment shall be deemed effective as of the Amendment Date upon (a) the due execution and delivery to Collateral Agent of this Amendment by each party hereto, (b) Borrower’s delivery of the certificate(s) for shares of capital stock of Entellus Medical Europe Limited, representing sixty five percent (65%) of the capital stock of Entellus Medical Europe Limited held by Borrower, together with Assignment(s) Separate from such certificate(s), duly executed in blank and (c) Borrower’s payment of all Lenders’ Expenses incurred through the date hereof, which may be debited from any of Borrower’s accounts with Lenders.

 

	
11.
	
This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, and all of which, taken together, shall constitute one and the same instrument.

 

	
12.
	
This Amendment and the rights and obligations of the parties hereto shall be governed by and construed in accordance with the laws of the State of New York.

 

 

[Balance of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to Amended and Restated Loan and Security Agreement to be executed as of the date first set forth above.

			
	
BORROWER:
	
 
	
 

	
 
	
 
	
 

	
ENTELLUS MEDICAL, INC.
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
By /s/ Thomas E. Griffin
	
 
	
 

	
Name: Thomas E. Griffin
	
 
	
 

	
Title:   Chief Financial Officer
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
COLLATERAL AGENT AND LENDER:
	
 
	
 

	
 
	
 
	
 

	
OXFORD FINANCE LLC
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
By /s/ Mark Davis
	
 
	
 

	
Name: Mark Davis
	
 
	
 

	
Title:   Vice President – Finance, Secretary & Treasurer
	
 
	
 

 

 

 

 

Exhibit A

	
 

 

DEBTOR:
	
 
	
ENTELLUS MEDICAL, INC.

	
SECURED PARTY:
	
 
	
OXFORD FINANCE LLC,

as Collateral Agent

EXHIBIT A TO UCC FINANCING STATEMENT 

Description of Collateral 

The Collateral consists of all of Debtor’s right, title and interest in and to the following personal property: 

All goods, Accounts (including health-care receivables), Equipment, Inventory, contract rights or rights to payment of money, leases, license agreements, franchise agreements, General Intangibles (except as noted below)], commercial tort claims, documents, instruments (including any promissory notes), chattel paper (whether tangible or electronic), cash, deposit accounts and other Collateral Accounts, all certificates of deposit, fixtures, letters of credit rights (whether or not the letter of credit is evidenced by a writing), securities, and all other investment property, supporting obligations, and financial assets, whether now owned or hereafter acquired, wherever located; and 

All Borrower’s Books relating to the foregoing, and any and all claims, rights and interests in any of the above and all substitutions for, additions, attachments, accessories, accessions and improvements to and replacements, products, proceeds and insurance proceeds of any or all of the foregoing. 

Notwithstanding the foregoing, the Collateral does not include (i) any Intellectual Property; provided, however, the Collateral shall include all Accounts and all proceeds of Intellectual Property. If a judicial authority (including a U.S. Bankruptcy Court) would hold that a security interest in the underlying Intellectual Property is necessary to have a security interest in such Accounts and such property that are proceeds of Intellectual Property, then the Collateral shall automatically, and effective as of the Effective Date, include the Intellectual Property to the extent necessary to permit perfection of Collateral Agent’s security interest in such Accounts and such other property of Debtor that are proceeds of the Intellectual Property; or (ii) more than 65% of the total combined voting power of all classes of stock entitled to vote the shares of capital stock (the “Shares”) of any Foreign Subsidiary, if Borrower demonstrates to Collateral Agent’s reasonable satisfaction that a pledge of more than sixty five percent (65%) of the Shares of such Subsidiary creates a present and existing adverse tax consequence to Borrower under the U.S. Internal Revenue Code.

Pursuant to the terms of a certain negative pledge arrangement with Collateral Agent and the Lenders, Debtor has agreed not to encumber any of its Intellectual Property. 

Capitalized terms used but not defined herein have the meanings ascribed in the Uniform Commercial Code in effect in the State of New York as in effect from time to time (the “Code”) or, if not defined in the Code, then in the Amended and Restated Loan and Security Agreement by and between Debtor, Secured Party and the other Lenders party thereto (as modified, amended and/or restated from time to time).

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