Document:

Unassociated Document

Exhibit 4.16

 

 

Dated 14 March 2014

 

 

 

 

 

US$39,000,000

 

TERM LOAN FACILITY

 

 

STAR SIRIUS LLC and

STAR VEGA LLC

as joint and several Borrowers

 

and

 

STAR BULK CARRIERS CORP.

as Parent Guarantor

 

and

 

DEUTSCHE BANK AG FILIALE DEUTSCHLANDGESCHAFT

as Arranger

 

and

 

DEUTSCHE BANK AG FILIALE DEUTSCHLANDGESCHAFT

as Facility Agent

 

and

 

DEUTSCHE BANK AG FILIALE DEUTSCHLANDGESCHAFT

as Security Agent

 

 

 

 

 

 

FACILITY AGREEMENT

 

relating to

the refinancing of m.v.'s "STAR SIRIUS" and "STAR VEGA"

 

Watson, Farley & Williams

  

  

  

index

 

	
Clause

	
Page

	  	  
	  	  
	
Section 1 Interpretation

	
2

	
1

	
Definitions and Interpretation

	
 2

	
Section 2 The Facility

	
22

	
2

	
The Facility

	
 22

	
3

	
Purpose

	
22

	
4

	
Conditions of Utilisation

	
 22

	
Section 3 Utilisation

	
24

	
5

	
Utilisation

	
24

	
Section 4 Repayment, Prepayment and Cancellation

	
25

	
6

	
Repayment

	
25

	
7

	
Repayment and Cancellation

	
 25

	
Section 5 Costs of Utilisation

	
29

	
8

	
Interest

	
29

	
9

	
Interest Periods

	
 32

	
10

	
Changes to the Calculation of Interest

	
32

	
11

	
Fees

	
34

	
Section 6 Additional Payment Obligations

	
35

	
12

	
Tax Gross Up and Indemnities

	
35

	
13

	
Increased Costs

	
39

	
14

	
Other Indemnities

	
 41

	
15

	
Mitigation by the Finance Parties

	
43

	
16

	
Costs and Expenses

	
43

	
Section 7 Guarantees and Joint and Several Liability of Borrowers

	
45

	
17

	
Guarantee and Indemnity — Parent Guarantor

	
45

	
18

	
Joint and Several Liability of the Borrowers

	
47

	
Section 8 Representations, Undertakings and Events of Default

	
50

	
19

	
Representations

	
50

	
20

	
Information Undertakings

	
56

	
21

	
Financial Covenants

	
59

	
22

	
General Undertakings

	
62

	
23

	
Insurance Undertakings

	
67

	
24

	
General Ship Undertakings

	
72

	
25

	
Security Cover

	
77

	
26

	
Application of Earnings

	
79

	
27

	
Events of Default

	
79

	
Section 9 Changes to Parties

	
84

	
28

	
Changes to the Lenders

	
84

	
29

	
Changes to the Obligors

	
 88

	
Section 10 The Finance Parties

	
89

	
30

	
The Facility Agent and the Arranger

	
89

	
31

	
The Security Agent

	
95

	
32

	
Conduct of Business by the Finance Parties

	
 106

	
33

	
Sharing Among the Finance Parties

	
 106

	
Section 11 Administration

	
108

	
34

	
Payment Mechanics

	
108

	
35

	
Set-Off

	
111

	
36

	
Notices

	
 111

	
37

	
Calculations and Certificates

	
 113

	
38

	
Partial Invalidity

	
 113

	
39

	
Remedies and Waivers

	
 113

	
40

	
Settlement or Discharge Conditional

	
 113

	
41

	
Irrevocable Payment

	
114

	
42

	
Amendments and Waivers

	
 114

  

  

  

 

	
43

	
Confidentiality

	
116

	
44

	
Counterparts

	
119

	
Section 12 Governing Law and Enforcement

	
120

	
45

	
Governing Law

	
120

	
46

	
Enforcement

	
120

	
Schedule 1 The Parties

	
121

	
Schedule 2 Conditions Precedent

	
124

	
Schedule 3 Requests

	
128

	
Schedule 4 Form of Transfer Certificate

	
130

	
Schedule 5 Form of Assignment Agreement

	
132

	
Schedule 6 Form of Compliance Certificate

	
135

	
Schedule 7 Details of the Ships

	
136

	
Schedule 8 Timetables

	
137

	
Execution Pages

	
138

  

  

  

THIS AGREEMENT is made on 14 March 2014 

 

PARTIES

 

	
(1)

	
STAR SIRIUS LLC, a limited liability company duly formed and existing in The Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro MH 96960, The Marshall Islands as a borrower ("Borrower A")

 

	
(2)

	
STAR VEGA LLC, a limited liability company duly formed and existing in The Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro MH 96960, The Marshall Islands as a borrower ("Borrower B")

 

	
(3)

	
STAR BULK CARRIERS CORP., a corporation duly incorporated and existing in The Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro MH 96960, The Marshall Islands as a borrower (the "Parent Guarantor")

 

	
(4)

	
DEUTSCHE BANK AG FILIALE DEUTSCHLANDGESCHAFT as arranger (the "Arranger")

 

	
(5)

	
THE FINANCIAL INSTITUTIONS listed in Part B of Schedule 1 (The Parties) as lenders (the "Original Lenders")

 

	
(6)

	
DEUTSCHE BANK AG FILIALE DEUTSCHLANDGESCHAFT as agent of the other Finance Parties (the "Facility Agent")

 

	
(7)

	
DEUTSCHE BANK AG FILIALE DEUTSCHLANDGESCHAFT as security agent for the Secured Parties (the "Security Agent")

 

BACKGROUND

 

The Original Lenders have agreed to make available to the Borrowers a facility of up to US$39,000,000 in two Tranches, each to be made available for the purpose of:

 

	
(A)

	
in the case of Tranche A, refinancing the acquisition of Ship A by way of a loan in a principal amount not exceeding the lesser of (I) $19,500,000 and (ii) 65 per cent. of the Initial Market Value of that Ship; and

 

	
(B)

	
in the case of Tranche B, refinancing the acquisition of Ship B by way of a loan in a principal amount not exceeding the lesser of (i) $19,500,000 and (ii) 65 per cent. of the Initial Market Value of that Ship.

 

OPERATIVE PROVISIONS

 

  

  

  

SECTION 1

 

INTERPRETATION

 

	
1

	
DEFINITIONS AND INTERPRETATION

 

	
1.1

	
Definitions

 

In this Agreement:

 

"Accounts" means the Earnings Accounts and the Minimum Liquidity Accounts. 

 

"Account Security" means a document creating Security over any Account in agreed form. 

 

"Advance" means a borrowing of all or part of a Tranche under this Agreement. 

 

"Affected Lender" has the meaning given to it in Clause 10.2 (Market disruption).

 

"Affiliate" means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.

 

"Approved Broker" means any firm or firms of insurance brokers approved in writing by the Facility Agent, acting with the authorisation of the Majority Lenders, such authorisation not to be unreasonably withheld.

 

"Approved Charter" means:

 

	 	
(a)

	
in relation to Ship A, a time charterparty dated 7 March 2014 entered into between Borrower A and the Approved Charterer the duration of which is minimum 28 months and maximum 32.5 months and for net daily hire rate of $14,812; and

 

	 	
(b)

	
in relation to Ship B, a time charterparty dated 13 February 2014 entered into between Borrower B and the Approved Charterer the duration of which is minimum 28 months and maximum 32.5 months and for net daily hire rate of $14,812.

 

"Approved Charterer" means Glocal Maritime Ltd. a corporation incorporated in Hong Kong whose registered office is at Unit A, 21F, One Capital Place 18 Luand Road, Wanchai, Hong Kong.

 

"Approved Classification" means, in relation to a Ship, as at the date of this Agreement, the classification in relation to that Ship specified in Schedule 7 (Details of the Ships) with the classification in relation to that Ship specified in Schedule 7 (Details of the Ships) or the equivalent classification with another Approved Classification Society.

 

"Approved Classification Society" means, in relation to a Ship, as at the date of this Agreement, the classification society in relation to that Ship specified in Schedule 7 (Details of the Ships) or any other classification society approved in writing by the Facility Agent acting with the authorisation of all the Lenders, such authorisation not to be unreasonably withheld.

 

"Approved Commercial Manager" means, in relation to a Ship, as at the date of this Agreement, the manager specified as the approved commercial manager in relation to that Ship in Schedule 7 (Details of the Ships) or any other person approved in writing by the Facility Agent acting with the authorisation of all the Lenders, such authorisation not to be unreasonably withheld, as the commercial manager of that Ship.

 

  

2

  

"Approved Flag" means, in relation to a Ship, as at the date of this Agreement, the flag in relation to that Ship specified in Schedule 7 (Details of the Ships) or such other flag approved in writing by the Facility Agent acting with the authorisation of all the Lenders, such authorisation not to be unreasonably withheld.

 

"Approved Flag State" means, in relation to a Ship, the jurisdiction relative to the Approved Flag of that Ship;

 

"Approved Manager" means, in relation to a Ship, the Approved Commercial Manager or the Approved Technical Manager of that Ship (and, where the context so permits, means both of the Approved Commercial Manager and the Approved Technical Manager).

 

"Approved Technical Manager" means, in relation to a Ship, as at the date of this Agreement, the manager specified as the approved technical manager in relation to that Ship in Schedule 7 (Details of the Ships) or any other person approved in writing by the Facility Agent acting with the authorisation of all the Lenders, such authorisation not to be unreasonably withheld, as the technical manager of that Ship.

 

"Approved Valuer" means H. Clarkson & Company Limited, Fearnelys AS, AS, Arrow Valuations Ltd United Kingdom, Maersk Broker AS, SSY Valuation Services Ltd., RS Platou Shipbrokers AS, Maritime Strategies International Ltd, ICAP Shipping International Limited and any other firm or firms of independent sale and purchase shipbrokers mutually agreed between the Facility Agent, acting with the authorisation of the Majority Lenders and the Borrowers.

 

"Assignable Charter" means, in relation to a Ship, any time charterparty (including, without limitation, either Approved Charter), consecutive voyage charter or contract of affreightment in respect of such Ship of a duration (or capable of exceeding a duration) of 12 months or more and any guarantee of such charter or any bareboat charter in respect of that Ship and any guarantee of such bareboat charter, be entered into by the Borrower which is the owner thereof and a charterer or, as the context may require, bareboat charter in accordance with Clauses 25.14 and 25.17.

 

"Assignment Agreement" means an agreement substantially in the form set out in Schedule 5 (Form of Assignment Agreement) or any other form agreed between the relevant assignor and assignee.

 

"Authorisation" means an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation, legalisation or registration.

 

"Availability Period" means the period from and including the date of this Agreement to and including 31 May 2014.

 

"Available Commitment" means a Lender's Commitment minus:

 

	
  

	
(a)

	
the amount of its participation in the outstanding Loan; and

 

	
  

	
(b)

	
in relation to any proposed Utilisation, the amount of its participation in any Advance that is due to be made on or before the proposed Utilisation Date.

 

"Available Facility" means the aggregate for the time being of each Lender's Available Commitment.

 

"Balloon Instalment" has the meaning given in Clause 6.1 (Repayment of Loan). 

 

"Borrower" means Borrower A or Borrower B.

 

"Break Costs" means the amount (if any) by which:

 

  

3

  

	
  

	
(a)

	
the interest which a Lender should have received for the period from the date of receipt of all or any part of its participation in the Loan or Unpaid Sum to the last day of the current Interest Period in relation to the Loan or Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the last day of that Interest Period;

 

exceeds

 

	
  

	
(b)

	
the amount which that Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank in the Relevant Interbank Market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period.

 

"Business Day" means a day (other than a Saturday or Sunday) on which banks are open for general business in Athens, Piraeus, Hamburg, Frankfurt, London and New York.

 

"Charged Property" means all of the assets which from time to time are, or are expressed to be, the subject of the Transaction Security.

 

"Charter" means, in relation to a Ship, any charter relating to that Ship, or other contract for its employment, whether or not already in existence (including, without limitation, either Approved Charter or any other Assignable Charter).

 

"Charterparty Assignment" means, in relation to a Ship, an assignment of the rights of the Borrower who is the owner of that Ship under any Assignable Charter relative thereto executed or to be executed by that Borrower in favour of the Security Agent in the agreed form.

 

"Code" means the United States Internal Revenue Code of 1986.

 

"Commitment" means:

 

	
  

	
(a)

	
in relation to an Original Lender, the amount set opposite its name under the heading "Commitment" in Part B of Schedule 1 (The Parties) and the amount of any other Commitment transferred to it under this Agreement; and

 

	
  

	
(b)

	
in relation to any other Lender, the amount of any Commitment transferred to it under this Agreement,

 

to the extent not cancelled, reduced or transferred by it under this Agreement.

 

"Compliance Certificate" means a certificate in the form set out in Schedule 6 (Form of Compliance Certificate) or in any other form agreed between the Parent Guarantor, the Borrowers and the Facility Agent.

 

"Confidential Information" means all information relating to any Transaction Obligor, the Group, the Finance Documents or the Facility of which a Finance Party becomes aware in its capacity as, or for the purpose of becoming, a Finance Party or which is received by a Finance Party in relation to, or for the purpose of becoming a Finance Party under, the Finance Documents or the Facility from either:

 

	
  

	
(a)

	
any member of the Group or any of its advisers; or

 

	
  

	
(b)

	
another Finance Party, if the information was obtained by that Finance Party directly or indirectly from any member of the Group or any of its advisers,

 

in whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording information which

 

  

4

  

contains or is derived or copied from such information but excludes information that:

 

	
  

	
(i)

	
is or becomes public information; or

 

	
  

	
(ii)

	
is identified in writing at the time of delivery as non-confidential by any member of the Group or any of its advisers; or

 

	
  

	
(iii)

	
is known by that Finance Party before the date the information is disclosed to it in accordance with paragraphs (a) or (b) above or is lawfully obtained by that Finance Party after that date, from a source which is, as far as that Finance Party is aware, unconnected with the Group and which, in either case, as far as that Finance Party is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality.

 

"Confidentiality Undertaking" means a confidentiality undertaking in substantially the appropriate form recommended by the LMA from time to time or in any other form agreed between the Borrowers and the Facility Agent.

 

"Corresponding Debt" means any amount, other than any Parallel Debt, which an Obligor owes to a Secured Party under or in connection with the Finance Documents.

 

"Deed of Covenant" means, in relation to a Ship, a deed of covenant collateral to a Mortgage over that Ship and creating Security over that Ship together with the Earnings, the Insurances and any Requisition Compensation in each case in relation to that Ship, in agreed form.

 

"Default" means an Event of Default or a Potential Event of Default.

 

"Delegate" means any delegate, agent, attorney, co-trustee or other person appointed by the Security Agent.

 

"Disruption Event" means either or both of:

 

	
  

	
(a)

	
a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Facility (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the Parties; or

 

	
  

	
(b)

	
the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a Party preventing that, or any other, Party:

 

	
  

	
(i)

	
from performing its payment obligations under the Finance Documents; or

 

	
  

	
(ii)

	
from communicating with other Parties in accordance with the terms of the Finance Documents,

 

and which (in either such case) is not caused by, and is beyond the control of, the Party whose operations are disrupted.

 

"Document of Compliance" has the meaning given to it in the ISM Code.

 

"dollars" and "$" mean the lawful currency, for the time being, of the United States of America.

 

  

5

  

"Earnings" means, in relation to a Ship, all moneys whatsoever which are now, or later become, payable (actually or contingently) to a Borrower or the Security Agent and which arise out of the use or operation of that Ship, including (but not limited to):

 

	
  

	
(a)

	
the following, save to the extent that any of them is, with the prior written consent of the Facility Agent, pooled or shared with any other person:

 

	
  

	
(i)

	
all freight, hire and passage moneys;

 

	
  

	
(ii)

	
compensation payable to a Borrower or the Security Agent in the event of requisition of that Ship for hire;

 

	
  

	
(iii)

	
remuneration for salvage and towage services;

 

	
  

	
(iv)

	
demurrage and detention moneys;

 

	
  

	
(v)

	
damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of that Ship;

 

	
  

	
(vi)

	
all moneys which are at any time payable under any Insurances in relation to loss of hire;

 

	
  

	
(vii)

	
all monies which are at any time payable to a Borrower in relation to general average contribution; and

 

	
  

	
(b)

	
if and whenever that Ship is employed on terms whereby any moneys falling within sub-paragraphs (i) to (vi) of paragraph (a) above are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to that Ship.

 

"Earnings Account" means, in relation to a Borrower:

 

	
  

	
(a)

	
an account in the name of that Borrower with the Facility Agent designated "Earnings Account"; or

 

	
  

	
(b)

	
any other account (with that or another office of the Facility Agent or with a bank or financial institution other than the Facility Agent) which is designated by the Facility Agent as the Earnings Account of that Borrower for the purposes of this Agreement.

 

"Environmental Approval" means any present or future permit, ruling, variance or other Authorisation required under Environmental Laws.

 

"Environmental Claim" means any claim by any governmental, judicial or regulatory authority or any other person which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law and, for this purpose, "claim" includes a claim for damages, compensation, contribution, injury, fines, losses and penalties or any other payment of any kind, including in relation to clean-up and removal, whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset.

 

"Environmental Incident" means:

 

	
  

	
(a)

	
any release, emission, spill or discharge into any Fleet Vessel or into or upon the air, sea, land or soils (including the seabed) or surface water of Environmentally Sensitive Material within or from any Fleet Vessel; or

 

  

6

  

	
  

	
(b)

	
any incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, sea, land or soils (including the seabed) or surface water from a vessel other than any Fleet Vessel and which involves a collision between any Fleet Vessel and such other vessel or some other incident of navigation or operation, in either case, in connection with which any Fleet Vessel is actually or potentially liable to be arrested, attached, detained or injuncted and/or any Fleet Vessel and/or any Obligor or any other member of the Group and/or any operator or manager of any Fleet Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or

 

	
  

	
(c)

	
any other incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, sea, land or soils (including the seabed) or surface water otherwise than from any Fleet Vessel and in connection with which any Fleet Vessel is actually or potentially liable to be arrested and/or where any Obligor and/or any operator or manager of any Fleet Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action.

 

"Environmental Law" means any present or future law relating to pollution or protection of human health or the environment, to conditions in the workplace, to the carriage, generation, handling, storage, use, release or spillage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material.

 

"Environmentally Sensitive Material" means and includes all contaminants, oil, oil products, toxic substances and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous.

 

"Event of Default" means any event or circumstance specified as such in Clause 27 (Events of Default).

 

"Facility" means the term loan facility made available under this Agreement as described in Clause 2 (The Facility).

 

"Facility Office" means the office or offices notified by a Lender to the Facility Agent in writing on or before the date it becomes a Lender (or, following that date, by not less than 5 Business Days' written notice) as the office or offices through which it will perform its obligations under this Agreement.

 

"Family" means, together, Mr. Petros Pappas and the linear descendants of Mr. Petros Pappas.

 

"FATCA" means:

 

	
  

	
(a)

	
sections 1471 to 1474 of the Code or any associated regulations or other official guidance;

 

	
  

	
(b)

	
any treaty, law, regulation or other official guidance enacted in any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of paragraph (a) above; or

 

	
  

	
(c)

	
any agreement pursuant to the implementation of paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction.

 

"FATCA Application Date" means:

 

  

7

  

	
  

	
(a)

	
in relation to a "withholdable payment" described in section 1473(1)(A)(i) of the Code (which relates to payments of interest and certain other payments from sources within the US), 1 July 2014;

 

	
  

	
(b)

	
in relation to a "withholdable payment" described in section 1473(1)(A)(ii) of the Code (which relates to "gross proceeds" from the disposition of property of a type that can produce interest from sources within the US), 1 January 2017; or

 

	
  

	
(c)

	
in relation to a "passthru payment" described in section 1471(d)(7) of the Code not falling within paragraphs (a) or (b) above, 1 January 2017,

 

or, in each case, such other date from which such payment may become subject to a deduction or withholding required by FATCA as a result of any change in FATCA after the date of this Agreement.

 

	
  

	
"FATCA Deduction" means a deduction or withholding from a payment under a Finance Document required by FATCA.

 

	
  

	
"FATCA Exempt Party" means a Party that is entitled to receive payments free from any FATCA Deduction.

 

	
  

	
"FATCA FFI" means a foreign financial institution as defined in section 1471(d)(4) of the Code which, if any Finance Party is not a FATCA Exempt Party, could be required to make a FATCA Deduction.

 

	
  

	
"Fee Letter" means any letter or letters dated on or about the date of this Agreement between the Facility Agent, each Borrower and the Parent Guarantor setting out any of the fees referred to in Clause 11 (Fees).

 

	
  

	
"Finance Document" means:

 

	
  

	
(a)

	
this Agreement;

 

	
  

	
(b)

	
any Fee Letter;

 

	
  

	
(c)

	
any Shares Security;

 

	
  

	
(d)

	
any Charterparty Assignment;

 

	
  

	
(e)

	
any Mortgage;

 

	
  

	
(f)

	
any Deed of Covenant;

 

	
  

	
(g)

	
any General Assignment;

 

	
  

	
(h)

	
any Accounts Security;

 

	
  

	
(I)

	
the Manager's Undertakings;

 

	
  

	
(j)

	
any Hedging Agreement;

 

	
  

	
(k)

	
any Hedging Agreement Assignment;

 

	
  

	
(l)

	
any other document (whether or not it creates Security) which is executed as security for, or for the purpose of establishing any priority or subordination arrangement in relation to, the Secured Liabilities; or

 

	
  

	
(m)

	
any other document designated as such by the Facility Agent and the Borrowers.

 

  

8

  

"Finance Party" means the Facility Agent, the Security Agent, the Arranger or a Lender.

 

"Financial Indebtedness" means any indebtedness for or in relation to:

 

	
  

	
(a)

	
moneys borrowed;

 

	
  

	
(b)

	
any amount raised by acceptance under any acceptance credit facility or dematerialised equivalent;

 

	
  

	
(c)

	
any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;

 

	
  

	
(d)

	
the amount of any liability in relation to any lease or hire purchase contract which would, in accordance with GAAP, be treated as a finance or capital lease;

 

	
  

	
(e)

	
receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis);

 

	
  

	
(f)

	
any amount raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing;

 

	
  

	
(g)

	
any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price (and, when calculating the value of any derivative transaction, only the marked to market value shall be taken into account);

 

	
  

	
(h)

	
any counter-indemnity obligation in relation to a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution; and

 

	
  

	
(i)

	
the amount of any liability in relation to any guarantee or indemnity for any of the items referred to in paragraphs (a) to (h) above.

 

"Fleet Vessel" means each of the vessels (including, but not limited to, the Ships) from time to time wholly owned by members of the Group.

 

"GAAP" means generally accepted accounting principles in the United States of America.

 

"General Assignment" means, in relation to a Ship, a general assignment creating Security over that Ship's Earnings, its Insurances and any Requisition Compensation in relation to that Ship, in agreed form.

 

"Group" means the Parent Guarantor and its Subsidiaries for the time being.

 

"Hedge Counterparty" means any party to a Hedging Agreement (other than a Borrower) which may enter into such Hedging Agreement in accordance with Clause 8.5.

 

"Hedging Agreement" means any master agreement, confirmation, transaction, schedule or other agreement in agreed form entered into or to be entered into by a Borrower and a Hedge Counterparty in accordance with Clause 8.5 (Hedging) for the purpose of hedging interest payable under this Agreement.

 

"Hedging Agreement Assignment " means, in relation to a Borrower, a first assignment of that Borrower's rights and interests in any Hedging Agreement, in agreed form.

 

"Holding Company" means, in relation to a person, any other person in relation to which it is a Subsidiary.

 

"Indemnified Person" has the meaning given to it in Clause 14.2 (Other indemnities).

 

  

9

  

"Initial Market Value" means, in relation to a Ship, the Market Value of that Ship calculated in accordance with the valuation relative thereto referred to in paragraph 2.5 of Schedule 2, Part B;

 

"Insurances" means, in relation to a Ship:

 

	
  

	
(a)

	
all policies and contracts of insurance, including entries of that Ship in any protection and indemnity or war risks association, effected in relation to that Ship, the Earnings or otherwise in relation to that Ship whether before, on or after the date of this Agreement; and

 

	
  

	
(b)

	
all rights and other assets relating to, or derived from, any of such policies, contracts or entries, including any rights to a return of premium and any rights in relation to any claim whether or not the relevant policy, contract of insurance or entry has expired on or before the date of this Agreement.

 

"Interest Period" means, in relation to an Advance, the Loan or any part of the Loan, each period determined in accordance with Clause 9 (Interest Periods) and, in relation to an Unpaid Sum, each period determined in accordance with Clause 8.3 (Default interest).

 

"Interpolated Screen Rate" means, in relation to LIBOR for an Advance, the Loan, any part of the Loan or any Unpaid Sum, the rate (rounded to the same number of decimal places as the two relevant Screen Rates) which results from interpolating on a linear basis between:

 

	
  

	
(a)

	
the applicable Screen Rate for the longest period (for which that Screen Rate is available) which is less than the Interest Period of that Advance, the Loan, that part of the Loan or that Unpaid Sum; and

 

	
  

	
(b)

	
the applicable Screen Rate for the shortest period (for which that Screen Rate is available) which exceeds the Interest Period of that Advance, the Loan, that part of the Loan or that Unpaid Sum,

 

each as of the Specified Time on the Quotation Day for the currency of that Advance, the Loan, that part of the Loan or that Unpaid Sum.

 

"ISM Code" means the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention (including the guidelines on its implementation), adopted by the International Maritime Organisation, as the same may be amended or supplemented from time to time.

 

"ISPS Code" means the International Ship and Port Facility Security (ISPS) Code as adopted by the International Maritime Organization's (IMO) Diplomatic Conference of December 2002, as the same may be amended or supplemented from time to time.

 

"ISSC" means an International Ship Security Certificate issued under the ISPS Code. 

 

"Legal Reservations" means:

 

	
  

	
(a)

	
the principle that equitable remedies may be granted or refused at the discretion of a court and the limitation of enforcement by laws relating to insolvency, reorganisation and other laws generally affecting the rights of creditors;

 

	
  

	
(b)

	
the time barring of claims under the Limitation Acts, the possibility that an undertaking to assume liability for or indemnify a person against non-payment of UK stamp duty may be void and defences of set-off or counterclaim;

 

	
  

	
(c)

	
similar principles, rights and defences under the laws of any Relevant Jurisdiction; and

 

  

10

  

	
  

	
(d)

	
any other matters which are set out as qualifications or reservations as to matters of law of general application in any legal opinion delivered pursuant to Clause 4 (Conditions of Utilisation).

 

"Lender" means:

 

	
  

	
(a)

	
any Original Lender; and

 

	
  

	
(b)

	
any bank, financial institution, trust, fund or other entity which has become a Party in accordance with Clause 28 (Changes to the Lenders),

 

which in each case has not ceased to be a Party in accordance with this Agreement.

 

"LIBOR" means, in relation to any Advance, the Loan, any part of the Loan or any Unpaid Sum:

 

	
  

	
(a)

	
the applicable Screen Rate; or

 

	
  

	
(b)

	
(if no Screen Rate is available for the Interest Period of that Advance, the Loan, that part of the Loan or that Unpaid Sum), the applicable Interpolated Screen Rate; or

 

	
  

	
(c)

	
if:

 

	
  

	
(i)

	
no Screen Rate is available for the Interest Period of that Advance, the Loan, that part of the Loan or that Unpaid Sum); or

 

	
  

	
(ii)

	
it is not possible to calculate an Interpolated Screen Rate for that Advance,  the Loan, that part of the Loan or that Unpaid Sum,

 

the Reference Bank Rate,

 

(as of, in the case of paragraphs (a) and (c) above, the Specified Time on the Quotation Day for a period comparable to the Interest Period for that Advance, the Loan, that part of the Loan or that Unpaid Sum) and, if any such rate is below zero, LIBOR shall be deemed to be zero.

 

"Limitation Acts" means the Limitation Act 1980 and the Foreign Limitation Periods Act 1984.

 

"LMA" means the Loan Market Association.

 

"Loan" means the loan to be made available under the Facility or the aggregate principal amount outstanding for the time being of the borrowings under the Facility.

 

"Major Casualty" means, in relation to a Ship, any casualty to that Ship in relation to which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds $1,500,000 or the equivalent in any other currency.

 

"Majority Lenders" means:

 

	
  

	
(a)

	
if no Advance has yet been made, a Lender or Lenders whose Commitments aggregate more than 66.67 per cent. of the Total Commitments; or

 

	
  

	
(b)

	
at any other time, a Lender or Lenders whose participations in the Loan aggregate more than 66.67 per cent. of the amount of the Loan then outstanding or, if the Loan has been repaid or prepaid in full, a Lender or Lenders whose participations in

 

  

11

  

the Loan immediately before repayment or prepayment in full aggregate more than 66.67 per cent. of the Loan immediately before such repayment.

 

"Manager's Undertaking" means, in relation to each Ship, the letter of undertaking from each Approved Manager subordinating the rights of that Approved Manager against that Ship and the Borrower which is the owner thereof to the rights of the Finance Parties in agreed form.

 

"Margin" means 3.35 per cent. per annum.

 

"Market Disruption Event" has the meaning given to it in Clause 10.2 (Market disruption).

 

"Market Value" means, (i) in relation to a Ship or Fleet Vessel, at any date, the market value of that Ship or Fleet Vessel determined in accordance with Clause 25 (Security Cover) and (ii) in relation to any other Fleet Vessel the value attributed to such Fleet Vessel in accordance with the same principles as apply to valuation of the Ships in accordance with Clause 25 (Security Cover) but using the latest market valuation of such Fleet Vessel used for the purposes of the Compliance Certificate, in each case after deducting the estimated amount of the usual and reasonable expenses which would be incurred in connection with a sale.

 

"Material Adverse Effect" means a material adverse effect on:

 

	
  

	
(a)

	
the business, operations, property, condition (financial or otherwise) or prospects of any member of the Group or the Group as a whole; or

 

	
  

	
(b)

	
the ability of any Transaction Obligor to perform its obligations under any Finance Document; or

 

	
  

	
(c)

	
the validity or enforceability of, or the effectiveness or ranking of any Security granted or intended to be granted pursuant to any of, the Finance Documents or the rights or remedies of any Finance Party under any of the Finance Documents.

 

"Minimum Liquidity Account" means, in relation to each Borrower:

 

	
  

	
(a)

	
an account in the name of that Borrower with the Facility Agent designated "[Name of Borrower]" — Minimum Liquidity Account"; or

 

	
  

	
(b)

	
any other account (with that or another office of the Facility Agent or with a bank or financial institution other than the Facility Agent) which is designated by the Facility Agent as the Minimum Liquidity Account for that Borrower for the purposes of this Agreement.

 

"Money Laundering" has the meaning given in Article I (2001/97EC of the European Parliament and of 4 December 2001) including, but not limited to Directive 2005/60 amending Council Directive 91/308 of the Directive).

 

"Month" means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, except that:

 

	
  

	
(a)

	
(subject to paragraph (c) below) if the numerically corresponding day is not a Business Day, that period shall end on the next Business Day in that calendar month in which that period is to end if there is one, or if there is not, on the immediately preceding Business Day;

 

	
  

	
(b)

	
if there is no numerically corresponding day in the calendar month in which that period is to end, that period shall end on the last Business Day in that calendar month; and

 

  

12

  

	
  

	
(c)

	
if an Interest Period begins on the last Business Day of a calendar month, that Interest Period shall end on the last Business Day in the calendar month in which that Interest Period is to end.

 

The above rules will only apply to the last Month of any period.

 

"Mortgage" means, in relation to a Ship, a first preferred or, as the case may be, priority mortgage on that Ship in agreed form.

 

"Mortgaged Ship" means a Ship which is subject to a Mortgage at the relevant time.

 

"Obligor" means a Borrower or the Parent Guarantor.

 

"Original Financial Statements" means, in relation to the Parent Guarantor:

 

	
  

	
(a)

	
in the case of a financial year, the audited consolidated financial statements of the Group for its financial year ended on 31 December 2012; and

 

	
  

	
(b)

	
in the case of a financial quarter of a financial year, the unaudited consolidated financial statements for the financial quarter ended on 30 September 2013.

 

"Overseas Regulations" means the Overseas Companies Regulations 2009 (SI 2009/1801).

 

"Parallel Debt" means any amount which an Obligor owes to the Security Agent under Clause 31.2 (Parallel Debt (Covenant to pay the Security Agent)).

 

"Parent Guarantee" means a guarantee executed by the Parent Guarantor in agreed form.

 

"Parent Guarantor" means Star Bulk Carriers Corp., a corporation incorporated in The Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro MH96960, The Marshall Islands.

 

"Party" means a party to this Agreement.

 

"Permitted Charter" means, in relation to a Ship, the Approved Charter relative to that Ship, any other charter or sub-charter or any bareboat charter:

 

	
  

	
(a)

	
which is a time or consecutive voyage charter;

 

	
  

	
(b)

	
the duration of which

 

	
  

	
(i)

	
does not exceed and is not capable of exceeding, by virtue of any optional extensions, 12 months plus a redelivery allowance of not more than 30 days; or

 

	
  

	
(ii)

	
does exceed or is capable of exceeding, by virtue of any optional extensions, 12 months provided that there shall have been entered into as a condition thereto a Charterparty Assignment in accordance with Clause 25.17 (Charterparty Assignment);

 

	
  

	
(c)

	
which is entered into on bona fide arm's length terms at the time at which that Ship is fixed; and

 

	
  

	
(d)

	
in relation to which not more than two months' hire is payable in advance,

 

and any other charter which is approved in writing by the Facility Agent acting with the authorisation of all the Lenders, such authorisation not to be unreasonably withheld.

 

  

13

  

"Permitted Financial Indebtedness" means :

 

	
  

	
(a)

	
any Financial Indebtedness incurred under the Finance Documents;

 

	
  

	
(b)

	
any Financial Indebtedness that is subordinated to all Financial Indebtedness incurred under the Finance Documents in a manner satisfactory to the Facility Agent; and

 

	
  

	
(c)

	
any other Financial Indebtedness reasonably incurred in the relevant Borrower's ordinary course business of owning, operating and chartering not exceeding, at any relevant time, in aggregate, $250,000.

 

"Permitted Security" means:

 

	
  

	
(a)

	
Security created by the Finance Documents;

 

	
  

	
(b)

	
any netting or set-off arrangement entered into by any member of the Group in the ordinary course of its banking arrangements for the purpose of netting debit and credit balances;

 

	
  

	
(c)

	
liens for unpaid master's and crew's wages in accordance with usual maritime practice;

 

	
  

	
(d)

	
liens for salvage;

 

	
  

	
(e)

	
liens for master's disbursements incurred in the ordinary course of trading; and

 

	
  

	
(f)

	
any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of either Ship and not as a result of any default or omission by either Borrower, provided such liens do not secure amounts more than 30 days overdue and subject, in the case of liens for repair or maintenance, to Clause 24.14 (Restrictions on chartering, appointment of managers etc.)

 

"Potential Event of Default" means any event or circumstance specified in Clause 27 (Events of Default) which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default.

 

"Prohibited Person" means any person (whether designated by name or by reason of being included in a class of persons) against whom Sanctions are directed.

 

"Quotation Day" means, in relation to any period for which an interest rate is to be determined, two Business Days before the first day of that period unless market practice differs in the Relevant Interbank Market in which case the Quotation Day will be determined by the Facility Agent in accordance with market practice in the Relevant Interbank Market (and if quotations would normally be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those days).

 

"Receiver" means a receiver or receiver and manager or administrative receiver of the whole or any part of the Charged Property.

 

"Reference Bank Rate" means the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Facility Agent at its request by the Reference Banks as the rate at which the relevant Reference Bank could borrow funds in the London interbank market in dollars for the relevant period, were it to do so by asking for and then accepting interbank offers for deposits in reasonable market size in that currency and for that period.

 

  

14

  

"Reference Banks" means the principal London offices of each of the Original Lenders or such other banks as may be appointed by the Facility Agent with the approval of the Majority Lenders in consultation with the Borrowers.

 

"Related Fund" in relation to a fund (the "first fund"), means a fund which is managed or advised by the same investment manager or investment adviser as the first fund or, if it is managed by a different investment manager or investment adviser, a fund whose investment manager or investment adviser is an Affiliate of the investment manager or investment adviser of the first fund.

 

"Relevant Interbank Market" means the London interbank market.

 

"Relevant Jurisdiction" means, in relation to a Transaction Obligor:

 

	
  

	
(a)

	
its jurisdiction of incorporation;

 

	
  

	
(b)

	
any jurisdiction where any asset subject to, or intended to be subject to, any of the Transaction Security created, or intended to be created, under the Finance Documents to which it is a party is situated;

 

	
  

	
(c)

	
any jurisdiction where it conducts its business; and

 

	
  

	
(d)

	
the jurisdiction whose laws govern the perfection of any of the Transaction Security created, or intended to be created, under the Finance Documents to which it is a party.

 

"Repayment Date" means each date on which a Repayment Instalment is required to be paid under Clause 6.1 (Repayment of Loan).

 

"Repayment Instalment" has the meaning given to it in Clause 6.1 (Repayment of Loan).

 

"Repeating Representation" means each of the representations set out in Clause 19 (Representations) except Clause 19.10 (Insolvency), Clause 19.11 (No filing or stamp taxes) and Clause 19.12 (Deduction of Tax) and any representation of any Transaction Obligor made in any other Finance Document that is expressed to be a "Repeating Representation" or is otherwise expressed to be repeated.

 

"Representative" means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian.

 

"Requisition" means, in relation to a Ship:

 

	
  

	
(a)

	
any expropriation, confiscation, requisition or acquisition of that Ship, whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority (excluding a requisition for hire for a fixed period not exceeding one year without any right to an extension) unless it is within 30 days redelivered to the full control of the relevant Borrower; and

 

	
  

	
(b)

	
any arrest, capture, seizure or detention of that Ship (including any hijacking or theft) unless it is within 30 days redelivered to the full control of the relevant Borrower.

 

"Requisition Compensation" includes all compensation or other moneys payable by reason of any Requisition.

 

"Safety Management Certificate" has the meaning given to it in the ISM Code.

 

  

15

  

"Safety Management System" has the meaning given to it in the ISM Code.

 

"Sanctions" means any sanctions, embargoes, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment, exporting, financing or making assets available (or other activities similar to or connected with any of the foregoing):

 

	
  

	
(a)

	
imposed by law or regulation of the United Kingdom, the Council of the European Union, the United Nations or its Security Council or the United States of America; or

 

	
  

	
(b)

	
otherwise imposed by any law or regulation,

 

by which any Transaction Obligor, any other member of the Group or any Affiliate (or any of them) is bound.

 

"Screen Rate" means the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for dollars for the relevant period displayed on pages LIBOR01 or LIBOR02 of the Reuters screen (or any replacement Reuters page which displays that rate) or on the appropriate page of such other information service which publishes that rate from time to time in place of Reuters. If such page or service ceases to be available, the Facility Agent may specify another page or service displaying the relevant rate after consultation with the Borrowers.

 

"Secured Liabilities" means all present and future obligations and liabilities, (whether actual or contingent and whether owed jointly or severally or in any other capacity whatsoever) of each Transaction Obligor to any Secured Party under or in connection with each Finance Document.

 

"Secured Party" means each Finance Party from time to time party to this Agreement and any Receiver or Delegate.

 

"Security" means a mortgage, pledge, lien, charge, assignment, hypothecation or security interest or any other agreement or arrangement having the effect of conferring security.

 

"Security Period" means the period starting on the date of this Agreement and ending on the date on which the Facility Agent is satisfied that there is no outstanding Commitment in force and that the Secured Liabilities have been irrevocably and unconditionally paid and discharged in full.

 

"Security Property" means:

 

	
  

	
(a)

	
the Transaction Security (including, for the avoidance of doubt, the Transaction Security created pursuant to the Finance Documents) expressed to be granted in favour of the Security Agent as trustee for the Secured Parties and all proceeds of that Transaction Security;

 

	
  

	
(b)

	
all obligations expressed to be undertaken by a Transaction Obligor to pay amounts in relation to the Secured Liabilities to the Security Agent as trustee for the Secured Parties and secured by the Transaction Security together with all representations and warranties expressed to be given by a Transaction Obligor or any other person in favour of the Security Agent as trustee for the Secured Parties;

 

	
  

	
(c)

	
the Security Agent's interest in any turnover trust created under the Finance Documents;

 

	
  

	
(d)

	
any other amounts or property, whether rights, entitlements, choses in action or otherwise, actual or contingent, which the Security Agent is required by the terms of the Finance Documents to hold as trustee on trust for the Secured Parties,

 

  

16

  

except:

 

	
  

	
(i)

	
rights intended for the sole benefit of the Security Agent; and

 

	
  

	
(ii)

	
any moneys or other assets which the Security Agent has transferred to the Facility Agent or (being entitled to do so) has retained in accordance with the provisions of this Agreement.

 

"Selection Notice" means a notice substantially in the form set out in Part B of Schedule 3 (Requests) given in accordance with Clause 9 (Interest Periods).

 

"Servicing Party" means the Facility Agent or the Security Agent.

 

"Shares Security" means, in relation to a Borrower, a document creating Security over the limited liability membership interests in that Borrower in agreed form.

 

"Ship" means Ship A or Ship B.

 

"Ship A" means m.v. "STAR SIRIUS", details of which are set out opposite its name in Schedule 7 (Details of the Ships).

 

"Ship B" means m.v. "STAR VEGA", details of which are set out opposite its name in Schedule 7 (Details of the Ships).

 

"Specified Time" means a time determined in accordance with Schedule 8 (Timetables).

 

"Subsidiary" means a subsidiary within the meaning of section 1159 of the Companies Act 2006.

 

"Tax" means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same).

 

"Tax Credit" has the meaning given to it in Clause 12.1 (Definitions). 

 

"Tax Deduction" has the meaning given to it in Clause 12.1 (Definitions). 

 

"Tax Payment" has the meaning given to it in Clause 12.1 (Definitions).

 

"Termination Date" means, the date falling 81 Months from the first Repayment Date under Clause 6.1 (Repayment of Loan).

 

"Third Parties Act" has the meaning given to it in Clause 1.5 (Third party rights).

 

"Total Commitments" means the aggregate of the Commitments, being $39,000,000 at the date of this Agreement.

 

"Total Loss" means, in relation to a Ship:

 

	
  

	
(a)

	
actual, constructive, compromised, agreed or arranged total loss of that Ship;

 

	
  

	
(b)

	
any expropriation, confiscation, requisition or acquisition of that Ship, whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority (excluding a requisition for hire for a fixed period not exceeding 1 year without any right to an extension) unless it is within 30 days redelivered to the full control of the Obligor which owns that Ship; and

 

  

17

  

	
  

	
(c)

	
any arrest, capture, seizure or detention of that Ship (including any hijacking or theft) unless it is within 180 days redelivered to the full control of the Obligor which owns that Ship.

 

"Total Loss Date" means, in relation to the Total Loss of a Ship:

 

	
  

	
(a)

	
in the case of an actual loss of that Ship, the date on which it occurred or, if that is unknown, the date when that Ship was last heard of;

 

	
  

	
(b)

	
in the case of a constructive, compromised, agreed or arranged total loss of that Ship, the earlier of:

 

	
  

	
(i)

	
the date on which a notice of abandonment is given to the insurers; and

 

	
  

	
(ii)

	
the date of any compromise, arrangement or agreement made by or on behalf of the relevant Borrower with that Ship's insurers in which the insurers agree to treat that Ship as a total loss; and

 

	
  

	
(c)

	
in the case of any other type of total loss, the date (or the most likely date) on which it appears to the Facility Agent that the event constituting the total loss occurred.

 

"Tranche" means each of Tranche A and Tranche B.

 

"Tranche A" means that part of the Loan made or to be made available to the Borrowers to refinance the acquisition cost of Ship A in a principal amount not exceeding the lesser of (i) $19,500,000 and (ii) 65 per cent. of the Initial Market Value of that Ship or, as the context may require, the principal amount outstanding of that Tranche at the relevant time.

 

"Tranche B" means that part of the Loan made or to be made available to the Borrowers to refinance the acquisition cost of Ship B in a principal amount not exceeding the lesser of (i) $19,500,000 and (ii) 65 per cent. of the initial Market Value of that Ship or, as the context may require, the principal amount outstanding of that Tranche at the relevant time.

 

"Transaction Document" means:

 

	
  

	
(a)

	
a Finance Document;

 

	
  

	
(b)

	
any Charter; or

 

	
  

	
(e)

	
any other document designated as such by the Facility Agent and the Borrower.

 

"Transaction Obligor" means an Obligor and the Approved Managers or any other person, except a Finance Party, who executes a Finance Document.

 

"Transaction Security" means the Security created or intended to be created in favour of the Security Agent pursuant to the Finance Documents.

 

"Transfer Certificate" means a certificate in the form set out in Schedule 4 (Form of Transfer Certificate) or any other form agreed between the Facility Agent and the Borrowers.

 

"Transfer Date" means, in relation to an assignment or a transfer, the later of:

 

	
  

	
(a)

	
the proposed Transfer Date specified in the relevant Assignment Agreement or Transfer Certificate; and

 

	
  

	
(b)

	
the date on which the Facility Agent executes the relevant Assignment Agreement or Transfer Certificate.

 

  

18

  

"UK Establishment" means a UK establishment as defined in the Overseas Regulations.

 

"Unpaid Sum" means any sum due and payable but unpaid by an Obligor under the Finance Documents.

 

"US Tax Obligor" means:

 

	
  

	
(a)

	
a person which is resident for tax purposes in the United States of America; or

 

	
  

	
(b)

	
a person some or all of whose payments under the Finance Documents are from sources within the United States for US federal income tax purposes.

 

"Utilisation" means a utilisation of the Facility.

 

"Utilisation Date" means the date of a Utilisation, being the date on which the relevant Advance is to be made.

 

"Utilisation Request" means a notice substantially in the form set out in Part A of Schedule 3 (Requests).

 

"VAT" means:

 

	
  

	
(a)

	
any tax imposed in compliance with the Council Directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112); and

 

	
  

	
(b)

	
any other tax of a similar nature, whether imposed in a member state of the European Union in substitution for, or levied in addition to, such tax referred to in paragraph (a) above, or imposed elsewhere.

 

	
1.2

	
Construction

 

	
(a)

	
Unless a contrary indication appears, a reference in this Agreement to:

 

	
  

	
(i)

	
the "Arranger", the "Facility Agent", any "Finance Party", any "Lender", any "Obligor", any "Party", any "Secured Party", the "Security Agent", any "Transaction Obligor" or any other person shall be construed so as to include its successors in title, permitted assigns and permitted transferees to, or of, its rights and/or obligations under the Finance Documents;

 

	
  

	
(ii)

	
"assets" includes present and future properties, revenues and rights of every description;

 

	
  

	
(iii)

	
"contingent liability" means a liability which is not certain to arise and/or the amount of which remains unascertained;

 

	
  

	
(iv)

	
"document" includes a deed and also a letter, fax or telex;

 

	
  

	
(v)

	
"expense" means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable Tax including VAT;

 

	
  

	
(vi)

	
a "Finance Document" or "Transaction Document" or any other agreement or instrument is a reference to that Finance Document or Transaction Document or other agreement or instrument as amended or novated;

 

	
  

	
(vii)

	
"indebtedness" includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;

 

  

19

  

	
  

	
(viii)

	
"law" includes any order or decree, any form of delegated legislation, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council;

 

	
  

	
(ix)

	
"proceedings" means, in relation to any enforcement provision of a Finance Document, proceedings of any kind, including an application for a provisional or protective measure;

 

	
  

	
(x)

	
a "person" includes any individual, firm, company, corporation, government, state or agency of a state or any association, trust, joint venture, consortium or partnership (whether or not having separate legal personality);

 

	
  

	
(xi)

	
a "regulation" includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;

 

	
  

	
(xii)

	
a provision of law is a reference to that provision as amended or re-enacted;

 

	
  

	
(xiii)

	
a time of day is a reference to London time;

 

	
  

	
(xiv)

	
any English legal term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official or any legal concept or thing shall, in respect of a jurisdiction other than England, be deemed to include that which most nearly approximates in that jurisdiction to the English legal term;

 

	
  

	
(xv)

	
words denoting the singular number shall include the plural and vice versa; and

 

	
  

	
(xvi)

	
"including" and "in particular" (and other similar expressions) shall be construed as not limiting any general words or expressions in connection with which they are used.

 

	
(b)

	
Section, Clause and Schedule headings are for ease of reference only and are not to be used for the purposes of construction or interpretation of the Finance Documents.

 

	
(c)

	
Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under, or in connection with, any Finance Document has the same meaning in that Finance Document or notice as in this Agreement.

 

	
(d)

	
A Potential Event of Default is "continuing" if it has not been remedied or waived and an Event of Default is "continuing" if it has not been waived or, in the opinion of the Lenders, remedied.

 

	
1.3

	
Construction of insurance terms

 

In this Agreement:

 

"approved" means, for the purposes of Clause 23 (Insurance Undertakings), approved in writing by the Facility Agent;

 

"excess risks" means, in respect of a Ship, the proportion of claims for general average, salvage and salvage charges not recoverable under the hull and machinery policies in respect of that Ship in consequence of its insured value being less than the value at which that Ship is assessed for the purpose of such claims;

 

  

20

  

"obligatory insurances" means all insurances effected, or which either Borrower is obliged to effect, under Clause 23 (Insurance Undertakings) or any other provision of this Agreement or of another Finance Document;

 

"policy" includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;

 

"protection and indemnity risks" means the usual risks covered by a protection and indemnity association managed in London, including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 1 of the Institute Time Clauses (Hulls) (1/10/82) or clause 8 of the Institute Time Clauses (Hulls) (1/11/1995) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision; and

 

"war risks" includes the risk of mines and all risks excluded by clause 23 of the Institute Time Clauses (Hulls)(1/10/83) or clause 24 of the Institute Time Clauses (Hulls) (1/11/1995).

 

	
1.4

	
Agreed forms of Finance Documents

 

References in Clause 1.1 (Definitions) to any Finance Document being in "agreed form" are to that Finance Document:

 

	
(a)

	
in a form attached to a certificate dated the same date as this Agreement (and signed by each Borrower and the Facility Agent); or

 

	
(b)

	
in any other form agreed in writing between each Borrower and the Facility Agent acting with the authorisation of the Majority Lenders or, where Clause 42.2 (All Lender matters) applies, all the Lenders.

 

	
1.5

	
Third party rights

 

	
(a)

	
Unless expressly provided to the contrary in a Finance Document, a person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 (the "Third Parties Act") to enforce or to enjoy the benefit of any term of this Agreement.

 

	
(b)

	
Notwithstanding any term of any Finance Document, the consent of any person who is not a Party is not required to rescind or vary this Agreement at any time.

 

	
(c)

	
Any Receiver, Delegate or any other person described in Clause 31.15 (No proceedings) may, subject to this Clause 1.5 (Third party rights) and the Third Parties Act, rely on any Clause of this Agreement which expressly confers rights on it.

 

  

21

  

SECTION 2

 

THE FACILITY

 

	
2

	
THE FACILITY

 

	
2.1

	
The Facility

 

Subject to the terms of this Agreement, the Lenders make available to the Borrowers a dollar term loan facility in two Tranches in an aggregate amount not exceeding the Total Commitments.

 

	
2.2

	
Finance Parties' rights and obligations

 

	
(a)

	
The obligations of each Finance Party under the Finance Documents are several. Failure by a Finance Party to perform its obligations under the Finance Documents does not affect the obligations of any other Party under the Finance Documents. No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents.

 

	
(b)

	
The rights of each Finance Party under or in connection with the Finance Documents are separate and independent rights and any debt arising under the Finance Documents to a Finance Party from an Obligor shall be a separate and independent debt.

 

	
(c)

	
A Finance Party may, except as otherwise stated in the Finance Documents, separately enforce its rights under the Finance Documents.

 

	
(d)

	
Notwithstanding any other provision of the Finance Documents, a Finance Party may separately sue for any Unpaid Sum due to it without the consent of any other Finance Party or joining any other Finance Party to the relevant proceedings.

 

	
3

	
PURPOSE

 

	
3.1

	
Purpose

 

Each Borrower shall apply all amounts borrowed by it under the Facility only for the purpose of:

 

	
(a)

	
in respect of Tranche A, refinancing the acquisition cost of Ship A by way of a loan in a principal amount not exceeding the lower of (i) $19,500,000 and (ii) 65 per cent. of the Initial Market Value of that Ship; and

 

	
(b)

	
in respect of Tranche B, refinancing the acquisition of Ship B by way of a loan in a principal amount not exceeding the lower of (1) $19,500,000 and (ii) 65 per cent. of the Initial Market Value of that Ship.

 

	
3.2

	
Monitoring

 

No Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.

 

	
4

	
CONDITIONS OF UTILISATION

 

	
4.1

	
Initial conditions precedent

 

The Borrowers may not deliver a Utilisation Request unless the Facility Agent has received all of the documents and other evidence listed in Part A of Schedule 2 (Conditions Precedent) in form and substance satisfactory to the Facility Agent.

 

  

22

  

	
4.2

	
Further conditions precedent

 

The Lenders will only be obliged to comply with Clause 5.4 (Lenders' participation) if on the date of the Utilisation Request and on the proposed Utilisation Date and before the Advance is made available:

 

	
(a)

	
no Default is continuing or would result from the proposed Advance;

 

	
(b)

	
the Repeating Representations to be made by each Transaction Obligor are true;

 

	
(c)

	
no event described in paragraph (a) of Clause 7.2 (Change of control) has occurred;

 

	
(d)

	
in the case of each Tranche, no event described in paragraph (b) of Clause 7.5 (Mandatory prepayment on sale or Total Loss) has occurred in relation to the Ship in respect of which such Tranche is to be made;

 

	
(e)

	
the provisions of paragraph (c) of Clause 10.3 (Alternative basis of interest or funding, suspension) do not apply; and

 

	
(f)

	
in the case of each Tranche, the Facility Agent has received, or is satisfied it will receive when that Tranche is made available, all of the documents and other evidence listed in Part B of Schedule 2 (Conditions Precedent) in form and substance satisfactory to the Facility Agent;

 

	
4.3

	
Notification of satisfaction of conditions precedent

 

	
(a)

	
The Facility Agent shall notify the Borrowers and the Lenders promptly upon being satisfied as to the conditions precedent referred to in Clause 4.1 (Initial conditions precedent) and Clause 4.2 (Further conditions precedent).

 

	
(b)

	
Other than to the extent that the Majority Lenders notify the Facility Agent in writing to the contrary before the Facility Agent gives the notification described in paragraph (a) above, the Lenders authorise (but do not require) the Facility Agent to give that notification. The Facility Agent shall not be liable for any damages, costs or losses whatsoever as a result of giving any such notification.

 

	
4.4

	
Waiver of conditions precedent

 

If the Majority Lenders, at their discretion, permit an Advance to be borrowed before any of the conditions precedent referred to in Clause 4.1 (Initial conditions precedent) or Clause 4.2 (Further conditions precedent) has been satisfied, the Borrowers shall ensure that that condition is satisfied within five Business Days after the relevant Utilisation Date or such later date as the Facility Agent, acting with the authorisation of the Majority Lenders, may agree in writing with the Borrowers.

 

  

23

  

SECTION 3

 

UTILISATION

 

	
5

	
UTILISATION

 

	
5.1

	
Delivery of a Utilisation Request

 

	
(a)

	
The Borrowers may utilise each Tranche by delivery to the Facility Agent of a duly completed Utilisation Request not later than the Specified Time.

 

	
(b)

	
The Borrowers may not deliver more than one Utilisation Request under each Tranche.

 

	
5.2

	
Completion of a Utilisation Request

 

	
(a)

	
Each Utilisation Request is irrevocable and will not be regarded as having been duly completed unless:

 

	
  

	
(i)

	
the proposed Utilisation Date is a Business Day within the relevant Availability Period;

 

	
  

	
(ii)

	
the currency and amount of the Utilisation comply with Clause 5.3 (Currency and amount); and

 

	
  

	
(iii)

	
the proposed Interest Period complies with Clause 9 (Interest Periods).

 

	
(b)

	
Only one Advance may be requested in each Utilisation Request.

 

	
5.3

	
Currency and amount

 

	
(a)

	
The currency specified in a Utilisation Request must be dollars.

 

	
(b)

	
The amount of the proposed Advance in respect of each Tranche must be an amount which is not more than (i) $19,500,000 and (ii) 65 per cent. of the Initial Market Value of the Ship to which that Tranche relates.

 

	
(c)

	
The amount of the proposed Advance must be an amount which is not more than the Available Facility.

 

	
5.4

	
Lenders' participation

 

	
(a)

	
If the conditions set out in this Agreement have been met, each Lender shall make its participation in each Advance available by the Utilisation Date through its Facility Office.

 

	
(b)

	
The amount of each Lender's participation in each Advance will be equal to the proportion borne by its Available Commitment to the Available Facility immediately before making that Advance.

 

	
(c)

	
The Facility Agent shall notify each Lender of the amount of each Advance and the amount of its participation in that Advance by the Specified Time.

 

	
5.5

	
Cancellation of Commitments

 

The Commitments in respect of any Tranche which are unutilised at the end of the Availability Period for such Tranche shall then be cancelled.

 

  

24

  

SECTION 4

 

REPAYMENT, PREPAYMENT AND CANCELLATION

 

	
6

	
REPAYMENT

 

	
6.1.

	
Repayment of Loan

 

The Borrowers shall repay each Tranche by 28 equal quarterly repayment instalments (each a "Repayment Instalment" and, together, the "Repayment Instalments") each being in amount equal to 1/50th of the amount of the Advance in respect of that Tranche as at the relevant Utilisation Date, the first of which shall be repaid on the date falling three months after the Utilisation Date in respect of the Advance relative to that Tranche, each subsequent Repayment Instalment relative to that Tranche shall be repaid at 3-monthly intervals thereafter and the last Repayment Instalment of that Tranche shall be repaid on the Termination Date together with an instalment (in relation to each Tranche, a "Balloon Instalment") equal to the balance of that Tranche.

 

	
6.2

	
Reduction of Repayment Instalments

 

If any part of the Facility is cancelled, the Repayment Instalments and the Balloon Instalments shall be reduced pro rata by the amount cancelled.

 

	
6.3

	
Termination Date

 

On the Termination Date, the Borrowers shall additionally pay to the Facility Agent for the account of the Finance Parties all other sums then accrued and owing under the Finance Documents.

 

	
6.4

	
Reborrowing

 

No Borrower may reborrow any part of the Facility which is repaid.

 

	
7

	
REPAYMENT AND CANCELLATION

 

	
7.1

	
Illegality

 

	
(a)

	
If (other than by reason of breach of Sanctions) it becomes unlawful in any applicable jurisdiction for a Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain its participation in an Advance or the Loan or it becomes unlawful for any Affiliate of a Lender for that Lender to do so:

 

	
  

	
(i)

	
that Lender shall promptly notify the Facility Agent upon becoming aware of that event;

 

	
  

	
(ii)

	
upon the Facility Agent notifying the Borrowers, the Commitment of that Lender will be immediately cancelled; and

 

	
  

	
(iii)

	
the Borrowers shall repay that Lender's participation in the Loan on the last day of the Interest Period for the Loan occurring after the Facility Agent has notified the Borrowers or, if earlier, the date specified by the Lender in the notice delivered to the Facility Agent (being no earlier than the last day of any applicable grace period permitted by law).

 

	
(b)

	
Any partial prepayment under this Clause 7.1 (Illegality) shall reduce proportionately each Tranche by the amount prepaid, first against the Balloon Instalments in respect of that Tranche and thereafter the Repayment Instalments which are at the time being outstanding.

 

  

25

  

	
7.2

	
Change of control

 

	
(a)

	
If

 

	
  

	
(i)

	
any person or group of persons acting in concert gains directly or indirectly control of the Parent Guarantor other than (i) the Family (or any member thereof), (ii) Monarch Alternative Capital LP or any of its Affiliates and/or (iii) Oaktree Capital Management or any of its Affiliates; and/or

 

	
  

	
(ii)

	
the Parent Guarantor ceases to be the sole member in each Borrower:

 

	
  

	
(A)

	
the Parent Guarantor shall promptly notify the Facility Agent upon becoming aware of that event; and

 

	
  

	
(B)

	
if all the Lenders so require, the Facility Agent shall, by not less than 10 Business Days' notice to the Borrowers, cancel the Facility and declare the Loan, together with accrued interest, and all other amounts accrued under the Finance Documents immediately due and payable, whereupon the Facility will be cancelled and all such outstanding amounts will become immediately due and payable.

 

	
(b)

	
For the purpose of paragraph (a)(i) above "control" means:

 

	
  

	
(i)

	
the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:

 

	
  

	
(A)

	
cast, or control the casting of, more than 50 per cent. of the maximum number of votes that might be cast at a general meeting of the Parent Guarantor; or

 

	
  

	
(B)

	
appoint or remove all, or the majority, of the directors or other equivalent officers of the Parent Guarantor; or

 

	
  

	
(C)

	
give directions with respect to the operating and financial policies of the Parent Guarantor with which the directors or other equivalent officers of the Parent Guarantor are obliged to comply; and/or

 

	
  

	
(ii)

	
the holding beneficially of more than 50 per cent. of the issued share capital of the Parent Guarantor (excluding any part of that issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital).

 

	
(c)

	
For the purpose of paragraph (a) above "acting in concert" means a group of persons who, pursuant to an agreement or understanding (whether formal or informal), actively co­operate, through the acquisition directly or indirectly of shares in the Parent Guarantor by any of them, either directly or indirectly, to obtain or consolidate control of the Parent Guarantor.

 

	
7.3

	
Voluntary and automatic cancellation

 

	
(a)

	
The Borrowers may, if they give the Facility Agent not less than 10 Business Days' (or such shorter period as the Majority Lenders may agree) prior notice and subject to compliance with Clause 11.3 (Prepayment or cancellation fee), cancel the whole or any part (being a minimum amount of $500,000 or any multiple thereof) of the Available Facility. Any cancellation under this Clause 7.3 (Voluntary and automatic cancellation) shall reduce the Commitments of the Lenders and the amount of each Tranche then unutilised rateably.

 

  

26

  

	
(b)

	
The unutilised Commitment (if any) of each Lender shall be automatically cancelled at close of business on the date on which the Tranches are made available.

 

	
7.4

	
Voluntary prepayment of Loan

 

	
(a)

	
The Borrowers may, if they give the Facility Agent not less than 10 Business Days' (or such shorter period as the Majority Lenders may agree) prior notice and subject to compliance with Clause 11.3 (Prepayment or cancelation fee), prepay the whole or any part of the Loan (but, if in part, being an amount that reduces the amount of the Loan by a minimum amount of $500,000 or a multiple of that amount).

 

	
(b)

	
Any partial prepayment under this Clause 7.4 (Voluntary prepayment of Loan) shall reduce proportionately the amount of each Tranche by the amount prepaid, firstly the Balloon Instalment in relation that Tranche and thereafter the relevant Repayment Instalments which are at the time being outstanding in inverse order of maturity.

 

	
7.5

	
Mandatory prepayment on sale or Total Loss

 

	
(a)

	
If a Ship is sold or becomes a Total Loss, the Borrowers shall on the Relevant Date prepay the Tranche applicable to that Ship.

 

	
(b)

	
On the Relevant Date, the Borrowers shall also prepay such part of the Loan as shall eliminate any shortfall arising if the ratio set out in Clause 25 (Security Cover) were applied immediately following the payment referred to in paragraph (a) above.

 

	
(c)

	
Provided that no Default has occurred and is continuing, any remaining proceeds of the sale or Total Loss of a Ship after the prepayments referred to in paragraph (a) and paragraph (b) above have been made together with all other amounts that arc payable on any such prepayment pursuant to the Finance Documents shall be paid to the Borrower that owned the relevant Ship or any other person who appears to be entitled to it.

 

	
(d)

	
In this Clause 7.5 (Mandatory prepayment on sale or Total Loss):

 

"Relevant Date" means:

 

	
  

	
(i)

	
in the case of a sale of a Ship, on the date on which the sale is completed by delivery of that Ship to the buyer of that Ship; and

 

	
  

	
(ii)

	
in the case of a Total Loss of a Ship, on the earlier of:

 

	
  

	
(A)

	
the date falling 90 days after the Total Loss Date; and

 

	
  

	
(B)

	
the date of receipt by the Security Agent of the proceeds of insurance relating to such Total Loss.

 

	
(e)

	
The amount of any partial prepayment of the Loan under this Clause 7.5 (Mandatory prepayment on sale or Total Loss) shall be used for full prepayment of the Tranche relative to the Ship being sold or which has become a Total Loss and thereafter shall be applied first against the Balloon Instalment in relation to the other Tranche and thereafter against the relevant Repayment Instalments which remain outstanding as at the date of prepayment in inverse order of maturity.

 

	
7.6

	
Right of repayment and cancellation in relation to a single Lender

 

	
(a)

	
If:

 

	
  

	
(i)

	
any sum payable to any Lender by an Obligor is required to be increased under paragraph (c) of Clause 12.2 (Tax gross-up); or

 

  

27

  

	
  

	
(ii)

	
any Lender claims indemnification from a Borrower under Clause 12.3 (Tax indemnity) or Clause 13.1 (Increased costs) ; or

 

	
  

	
(iii)

	
the Facility Agent receives notification from an Affected Lender under sub-paragraph (iii) of paragraph (b) of Clause 10.2 (Market disruption),

 

the Borrowers may:

 

	
  

	
(A)

	
whilst in the case of sub-paragraphs (i) and (ii) above the circumstance giving rise to the requirement for that increase or indemnification continues; or

 

	
  

	
(B)

	
whilst in the case of sub-paragraph (iii) above the Market Disruption Event in relation to the Affected Lender continues,

 

give the Facility Agent notice of cancellation of the Commitment of that Lender and its intention to procure the repayment of that Lender's participation in the Loan.

 

	
(b)

	
On receipt of a notice of cancellation referred to in paragraph (a) above, the Commitment of that Lender shall immediately be reduced to zero.

 

	
(c)

	
On the last day of each Interest Period which ends after the Borrower has given notice of cancellation under paragraph (a) above in relation to a Lender (or, if earlier, the date specified the Borrower in that notice), the Borrower shall repay that Lender's participation in the Loan.

 

	
(d)

	
Any partial prepayment under this Clause 7.6 (Right of repayment and cancellation in relation to a single Lender) shall reduce proportionately each Tranche by the amount prepaid, first the Balloon Instalment in relation to that Tranche and thereafter the relevant Repayment Instalments in inverse order of maturity.

 

	
7.7

	
Restrictions

 

	
(a)

	
Any notice of cancellation or prepayment given by any Party under this Clause 7 (Repayment and Cancellation) (Prepayment and Cancellation) shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant cancellation or prepayment is to be made and the amount of that cancellation or prepayment.

 

	
(b)

	
Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid in connection with that prepayment and, subject to any Break Costs, without premium or penalty.

 

	
(c)

	
No Borrower may reborrow any part of the Facility which is prepaid.

 

	
(d)

	
The Borrowers shall not repay or prepay all or any part of the Loan or cancel all or any part of the Commitments except at the times and in the manner expressly provided for in this Agreement.

 

	
(e)

	
No amount of the Total Commitments cancelled under this Agreement may be subsequently reinstated.

 

	
(f)

	
If the Facility Agent receives a notice under this Clause 7 (Repayment and Cancellation) it shall promptly forward a copy of that notice to the Borrowers or the affected Lenders, as appropriate.

 

  

28

  

SECTION 5

 

COSTS OF UTILISATION

 

	
8

	
INTEREST

 

	
8.1

	
Calculation of interest

 

The rate of interest on the Loan or any part of the Loan for each Interest Period is the percentage rate per annum which is the aggregate of:

 

	
(a)

	
the Margin; and

 

	
(b)

	
LIBOR.

 

	
8.2

	
Payment of interest

 

	
(a)

	
The Borrowers shall pay accrued interest on the Loan or any part of the Loan on the last day of each Interest Period.

 

	
(b)

	
If an Interest Period is longer than 3 Months, the Borrowers shall also pay interest then accrued on the Loan or the relevant part of the Loan on the dates falling at 3 Monthly intervals after the first day of the Interest Period.

 

	
8.3

	
Default interest

 

	
(a)

	
if an Obligor fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the Unpaid Sum from the due date up to the date of actual payment (both before and after judgment) at a rate which, subject to paragraph (b) below, is 2 per cent. higher than the rate which would have been payable if the Unpaid Sum had, during the period of non-payment, constituted part of a Loan in the currency of the Unpaid Sum for successive Interest Periods, each of a duration selected by the Facility Agent. Any interest accruing under this Clause 8.3 (Default interest) shall be immediately payable by the Obligor on demand by the Facility Agent.

 

	
(b)

	
If an Unpaid Sum consists of all or part of the Loan which became due on a day which was not the last day of an Interest Period relating to the Loan or such other period as the Facility Agent may elect (acting on the instructions of all Lenders):

 

	
  

	
(i)

	
the first Interest Period for that Unpaid Sum shall have a duration equal to the unexpired portion of the current Interest Period relating to the Loan or such other period as the Facility Agent may elect (acting on the instructions of all Lenders); and

 

	
  

	
(ii)

	
the rate of interest applying to that Unpaid Sum during that first Interest Period shall be 2 per cent. higher than the rate which would have applied if that Unpaid Sum had not become due.

 

	
(c)

	
Default interest (if unpaid) arising on an Unpaid Sum will be compounded with the Unpaid Sum at the end of each Interest Period applicable to that Unpaid Sum but will remain immediately due and payable.

 

	
8.4

	
Notification of rates of interest

 

The Facility Agent shall promptly notify the Lenders and the Borrowers of the determination of a rate of interest under this Agreement.

 

	
8.5

	
Hedging

 

  

29

  

	
(a)

	
If the Borrowers, in their discretion, determine that they wish to hedge their exposure to floating rate interest under this Agreement they shall give the Hedge Counterparties the opportunity to bid for that business through participating in a competitive bidding process such that the party or party's offering the best terms shall enter into a Hedging Agreement(s) with the Borrowers subject to and upon the terms and conditions of this Clause 8.5 (Hedging).

 

	
(b)

	
The aggregate notional amount of the transactions in respect of the Hedging Agreements shall not exceed the aggregate amount of the Loan (for the avoidance of doubt which means the Loan outstanding from time to time).

 

	
(c)

	
Each Hedging Agreement shall:

 

	
  

	
(i)

	
be for a term ending no later than the Termination Date;

 

	
  

	
(ii)

	
have settlement dates coinciding with the last day of each Interest Period;

 

	
  

	
(iii)

	
provide for two-way payments in the event of a termination of a transaction in respect of a Hedging Agreement, whether on a Termination Event (as defined in the relevant Hedging Agreement) or on an Event of Default (as defined in the relevant Hedging Agreement); and

 

	
  

	
(iv)

	
provide that the Termination Currency (as defined in the relevant Hedging Agreement) shall be dollars.

 

	
(d)

	
The rights of a Borrower under a Hedging Agreement shall be assigned by way of security under a Hedging Agreement Assignment.

 

	
(e)

	
The parties to each Hedging Agreement must comply with the terms of that Hedging Agreement.

 

	
(f)

	
Neither a Hedge Counterparty nor a Borrower may amend, supplement, extend or waive the terms of any Hedging Agreement without the consent of the Facility Agent.

 

	
(g)

	
Paragraph (g) above shall not apply to an amendment, supplement or waiver that is administrative and mechanical in nature and does not give rise to a conflict with any provision of this Agreement.

 

	
(h)

	
lf, at any time, the aggregate notional principal amount of the transactions in respect of a Hedging Agreement exceeds or, as a result of any repayment or prepayment under this Agreement, will exceed the Loan at that time, the Borrowers must promptly notify the Facility Agent and must, at the request of the Facility Agent, reduce the aggregate notional amount of those transactions by an amount and in a manner satisfactory to the Facility Agent so that it no longer exceeds or will not exceed the Loan then or that will be outstanding.

 

	
(i)

	
Any reductions in the aggregate notional amount of the transactions in respect of the Hedging Agreements in accordance with paragraph (i) above will be apportioned as between those transactions pro rata.

 

	
(j)

	
Paragraph (i) above shall not apply to any transactions in respect of any Hedging Agreement under which no Borrower has any actual or contingent indebtedness.

 

	
(k)

	
Subject to paragraph (m) below, neither a Hedge Counterparty nor a Borrower may terminate or close out any transactions in respect of any Hedging Agreement (in whole or in part) except:

 

	
  

	
(i)

	
in accordance with paragraph (i) above;

 

  

30

  

	
  

	
(ii)

	
on the occurrence of an Illegality, (as such expression is defined in the relevant Hedging Agreement);

 

	
  

	
(iii)

	
in the case of termination or closing out by a Hedge Counterparty, if the Facility Agent serves notice under paragraph (b) of Clause 27.19 (Acceleration) or, having served notice under paragraph (c) of Clause 27.19 (Acceleration), makes a demand;

 

	
  

	
(iv)

	
in the case of any other termination or closing out by a Hedge Counterparty or a Borrower, with the consent of the Facility Agent; or

 

	
  

	
(v)

	
If the Secured Liabilities (other than in respect of the Hedging Agreements) have been irrevocably and unconditionally paid and discharged in full;

 

	
(l)

	
If a Hedge Counterparty is entitled to terminate or close out any transaction in respect of any Hedging Agreement under paragraph (WM) above, such Hedge Counterparty shall promptly terminate or close out such transaction following a request to do so by the Security Agent.

 

	
(m)

	
A Hedge Counterparty may only suspend making payments under a transaction in respect of a Hedging Agreement if a Borrower is in breach of its payment obligations under any transaction in respect of that Hedging Agreement.

 

	
(n)

	
Each Hedge Counterparty consents to the assigning by way of security by each Borrower pursuant to the relevant Hedging Agreement Assignment of its rights under the Hedging Agreements to which it is party in favour of the Security Agent.

 

	
(o)

	
Any such assigning by way of security is without prejudice to, and after giving effect to, the operation of any payment or close-out netting in respect of any amounts owing under any Hedging Agreement.

 

	
(p)

	
The Security Agent shall not be liable for the performance of any of a Borrower's obligations under a Hedging Agreement.

 

	
(q)

	
It shall be a condition to the effectiveness of any Hedging Agreement that:

 

	
  

	
(i)

	
the Obligors execute and deliver, upon the Facility Agent's request (acting on the instructions of all Lenders), an agreement or deed (each, a "Deed") in an agreed form amending, supplementing and/or restating this Agreement for the purpose of incorporating:

 

	
  

	
(A)

	
a guarantee to be granted by each Borrower in connection with the obligations and liabilities of the other Borrower (the "Guaranteed Borrower") under or in connection with any Hedging Agreement to which the Guaranteed Borrower may become a party pursuant to this Clause 8.5 (Hedging); and

 

	
  

	
(B)

	
any other provisions which the Lenders deem necessary in connection with that Hedging Agreement and the hedging arrangements contemplated thereunder; and

 

	
  

	
(ii)

	
if required by the law of any Approved Flag on which a Ship is registered in order to ensure that the obligations and liabilities of the Guaranteed Borrower under the Hedging Agreement to which that Guaranteed Borrower is a party, as such obligations and liabilities shall be guaranteed by the other Borrower in accordance with the terms of the relevant Deed, are secured by each Mortgage, any necessary supplement or addendum to a Mortgage is executed and registered in an agreed form.

 

  

31

  

	
9

	
INTEREST PERIODS

 

	
9.1.

	
Selection of Interest Periods

 

	
(a)

	
The Borrowers may select the Interest Period for the Loan in the Utilisation Request for the first Advance. Subject to paragraphs (f) and (h) below, the Borrowers may select each subsequent Interest Period in respect of the Loan in a Selection Notice.

 

	
(b)

	
Each Selection Notice is irrevocable and must be delivered to the Facility Agent by the Borrowers not later than the Specified Time.

 

	
(c)

	
If the Borrowers fail to select an Interest Period in the first Utilisation Request or fail to deliver a Selection Notice to the Facility Agent in accordance with paragraphs (a) and (b) above, the relevant Interest Period will, subject to Clause 9.2 (Changes to Interest Periods) and paragraph (h) below, be three Months.

 

	
(d)

	
Subject to this Clause 9 (Interest Periods), the Borrowers may select an Interest Period of 3 or 6 Months or any other period agreed between the Borrowers and the Facility Agent (acting on the instructions of all the Lenders).

 

	
(e)

	
An Interest Period in respect of the Loan shall not extend beyond the Termination Date.

 

	
(f)

	
In respect of a Repayment Instalment, an Interest Period for a part of the Loan equal to such Repayment Instalment shall end on the Repayment Date relating to it if such date is before the end of the Interest Period then current.

 

	
(g)

	
Subject to paragraph (h) below, the first Interest Period for the Loan shall start on the first Utilisation Date and each subsequent interest Period shall start on the last day of the preceding Interest Period.

 

	
(h)

	
The first Interest Period for the second Tranche shall start on the Utilisation Date of such Tranche and end on the last day of the Interest Period applicable to the Loan on the date on which such Tranche is made.

 

	
(i)

	
Except for the purposes of paragraph (f) and paragraph (h) above, the Loan shall have one Interest Period only at any time.

 

	
9.2

	
Changes to Interest Periods

 

	
(a)

	
If after the Borrowers have selected and the Lenders have agreed an Interest Period other than 3 or 6 months, any Lender notifies the Facility Agent within two Business Days after the Specified Time relating to the relevant Utilisation Request or Selection Notice that it is not satisfied that deposits in dollars for a period equal to the interest Period will be available to it in the Relevant Interbank Market when the Interest Period commences, the Facility Agent shall define the Interest Period as 3 months.

 

	
(b)

	
If the Facility Agent makes any change to an Interest Period referred to in this Clause 9.2 (Changes to Interest Periods), it shall promptly notify the Borrowers and the Lenders.

 

	
9.3

	
Non-Business Days

 

If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).

 

	
10

	
CHANGES TO THE CALCULATION OF INTEREST

 

	
10.1

	
Absence of quotations

 

  

32

  

Subject to Clause 10.2 (Market disruption), if LIBOR is to be determined by reference to the Reference Banks but a Reference Bank does not supply a quotation by the Specified Time on the Quotation Day, the applicable LIBOR shall be determined on the basis of the quotations of the remaining Reference Banks.

 

	
10.2

	
Market disruption

 

	
(a)

	
If a Market Disruption Event occurs in relation to the Loan or any Advance for any Interest Period, then the rate of interest on each Lender's share of the Loan or such Advance for the Interest Period shall be the rate per annum which is the sum of:

 

	
  

	
(i)

	
the Margin; and

 

	
  

	
(ii)

	
the rate notified to the Facility Agent by that Lender as soon as practicable and in any event before interest is due to be paid in respect of that Interest Period, to be that which expresses as a percentage rate per annum the cost to that Lender of funding its participation in the Loan or such Advance from whatever source it may reasonably select.

 

	
(b)

	
In this Agreement "Market Disruption Event" means:

 

	
  

	
(i)

	
at or about noon on the Quotation Day for the relevant Interest Period, LIBOR is to be determined by reference to the Reference Banks and none or only one of the Reference Banks supplies a rate to the Facility Agent to determine LIBOR for dollars for the relevant Interest Period; or

 

	
  

	
(ii)

	
before close of business in London on the Quotation Day for the relevant Interest Period, the Facility Agent receives notifications from a Lender or Lenders (whose participations in the Loan exceed 33 1/3 per cent. of the Loan) that the cost to it or them of obtaining matching deposits in the Relevant Interbank Market would be in excess of LIBOR; or

 

	
  

	
(iii)

	
at least one Business Day before the start of an Interest Period, the Facility Agent receives notification from a Lender (the "Affected Lender") that for any reason it is unable to obtain dollars in the Relevant Interbank Market in order to fund its participation in the Loan or any Advance.

 

	
10.3

	
Alternative basis of interest or funding, suspension

 

	
(a)

	
If a Market Disruption Event occurs and the Facility Agent or the Borrowers so require, the Facility Agent and the Borrowers shall enter into negotiations (for a period of not more than 30 days) with a view to agreeing a substitute basis for determining the rate of interest or (as the case may be) an alternative basis for funding.

 

	
(b)

	
Any substitute or alternative basis agreed pursuant to paragraph (a) above shall, with the prior consent of all the Lenders and the Borrowers, be binding on all Parties.

 

	
(c)

	
If a Market Disruption Event occurs before an Advance is made:

 

	
  

	
(i)

	
in circumstances falling within sub-paragraph (i) or (ii) of paragraph (b) of Clause 10.2 (Market disruption), the Lenders' obligation to make that Advance; or

 

	
  

	
(ii)

	
in circumstances falling within sub-paragraph (iii) of paragraph (b) of Clause 10.2 (Market disruption), the Affected Lender's obligation to participate in that Advance,

 

shall be suspended while the circumstances giving rise to the Market Disruption Event continue.

 

  

33

  

	
10.4

	
Break Costs

 

	
(a)

	
The Borrowers shall, within three Business Days of demand by a Finance Party, pay to that Finance Party its Break Costs attributable to all or any part of the Loan or Unpaid Sum being paid by a Borrower on a day other than the last day of an Interest Period for the Loan or Unpaid Sum.

 

	
(b)

	
Each Lender shall, as soon as reasonably practicable after a demand by the Facility Agent, provide a certificate confirming the amount of its Break Costs for any Interest Period in which they accrue.

 

	
11

	
FEES

 

	
11.1

	
Commitment fee

 

	
(a)

	
The Borrowers shall pay to the Facility Agent (for the account of each Lender) a fee computed at the rate of 1.30 per cent. per annum on that Lender's Available Commitment from time to time for the Availability Period.

 

	
(b)

	
The accrued commitment fee is payable on the last day of each successive period of three Months which ends during the Availability Period, on the last day of the Availability Period and, if cancelled, on the cancelled amount of the relevant Lender's Commitment at the time the cancellation is effective.

 

	
11.2

	
Other fees

 

The Borrowers shall pay to the Facility Agent (whether for its own account or otherwise) certain fees in the amounts and at the times agreed in a Fee Letter.

 

	
11.3

	
Prepayment or cancelation fee

 

	
(a)

	
The Borrowers must pay to the Facility Agent for each Lender a prepayment fee on the date of cancellation or prepayment of all or any part of the Loan, if the relevant cancellation is made pursuant to Clause 7.3 (Voluntary and automatic cancellation) or if the relevant prepayment made pursuant to Clause 7.4 (Voluntary prepayment of Loan) at any time during the period commencing on the date of this Agreement and ending on the fourth anniversary thereof unless, in the case of a prepayment, such prepayment is made (i) by way of refinancing of the Loan (or the relevant part thereof) by Deutsche Bank AG Filiale Deutschlandgeschaft or (ii) pursuant to Clause 26.2 (Provision of additional security; prepayment).

 

	
(b)

	
The amount of the prepayment fee is 1.25 per cent. of the amount cancelled or prepaid.

 

  

34

  

SECTION 6

 

ADDITIONAL PAYMENT OBLIGATIONS

 

	
12

	
TAX GROSS UP AND INDEMNITIES

 

	
12.1

	
Definitions

 

	
(a)

	
In this Agreement:

 

"Protected Party" means a Finance Party which is or will be subject to any liability, or required to make any payment, for or on account of Tax in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Finance Document.

 

"Tax Credit" means a credit against, relief or remission for, or repayment of any Tax.

 

"Tax Deduction" means a deduction or withholding for or on account of Tax from a payment under a Finance Document.

 

"Tax Payment" means either the increase in a payment made by an Obligor to a Finance Party under Clause 12.2 (Tax gross-up) or a payment under Clause 12.3 (Tax indemnity).

 

	
(b)

	
Unless a contrary indication appears, in this Clause 12 (Tax Gross Up and Indemnities) reference to "determines" or "determined" means a determination made in the absolute discretion of the person making the determination.

 

	
12.2

	
Tax gross-up

 

	
(a)

	
Each Obligor shall make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law.

 

	
(b)

	
The Borrowers shall promptly upon becoming aware that an Obligor must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Facility Agent accordingly. Similarly, a Lender shall notify the Facility Agent on becoming so aware in respect of a payment payable to that Lender. If the Facility Agent receives such notification from a Lender it shall notify the Borrowers and that Obligor.

 

	
(c)

	
if a Tax Deduction is required by law to be made by an Obligor, the amount of the payment due from that Obligor shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required.

 

	
(d)

	
If an Obligor is required to make a Tax Deduction, that Obligor shall make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law.

 

	
(e)

	
Within 30 days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Obligor making that Tax Deduction shall deliver to the Facility Agent for the Finance Party entitled to the payment evidence reasonably satisfactory to that Finance Party that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.

 

	
12.3

	
Tax indemnity

 

	
(a)

	
The Borrowers shall (within three Business Days of demand by the Facility Agent) pay to a Protected Party an amount equal to the loss, liability or cost which that Protected Party

 

  

35

  

determines will be or has been (directly or indirectly) suffered for or on account of Tax by that Protected Party in respect of a Finance Document.

 

	
(b)

	
Paragraph (a) above shall not apply:

 

	
  

	
(i)

	
with respect to any Tax assessed on a Finance Party:

 

	
  

	
(A)

	
under the law of the jurisdiction in which that Finance Party is incorporated or, if different, the jurisdiction (or jurisdictions) in which that Finance Party is treated as resident for tax purposes; or

 

	
  

	
(B)

	
under the law of the jurisdiction in which that Finance Party's Facility Office is located in respect of amounts received or receivable in that jurisdiction,

 

if that Tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by that Finance Party; or

 

	
  

	
.(ii)

	
to the extent a loss, liability or cost is compensated for by an increased payment under Clause 12.2 (Tax gross-up).

 

	
(c)

	
A Protected Party making, or intending to make, a claim under paragraph (a) above shall promptly notify the Facility Agent of the event which will give, or has given, rise to the claim, following which the Facility Agent shall notify the Borrowers.

 

	
(d)

	
A Protected Party shall, on receiving a payment from an Obligor under this Clause 12.3 (Tax indemnity), notify the Facility Agent.

 

	
12.4

	
Tax Credit

 

If an Obligor makes a Tax Payment and the relevant Finance Party determines that:

 

	
(a)

	
a Tax Credit is attributable to an increased payment of which that Tax Payment forms part, to that Tax Payment or to a Tax Deduction in consequence of which that Tax Payment was received; and

 

	
(b)

	
that Finance Party has obtained, utilised and retained that Tax Credit,

 

the Finance Party shall pay an amount to the Obligor which that Finance Party determines will leave it (after that payment) in the same after-Tax position as it would have been in had the Tax Payment not been required to be made by the Obligor.

 

	
12.5

	
Stamp taxes

 

The Borrowers shall pay and, within three Business Days of demand, indemnify each Secured Party against any cost, loss or liability which that Secured Party incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Finance Document.

 

	
12.6

	
VAT

 

	
(a)

	
All amounts expressed to be payable under a Finance Document by any Party to a Finance Party which (in whole or in part) constitute the consideration for any supply for VAT purposes are deemed to be exclusive of any VAT which is chargeable on that supply, and accordingly, subject to paragraph (b) below, if VAT is or becomes chargeable on any supply made by any Finance Party to any Party under a Finance Document and such Finance Party is required to account to the relevant tax authority for the VAT, that Party must pay to such Finance Party (in addition to and at the same time as paying any other consideration for such

 

  

36

  

supply) an amount equal to the amount of the VAT (and such Finance Party must promptly provide an appropriate VAT invoice to that Party).

 

	
(b)

	
If VAT is or becomes chargeable on any supply made by any Finance Party (the "Supplier") to any other Finance Party (the "Recipient") under a Finance Document, and any Party other than the Recipient (the "Relevant Party") is required by the terms of any Finance Document to pay an amount equal to the consideration for that supply to the Supplier (rather than being required to reimburse or indemnify the Recipient in respect of that consideration):

 

	
  

	
(i)

	
(where the Supplier is the person required to account to the relevant tax authority for the VAT) the Relevant Party must also pay to the Supplier (at the same time as paying that amount) an additional amount equal to the amount of the VAT. The Recipient must (where this sub-paragraph (i) applies) promptly pay to the Relevant Party an amount equal to any credit or repayment the Recipient receives from the relevant tax authority which the Recipient reasonably determines relates to the VAT chargeable on that supply; and

 

	
  

	
(ii)

	
(where the Recipient is the person required to account to the relevant tax authority for the VAT) the Relevant Party must promptly, following demand from the Recipient, pay to the Recipient an amount equal to the VAT chargeable on that supply but only to the extent that the Recipient reasonably determines that it is not entitled to credit or repayment from the relevant tax authority in respect of that VAT.

 

	
(c)

	
Where a Finance Document requires any Party to reimburse or indemnify a Finance Party for any cost or expense, that Party shall reimburse or indemnify (as the case may be) such Finance Party for the full amount of such cost or expense, including such part of it as represents VAT, save to the extent that such Finance Party reasonably determines that it is entitled to credit or repayment in respect of such VAT from the relevant tax authority.

 

	
(d)

	
Any reference in this Clause 12.6 (VAT) to any Party shall, at any time when such Party is treated as a member of a group for VAT purposes, include (where appropriate and unless the context otherwise requires) a reference to the representative member of such group at such time (the term "representative member" to have the same meaning as in the Value Added Tax Act 1994).

 

	
(e)

	
In relation to any supply made by a Finance Party to any Party under a Finance Document, if reasonably requested by such Finance Party, that Party must promptly provide such Finance Party with details of that Party's VAT registration and such other information as is reasonably requested in connection with such Finance Party's VAT reporting requirements in relation to such supply.

 

	
12.7

	
FATCA Information

 

	
(a)

	
Subject to paragraph (c) below, each Party shall, within ten Business Days of a reasonable request by another Party:

 

	
  

	
(i)

	
confirm to that other Party whether it is:

 

	
  

	
(A)

	
a FATCA Exempt Party; or

 

	
  

	
(B)

	
not a FATCA Exempt Party; and

 

	
  

	
(ii)

	
supply to that other Party such forms, documentation and other information relating to its status under FATCA (including its applicable "passthru payment percentage" or other information required under the US Treasury Regulations or other official guidance including intergovernmental agreements) as that other Party reasonably requests for the purposes of that other Party's compliance with FATCA.

 

  

37

  

	
(b)

	
If a Party confirms to another Party pursuant to sub-paragraph (i) of paragraph (a) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly.

 

	
(c)

	
Paragraph (a) above shall not oblige any Finance Party to do anything which would or might in its reasonable opinion constitute a breach of:

 

	
  

	
(i)

	
any law or regulation;

 

	
  

	
(ii)

	
any fiduciary duty; or

 

	
  

	
(iii)

	
any duty of confidentiality.

 

	
(d)

	
If a Party fails to confirm its status or to supply forms, documentation or other information requested in accordance with paragraph (a) above (including, for the avoidance of doubt, where paragraph (c) above applies), then:

 

	
  

	
(i)

	
if that Party failed to confirm whether it is (and/or remains) a FATCA Exempt Party then such Party shall be treated for the purposes of the Finance Documents as if it is not a FATCA Exempt Party; and

 

	
  

	
(ii)

	
if that Party failed to confirm its applicable "passthru payment percentage" then such Party shall be treated for the purposes of the Finance Documents (and payments made thereunder) as if its applicable "passthru payment percentage" is 100%,

 

until (in each case) such time as the Party in question provides the requested confirmation, forms, documentation or other information.

 

	
(e)

	
If a Borrower is a US Tax Obligor, or where the Facility Agent reasonably believes that its obligations under FATCA require it, each Lender shall, within ten Business Days of:

 

	
  

	
(i)

	
where a Borrower is a US Tax Obligor and the relevant Lender is an Original Lender, the date of this Agreement;

 

	
  

	
(ii)

	
where a Borrower is a US Tax Obligor and the relevant Lender is a New Lender, the relevant Transfer Date; or

 

	
  

	
(iii)

	
where a Borrower is not a US Tax Obligor, the date of a request from the Facility Agent, supply to the Facility Agent:

 

	
  

	
(iv)

	
a withholding certificate on Form W-8 or Form W-9 (or any successor form) (as applicable); or

 

	
  

	
(v)

	
any withholding statement and other documentation, authorisations and waivers as the Facility Agent may require to certify or establish the status of such Lender under FATCA.

 

The Facility Agent shall provide any withholding certificate, withholding statement, documentation, authorisations and waivers it receives from a Lender pursuant to this paragraph (e) to the Borrowers and shall be entitled to rely on any such withholding certificate, withholding statement, documentation, authorisations and waivers provided without further verification. The Facility Agent shall not be liable for any action taken by it under or in connection with this paragraph (e).

 

  

38

  

	
(f)

	
Each Lender agrees that if any withholding certificate, withholding statement, documentation, authorisations and waivers provided to the Facility Agent pursuant to paragraph (e) above is or becomes materially inaccurate or incomplete, it shall promptly update such withholding certificate, withholding statement, documentation, authorisations and waivers or promptly notify the Facility Agent in writing of its legal inability to do so. The Facility Agent shall provide any such updated withholding certificate, withholding statement, documentation, authorisations and waivers to the Borrowers. The Facility Agent shall not be liable for any action taken by it under or in connection with this paragraph (f).

 

	
13

	
INCREASED COSTS

 

	
13.1

	
Increased costs

 

	
(a)

	
Subject to Clause 13.3 (Exceptions), the Borrowers shall, within three Business Days of a demand by the Facility Agent, pay for the account of a Finance Party the amount of any Increased Costs incurred by that Finance Party or any of its Affiliates as a result of:

 

	
  

	
(i)

	
Basel ill as in force at the date of this Agreement;

 

	
  

	
(ii)

	
any change in (or in the interpretation, administration or application of, or any replacement of,) Basel Ill as in force at the date of this Agreement, or the introduction after the date of this Agreement of any law, regulation, request or requirement (whether or not having the force of law, but if not having the force of law, with which the relevant Finance Party, or as the case may be, its Affiliate is required to comply) in relation to Basel ill;

 

	
  

	
(iii)

	
the introduction of or any change in (or in the interpretation, administration or application of) any other law, regulation, request or requirement (whether or not having the force of law, but if not having the force of law, with which the relevant Finance Party, or as the case may be, its Affiliate is required to comply) including, without limitation, those relating to capital adequacy, liquidity, reserve assets, cash ratio deposits and special deposits; or

 

	
  

	
(iv)

	
compliance with any law or regulation made, enacted or imposed after the date of this Agreement.

 

	
(b)

	
In this Agreement, "Increased Costs" means:

 

	
  

	
(i)

	
a reduction in the rate of return from the Facility or on a Finance Party's (or its Affiliate's) overall capital;

 

	
  

	
(ii)

	
an additional or increased cost; or

 

	
  

	
(iii)

	
a reduction of any amount due and payable under any Finance Document,

 

which is incurred or suffered by a Finance Party or any of its Affiliates to the extent that it is attributable to that Finance Party having entered into its Commitment or funding or performing its obligations under any Finance Document.

 

"Basel" shall have the meaning attributed thereto in paragraph (e) of Clause 13.3(c) (Exceptions);

 

"Basel III" means:

 

	
  

	
(i)

	
the agreements on capital requirements, a leverage ratio and liquidity standards contained in "Basel III: A global regulatory framework for more resilient banks and banking systems", "Basel Ill: International framework for liquidity risk measurement, standards and monitoring" and "Guidance for national authorities operating the

 

  

39

  

countercyclical capital buffer published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated; and

 

	
  

	
(ii)

	
any further guidance or standards published by the Basel Committee on Banking Supervision relating to "Basel Ill"; and

 

	
  

	
(iii)

	
the rules of:

 

	
  

	
(A)

	
the 2013/36/UE Capital Requirements Directive of the European Parliament and the Council dated June 26, 2013 concerning the access to the activity of credit institutions and the prudential supervision of credit institutions and enterprises investment; and

 

	
  

	
(B)

	
the (EU) 575/2013 Regulation of the European Parliament and the Council dated June 26, 2013 on prudential requirements for credit institutions and investment firms, both implementing the solvency and capitalisation rules known as "Basel Ill" rules endorsed by the central bank governors and the heads of bank supervisory authorities in the G20 countries on 16 December 2010; and

 

any other law, regulation, request or requirement (whether or not having the force of law, but if not having the force of law, with which the relevant Finance Party, or as the case may be, its Affiliate is required to comply) which implements, interprets or applies the Basel III documentation published by the Basel Committee on Banking Supervision and referred to in paragraphs (a) and (b) above (whether such implementation, interpretation, application or compliance is by a government, regulator, Finance Party or any of its Affiliates).

 

	
13.2

	
Increased cost claims

 

	
(a)

	
A Finance Party intending to make a claim pursuant to Clause 13.1 (Increased costs) shall notify the Facility Agent of the event giving rise to the claim, following which the Facility Agent shall promptly notify the Borrowers.

 

	
(b)

	
Each Finance Party shall, as soon as practicable after a demand by the Facility Agent, provide a certificate confirming the amount of its Increased Costs.

 

	
13.3

	
Exceptions

 

Clause 13.1 (Increased costs) does not apply to the extent any Increased Cost is:

 

	
(a)

	
attributable to a Tax Deduction required by law to be made by an Obligor;

 

	
(b)

	
compensated for by Clause 12.3 (Tax indemnity) (or would have been compensated for under Clause 12.3 (Tax indemnity) but was not so compensated solely because any of the exclusions in paragraph (b) of Clause 12.3 (Tax indemnity) applied);

 

	
(c)

	
attributable to the implementation or application of or compliance with 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 date of this Agreement ("Basel II") or any other law or regulation which implements Basel 11 (whether such implementation, application or compliance is by a government, regulator, Finance Party or any of its Affiliates) provided that this exception shall not apply to any Increased Cost arising directly or indirectly from Basel ill; or

 

	
(d)

	
attributable to the wilful breach by the relevant Finance Party or its Affiliates of any law or regulation.

 

  

40

  

	
14

	
OTHER INDEMNITIES

 

	
14.1

	
Currency indemnity

 

	
(a)

	
If any sum due from an Obligor under the Finance Documents (a "Sum"), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the "First Currency") in which that Sum is payable into another currency (the "Second Currency") for the purpose of:

 

	
  

	
(i)

	
making or filing a claim or proof against that Obligor; or

 

	
  

	
(ii)

	
obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,

 

that Obligor shall, as an independent obligation, on demand, indemnify each Secured Party to which that Sum is due against any cost, loss or liability arising out of or as a result of the conversion including any discrepancy between (A) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (B) the rate or rates of exchange available to that person at the time of its receipt of that Sum.

 

	
(b)

	
Each Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable.

 

	
14.2

	
Other indemnities

 

	
(a)

	
Each Obligor shall, on demand, indemnify each Secured Party against any cost, loss or liability incurred by it as a result of:

 

	
  

	
(i)

	
the occurrence of any Event of Default;

 

	
  

	
(ii)

	
a failure by an Obligor to pay any amount due under a Finance Document on its due date, including without limitation, any cost, loss or liability arising as a result of Clause 33 (Sharing Among the Finance Parties);

 

	
  

	
(iii)

	
funding, or making arrangements to fund, its participation in an Advance requested by the Borrowers in a Utilisation Request but not made by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by that Finance Party alone); or

 

	
  

	
(iv)

	
the Loan (or part of the Loan) not being prepaid in accordance with a notice of prepayment given by the Borrowers.

 

	
(b)

	
Each Obligor shall, on demand, indemnify each Finance Party, each Affiliate of a Finance Party and each officer or employee of a Finance Party or its Affiliate (each such person for the purposes of this Clause 14.2 (Other indemnities) an "Indemnified Person"), against any cost, loss or liability incurred by that Indemnified Person pursuant to or in connection with any litigation, arbitration or administrative proceedings or regulatory enquiry, in connection with or arising out of the entry into and the transactions contemplated by the Finance Documents, having the benefit of any Security constituted by the Finance Documents or which relates to the condition or operation of, or any incident occurring in relation to, any Ship unless such cost, loss or liability is caused by the gross negligence or wilful misconduct of that Indemnified Person.

 

	
(c)

	
Without limiting, but subject to any limitations set out in paragraph (b) above, the indemnity in paragraph (b) above shall cover any cost, loss or liability incurred by each Indemnified Person in any jurisdiction:

 

  

41

  

	
  

	
(i)

	
arising or asserted under or in connection with any law relating to safety at sea, the ISM Code, any Environmental Law or any Sanctions; or

 

	
  

	
(ii)

	
in connection with any Environmental Claim.

 

	
(d)

	
Any Affiliate or any officer or employee of a Finance Party or of any of its Affiliates may rely on this Clause 14.2 (Other indemnities and the provisions of the Third Parties Act.

 

	
14.3

	
Indemnity to the Servicing Parties

 

Each Obligor shall, on demand, indemnify each Servicing Party against any cost, loss or liability incurred by that Servicing Party (acting reasonably) as a result of:

 

	
(a)

	
investigating any event which it reasonably believes is a Default;

 

	
(b)

	
acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised; and

 

	
(c)

	
instructing lawyers, accountants, tax advisers, surveyors or other professional advisers or experts as permitted under the Finance Documents.

 

	
14.4

	
Indemnity to the Facility Agent

 

Each Obligor shall, on demand, indemnify the Facility Agent against any cost, loss or liability incurred by the Facility Agent (otherwise than by reason of the Facility Agent's gross negligence or wilful misconduct) or, in the case of any cost, loss or liability pursuant to Clause 34.11 (Disruption to Payment Systems etc.) notwithstanding the Facility Agent's negligence, or any other category of liability whatsoever but not including any claim based on the fraud of the Facility Agent in acting as Facility Agent under the Finance Documents.

 

	
14.5

	
Indemnity to the Security Agent

 

	
(a)

	
Each Obligor shall, on demand, indemnify the Security Agent and every Receiver and Delegate against any cost, loss or liability incurred by any of them:

 

	
  

	
(i)

	
in relation to or as a result of:

 

	
  

	
(A)

	
acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised;

 

	
  

	
(B)

	
the taking, holding, protection or enforcement of the Finance Documents and the Transaction Security;

 

	
  

	
(C)

	
the exercise of any of the rights, powers, discretions, authorities and remedies vested in the Security Agent and each Receiver and Delegate by the Finance Documents or by law;

 

	
  

	
(D)

	
any default by any Transaction Obligor in the performance of any of the obligations expressed to be assumed by it in the Finance Documents;

 

	
  

	
(E)

	
any action by any Obligor which vitiates, reduces the value of, or is otherwise prejudicial to, the Transaction Security; and

 

	
  

	
(F)

	
instructing lawyers, accountants, tax advisers, surveyors or other professional advisers or experts as permitted under the Finance Documents.

 

	
  

	
(ii)

	
acting as Security Agent, Receiver or Delegate under the Finance Documents or which otherwise relates to any of the Security Property or the performance of the

 

  

42

  

terms of this Agreement or the other Finance Documents (otherwise, in each case, than by reason of the relevant Security Agent's, Receiver's or Delegate's gross negligence or wilful misconduct).

 

	
(b)

	
The Security Agent and every Receiver and Delegate may, in priority to any payment to the Secured Parties, indemnify itself out of the Charged Property in respect of, and pay and retain, all sums necessary to give effect to the indemnity in this Clause 14.5 (Indemnity to the Security Agent) and shall have a lien on the Transaction Security and the proceeds of the enforcement of the Transaction Security for all monies payable to it.

 

	
14.6

	
Indemnity Survival

 

The indemnities contained in this Agreement shall survive repayment of the Loan.

 

	
15

	
MITIGATION BY THE FINANCE PARTIES

 

	
15.1

	
Mitigation

 

	
(a)

	
Each Finance Party shall, in consultation with the Borrowers, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of Clause 7.1 (Illegality), Clause 12 (Tax Gross Up and indemnities), Clause 13 (Increased Costs) including (but not limited to) transferring its rights and obligations under the Finance Documents to another Affiliate or Facility Office.

 

	
(b)

	
Paragraph (a) above does not in any way limit the obligations of any Obligor under the Finance Documents.

 

	
15.2

	
Limitation of liability

 

	
(a)

	
Each Borrower shall, on demand, indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party as a result of steps taken by it under Clause 15.1 (Mitigation).

 

	
(b)

	
A Finance Party is not obliged to take any steps under Clause 15.1 (Mitigation) if, in the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it.

 

	
16

	
COSTS AND EXPENSES

 

	
16.1

	
Transaction expenses

 

The Borrowers shall, on demand, pay the Facility Agent, the Security Agent and the Arranger the amount of all costs and expenses (including fees, costs and expenses of legal advisors and insurance and other consultants and other advisors) reasonably incurred by any Secured Party in connection with the negotiation, preparation, printing, execution, syndication and perfection of and any release, discharge or reassignment of:

 

	
(a)

	
this Agreement and any other documents referred to in this Agreement;

 

	
(b)

	
the Transaction Security; and

 

	
(c)

	
any other Finance Documents executed after the date of this Agreement.

 

	
16.2

	
Amendment costs

 

If:

 

	
(a)

	
an Obligor requests an amendment, waiver or consent; or

 

  

43

  

	
(b)

	
an amendment is required pursuant to Clause 34.9 (Change of currency); or

 

	
(c)

	
an Obligor requests, and the Security Agent agrees to, the release of all or any part of the Charged Property from the Transaction Security,

 

the Borrowers shall, on demand, reimburse each of the Facility Agent and the Security Agent for the amount of all costs and expenses (including legal fees) reasonably incurred by each Secured Party in responding to, evaluating, negotiating or complying with that request or requirement.

 

	
16.3

	
Enforcement and preservation costs

 

The Borrowers shall, on demand, pay to each Secured Party the amount of all costs and expenses (including fees, costs and expenses of legal and financial advisors and insurance and other consultants and other advisors) incurred by that Secured Party in connection with the enforcement of, or the preservation of any rights under, any Finance Document and the Transaction Security and any proceedings instituted by or against the Security Agent as a consequence of taking or holding the Transaction Security or enforcing those rights.

 

  

44

  

SECTION 7

 

GUARANTEES AND JOINT AND SEVERAL LIABILITY OF BORROWERS

 

	
17

	
GUARANTEE AND INDEMNITY — PARENT GUARANTOR

 

	
17.1

	
Guarantee and indemnity

 

The Parent Guarantor irrevocably and unconditionally:

 

	
(a)

	
guarantees to each Finance Party punctual performance by each Obligor other than the Parent Guarantor of all such other Obligor's obligations under the Finance Documents;

 

	
(b)

	
undertakes with each Finance Party that whenever an Obligor other than the Parent Guarantor does not pay any amount when due under or in connection with any Finance Document, the Parent Guarantor shall immediately on demand pay that amount as if it were the principal obligor; and

 

	
(c)

	
agrees with each Finance Party that if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal, it will, as an independent and primary obligation, indemnify that Finance Party immediately on demand against any cost, loss or liability it incurs as a result of an Obligor other than the Parent Guarantor not paying any amount which would, but for such unenforceability, invalidity or illegality, have been payable by it under any Finance Document on the date when it would have been due. The amount payable by the Parent Guarantor under this indemnity will not exceed the amount it would have had to pay under this Clause 17 (Guarantee and Indemnity — Parent Guarantor) if the amount claimed had been recoverable on the basis of a guarantee.

 

	
17.2

	
Continuing guarantee

 

This guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by any Obligor under the Finance Documents, regardless of any intermediate payment or discharge in whole or in part.

 

	
17.3

	
Reinstatement

 

If any discharge, release or arrangement (whether in respect of the obligations of any Obligor or any security for those obligations or otherwise) is made by a Secured Party in whole or in part on the basis of any payment, security or other disposition which is avoided or must be restored in insolvency, liquidation, administration or otherwise, without limitation, then the liability of the Parent Guarantor under this Clause 17 (Guarantee and Indemnity — Parent Guarantor) will continue or be reinstated as if the discharge, release or arrangement had not occurred.

 

	
17.4

	
Waiver of defences

 

The obligations of the Parent Guarantor under this Clause 17 (Guarantee and Indemnity — Parent Guarantor) and in respect of any Transaction Security will not be affected or discharged by an act, omission, matter or thing which, but for this Clause 17.4 (Waiver of defences), would reduce, release or prejudice any of its obligations under this Clause 17 (Guarantee and Indemnity — Parent Guarantor) or in respect of any Transaction Security (without limitation and whether or not known to it or any Secured Party) including:

 

	
(a)

	
any time, waiver or consent granted to, or composition with, any Obligor or other person;

 

	
(b)

	
the release of any other Obligor or any other person under the terms of any composition or arrangement with any creditor of any member of the Group;

 

  

45

  

	
(c)

	
the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect or delay in perfecting, or refusal or neglect to take up or enforce, or delay in taking or enforcing any rights against, or security over assets of, any Obligor or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;

 

	
(d)

	
any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of an Obligor or any other person;

 

	
(e)

	
any amendment, novation, supplement, extension, restatement (however fundamental and whether or not more onerous) or replacement of any Finance Document or any other document or security including, without limitation, any change in the purpose of, any extension of or any increase in any facility or the addition of any new facility under any Finance Document or other document or security;

 

	
(f)

	
any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security; or

 

	
(g)

	
any insolvency or similar proceedings.

 

	
17.5

	
Immediate recourse

 

The Parent Guarantor waives any right it may have of first requiring any Secured Party (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or claim payment from any person (including without limitation to commence any proceedings under any Finance Document or to enforce any Transaction Security) before claiming or commencing proceedings under this Clause 17 (Guarantee and Indemnity —Parent Guarantor). This waiver applies irrespective of any law or any provision of a Finance Document to the contrary.

 

	
17.6

	
Appropriations

 

Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full, each Secured Party (or any trustee or agent on its behalf) may:

 

	
(a)

	
refrain from applying or enforcing any other moneys, security or rights held or received by that Secured Party (or any trustee or agent on its behalf) in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those amounts or otherwise) and the Parent Guarantor shall not be entitled to the benefit of the same; and

 

	
(b)

	
hold in an interest-bearing suspense account any moneys received from the Parent Guarantor or on account of the Parent Guarantor's liability under this Clause 17 (Guarantee and Indemnity — Parent Guarantor).

 

	
17.7

	
Deferral of Parent Guarantor's rights

 

All rights which the Parent Guarantor at any time has (whether in respect of this guarantee, a mortgage or any other transaction) against any Obligor or their respective assets shall be fully subordinated to the rights of the Secured Parties under the Finance Documents and until the end of the Security Period and unless the Facility Agent otherwise directs, the Parent Guarantor will not exercise any rights which it may have (whether in respect of any Finance Document to which it is a Party or any other transaction) by reason of performance by it of its obligations under the Finance Documents or by reason of any amount being payable, or liability arising, under this Clause 17 (Guarantee and Indemnity — Parent Guarantor):

 

  

46

  

	
(a)

	
to be indemnified by an Obligor;

 

	
(b)

	
to claim any contribution from any third party providing security for, or any other guarantor of, any Obligor's obligations under the Finance Documents;

 

	
(c)

	
to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Secured Parties under the Finance Documents or of any other guarantee or security taken pursuant to, or in connection with, the Finance Documents by any Secured Party;

 

	
(d)

	
to bring legal or other proceedings for an order requiring any Obligor to make any payment, or perform any obligation, in respect of which the Parent Guarantor has given a guarantee, undertaking or indemnity under Clause 17.1 (Guarantee and indemnity);

 

	
(e)

	
to exercise any right of set-off against any Obligor; and/or

 

	
(f)

	
to claim or prove as a creditor of any Obligor in competition with any Secured Party.

 

If following the occurrence of a Default the Parent Guarantor receives any benefit, payment or distribution in relation to such rights it shall hold that benefit, payment or distribution to enable all amounts which may be or become payable to the Secured Parties by the Obligors under or in connection with the Finance Documents to be repaid in full on trust for the Secured Parties and shall promptly pay or transfer the same to the Facility Agent or as the Facility Agent may direct for application in accordance with Clause 34 (Payment Mechanics).

 

	
17.8

	
Additional security

 

This guarantee and any other Security given by the Parent Guarantor is in addition to and is not in any way prejudiced by, and shall not prejudice, any other guarantee or Security or any other right of recourse now or subsequently held by any Secured Party or any right of set-off or netting or right to combine accounts in connection with the Finance Documents.

 

	
17.9

	
Applicability of provisions of Guarantee to other Security

 

Clauses 17.2 (Continuing guarantee), 17.3 (Reinstatement), 17.4 (Waiver of defences), 173 (Immediate recourse), 17.6 (Appropriations), 17.7 (Deferral of Parent Guarantor's rights) and 17.8 (Additional security) shall apply, with any necessary modifications, to any Security which the Parent Guarantor creates (whether at the time at which it signs this Agreement or at any later time) to secure the Secured Liabilities or any part of them.

 

	
18

	
JOINT AND SEVERAL LIABILITY OF THE BORROWERS

 

	
18.1

	
Joint and several liability

 

All liabilities and obligations of the Borrowers under this Agreement shall, whether expressed to be so or not, be joint and several.

 

	
18.2

	
Waiver of defences

 

The liabilities and obligations of a Borrower shall not be impaired by:

 

	
(a)

	
this Agreement being or later becoming void, unenforceable or illegal as regards the other Borrower;

 

	
(b)

	
any Lender or the Security Agent entering into any rescheduling, refinancing or other arrangement of any kind with the other Borrower;

 

  

47

  

	
(c)

	
any Lender or the Security Agent releasing the other Borrower or any Security created by a Finance Document; or

 

	
(d)

	
any time, waiver or consent granted to, or composition with the other Borrower or other person;

 

	
(e)

	
the release of the other Borrower or any other person under the terms of any composition or arrangement with any creditor of any member of the Group;

 

	
(f)

	
the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, the other Borrower or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;

 

	
(g)

	
any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of the other Borrower or any other person;

 

	
(h)

	
any amendment, novation, supplement, extension, restatement (however fundamental, and whether or not more onerous) or replacement of a Finance Document or any other document or security including, without limitation, any change in the purpose of, any extension of or any increase in any facility or the addition of any new facility under any Finance Document or other document or security;

 

	
(i)

	
any unenforceability, illegality or invalidity of any obligation or any person under any Finance Document or any other document or security; or

 

	
(j)

	
any insolvency or similar proceedings.

 

	
18.3

	
Principal Debtor

 

Each Borrower declares that it is and will, throughout the Security Period, remain a principal debtor for all amounts owing under this Agreement and the Finance Documents and no Borrower shall, in any circumstances, be construed to be a surety for the obligations of the other Borrower under this Agreement.

 

	
18.4

	
Borrower restrictions

 

	
(a)

	
Subject to paragraph (b) below, during the Security Period neither Borrower shall:

 

	
  

	
(i)

	
claim any amount which may be due to it from the other Borrower whether in respect of a payment made under, or matter arising out of, this Agreement or any Finance Document, or any matter unconnected with this Agreement or any Finance Document; or

 

	
  

	
(ii)

	
take or enforce any form of security from the other Borrower for such an amount, or in any the way seek to have recourse in respect of such an amount against any asset of the other Borrower; or

 

	
  

	
(iii)

	
set off such an amount against any sum due from it to the other Borrower; or

 

	
  

	
(iv)

	
prove or claim for such an amount in any liquidation, administration, arrangement or similar procedure involving the other Borrower; or

 

	
  

	
(v)

	
exercise or assert any combination of the foregoing.

 

	
(b)

	
If during the Security Period, the Facility Agent, by notice to a Borrower, requires it to take any action referred to in paragraph (a) above in relation to the other Borrower, that

 

  

48

  

Borrower shall take that action as soon as practicable after receiving the Facility Agent's notice.

 

	
18.5

	
Deferral of Borrowers' rights

 

Until all amounts which may be or become payable by the Borrowers under or in connection with the Finance Documents have been irrevocably paid in full and unless the Facility Agent otherwise directs, neither Borrower will exercise any rights which it may have by reason of performance by it of its obligations under the Finance Documents:

 

	
(a)

	
to be indemnified by the other Borrower; or

 

	
(b)

	
to claim any contribution from the other Borrower in relation to any payment made by it under the Finance Documents.

 

  

49

  

SECTION 8

 

REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT

 

	
19

	
REPRESENTATIONS

 

	
19.1

	
General

 

Each Obligor makes the representations and warranties set out in this Clause 19 (Representations) to each Finance Party on the date of this Agreement.

 

	
19.2

	
Status

 

	
(a)

	
It is a limited liability:

 

	
  

	
(i)

	
in the case of each Borrower, company duly formed and validly existing and in good standing under the laws of the Marshall Islands; and

 

	
  

	
(ii)

	
in the case of the Parent Guarantor, corporation duly incorporated and validly existing in good standing under the law of the Marshall Islands.

 

	
(b)

	
It and, in the case of the Parent Guarantor, each of its Subsidiaries has the power to own its assets and carry on its business as it is being conducted.

 

	
19.3

	
Share capital, limited liability membership interests and ownership

 

	
(a)

	
Each Borrower's limited liability membership interests are divided into 100 limited liability shares.

 

	
(b)

	
The legal title to and beneficial interest in all of the limited liability membership interests in each Borrower is held free of any Security or any other claim by the Parent Guarantor.

 

	
(c)

	
The Parent Guarantor has an authorised share capital divided into 325,000,000 shares, of which 300,000,000 are common and 25,000,000 are preferred, $0.01 par value each, of which 29,059,671 common shares are issued and outstanding;

 

	
19.4

	
Binding obligations

 

Subject to the Legal Reservations the obligations expressed to be assumed by it in each Transaction Document to which it is a party are legal, valid, binding and enforceable obligations.

 

	
19.5

	
Validity, effectiveness and ranking of Security

 

	
(a)

	
Each Finance Document to which it is a party does now or, as the case may be, will upon execution and delivery and, where applicable, registration as provided for in that Finance Document create, subject to the Legal Reservations, the Security it purports to create over any assets to which such Security, by its terms, relates, and such Security will, when created or intended to be created, be valid and effective.

 

	
(b)

	
No third party has or will have any Security (except for Permitted Security) over any assets that are the subject of any Transaction Security granted by it.

 

	
(c)

	
The Transaction Security granted by each Transaction Obligor to the Security Agent or any other Secured Party has or will when created or intended to be created have first ranking priority and is not subject to any prior ranking or pari passu ranking security.

 

  

50

  

	
(d)

	
No concurrence, consent or authorisation of any person is required for the creation of or otherwise in connection with any Transaction Security.

 

	
19.6

	
Non-conflict with other obligations

 

The entry into and performance by each Transaction Obligor of, and the transactions contemplated by, each Transaction Document to which it is a party do not and will not conflict with:

 

	
(a)

	
any law or regulation applicable to it;

 

	
(b)

	
the constitutional documents of any member of the Group; or

 

	
(c)

	
any agreement or instrument binding upon any Transaction Obligor or any member of the Group or any member of the Group's assets or constitute a default or termination event (however described) under any such agreement or instrument.

 

	
19.7

	
Power and authority

 

	
(a)

	
Each Transaction Obligor has the power to enter into, perform and deliver, and has taken all necessary action to authorise:

 

	
  

	
(i)

	
its entry into, performance and delivery of, each Transaction Document to which it is or will be a party and the transactions contemplated by those Transaction Documents; and

 

	
  

	
(ii)

	
in the case of each Borrower, its registration of its Ship under its Approved Flag.

 

	
(b)

	
No limit on its powers will be exceeded as a result of the borrowing, granting of security or giving of guarantees or indemnities contemplated by the Transaction Documents to which any Transaction Obligor is a party.

 

	
19.8

	
Validity and admissibility in evidence

 

All Authorisations required or desirable:

 

	
(a)

	
to enable each Transaction Obligor lawfully to enter into, exercise its rights and comply with its obligations in the Transaction Documents to which it is a party; and

 

	
(b)

	
to make the Transaction Documents to which each Transaction Obligor is a party admissible in evidence in its Relevant Jurisdictions, have been obtained or effected and are in full force and effect.

 

	
19.9

	
Governing law and enforcement

 

Subject to any qualification which is specifically referred to in any legal opinion delivered pursuant to Clause 4 (Conditions of Utilisation]:

 

	
(a)

	
The choice of governing law of each Transaction Document to which each Transaction Obligor is a party will be recognised and enforced in its Relevant Jurisdictions.

 

	
(b)

	
Any judgment obtained in relation to a Transaction Document to which each Transaction Obligor is a party in the jurisdiction of the governing law of that Transaction Document will be recognised and enforced in its Relevant Jurisdictions.

 

	
19.10

	
Insolvency

 

  

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No:

 

	
(a)

	
corporate action, legal proceeding or other procedure or step described in paragraph (a) of Clause 27.8 (Insolvency proceedings); or

 

	
(b)

	
creditors' process described in Clause 27.10 (Ownership of the Obligors),

 

has been taken or, to its knowledge, threatened in relation to a member of the Group; and none of the circumstances described in Clause 27.7 (Insolvency) applies to a member of the Group.

 

	
19.11

	
No filing or stamp taxes

 

Under the laws of its Relevant Jurisdictions it is not necessary that the Finance Documents to which each Transaction Obligor is a party be filed, recorded or enrolled with any court or other authority in that jurisdiction or that any stamp, registration, notarial or similar taxes or fees be paid on or in relation to the Finance Documents to which it is a party or the transactions contemplated by those Finance except any filing, recording or enrolling or any tax or fee payable in relation to any Transaction Obligor which is referred to in any legal opinion delivered pursuant to Clause 4 (Conditions of Utilisation) and which will be made or paid promptly after the date of the relevant Finance Document].

 

	
19.12

	
Deduction of Tax

 

It is not required to make any deduction for or on account of Tax from any payment it may make under any Finance Document.

 

	
19.13

	
No default

 

	
(a)

	
No Event of Default and, on the date of this Agreement and on each Utilisation Date, no Default is continuing or might reasonably be expected to result from the making of any Utilisation or the entry into, the performance of, or any transaction contemplated by, any Transaction Document.

 

	
(b)

	
No other event or circumstance is outstanding which constitutes a default or a termination event (however described) under any other agreement or instrument which is binding on it or any of its Subsidiaries or to which its (or any of its Subsidiaries') assets are subject which might have a Material Adverse Effect.

 

	
19.14

	
No misleading information

 

	
(a)

	
Any factual information provided by any member of the Group for the purposes of this Agreement was true and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated.

 

	
(b)

	
The financial projections contained in any such information have been prepared on the basis of recent historical information and on the basis of reasonable assumptions.

 

	
(c)

	
Nothing:

 

	
  

	
(i)

	
has occurred or been omitted from any such information to the best of our knowledge; and

 

	
  

	
(ii)

	
no information has been given or withheld that results in any such information being untrue or misleading in any material respect.

 

	
19.15

	
Financial Statements

 

  

52

  

	
(a)

	
The Parent Guarantor's Original Financial Statements were prepared in accordance with GAAP consistently applied.

 

	
(b)

	
the Original Financial Statements give a true and fair view of the Parent Guarantor's consolidated financial condition and operations during the relevant financial year or, as the case may be, financial quarter.

 

	
(c)

	
There has been no material adverse change in its assets, business or financial condition or the assets, business or consolidated financial condition of the Group since 30 September 2013.

 

	
(d)

	
Its most recent financial statements delivered pursuant to Clause 20.2 (Financial statements):

 

	
  

	
(i)

	
have been prepared in accordance with Clause 20.4 (Requirements as to financial statements); and

 

	
  

	
(ii)

	
give a true and fair view of (if audited) or fairly represent (if unaudited) its financial condition and operations (consolidated in the case of the Parent Guarantor) during the relevant financial year.

 

	
(e)

	
Since the date of the most recent financial statements delivered pursuant to Clause 20.2 (Financial statements) there has been no material adverse change in its business, assets or financial condition (or the business or consolidated financial condition of the Group, in the case of the Parent Guarantor).

 

	
19.16

	
Pari passu ranking

 

The payment obligations of each Transaction Obligor under the Finance Documents to which it is a party rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.

 

	
19.17

	
No proceedings pending or threatened

 

No litigation, arbitration or administrative proceedings or investigations (including proceedings or investigations relating to any alleged or actual breach of the ISM Code or of the ISPS Code) of or before any court, arbitral body or agency which, if adversely determined, might reasonably be expected to have a Material Adverse Effect have (to the best of its knowledge and belief (having made due and careful enquiry) been started or threatened against any Transaction Obligor or any of its Subsidiaries.

 

	
19.18

	
Valuations

 

	
(a)

	
All information supplied by it or on its behalf to an Approved Valuer for the purposes of a valuation delivered to the Facility Agent in accordance with this Agreement was true and accurate as at the date it was supplied or (if appropriate) as at the date (if any) at which it is stated to be given.

 

	
(b)

	
It has not omitted to supply any information to an Approved Valuer which, if disclosed, would adversely affect any valuation prepared by such Approved Valuer.

 

	
(c)

	
There has been no change to the factual information provided pursuant to paragraph (a) above in relation to any valuation between the date such information was provided and the date of that valuation which, in either case, renders that information untrue or misleading in any material respect.

 

	
19.19

	
No breach of laws

 

  

53

  

No Transaction Obligor, nor has any other member of the Group breached any law or regulation which breach has or is reasonably likely to have a Material Adverse Effect.

 

	
19.20

	
No Charter

 

No Ship is subject to any Charter or sub-charter other than a Permitted Charter.

 

	
19.21

	
Compliance with Environmental Laws

 

All Environmental laws relating to the ownership, operation and management of each Fleet Vessel and the business of each member of the Group (as now conducted and as reasonably anticipated to be conducted in the future) and the terms of all Environmental Approvals have been complied with.

 

	
19.22

	
No Environmental Claim

 

No Environmental Claim has been made or threatened against any member of the Group or any Fleet Vessel which might reasonably be expected to have a Material Adverse Effect.

 

	
19.23

	
No Environmental Incident

 

No Environmental Incident has occurred and no person has claimed that an Environmental Incident has occurred.

 

	
19.24

	
ISM and ISPS Code compliance

 

All requirements of the ISM Code and the ISPS Code as they relate to each Borrower, each Approved Manager and each Ship have been complied with.

 

	
19.25

	
Taxes paid

 

	
(a)

	
It is not and no other member of the Group is materially overdue in the filing of any Tax returns and it is not (and no other member of the Group is) overdue in the payment of any amount in respect of Tax.

 

	
(b)

	
No claims or investigations are being, or are reasonably likely to be, made or conducted against it (or any other member of the Group) with respect to Taxes.

 

	
19.26

	
Financial Indebtedness

 

No Borrower has any Financial Indebtedness outstanding other than as permitted by this Agreement.

 

	
19.27

	
Overseas companies

 

No Obligor has delivered particulars, whether in its name stated in the Finance Documents or any other name, of any UK Establishment to the Registrar of Companies as required under the Overseas Regulations or, if it has so registered, it has provided to the Facility Agent sufficient details to enable an accurate search against it to be undertaken by the Lenders at the Companies Registry.

 

	
19.28

	
Good title to assets

 

It and each other member of the Group has good, valid and marketable title to, or valid leases or licences of, and all appropriate Authorisations to use, the assets necessary to carry on its business as presently conducted.

 

	
19.29

	
Ownership

 

  

54

  

	
(a)

	
Each Borrower is the sole legal and beneficial owner of its Ship, its Earnings and its insurances.

 

	
(b)

	
The Parent Guarantor is the sole member of each Borrower.

 

	
(c)

	
With effect on and from the date of its creation or intended creation, each Obligor will be the sole legal and beneficial owner of any other asset that is the subject of any Transaction Security created or intended to be created by that Obligor.

 

	
19.30

	
Centre of main interests and establishments

 

For the purposes of The Council of the European Union Regulation No. 1346/2000 on Insolvency Proceedings (the "Regulation"), its centre of main interest (as that term is used in Article 3(1) of the Regulation) of each Obligor is situated in the Marshall islands and it has no "establishment" (as that term is used in Article 2(h) of the Regulation) in any other jurisdiction.

 

	
19.31

	
Place of business

 

No Borrower has a place of business in the United States of America or the United Kingdom.

 

	
19.32

	
No employee or pension arrangements

 

No Obligor has any employees or any liabilities under any pension scheme other than any crew members in the case of each Borrower.

 

	
19.33

	
Sanctions

 

	
(a)

	
None of the Transaction Obligors, any other member of the Group or any Affiliate of any of them:

 

	
  

	
(i)

	
is a Prohibited Person;

 

	
  

	
(ii)

	
is owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person; or

 

	
  

	
(iii)

	
owns or controls a Prohibited Person.

 

	
(b)

	
No proceeds of any Advance or the Loan shall be made available, directly or indirectly, to or for the benefit of a Prohibited Person nor shall they be otherwise directly or indirectly, applied in a manner or for a purpose prohibited by Sanctions.

 

	
(c)

	
Each member of the Group complies with all Sanctions.

 

	
19.34

	
No Money laundering

 

Each Obligor is acting for its own account in relation to the Loan and in relation to the performance and the discharge of its respective obligations and liabilities under the Finance Documents and the transactions and other arrangements effected or contemplated by the Finance Documents to which such Obligor is a party, and the foregoing will not involve or lead to contravention of any law, official requirement or other regulatory measure or procedure implemented to combat Money Laundering.

 

	
19.35

	
Repetition

 

The Repeating Representations are deemed to be made by each Obligor by reference to the facts and circumstances then existing on the date of each Utilisation Request and the first day of each Interest Period.

 

  

55

  

	
20

	
INFORMATION UNDERTAKINGS

 

	
20.1

	
General

 

The undertakings in this Clause 20 (Information Undertakings) remain in force throughout the Security Period unless the Facility Agent, acting with the authorisation of the Majority Lenders (or, where specified, all the Lenders), may otherwise permit.

 

	
20.2

	
Financial statements

 

The Obligors shall supply to the Facility Agent in sufficient copies for all the Lenders:

 

	
(a)

	
as soon as they become available, but in any event within 120 days after the end of each of the Parent Guarantor's financial year, the audited consolidated financial statements of the Parent Guarantor and the Group for that financial year;

 

	
(b)

	
as soon as they become available, but in any event within 180 days after the end of each of the Borrower's financial year, the unaudited management accounts of each Borrower for that financial year;

 

	
(c)

	
as soon as the same become available, but in any event within 90 days after the end of each half or, as the case may be, quarter of each of their respective financial years:

 

	
  

	
(i)

	
the unaudited consolidated financial statements of the Parent Guarantor for that financial quarter year; and

 

	
  

	
(ii)

	
unaudited management accounts of each Borrower in a format approved by the Facility Agent which show the results of the operation of each Ship during the preceding financial half year;

 

	
(d)

	
as soon as possible, but in no event later than 31 December 2014 a written plan acceptable to the Facility Agent demonstrating that the equity portions of the current capex requirements of the Parent Guarantor and the Group have been or will be raised; and

 

	
(e)

	
as soon as possible, but in no event later than 30 September 2015 a written plan acceptable to the Facility Agent demonstrating that any loan facilities made available to the Parent Guarantor or any other member of the Group and which mature within 2016 have been (or will be) refinanced in full prior to their respective maturity dates.

 

	
20.3

	
Compliance Certificate

 

The Parent Guarantor shall supply to the Facility Agent, with each set of financial statements delivered pursuant to paragraph (a) or sub-paragraph (i) of paragraph (b) of Clause 20.2 (Financial statements), a Compliance Certificate signed by the Parent Guarantor's chief financial officer setting out (in reasonable detail) computations as to compliance with Clause 21 (Financial Covenants) as at the date as at which those financial statements were drawn up.

 

	
20.4

	
Requirements as to financial statements

 

	
(a)

	
Each set of financial statements delivered by an Obligor pursuant to Clause 20.2 (Financial statements) shall be certified by the chief financial officer of the Parent Guarantor of the relevant company as giving a true and fair view (if audited) or fairly representing (if unaudited) its or, in the case of the Parent Guarantor, the Group's , financial condition and operations as at the date as at which those financial statements were drawn up.

 

	
(b)

	
The Obligors shall procure that each set of financial statements of each Obligor delivered pursuant to Clause 20.2 (Financial statements) is prepared using GAAP, accounting practices

 

  

56

  

and financial reference periods consistent with those applied in the preparation of the Original Financial Statements for that Obligor (if applicable) unless, in relation to any set of financial statements, it notifies the Facility Agent that there has been a change in GAAP, the accounting practices or reference periods and its auditors (or, if appropriate, the auditors of that Obligor deliver to the Facility Agent:

 

	
  

	
(i)

	
a description of any change necessary for those financial statements to reflect the GAAP, accounting practices and reference periods upon which that Obligor's Original Financial Statements were prepared; and

 

	
  

	
(ii)

	
sufficient information, in form and substance as may be reasonably required by the Facility Agent, to enable the Lenders to determine whether Clause 21 (Financial Covenants) has been complied with and make an accurate comparison between the financial position indicated in those financial statements and that Obligor's Original Financial Statements.

 

Any reference in this Agreement to those financial statements shall be construed as a reference to those financial statements as adjusted to reflect the basis upon which the Original Financial Statements were prepared.

 

	
20.5

	
Information: miscellaneous

 

Each Obligor shall supply to the Facility Agent (in sufficient copies for all the Lenders, if the Facility Agent so requests):

 

	
(a)

	
all documents dispatched by it to its shareholders (or any class of them) or its creditors generally at the same time as they are dispatched;

 

	
(b)

	
promptly upon becoming aware of them, the details of any litigation, arbitration or administrative proceedings (including proceedings relating to any alleged or actual breach of the ISM Code or of the ISPS Code) which are current, threatened or pending against any member of the Group, and which might, if adversely determined, have a Material Adverse Effect;

 

	
(c)

	
promptly, such further information and/or documents regarding:

 

	
  

	
(i)

	
each Ship, its Earnings and its Insurances;

 

	
  

	
(ii)

	
the Charged Property;

 

	
  

	
(iii)

	
compliance of the Transaction Obligors with the terms of the Finance Documents;

 

	
  

	
(iv)

	
the financial condition, business and operations of any member of the Group (including, without limitation, Fleet Vessel and Group cash flow forecast, employment summaries),

 

as any Finance Party (through the Facility Agent) may reasonably request; and

 

	
(d)

	
promptly on the request of the Facility Agent from time to time such further financial or other information as any Finance Party (acting reasonably) may require, which information without limitation may extend to:

 

	
  

	
(i)

	
individual Ship operating results;

 

	
  

	
(ii)

	
individual Ship budgeted income and operating expenditure;

 

	
  

	
(iii)

	
Financial Indebtedness or other indebtedness owed by or to any member of the Group;

 

  

57

  

	
  

	
(iv)

	
vessels owned by members of the Group not subject to the Transaction Security, and their value;

 

	
  

	
(v)

	
cashflow forecasts for the Group; and

 

	
  

	
(vi)

	
vessels chartered in by members of the Group;

 

	
(e)

	
promptly, such further information and/or documents as any Finance Party (through the Facility Agent) may reasonably request so as to enable such Finance Party to comply with any laws applicable to it (including, without limitation, compliance with FATCA).

 

	
20.6

	
Notification of default

 

	
(a)

	
Each Obligor shall, and shall procure that each other Transaction Obligor shall, notify the Facility Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence (unless that Obligor is aware that a notification has already been provided by another Obligor).

 

	
(b)

	
Promptly upon a request by the Facility Agent, each Borrower shall supply to the Facility Agent a certificate signed by two of its directors or senior officers on its behalf certifying that no Default is continuing (or if a Default is continuing, specifying the Default and the steps, if any, being taken to remedy it).

 

	
20.7

	
Use of websites

 

	
(a)

	
Each Obligor may satisfy its obligation under the Finance Documents to which it is a party to deliver any information in relation to those Lenders (the "Website Lenders") which accept this method of communication by posting this information onto an electronic website designated by the Borrowers and the Facility Agent (the "Designated Website") if:

 

	
  

	
(i)

	
the Facility Agent expressly agrees (after consultation with each of the Lenders) that it will accept communication of the information by this method;

 

	
  

	
(ii)

	
both the relevant Obligor and the Facility Agent are aware of the address of and any relevant password specifications for the Designated Website; and

 

	
  

	
(iii)

	
the information is in a format previously agreed between the relevant Obligor and the Facility Agent.

 

if any Lender (a "Paper Form Lender") does not agree to the delivery of information electronically then the Facility Agent shall notify the Obligors accordingly and each Obligor shall supply the information to the Facility Agent (in sufficient copies for each Paper Form Lender) in paper form. In any event each Obligor shall supply the Facility Agent with at least one copy in paper form of any information required to be provided by it.

 

	
(b)

	
The Facility Agent shall supply each Website Lender with the address of and any relevant password specifications for the Designated Website following designation of that website by the Obligors or any of them and the Facility Agent.

 

	
(c)

	
An Obligor shall promptly upon becoming aware of its occurrence notify the Facility Agent if:

 

	
  

	
(i)

	
the Designated Website cannot be accessed due to technical failure;

 

	
  

	
(ii)

	
the password specifications for the Designated Website change;

 

	
  

	
(iii)

	
any new information which is required to be provided under this Agreement is posted onto the Designated Website;

 

  

58

  

	
  

	
(iv)

	
any existing information which has been provided under this Agreement and posted onto the Designated Website is amended; or

 

	
  

	
(v)

	
if that Obligor becomes aware that the Designated Website or any information posted onto the Designated Website is or has been infected by any electronic virus or similar software.

 

If an Obligor notifies the Facility Agent under sub-paragraph (i) or (v) of paragraph (c) above, all information to be provided by the Obligors under this Agreement after the date of that notice shall be supplied in paper form unless and until the Facility Agent and each Website Lender is satisfied that the circumstances giving rise to the notification are no longer continuing.

 

	
(d)

	
Any Website Lender may request, through the Facility Agent, one paper copy of any information required to be provided under this Agreement which is posted onto the Designated Website. The Obligors shall comply with any such request within 10 Business Days.

 

	
20.8

	
"Know your customer" checks

 

	
(a)

	
If:

 

	
  

	
(i)

	
the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;

 

	
  

	
(ii)

	
any change in the status of an Obligor after the date of this Agreement; or

 

	
  

	
(iii)

	
a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,

 

obliges a Finance Party (or, in the case of sub-paragraph (iii) above, any prospective new Lender) to comply with "know your customer" or similar identification procedures in circumstances where the necessary information is not already available to it, each Obligor shall promptly upon the request of any Finance Party supply, or procure the supply of, such documentation and other evidence as is reasonably requested by a Servicing Party (for itself or on behalf of any other Finance Party) or any Lender (for itself or, in the case of the event described in sub-paragraph (iii) above, on behalf of any prospective new Lender) in order for such Finance Party or, in the case of the event described in sub-paragraph (iii) above, any prospective new Lender to carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.

 

	
(b)

	
Each Lender shall promptly upon the request of a Servicing Party supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Servicing Party (for itself) in order for that Servicing Party to carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.

 

	
21

	
FINANCIAL COVENANTS

 

	
21.1

	
Financial definitions

 

In this Agreement:

 

"Accounting Information" means the annual audited consolidated financial statements or, as the case may be, the quarterly unaudited consolidated accounts, each in respect of the

 

  

59

  

Parent Guarantor and the Group, to be provided by the Parent Guarantor to the Facility Agent in accordance with Clause 20.2 (Financial statements);

 

"EBITDA" means, as at the date of calculation or, as the case may be, for any accounting period, the consolidated net income of the Group for that accounting period:

 

	
  

	
(a)

	
plus, to the extent deducted in computing consolidated net income of the Group for that accounting period, the sum, without duplication, of:

 

	
  

	
(i)

	
all federal, state, local and foreign taxes and tax distributions;

 

	
  

	
(ii)

	
Net Interest Expenses; and

 

	
  

	
(iii)

	
depreciation, depletion, amortisation of intangibles and other non-cash charges or non-cash losses (including non-cash transaction expenses, the amortisation of debt discounts, the amortisation of above market acquired time charters, the amortisation of stock compensation and non-cash loss on sale or cancellation of vessels) and any extraordinary losses not incurred in the ordinary course of business;

 

	
  

	
(b)

	
minus, to the extent added in computing consolidated net income of the Group for that accounting period, any non-cash income or non-cash gains (including any non-cash gain on sale or cancellation of vessels) and any extraordinary gains not incurred in the ordinary course of business,

 

all determined on a consolidated basis in accordance with GAAP and as shown in the consolidated statements of income for the Group in the applicable Accounting Information;

 

"Liquid Funds" means, as at the date of calculation or, as the case may be, for any accounting period, the aggregate of cash in hand held by the Parent Guarantor or any member of the Group with banks or other financial institutions of at least investment grade rating which is free of any Security Interest;

 

"Market Adjusted Leverage" means, at any relevant time, the ratio of:

 

	
  

	
(a)

	
the Total Debt; to

 

	
  

	
(b)

	
the Market Value Adjusted Total Assets;

 

"Market Value Adjusted Net Worth" means the amount by which the Market Value Adjusted Total Assets exceed the Total Debt;

 

"Market Value Adjusted Total Assets" means, at any time, Total Assets adjusted to reflect the difference between the book values of all Fleet Vessels and the aggregate Market Value of all Fleet Vessels and lease transactions relating to any Fleet Vessels;

 

"Minimum Interest Coverage Ratio" means, as at the date of calculation or an account period, the ratio of (a) EBITDA for the most recent financial period of the Group ending on that date of calculation to (b) the Net Interest Expenses for that financial period (calculated on a trailing 12-months basis);

 

"Net Interest Expenses" means, as at the date of calculation or, as the case may be, for any accounting period, the aggregate of all consolidated interest, commitment and other fees, commissions, discounts and other costs, charges or expenses accruing due from all the members of the Group during that accounting period less interest income received, determined on a consolidated basis in accordance with GAAP and as shown in the consolidated statements of income for the Group in the most recent Accounting Information;

 

  

60

  

"Total Assets" means, as at the date of calculation or, as the case may be, for any accounting period, the aggregate value of all assets of the Group (including, without limitation, the Ships) included in the most recent Accounting Information as "current assets" and the value of all investments (valued in accordance with GAAP) and all other tangible and intangible assets of the Group properly included in the most recent Accounting Information as "fixed assets" in accordance with GAAP;

 

"Total Debt" means, with respect to the Group or any member thereof, at any date of determination (without duplication) as determined in conformity with GAAP:

 

	
  

	
(a)

	
all obligations of the Group for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the Group;

 

	
  

	
(b)

	
all obligations of the Group evidenced by bonds, debentures, notes or other similar instruments;

 

	
  

	
(c)

	
all obligations of the Group in respect of any acceptance credit, guarantee or letter of credit facility or equivalent made available to the members of the Group (including reimbursement obligations with respect thereto) which in accordance with GAAP would be shown on the liability side of a balance sheet;

 

	
  

	
(d)

	
all obligations of the Group to pay the deferred purchase price of property or services, which purchase price is due more than six months after the date of placing such property in service or taking delivery thereto or the completion of such services, except trade payables;

 

	
  

	
(e)

	
all capitalized lease obligations of the members of the Group as lessees;

 

	
  

	
(f)

	
all Financial Indebtedness of persons other than members of the Group secured by a Security on any asset of the Group, whether or not such Financial Indebtedness is assumed by the Group (or any member thereof), provided that the amount of such Financial Indebtedness shall be the lesser of (i) the fair market value of such asset at such date of determination and (ii) the amount of such Financial Indebtedness;

 

	
  

	
(g)

	
all Financial Indebtedness of persons other than members of the Group under any guarantee, indemnity or similar obligation entered into by the members of the Group to the extent such Financial Indebtedness is guaranteed, indemnified, etc. by the members of the Group; and

 

	
  

	
(a)

	
to the extent not otherwise included in this definition, obligations of the Group under currency agreements and interest rate agreements or any other kind of derivative transaction entered into by the Group or, if the agreement under which any such transaction is entered into requires netting of mutual liabilities, the liability of the Group for the net amount.

 

"Testing Date" means any yearly or quarterly period to the end of which the financial statements required to be delivered pursuant to paragraph (a) or (b)(i) of Clause 20.2 (Financial statements) are prepared.

 

	
21.2

	
Test

 

On each Testing Date and at all other times during the Security Period:

 

	
(a)

	
the Market Adjusted Leverage shall be less than 70 per cent.;

 

	
(b)

	
the Market Value Adjusted Net Worth of the Group shall not be less than $100,000,000;

 

  

61

  

	
(c)

	
the Minimum interest Coverage Ratio shall be no less than 2.00:1; and

 

	
(d)

	
the Parent Guarantor will maintain, on a consolidated basis, Liquid Funds in the amount, in aggregate, of not less than the greater of (i) $500,000 per Fleet Vessel and (ii) $8,500,000.

 

	
21.3

	
Equal treatment of lenders

 

If, in the opinion of the Facility Agent (acting on the instructions of the Lenders), any member of the Group agrees with any lender in the context of a financing made or to be made available to that member of the Group, financial covenants (together, the "Covenants") which place such lender or lenders in a more favourable position than that applicable to the Finance Parties pursuant to the Finance Documents, the Parent Guarantor shall, or shall procure that any Obligor or any other third party shall give the Finance Parties the benefit of such Covenants which, in the opinion of the Finance Parties, would place them in an equivalent position as that applicable to the other lender or lenders at the relevant time. The Borrowers and the Parent Guarantor shall also enter, if required by the Facility Agent (acting on the instructions of all Lenders), into a supplemental agreement to this Guarantee or, as the case may be, any of the other Finance Documents, to amend each such document accordingly (with such supplemental agreement or agreements being entered into on or immediately after the date on which the Covenants are granted).

 

	
22

	
GENERAL UNDERTAKINGS

 

	
22.1

	
Authorisations

 

Each Obligor shall, and shall procure that each other Transaction Obligor will, promptly:

 

	
(a)

	
obtain, comply with and do all that is necessary to maintain in full force and effect; and

 

	
(b)

	
supply certified copies to the Facility Agent of any Authorisation required under any law or regulation of a Relevant Jurisdiction or the state of the Approved Flag at any time of each Ship to enable it to:

 

	
  

	
(i)

	
perform its obligations under the Transaction Documents to which it is a party;

 

	
  

	
(ii)

	
ensure the legality, validity, enforceability or admissibility in evidence in any Relevant Jurisdiction or in the state of the Approved Flag at any time of each Ship of any Transaction Document to which it is a party; and

 

	
  

	
(iii)

	
own and operate each Ship (in the case of the Borrowers).

 

	
22.2

	
Compliance with laws

 

Each Obligor shall, and shall procure that each other Transaction Obligor will, comply in all respects with all laws and regulations to which it may be subject, if failure so to comply has or is reasonably likely to have a Material Adverse Effect.

 

	
22.3

	
Environmental compliance

 

Each Obligor shall, and shall procure that each other Transaction Obligor will, and the Parent Guarantor shall ensure that each other member of the Group will:

 

	
(a)

	
comply with all Environmental Laws;

 

	
(b)

	
obtain, maintain and ensure compliance with all requisite Environmental Approvals;

 

	
(c)

	
implement procedures to monitor compliance with and to prevent liability under any Environmental Law,

 

  

62

  

where failure to do so has or is reasonably likely to have a Material Adverse Effect.

 

	
22.4

	
Environmental claims

 

Each Obligor shall, and shall procure that each other Transaction Obligor will, (through the Parent Guarantor), promptly upon becoming aware of the same, inform the Facility Agent in writing of:

 

	
(a)

	
any Environmental Claim against any member of the Group which is current, pending or threatened; and

 

	
(b)

	
any facts or circumstances which are reasonably likely to result in any Environmental Claim being commenced or threatened against any member of the Group,

 

where the claim, if determined against that member of the Group, has or is reasonably likely to have a  Material Adverse Effect.

 

	
22.5

	
Taxation

 

Each Obligor shall, and shall procure that each other Transaction Obligor will, and the Parent Guarantor shall ensure that each other member of the Group will pay and discharge all Taxes imposed upon it or its assets within the time period allowed without incurring penalties unless and only to the extent that:

 

	
  

	
(i)

	
such payment is being contested in good faith;

 

	
  

	
(ii)

	
adequate reserves are maintained for those Taxes and the costs required to contest them which have been disclosed in its latest financial statements delivered to the Facility Agent under Clause 20.2 (Financial statements); and

 

	
  

	
(iii)

	
such payment can be lawfully withheld.

 

	
22.6

	
Overseas companies

 

Each Obligor shall promptly inform the Facility Agent if it delivers to the Registrar particulars required under the Overseas Regulations of any UK Establishment and it shall comply with any directions given to it by the Facility Agent regarding the recording of any Transaction Security on the register which it is required to maintain under The Overseas Companies (Execution of Documents and Registration of Charges) Regulations 2009.

 

	
22.7

	
Pari passu ranking

 

Each Obligor shall, and shall procure that each other Transaction Obligor will, ensure that at all times any unsecured and unsubordinated claims of a Finance Party against it under the Finance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors except those creditors whose claims are mandatorily preferred by laws of general application to companies.

 

	
22.8

	
Title

 

	
(a)

	
Each Borrower shall hold the legal title to, and own the entire beneficial interest in its Ship, its Earnings and its Insurances as from the Utilisation Date of the Tra riche to which that Ship relates.

 

	
(b)

	
The Parent Guarantor shall hold the whole of the limited liability membership interests of each Borrower throughout the Security Period free of any Security other than any Transaction Security.

 

  

63

  

	
(c)

	
With effect on and from its creation or intended creation, each Obligor shall hold the legal title to, and own the entire beneficial interest in any other assets the subject of any Transaction Security created or intended to be created by it.

 

	
22.9

	
Negative pledge

 

	
(a)

	
No Obligor shall, and the Obligors shall procure that no other Transaction Obligor will, (and the Parent Guarantor shall ensure that no other member of the Group will) create or permit to subsist any Security over any of its assets which are, in the case of members of the Group other than the Borrowers, the subject of the Security created or intended to be created by the Finance Documents.

 

	
(b)

	
No Obligor shall, and the Obligors shall procure that no other Transaction Obligor will, (and the Parent Guarantor shall ensure that no other member of the Group will):

 

	
  

	
(i)

	
sell, transfer or otherwise dispose of any of its assets on terms whereby they are or may be leased to or re-acquired by a Transaction Obligor or any other member of the Group;

 

	
  

	
(ii)

	
other than in the case of the Parent Guarantor, sell, transfer or otherwise dispose of any of its receivables on recourse terms;

 

	
  

	
(iii)

	
other than in the case of the Parent Guarantor, enter into any arrangement under which money or the benefit of a bank or other account may be applied, set-off or made subject to a combination of accounts; or

 

	
  

	
(iv)

	
enter into any other preferential arrangement having a similar effect, in circumstances where the arrangement or transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset.

 

	
(c)

	
Paragraphs (a) and (b) above do not apply to any Permitted Security.

 

	
22.10

	
Disposals

 

	
(a)

	
No Borrower shall, enter into a single transaction or a series of transactions (whether related or not) and whether voluntary or involuntary to sell, lease, transfer or otherwise dispose of any asset (including without limitation either Ship, its Earnings or its Insurances).

 

	
(b)

	
Paragraph (a) above does not apply to any charter of a Ship to which Clause 24.14 (Restrictions on chartering, appointment of managers etc.) applies.

 

	
22.11

	
Merger

 

No Obligor shall, and the Obligors shall procure that no other Transaction Obligor will, (and the Parent Guarantor shall ensure that no other member of the Group will) enter into any amalgamation, demerger, merger, consolidation or corporate reconstruction.

 

	
22.12

	
Change of business

 

	
(a)

	
The Parent Guarantor shall procure that no substantial change is made to the general nature of the business of the Parent Guarantor or the Group from that carried on at the date of this Agreement.

 

	
(b)

	
No Borrower shall engage in any business other than the ownership and operation of its Ship.

 

	
22.13

	
Financial Indebtedness

 

  

64

  

.No Borrower shall incur or permit to be outstanding any Financial Indebtedness except Permitted Financial Indebtedness.

 

	
22.14

	
Expenditure

 

No Borrower shall incur any expenditure, except for expenditure reasonably incurred in the ordinary course of owning, operating, maintaining and repairing its Ship.

 

	
22.15

	
Limited liability membership interests

 

	
(a)

	
The Parent Guarantor shall not purchase, cancel or redeem any of limited liability membership interests in either of the Borrowers;

 

	
(b)

	
No Borrower shall appoint any further officer of that Borrower (unless the provisions of the Shares Security applicable to that Borrower are complied with).

 

	
22.16

	
Dividends

 

	
(a)

	
No Borrower shall make or pay any dividend or other distribution (in cash or in kind) in respect of its limited liability membership interests if:

 

	
  

	
(i)

	
an Event of Default has occurred or is continuing or would result from such payment or distribution; and

 

	
  

	
(ii)

	
the balance standing to the credit of the Earnings Account in respect of that Borrower at the relevant time is less than $500,000;

 

	
(b)

	
The Parent Guarantor shall not make or pay any dividends or other distributions in cash or in kind in respect of its shared capital if an Event of Default has occurred or is continuing or would result from such payment or distribution.

 

	
22.17

	
Accounts

 

No Borrower shall open or maintain any account with any bank or financial institution except its Earnings Account and its Minimum Liquidity Account and accounts with the Facility Agent or the Security Agent for the purposes of the Finance Documents.

 

	
22.18

	
Borrower's Minimum liquidity

 

Each Borrower will maintain to the credit of its Minimum Liquidity Account an amount of not less than $500,000 in respect of its Ship as from the Utilisation Date of the Tranche relative to that Ship and at all other times during the Security Period.

 

	
22.19

	
Other transactions

 

No Borrower shall:

 

	
(a)

	
be the creditor in respect of any loan or any form of credit to any person other than another Obligor and where such loan or form of credit is Permitted Financial indebtedness;

 

	
(b)

	
give or allow to be outstanding any guarantee or indemnity to or for the benefit of any person in respect of any obligation of any other person or enter into any document under which that Borrower assumes any liability of any other person other than any guarantee or indemnity given under the Finance Documents.

 

	
(c)

	
enter into any material agreement other than:

 

	
  

	
(i)

	
the Transaction Documents;

 

  

65

  

	
  

	
(ii)

	
any other agreement expressly allowed under any other term of this Agreement; and

 

	
(d)

	
enter into any transaction on terms which are, in any respect, less favourable to that Borrower than those which it could obtain in a bargain made at arms' length; or

 

	
(e)

	
acquire any shares or other securities other than US or UK Treasury bills and certificates of deposit issued by major North American or European banks.

 

	
22.20

	
Unlawfulness, invalidity and ranking; Security imperilled

 

No Obligor shall, and the Obligors shall procure that no other Transaction Obligor will, (and the Parent Guarantor shall ensure that no other member of the Group will) do (or fail to do) or cause or permit another person to do (or omit to do) anything which is likely to:

 

	
(a)

	
make it unlawful for an Obligor to perform any of its obligations under the Transaction Documents;

 

	
(b)

	
cause any obligation of an Obligor under the Transaction Documents to cease to be legal, valid, binding or enforceable;

 

	
(c)

	
cause any Transaction Document to cease to be in full force and effect;

 

	
(d)

	
cause any Transaction Security to rank after, or lose its priority to, any other Security; and

 

	
(e)

	
imperil or jeopardise the Transaction Security.

 

	
22.21

	
Further assurance

 

	
(a)

	
Each Obligor shall (and the Parent Guarantor shall procure that any other Transaction Obligor will) promptly, and in any event within the time period specified by the Security Agent do all such acts (including procuring or arranging any registration, notarisation or authentication or the giving of any notice) or execute or procure execution of all such documents (including assignments, transfers, mortgages, charges, notices, instructions, acknowledgments, proxies and powers of attorney), as the Security Agent may specify (and in such form as the Security Agent may require in favour of the Security Agent or its nominee(s)):

 

	
  

	
(i)

	
to create, perfect, vest in favour of the Security Agent or protect the priority of the Security or any right or any kind created or intended to be created under or evidenced by the Finance Documents (which may include the execution of a mortgage, charge, assignment or other Security over all or any of the assets which are, or are intended to be, the subject of the Transaction Security) or for the exercise of any rights, powers and remedies of the Security Agent, any Receiver or the Secured Parties provided by or pursuant to the Finance Documents or by law;

 

	
  

	
(ii)

	
to confer on the Security Agent or confer on the Secured Parties Security over any property and assets of that Transaction Obligor located in any jurisdiction equivalent or similar to the Security intended to be conferred by or pursuant to the Finance Documents;

 

	
  

	
(iii)

	
to facilitate or expedite the realisation and/or sale of, the transfer of title to or the grant of, any interest in or right relating to the assets which are, or are intended to be, the subject of the Transaction Security or to exercise any power specified in any Finance Document in respect of which the Security has become enforceable; and/or

 

  

66

  

	
  

	
(iv)

	
to enable or assist the Security Agent to enter into any transaction to commence, defend or conduct any proceedings and/or to take any other action relating to any item of the Security Property.

 

	
(b)

	
Each Obligor shall, and shall procure that each other Transaction Obligor will, take all such action as is available to it (including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any Security conferred or intended to be conferred on the Security Agent or the Secured Parties by or pursuant to the Finance Documents.

 

	
22.22

	
Money Laundering

 

The Obligors undertake throughout the Security Period to:

 

	
(a)

	
provide the Lenders with information, certificates and any documents required by the Lenders to ensure compliance with any law, official requirement or other regulatory measure or procedure implemented to combat Money Laundering; and

 

	
(b)

	
notify the Lenders as soon as it becomes aware of any matters evidencing that a breach of any law, official requirement or other regulatory measure or procedure implemented to combat Money Laundering may or is about to occur.

 

	
23

	
INSURANCE UNDERTAKINGS

 

	
23.1

	
General

 

The undertakings in this Clause 23 (Insurance Undertakings) remain in force, in respect of each Borrower, from the Utilisation Date relative to the Ship of that Borrower throughout the rest of the Security Period except as the Facility Agent, acting with the authorisation of the Majority Lenders (or, where specified, all the Lenders) may otherwise permit.

 

	
23.2

	
Maintenance of obligatory insurances

 

Each Borrower shall keep the Ship owned by it insured at its expense against:

 

	
(a)

	
fire and usual marine risks (including hull and machinery and excess risks);

 

	
(b)

	
war risks (extended to cover piracy and terrorism if those risks are excluded from the fire and usual marine risks cover);

 

	
(c)

	
protection and indemnity risks (without exclusion of any Environmental Incident); and

 

	
(d)

	
any other risks against which the Facility Agent acting on the instructions of the Majority Lenders, considers are reasonable for a prudent shipowner or operator to insure against and which are generally insured against by leading operators of vessels of similar age and type to the Ships and/or engaged in similar trades.

 

	
23.3

	
Terms of obligatory insurances

 

Each Borrower shall effect such insurances:

 

	
(a)

	
in dollars;

 

	
(b)

	
in the case of fire and usual marine risks and war risks, in an amount on an agreed value basis at least the greater of:

 

	
  

	
(i)

	
together with the amount for which the other Mortgaged Ship is insured and any prior ranking Security on either Ship, 120 per cent. of the Loan; and

 

  

67

  

	
  

	
(ii)

	
the Market Value of that Ship;

 

	
(c)

	
in the case of oil pollution liability risks, for an aggregate amount equal to the highest level of cover from time to time available under basic protection and indemnity club entry with the International Group of Protection and Indemnity Associations or if the International Group of Protection and Indemnity Associations cease to exist or operate, leading protection and indemnity associations managed in London or Scandinavia;

 

	
(d)

	
in the case of protection and indemnity risks, in respect of the full tonnage of its Ship;

 

	
(e)

	
on approved terms; and

 

	
(f)

	
through Approved Brokers and with approved insurance companies and/or underwriters or, in the case of war risks and protection and indemnity risks, in approved war risks and protection and indemnity risks associations.

 

	
23.4

	
Further protections for the Finance Parties

 

In addition to the terms set out in Clause 23.3 (Terms of obligatory insurances), each Borrower shall procure that the obligatory insurances effected by it shall:

 

	
(a)

	
name that Borrower as the sole named assured unless the interest of every other named assured is limited:

 

	
  

	
(i)

	
in respect of any obligatory insurances for hull and machinery and war risks;

 

	
  

	
(A)

	
to any provable out-of-pocket expenses that it has incurred and which form part of any recoverable claim on underwriters; and

 

	
  

	
(B)

	
to any third party liability claims where cover for such claims is provided by the policy (and then only in respect of discharge of any claims made against it); and

 

	
  

	
(ii)

	
in respect of any obligatory insurances for protection and indemnity risks, to any recoveries it is entitled to make by way of reimbursement following discharge of any third party liability claims made specifically against it;

 

and every other named assured has undertaken in writing to the Security Agent (in such form as it requires) that any deductible shall be apportioned between that Borrower and every other named assured in proportion to the gross claims made or paid by each of them and that it shall do all things necessary and provide all documents, evidence and information to enable the Security Agent to collect or recover any moneys which at any time become payable in respect of the obligatory insurances;

 

	
(b)

	
name the Security Agent as loss payee with such directions for payment as the Facility Agent may specify;

 

	
(c)

	
provide that all payments by or on behalf of the insurers under the obligatory insurances to the Security Agent shall be made without set off, counterclaim or deductions or condition whatsoever;

 

	
(d)

	
provide that the obligatory insurances shall be primary without right of contribution from other insurances which may be carried by the Security Agent or any other Finance Party; and

 

	
(e)

	
provide that the Security Agent may make proof of loss if that Borrower fails to do so.

 

	
23.5

	
Renewal of obligatory insurances

 

  

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Each Borrower shall:

 

	
(a)

	
at least 21 days before the expiry of any obligatory insurance effected by it:

 

	
  

	
(i)

	
notify the Facility Agent of the Approved Brokers (or other insurers) and any protection and indemnity or war risks association through or with which it proposes to renew that obligatory insurance and of the proposed terms of renewal; and

 

	
  

	
(ii)

	
obtain the Facility Agents' approval to the matters referred to in sub-paragraph (i) of paragraph (a) above;

 

	
(b)

	
at least 14 days before the expiry of any obligatory insurance, renew that obligatory insurance in accordance with the Facility Agent's approval pursuant to paragraph (a) above; and

 

	
(c)

	
procure that the approved brokers and/or the approved war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal notify the Facility Agent in writing of the terms and conditions of the renewal.

 

	
23.6

	
Copies of policies; letters of undertaking

 

Each Borrower shall ensure that the Approved Brokers provide the Security Agent with:

 

	
(a)

	
pro forma copies of all policies relating to the obligatory insurances which they are to effect or renew; and

 

	
(b)

	
a letter or letters or undertaking in a form required by the Facility Agent having regard to market practice and including undertakings by the Approved Brokers that:

 

	
  

	
(i)

	
they will have endorsed on each policy, immediately upon issue, a loss payable clause and a notice of assignment complying with the provisions of Clause 23.4 (Further protections for the Finance Parties);

 

	
  

	
(ii)

	
they will hold such policies, and the benefit of such insurances, to the order of the Security Agent in accordance with such loss payable clause;

 

	
  

	
(iii)

	
they will advise the Security Agent immediately of any material change to the terms of the obligatory insurances;

 

	
  

	
(iv)

	
they will, if they have not received notice of renewal instructions from the relevant Borrower or its agents, notify the Security Agent not less than 14 days before the expiry of the obligatory insurances;

 

	
  

	
(v)

	
if they receive instructions to renew the obligatory insurances, they will promptly notify the Facility Agent of the terms of the instructions;

 

	
  

	
(vi)

	
they will not set off against any sum recoverable in respect of a claim relating to the Ship owned by that Borrower under such obligatory insurances any premiums or other amounts due to them or any other person whether in respect of that Ship or otherwise, they waive any lien on the policies, or any sums received under them, which they might have in respect of such premiums or other amounts and they will not cancel such obligatory insurances by reason of non-payment of such premiums or other amounts; and

 

	
  

	
(vii)

	
they will arrange for a separate policy to be issued in respect of the Ship owned by that Borrower forthwith upon being so requested by the Facility Agent.

 

	
23.7

	
Copies of certificates of entry

 

  

69

  

Each Borrower shall ensure that any protection and indemnity and/or war risks associations in which the Ship owned by it is entered provide the Security Agent with:

 

	
(a)

	
a certified copy of the certificate of entry for that Ship;

 

	
(b)

	
a letter or letters of undertaking in the form prescribed by the rules of that association or such other form as may be required by the Facility Agent; and

 

	
(c)

	
a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority in relation to that Ship.

 

	
23.8

	
Deposit of original policies

 

Each Borrower shall ensure that all policies relating to obligatory insurances effected by it are deposited with the Approved Brokers through which the insurances are effected or renewed.

 

	
23.9

	
Payment of premiums

 

Each Borrower shall punctually pay all premiums or other sums payable in respect of the obligatory insurances effected by it and produce all relevant receipts when so required by the Facility Agent or the Security Agent.

 

	
23.10

	
Guarantees

 

Each Borrower shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect.

 

	
23.11

	
Compliance with terms of insurances

 

	
(a)

	
No Borrower shall do or omit to do (nor permit to be done or not to be done) any act or thing which would or might render any obligatory insurance invalid, void, voidable or unenforceable or render any sum payable under an obligatory insurance repayable in whole or in part.

 

	
(b)

	
Without limiting paragraph (a) above, each Borrower shall:

 

	
  

	
(i)

	
take all necessary action and comply with all requirements which may from time to time be applicable to the obligatory insurances, and (without limiting the obligation contained in sub-paragraph (iii) of paragraph (b) of Clause 23.6 (Copies of policies; letters of undertaking)) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Facility Agent has not given its prior approval;

 

	
  

	
(ii)

	
not make any changes relating to the classification or classification society or manager or operator of the Ship owned by it approved by the underwriters of the obligatory insurances;

 

	
  

	
(iii)

	
make (and promptly supply copies to the Facility Agent of) all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Ship owned by it is entered to maintain cover for trading to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation); and

 

	
  

	
(iv)

	
not employ the Ship owned by it, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances, without first

 

  

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obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify.

 

	
23.12

	
Alteration to terms of insurances

 

No Borrower shall make or agree to any alteration to the terms of any obligatory insurance or waive any right relating to any obligatory insurance.

 

	
23.13

	
Settlement of claims

 

Each Borrower shall:

 

	
(a)

	
not settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty; and

 

	
(b)

	
do all things necessary and provide all documents, evidence and information to enable the Security Agent to collect or recover any moneys which at any time become payable in respect of the obligatory insurances.

 

	
23.14

	
Provision of copies of communications

 

Each Borrower shall provide the Security Agent, at the time of each such communication, with copies of all written communications between that Borrower and:

 

	
(a)

	
the Approved Brokers;

 

	
(b)

	
the approved protection and indemnity and/or war risks associations; and

 

	
(c)

	
the approved insurance companies and/or underwriters, which relate directly or indirectly to:

 

	
  

	
(i)

	
that Borrower's obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and

 

	
  

	
(ii)

	
any credit arrangements made between that Borrower and any of the persons referred to in paragraphs (a) or (b) above relating wholly or partly to the effecting or maintenance of the obligatory insurances.

 

	
23.15

	
Provision of information

 

Each Borrower shall promptly provide the Facility Agent (or any persons which it may designate) with any information which the Facility Agent (or any such designated person) requests for the purpose of:

 

	
(a)

	
obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory insurances effected or proposed to be effected; and/or

 

	
(b)

	
effecting, maintaining or renewing any such insurances as are referred to in Clause 23.16 (Mortgagee's interest and additional perils (pollution) insurances) or dealing with or considering any matters relating to any such insurances,

 

and the Borrowers shall, forthwith upon demand, indemnify the Security Agent in respect of all fees and other expenses incurred by or for the account of the Security Agent in connection with any such report as is referred to in paragraph (a) above.

 

	
23.16

	
Mortgagee's interest and additional perils (pollution) insurances

 

  

71

  

	
(a)

	
The Security Agent shall be entitled from time to time to effect, maintain and renew a mortgagee's interest marine insurance ("MII"), and a mortgagee's interest additional perils (pollution) insurance ("MIIAP") on such terms, through such insurers and generally in such manner as the Security Agent may from time to time consider appropriate.

 

	
(b)

	
The insurance referred to in paragraph (a) above shall be in the case of Mll in an amount equal to 110 per cent. of the Loan.

 

	
(c)

	
The MIIAP insurance referred to in paragraph (a) shall not be required if and for so long as the Borrowers have expressly confirmed in writing that the Ships will not enter territorial waters of the United States or the territorial waters of any other state which has in force pollution liability law and/or practice which, in the reasonable opinion of the Facility Agent, is equivalent to the Oil Pollution Act of 1990 of the United States and/or the practices applied thereunder.

 

	
(d)

	
The Borrowers shall upon demand fully indemnify the Security Agent in respect of all premiums and other expenses which are incurred in connection with or with a view to effecting, maintaining or renewing any insurance referred to in paragraph (a) above (subject to paragraph (c) above) or dealing with, or considering, any matter arising out of any such insurance.

 

	
24

	
GENERAL SHIP UNDERTAKINGS

 

	
24.1

	
General

 

The undertakings in this Clause 24 (General Ship Undertakings) remain in force, in the case of each Borrower, on and from the Utilisation Date in relation to the Ship owned by that Borrower and throughout the rest of the Security Period except as the Facility Agent, acting with the authorisation of the Majority Lenders (or, where specified, all the Lenders) may otherwise permit (in the case of sub-paragraph (c) of Clause 24.2 (Ships' names and registration) such permission not to be unreasonably withheld).

 

	
24.2

	
Ships' names and registration

 

Each Borrower shall, in respect of the Ship owned by it:

 

	
(a)

	
keep that Ship registered in its name under the Approved Flag from time to time at its port of registration;

 

	
(b)

	
not do or allow to be done anything as a result of which such registration might be suspended, cancelled or imperilled; and

 

	
(c)

	
not change the name of that Ship,

 

provided that any change of flag of a Ship shall be subject to:

 

	
  

	
(i)

	
the intended change of flag is acceptable to all Lenders;

 

	
  

	
(ii)

	
that Ship remaining subject to Security securing the Secured Liabilities created by a first priority or preferred ship mortgage on that Ship and, if appropriate, a first priority Deed of Covenant collateral to that mortgage (or equivalent first priority Security) on substantially the same terms as the Mortgage on that Ship and, if applicable, related Deed of Covenant and on such other terms and in such other form as the Facility Agent, acting with the authorisation of the Majority Lenders, shall approve or require; and

 

  

72

  

	
  

	
(iii)

	
the execution of such other documentation amending and supplementing the Finance Documents as the Facility Agent, acting with the authorisation of the Majority Lenders, shall approve or require.

 

	
24.3

	
Repair and classification

 

Each Borrower shall keep the Ship owned by it in a good and safe condition and state of repair:

 

	
(a)

	
consistent with first class ship ownership and management practice; and

 

	
(b)

	
so as to maintain highest possible class free of overdue recommendations and conditions affecting that Ship's class.

 

	
24.4

	
Modifications

 

No Borrower shall make any modification or repairs to, or replacement of, either Ship or equipment installed on it which would or might materially alter the structure, type or performance characteristics of that Ship or materially reduce its value.

 

	
24.5

	
Removal and installation of parts

 

	
(a)

	
Subject to paragraph (b) below, no Borrower shall remove any material part of either Ship, or any item of equipment installed on either Ship unless the part or item so removed:

 

	
  

	
(i)

	
is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed;

 

	
  

	
(ii)

	
is free from any Security in favour of any person other than the Security Agent; and

 

	
  

	
(iii)

	
becomes, on installation on that Ship, the property of that Borrower and subject to the security constituted by the Mortgage on that Ship and, if applicable, the related Deed of Covenant.

 

	
(b)

	
A Borrower may install equipment owned by a third party if the equipment can be removed without any risk of damage to the Ship owned by that Borrower.

 

	
24.6

	
Surveys

 

Each Borrower shall submit the Ship owned by it regularly to all periodic or other surveys which may be required for classification purposes and, if so required by the Facility Agent acting on the instructions of the Majority Lenders, provide the Facility Agent, with copies of all survey reports.

 

	
24.7

	
Inspection

 

Each Borrower shall (at its cost) permit the Security Agent (acting through surveyors or other persons appointed by it for that purpose) to board the Ship owned by it at all reasonable times to inspect its condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections.

 

	
24.8

	
Prevention of and release from arrest

 

(a)           Each Borrower shall, in respect of the Ship owned by it, promptly discharge:

 

	
  

	
(i)

	
all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against that Ship, its Earnings or its Insurances;

 

  

73

  

	
  

	
(ii)

	
all Taxes, dues and other amounts charged in respect of that Ship, its Earnings or its Insurances; and

 

	
  

	
(iii)

	
all other outgoings whatsoever in respect of that Ship, its Earnings or its Insurances.

 

	
(b)

	
Each Borrower shall immediately and, forthwith upon receiving notice of the arrest of the Ship owned by it or of its detention in exercise or purported exercise of any lien or claim, procure its release by providing bail or otherwise as the circumstances may require.

 

	
24.9

	
Compliance with laws etc.

 

Each Borrower shall:

 

	
(a)

	
comply, or procure compliance with all laws or regulations:

 

	
  

	
(i)

	
relating to its business generally; and

 

	
  

	
(ii)

	
relating to the Ship owned by it, its ownership, employment, operation, management and registration,

 

including the ISM Code, the ISPS Code, all Environmental Laws, all Sanctions and the laws of the Approved Flag;

 

	
(b)

	
obtain, comply with and do all that is necessary to maintain in full force and effect any Environment Approvals; and

 

	
(c)

	
without limiting paragraph (a) above, not employ the Ship owned by it nor allow its employment, operation or management in any manner contrary to any law or regulation including but not limited to the ISM Code, the ISPS Code, all Environmental Laws and all Sanctions.

 

	
24.10

	
ISPS Code

 

Without limiting paragraph (a) of Clause 24.9 (Compliance with laws etc.), each Borrower shall:

 

	
(a)

	
procure that the Ship owned by it and the company responsible for that Ship's compliance with the ISPS Code comply with the ISPS Code; and

 

	
(b)

	
maintain an ISSC for that Ship; and

 

	
(c)

	
notify the Facility Agent immediately in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC.

 

	
24.11

	
Trading in war zones

 

In the event of hostilities in any part of the world (whether war is declared or not), no Borrower shall cause or permit either Ship to enter or trade to any zone which is declared a war zone by any government or by that Ship's war risks insurers unless:

 

	
(a)

	
the prior written consent of the war risk insurers has been given; and

 

	
(b)

	
that Borrower has (at its expense) effected any special, additional or modified insurance cover which the war risk insurers may require.

 

	
24.12

	
Provision of information

 

  

74

  

Without prejudice to Clause 20.5 (Information: miscellaneous) each Borrower shall, in respect of the Ship owned by it, promptly provide the Facility Agent with any information which it requests regarding:

 

	
(a)

	
that Ship, its employment, position and engagements;

 

	
(b)

	
the Earnings and payments and amounts due to its master and crew;

 

	
(c)

	
any expenditure incurred, or likely to be incurred, in connection with the operation, maintenance or repair of that Ship and any payments made by it in respect of that Ship exceeding an amount of $500,000 (or the equivalent in any other currency);

 

	
(d)

	
any towages and salvages; and

 

	
(e)

	
its compliance, the Approved Manager's compliance and the compliance of that Ship with the ISM Code and the ISPS Code,

 

and, upon the Facility Agent's request, provide copies of any current Charter or sub-charter relating to that Ship, of any current guarantee of any such charter, the Ship's Safety Management Certificate and any relevant Document of Compliance.

 

	
24.13

	
Notification of certain events

 

Each Borrower shall, in respect of the Ship owned by it, immediately notify the Facility Agent by fax, confirmed forthwith by letter of:

 

	
(a)

	
any casualty to that Ship which is or is likely to be or to become a Major Casualty;

 

	
(b)

	
any occurrence as a result of which that Ship has become or is, by the passing of time or otherwise, likely to become a Total Loss;

 

	
(c)

	
any requisition of that Ship for hire;

 

	
(d)

	
any requirement or recommendation made in relation to that Ship by any insurer or classification society or by any competent authority which is not immediately complied with;

 

	
(e)

	
any arrest or detention of that Ship, any exercise or purported exercise of any lien on that Ship or the Earnings or any requisition of that Ship for hire;

 

	
(f)

	
any intended dry docking of that Ship;

 

	
(g)

	
any Environmental Claim made against that Borrower, any other member of the Group or in connection with that Ship or any other Fleet Vessel, or any Environmental Incident;

 

	
(h)

	
any claim for breach of the ISM Code or the ISPS Code being made against that Borrower, an Approved Manager, any other member of the Group or otherwise in connection with that Ship or any other Fleet Vessel; or

 

	
(i)

	
any other matter, event or incident, actual or threatened, the effect of which will or could lead to the ISM Code or the ISPS Code not being complied with,

 

and each Borrower shall keep the Facility Agent advised in writing on a regular basis and in such detail as the Facility Agent shall require as to that Borrower's, any such Approved Manager's or any other person's response to any of those events or matters.

 

	
24.14

	
Restrictions on chartering, appointment of managers etc.

 

No Borrower shall, in relation to the Ship owned by it:

 

  

75

  

	
(a)

	
let that Ship on demise charter for any period;

 

	
(b)

	
enter into any time or consecutive voyage charter in respect of that Ship other than a Permitted Charter;

 

	
(c)

	
appoint a manager of that Ship other than the Approved Commercial Manager and the Approved Technical Manager or agree to any alteration to the terms of an Approved Manager's appointment;

 

	
(d)

	
de-activate or lay-up that Ship; or

 

	
(e)

	
put that Ship into the possession of any person for the purpose of work being done upon it in an amount exceeding or likely to exceed $250,000 (or the equivalent in any other currency) unless that person has first given to the Security Agent and in terms satisfactory to it a written undertaking not to exercise any lien on that Ship or its Earnings for the cost of such work or for any other reason.

 

	
24.15

	
Notice of Mortgage

 

Each Borrower shall keep the relevant Mortgage registered against the Ship owned by it as a valid first priority or, as the case may be, preferred mortgage, carry on board that Ship a certified copy of the relevant Mortgage and place and maintain in a conspicuous place in the navigation room and the master's cabin of that Ship a framed printed notice stating that that Ship is mortgaged by that Borrower to the Security Agent.

 

	
24.16

	
Sharing of Earnings

 

No Borrower shall enter into any agreement or arrangement for the sharing of any Earnings other than any profit sharing or pool arrangements in respect of either Ship subject to such arrangements being notified to the Facility Agent on or prior to the date on which that Ship shall become subject to such arrangements.

 

	
24.17

	
Charterparty Assignment

 

If a Borrower enters into any Assignable Charter:

 

	
(a)

	
if such Assignable Charter is a time charterparty the duration of which exceeds or is capable of exceeding, by virtue of any optional extensions, 12 months that Borrower shall promptly after the date of such Charter enter into a Charterparty Assignment and the assignment contemplated thereunder shall be notified to, acknowledged by, the relevant charterer and any charter guarantor in accordance with the terms of such Charterparty Assignment; and

 

	
(b)

	
if such Assignable Charter is any bareboat charter, that Borrower shall promptly after the date of such Charter enter into a Charterparty Assignment and the assignment contemplated thereunder shall be notified to, acknowledged by, the relevant charterer and any charter guarantor in accordance with the terms of such Charterparty Assignment and shall procure that the relevant bareboat charterer executes in favour of the Security Agent an assignment of (inter alia) all its rights, title and interest in and to the Insurances in respect of that Ship effected either by that Borrower by the bareboat charterer and a customary letter of undertaking in favour of the Security Agent whereby (inter alia) the interests of the bareboat charterer under the bareboat charter are subordinated to the interests of the Security Agent under the Finance Documents,

 

and shall additionally deliver to the Facility Agent such other documents equivalent to those referred to at paragraphs 1.1, 1.2, 1.3, 1.4, 2 and 4 of Schedule 2, Part A as the Facility Agent may require.

 

	
24.18

	
Notification of compliance

 

  

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Each Borrower shall promptly provide the Facility Agent from time to time with evidence (in such form as the Facility Agent requires) that it is complying with this Clause 24 (General Ship Undertakings).

 

	
24.19

	
Civil merchant trading

 

Each Borrower shall ensure that the Ship owned by it shall only be used as a civil merchant trading ship.

 

	
24.20

	
German resident finance party

 

	
(a)

	
To the extent a Finance Party is resident in Germany ("Inlander") within the meaning of Section 2 Paragraph 15 of the German foreign trade and payment act (AWG AuBenwirtschaftsgesetz) and therefore subject to Section 7 of the AWV would not permitted to accept a representation or an undertaking that is made or to be made or is be granted or is to be granted by a Transaction Obligor with respect to Sanctions under this Agreement, such Finance Party shall not, in the event of a breach by a Transaction Obligor of any such representation or undertaking be entitled to invoke or declare an Event of Default or vote for a cancellation of the Total Commitments and immediate repayment of the Loan in accordance with Clause 28.20 (Acceleration).

 

	
(b)

	
The representations in Clause 20 (Representations) given by, and the undertakings in Clause 23.2 (Compliance with laws) of, any Transaction Obligor to any Finance Party resident in Germany ("Inlander") within the meaning of Section 2 Para. 15 of the AWV are granted only to the extent that such Finance Party itself would be permitted to receive such representations or undertakings pursuant to Section 7 of the AWV.

 

	
(c)

	
On any matter referred to in paragraph (a) above in respect of which the Lenders are to vote but in respect of which a German-resident Lender to whom paragraph (a) above applies shall not vote in accordance with such paragraph:

 

	
  

	
(i)

	
for the purposes of determining whether approval of the Majority Lenders is obtained the references in the definition of "Majority Lenders" to 66.67 per cent. of the Total Commitments and to 66.67 per cent. of the Loan shall for this purpose be construed to refer to 66.67 per cent. of the Total Commitments or, as the case may be, the Loan only taking account of the other Commitments of, or as the case may be, the participation in the Loan of, the Lenders and ignoring the Commitment of or, as the case may be, the participation in the Loan of, the German-resident Lender; and an action taken by the Majority Lenders as such definition is modified by this paragraph (c) shall be valid in the applicable circumstances and binding all Parties; and

 

	
  

	
(ii)

	
for the purposes of determining whether the approval of all Lenders is obtained, all Lenders shall be construed to mean the other Lenders ignoring the German-resident Lender and an action taken by all Lenders as modified by this paragraph (c) shall be valid in the applicable circumstances and binding on all Parties.

 

25          SECURITY COVER

 

25.1       Minimum required security cover

 

Clause 25.2 (Provision of additional security; prepayment) applies if the Facility Agent notifies the Borrowers that:

 

	
(i)

	
aggregate Market Value of the Mortgaged Ships; plus

 

	
(ii)

	
the aggregate balances standing to the credit of the Minimum Liquidity Accounts at the relevant time; plus

 

  

77

  

	
(iii)

	
the net realisable value of additional Security previously provided under this Clause 25.1 (Minimum required security cover),

 

	
 

	

is below 130 per cent. of the aggregate principal amount outstanding for the time being of the borrowings under the Facility.

 

	
25.2

	
Provision of additional security; prepayment

 

	
(a)

	
If the Facility Agent serves a notice on the Borrowers under Clause 25.1 (Minimum required security cover), the Borrowers shall, on or before the date falling 15 Business Days after the date (the "Prepayment Date") on which the Facility Agent's notice is served, prepay such part of the Loan as shall eliminate the shortfall.

 

	
(b)

	
A Borrower may, instead of making a prepayment as described in paragraph (a) above, provide, or ensure that a third party has provided, additional security which, in the opinion of the Facility Agent acting on the instructions of the Majority Lenders,

 

	
  

	
(i)

	
has a net realisable value at least equal to the shortfall; and

 

	
  

	
(ii)

	
is documented in such terms as the Facility Agent may approve or require,

 

before the Prepayment Date; and conditional upon such security being provided in such manner, it shall satisfy such prepayment obligation.

 

	
25.3

	
Value of additional vessel security

 

The net realisable value of any additional security which is provided under Clause 25.2 (Provision of additional security; prepayment) and which consists of Security over a vessel shall be the Market Value of the vessel concerned.

 

	
25.4

	
Valuations binding

 

Any valuation under this Clause 25 (Security Cover) shall be binding and conclusive as regards each Borrower.

 

	
25.5

	
Provision of information

 

	
(a)

	
Each Borrower shall promptly provide the Facility Agent and any shipbroker acting under this Clause 25 (Security Cover) with any information which the Facility Agent or the shipbroker may request for the purposes of the valuation.

 

	
(b)

	
If a Borrower fails to provide the information referred to in paragraph (a) above by the date specified in the request, the valuation may be made on any basis and assumptions which the shipbroker or the Facility Agent considers prudent.

 

	
25.6

	
Prepayment mechanism

 

Any prepayment pursuant to Clause 25.2 (Provision of additional security; prepayment) shall be made in accordance with the relevant provisions of Clause 7 (Repayment and Cancellation) are treated as a voluntary prepayment pursuant to Clause 7.4 (Voluntary prepayment of Loan) for the avoidance of doubt no fee shall be payable in connection with such prepayment in accordance with Clause 11.3 (Prepayment or cancelation fee).

 

	
25.7

	
Provision of valuations and determination of Market Value

 

	
(a)

	
The Borrowers shall provide valuations of the Ships as required in relation to each Utilisation and otherwise, on each Testing Date and at any other time whilst an Event of Default is continuing.

 

  

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(b)

	
The cost of valuations made in compliance with paragraph (a) above shall be borne or reimbursed by the Borrowers.

 

	
(c)

	
Each valuation shall be made by two Approved Valuers one selected by the Borrowers and the other by the Facility Agent.

 

	
(d)

	
The selected Approved Valuers shall value each Ship or other vessel;

 

	
  

	
(i)

	
with or without physical inspection (as the Facility Agent may require);

 

	
  

	
(ii)

	
on the basis of a sale for prompt delivery for cash on normal arm's length commercial terms as between a willing seller and a willing buyer, free of any Charter.

 

	
(e)

	
The Market Value of each Ship or other vessel shall be the arithmetic mean of the two valuations provided by the selected Approved Valuers (with the arithmetic mean of any range to apply, if an Approved Valuer gives a range).

 

	
(f)

	
The valuations required by this clause 25.7 (Provision of valuations and determination of Market Value) shall be made as close as reasonably practical before the date on which each Compliance Certificate is required to be delivered in accordance with Clause 20.3 (Compliance Certificate) and shall be made together with, for purposes of each Compliance Certificate, valuations of other vessels owned by any member of the Group as referred to in the definition of Market Value.

 

	
26

	
APPLICATION OF EARNINGS

 

	
26.1

	
Payment of Earnings

 

Each Borrower shall ensure that subject only to the provisions of the General Assignment or, as the case may be, Deed of Covenant to which it is a party, all the Earnings in respect of the Ship owned by it are paid in to its Earnings Account.

 

	
26.2

	
Location of accounts

 

Each Borrower shall promptly:

 

	
(a)

	
comply with any requirement of the Facility Agent as to the location or relocation of its Earnings Account and its Minimum Liquidity Account (or any of them); and

 

	
(b)

	
execute any documents which the Facility Agent specifies to create or maintain in favour of the Security Agent Security over (and/or rights of set-off, consolidation or other rights in relation to) the Earnings Accounts and its Minimum Liquidity Account.

 

	
27

	
EVENTS OF DEFAULT

 

	
27.1

	
General

 

Each of the events or circumstances set out in this Clause 27 (Events of Default) is an Event of Default except for Clause 27.19 (Acceleration) and Clause 27.20 (Enforcement of security).

 

	
27.2

	
Non-payment

 

An Obligor does not pay on the due date any amount payable pursuant to a Finance Document at the place at and in the currency in which it is expressed to be payable unless:

 

	
(a)

	
its failure to pay is caused by:

 

  

79

  

	
  

	
(i)

	
administrative or technical error; or

 

	
  

	
(ii)

	
a Disruption Event; and

 

	
(b)

	
payment is made within three Business Days of its due date or, as the case may be, the date of demand.

 

	
27.3

	
Specific obligations

 

A breach occurs of Clause 4.4 (Waiver of conditions precedent), Clause 7.3 (Change of control), 21.2(c) and (d) (Financial Statements), Clause 21 (Financial Covenants), Clause 22.8 (Title), Clause 22.9 (Negative pledge), Clause 22.20 (Unlawfulness, invalidity and ranking; Security imperilled), Clause 23,2 (Maintenance of obligatory insurances), Clause 23.3 (Terms of obligatory insurances), Clause 23.5 (Renewal of obligatory insurances) or Clause 25 (Security Cover).

 

	
27.4

	
Other obligations

 

	
(a)

	
A Transaction Obligor does not comply with any provision of the Finance Documents (other than those referred to in Clause 27.2 (Non-payment) and Clause 27.3 (Specific obligations)).

 

	
(b)

	
No Event of Default under paragraph (a) above will occur if the failure to comply is capable of remedy and is remedied within ten Business Days of the Facility Agent giving notice to the Borrowers or (if earlier) any Transaction Obligor becoming aware of the failure to comply.

 

	
27.5

	
Misrepresentation

 

	
(a)

	
Any representation or statement made or deemed to be made by a Transaction Obligor in the Finance Documents or any other document delivered by or on behalf of any Transaction Obligor under or in connection with any Finance Document is or proves to have been incorrect or misleading when made or deemed to be made.

 

	
(b)

	
No Event of Default under paragraph (a) will occur if, in the reasonable opinion of the Facility Agent (acting on the instructions of all Lenders), the facts or circumstances which make the representation or statement incorrect or misleading do not have a Material Adverse Effect.

 

	
27.6

	
Cross default

 

	
(a)

	
Any Financial Indebtedness of any member of the Group is not paid when due nor within any originally applicable grace period.

 

	
(b)

	
Any Financial Indebtedness of any member of the Group is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (however described).

 

	
(c)

	
Any commitment for any Financial Indebtedness of any member of the Group is cancelled or suspended by a creditor of any member of the Group as a result of an event of default (however described).

 

	
(d)

	
Any creditor of any member of the Group becomes entitled to declare any Financial Indebtedness of any member of the Group due and payable prior to its specified maturity as a result of an event of default (however described).

 

	
27.7

	
Insolvency

 

	
(a)

	
A member of the Group:

 

	
  

	
(i)

	
is unable or admits inability to pay its debts as they fall due;

 

  

80

  

	
  

	
(ii)

	
is, or is declared to, be unable to pay its debts under applicable law;

 

	
  

	
(iii)

	
suspends or threatens to suspend making payments on any of its debts unless such suspension or threat of suspension is solely related to any dispute initiated, or claim made, by that member of the Group acting in good faith regarding which the Facility Agent deems, in its reasonable opinion, that:

 

	
  

	
(A)

	
that member of the Group would be successful in the relevant dispute or, as the case may be, its claim; and

 

	
  

	
(B)

	
all appropriate steps have been taken on the part of that member of the Group; or

 

	
  

	
(iv)

	
by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors (excluding any Finance Party in its capacity as such) with a view to rescheduling any of its indebtedness.

 

	
(b)

	
The value of the assets of any member of the Group is less than its liabilities (taking into account contingent and prospective liabilities).

 

	
(c)

	
A moratorium is declared in respect of any indebtedness of any member of the Group. If a moratorium occurs, the ending of the moratorium will not remedy any Event of Default caused by that moratorium.

 

	
27.8

	
Insolvency proceedings

 

	
(a)

	
Any corporate action, legal proceedings or other procedure or step is taken in relation to:

 

	
  

	
(i)

	
the suspension of payments, a moratorium of any indebtedness, seeking bankruptcy protection, winding-up, dissolution, administration or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of any member of the Group other than a solvent liquidation or reorganisation of any member of the Group which is not a Transaction Obligor;

 

	
  

	
(ii)

	
a composition, compromise, assignment or arrangement with any creditor of any member of the Group;

 

	
  

	
(iii)

	
the appointment of a liquidator (other than in respect of a solvent liquidation of a member of the Group which is not a Transaction Obligor), receiver, administrator, administrative receiver, compulsory manager or other similar officer in respect of any member of the Group or any of its assets; or

 

	
  

	
(iv)

	
enforcement of any Security over any assets of any member of the Group, or any analogous procedure or step is taken in any jurisdiction.

 

	
(b)

	
Paragraph (a) above shall not apply to any winding-up petition which is frivolous or vexatious and is discharged, stayed or dismissed within 14 days of commencement.

 

	
27.9

	
Creditors' process

 

Any expropriation, attachment, sequestration, distress or execution (or any analogous process in any jurisdiction) affects any material asset or assets of any member of the Group.

 

In this Clause 27.9 (Creditors' process) "material" asset or assets means:

 

	
(a)

	
in the case of each Borrower, any asset owned by that Borrower;

 

  

81

  

	
(b)

	
in the case of the Parent Guarantor, any asset or group of assets being equal or exceeding in value 51 per cent. of the Market Adjusted Total Assets; and

 

	
(c)

	
in the case of any other member of the Group, any Ship owned by that member of the Group.

 

	
27.10

	
Ownership of the Obligors

 

An Obligor (other than the Parent Guarantor) is not or ceases to be a directly or indirectly owned Subsidiary of the Parent Guarantor.

 

	
27.11

	
Unlawfulness, invalidity and ranking

 

	
(a)

	
It is or becomes unlawful for a Transaction Obligor to perform any of its obligations under the Finance Documents.

 

	
(b)

	
Any obligation of a Transaction Obligor under the Finance Documents is not (subject to the Legal Reservations) or ceases to be legal, valid, binding or enforceable.

 

	
(c)

	
Any Finance Document ceases to be in full force and effect or to be continuing or is or purports to be determined or any Transaction Security is alleged by a party to it (other than a Finance Party) to be ineffective.

 

	
(d)

	
Any Transaction Security proves to have ranked after, or loses its priority to, any other Security.

 

	
27.12

	
Security imperilled

 

Any Security created or intended to be created by a Finance Document is in any way imperilled or in jeopardy.

 

	
27.13

	
Cessation of business

 

Any Transaction Obligor suspends or ceases to carry on (or threatens to suspend or ceases to carry on) all or a material part of its business.

 

	
27.14

	
Expropriation

 

The authority or ability of any member of the Group to conduct its business is limited or wholly or substantially curtailed by any seizure, expropriation, nationalisation, intervention, restriction or other action by or on behalf of any governmental, regulatory or other authority or other person in relation to any member of the Group or any of its assets.

 

	
27.15

	
Repudiation and rescission of agreements and termination of Approved Charters

 

	
(a)

	
A Transaction Obligor (or any other relevant party) rescinds or purports to rescind or repudiates or purports to repudiate a Transaction Document or any of the Transaction Security or evidences an intention to rescind or repudiate a Transaction Document or any Transaction Security.

 

	
(b)

	
Either of the Approved Charters is terminated and/or rescinded or purports to be rescinded other than by effluxion of time and is not replaced within thirty days with a duly negotiated and signed Assignable Charter acceptable to all the Lenders.

 

	
27.16

	
Litigation

 

Any litigation, arbitration, administrative, governmental, regulatory or other investigations, proceedings or disputes are commenced or threatened in relation to any of the Transaction

 

  

82

  

Documents or the transactions contemplated in any of the Transaction Documents or against any member of the Group or its assets which in the opinion of the Facility Agent (acting on the instructions of the Majority Lenders) has or is reasonably likely to have a Material Adverse Effect.

 

	
27.17

	
Material Adverse Effect

 

Any event or circumstance occurs which in the opinion of the Facility Agent (acting on the instructions of all the Lenders) has or is reasonably likely to have a Material Adverse Effect.

 

	
27.18

	
Sanctions

 

	
(a)

	
Any of the Obligors, or any other member of the Group or any Affiliate of any of them becomes a Prohibited Person or becomes owned or controlled by, or acts directly or indirectly on behalf of, a Prohibited Person or any of such persons becomes the owner or controller of a Prohibited person;

 

	
(b)

	
Any proceeds of the Loan is made available, directly or indirectly, to or for the benefit of a Prohibited Person or otherwise is, directly or indirectly, applied in a manner or for a purpose prohibited by Sanctions;

 

	
(c)

	
Any Obligor or other member of the Group or any Affiliate of any of them is not in compliance with all Sanctions.

 

	
27.19

	
Acceleration

 

On and at any time after the occurrence of an Event of Default the Facility Agent may, and shall if so directed by the Majority Lenders, by notice to the Borrowers:

 

	
(a)

	
cancel the Total Commitments, whereupon they shall immediately be cancelled;

 

	
(b)

	
declare that all or part of the Loan, together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents be immediately due and payable, whereupon it shall become immediately due and payable; and/or

 

	
(c)

	
declare that all or part of the Loan be payable on demand, whereupon it shall immediately become payable on demand by the Facility Agent acting on the instructions of the Majority Lenders,

 

and the Facility Agent may serve notices under paragraphs (a), (b) and (c) above simultaneously or on different dates and the Security Agent may take any action referred to in Clause 27.20 (Enforcement of security) if no such notice is served or simultaneously with or at any time after the service of any of such notice.

 

	
27.20

	
Enforcement of security

 

On and at any time after the occurrence of an Event of Default which is continuing the Security Agent may, and shall if so directed by the Majority Lenders, take any action which, as a result of the Event of Default or any notice served under Clause 27.19 (Acceleration), the Security Agent is entitled to take under any Finance Document or any applicable law or regulation.

 

  

83

  

SECTION 9

 

CHANGES TO PARTIES

 

	
28

	
CHANGES TO THE LENDERS

 

	
28.1

	
Assignments and transfers by the Lenders

 

Subject to this Clause 28 (Changes to the Lenders), a Lender (the "Existing Lender") may:

 

	
(a)

	
assign any of its rights; or

 

	
(b)

	
transfer by novation any of its rights and obligations,

 

under the Finance Documents to another bank or financial institution or to a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets (the "New Lender").

 

	
28.2

	
Conditions of assignment or transfer

 

	
(a)

	
The consent of the Borrowers is required for an assignment or transfer by an Existing Lender, unless the assignment or transfer is:

 

	
  

	
(i)

	
to another Lender or an Affiliate of a Lender;

 

	
  

	
(ii)

	
if the Existing Lender is a fund, to a fund which is a Related Fund; or

 

	
  

	
(iii)

	
made at a time when a Default is continuing.

 

	
(b)

	
The consent of the Borrowers to an assignment or transfer must not be unreasonably withheld or delayed. Each Borrower will be deemed to have given its consent 10 days after the Existing Lender has requested it unless consent is expressly refused by that Borrower within that time.

 

	
(c)

	
An assignment will only be effective on:

 

	
  

	
(i)

	
receipt by the Facility Agent (whether in the Assignment Agreement or otherwise) of written confirmation from the New Lender (in form and substance satisfactory to the Facility Agent) that the New Lender will assume the same obligations to the other Secured Parties as it would have been under if it were an Original Lender; and

 

	
  

	
(ii)

	
performance by the Facility Agent of all necessary "know your customer" or other similar checks under all applicable laws and regulations in relation to such assignment to a New Lender, the completion of which the Facility Agent shall promptly notify to the Existing Lender and the New Lender.

 

	
(d)

	
A transfer will only be effective if the procedure set out in Clause 28.5 (Procedure for transfer) is complied with.

 

	
(e)

	
if:

 

	
  

	
(i)

	
a Lender assigns or transfers any of its rights or obligations under the Finance Documents or changes its Facility Office; and

 

	
  

	
(ii)

	
as a result of circumstances existing at the date the assignment, transfer or change occurs, an Obligor would be obliged to make a payment to the New Lender or

 

  

84

  

Lender acting through its new Facility Office under Clause 12 (Tax Gross Up and Indemnities) or Clause 13 (Increased Costs),

 

then the New Lender or Lender acting through its new Facility Office is only entitled to receive payment under those Clauses to the same extent as the Existing Lender or Lender acting through its previous Facility Office would have been if the assignment, transfer or change had not occurred. This paragraph (e) shall not apply in respect of an assignment or transfer made in the ordinary course of the primary syndication of the Facility.

 

	
(f)

	
Each New Lender, by executing the relevant Transfer Certificate or Assignment Agreement, confirms, for the avoidance of doubt, that the Facility Agent has authority to execute on its behalf any amendment or waiver that has been approved by or on behalf of the requisite Lender or Lenders in accordance with this Agreement on or prior to the date on which the transfer or assignment becomes effective in accordance with this Agreement and that it is bound by that decision to the same extent as the Existing Lender would have been had it remained a Lender.

 

	
28.3

	
Assignment or transfer fee

 

The New Lender shall, on the date upon which an assignment or transfer takes effect, pay to the Facility Agent (for its own account) a fee of $5,000 which cannot be demanded from, or claimed against, any of the Obligors.

 

	
28.4

	
Limitation of responsibility of Existing Lenders

 

	
(a)

	
Unless expressly agreed to the contrary, an Existing Lender makes no representation or warranty and assumes no responsibility to a New Lender for:

 

	
  

	
(i)

	
the legality, validity, effectiveness, adequacy or enforceability of the Finance Documents, the Transaction Security or any other documents;

 

	
  

	
(ii)

	
the financial condition of any Transaction Obligor;

 

	
  

	
(iii)

	
the performance and observance by any Transaction Obligor of its obligations under the Finance Documents or any other documents; or

 

	
  

	
(iv)

	
the accuracy of any statements (whether written or oral) made in or in connection with any Finance Document or any other document,

 

and any representations or warranties implied by law are excluded.

 

	
(b)

	
Each New Lender confirms to the Existing Lender and the other Finance Parties and the Secured Parties that it:

 

	
  

	
(i)

	
has made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairs of each Transaction Obligor and its related entities in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Existing Lender or any other Finance Party in connection with any Finance Document or the Transaction Security; and

 

	
  

	
(ii)

	
will continue to make its own independent appraisal of the creditworthiness of each Transaction Obligor and its related entities throughout the Security Period.

 

	
(c)

	
Nothing in any Finance Document obliges an Existing Lender to:

 

	
  

	
(i)

	
accept a re-transfer or re-assignment from a New Lender of any of the rights and obligations assigned or transferred under this Clause 28 (Changes to the Lenders); or

 

  

85

  

	
  

	
(ii)

	
support any losses directly or indirectly incurred by the New Lender by reason of the non-performance by any Transaction Obligor of its obligations under the Finance Documents or otherwise.

 

	
28.5

	
Procedure for transfer

 

	
(a)

	
Subject to the conditions set out in 28.2 (Conditions of assignment or transfer), a transfer is effected in accordance with paragraph (c) below when the Facility Agent executes an otherwise duly completed Transfer Certificate delivered to it by the Existing Lender and the New Lender. The Facility Agent shall, subject to paragraph (b) below as soon as reasonably practicable after receipt by it of a duly completed Transfer Certificate appearing on its face to comply with this Agreement and delivered in accordance with this Agreement, execute that Transfer Certificate.

 

	
(b)

	
The Facility Agent shall only be obliged to execute a Transfer Certificate delivered to it by the Existing Lender and the New Lender once it is satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations in relation to the transfer to such New Lender.

 

	
(c)

	
Subject to Clause 28.9 (Pro rata interest settlement), on the Transfer Date:

 

	
  

	
(i)

	
to the extent that in the Transfer Certificate the Existing Lender seeks to transfer by novation its rights and obligations under the Finance Documents (other than any Hedging Agreement) and in respect of the Transaction Security, each of the Obligors and the Existing Lender shall be released from further obligations towards one another under the Finance Documents (other than any Hedging Agreement) and in respect of the Transaction Security and their respective rights against one another under the Finance Documents (other than any Hedging Agreement) and in respect of the Transaction Security shall be cancelled (being the "Discharged Rights and Obligations");

 

	
  

	
(ii)

	
each of the Obligors and the New Lender shall assume obligations towards one another and/or acquire rights against one another which differ from the Discharged Rights and Obligations only insofar as that Obligor and the New Lender have assumed and/or acquired the same in place of that Obligor and the Existing Lender;

 

	
  

	
(iii)

	
the Facility Agent, the Security Agent, the Arranger, the New Lender and other Lenders shall acquire the same rights and assume the same obligations between themselves and in respect of the Transaction Security as they would have acquired and assumed had the New Lender been an Original Lender with the rights and/or obligations acquired or assumed by it as a result of the transfer and to that extent the Facility Agent, the Security Agent, the Arranger and the Existing Lenders shall each be released from further obligations to each other under the Finance Documents (other than any Hedging Agreement); and

 

	
  

	
(iv)

	
the New Lender shall become a Party as a "Lender".

 

	
28.6

	
Procedure for assignment

 

	
(a)

	
Subject to the conditions set out in Clause 28.2 (Conditions of assignment or transfer) an assignment may be effected in accordance with paragraph (c) below when the Facility Agent executes an otherwise duly completed Assignment Agreement delivered to it by the Existing Lender and the New Lender. The Facility Agent shall, subject to paragraph (b) below, as soon as reasonably practicable after receipt by it of a duly completed Assignment Agreement appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, execute that Assignment Agreement.

 

  

86

  

	
(b)

	
The Facility Agent shall only be obliged to execute an Assignment Agreement delivered to it by the Existing Lender and the New Lender once it is satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations in relation to the assignment to such New Lender.

 

	
(c)

	
Subject to Clause 28.9 (Pro rata interest settlement), on the Transfer Date:

 

	
  

	
(i)

	
the Existing Lender will assign absolutely to the New Lender its rights under the Finance Documents (other than any Hedging Agreement) and in respect of the Transaction Security expressed to be the subject of the assignment in the Assignment Agreement;

 

	
  

	
(ii)

	
the Existing Lender will be released from the obligations (the "Relevant Obligations") expressed to be the subject of the release in the Assignment Agreement (and any corresponding obligations by which it is bound in respect of the Transaction Security); and

 

	
  

	
(iii)

	
the New Lender shall become a Party as a "Lender" and will be bound by obligations equivalent to the Relevant Obligations.

 

	
(d)

	
Lenders may utilise procedures other than those set out in this Clause 28.6 (Procedure for assignment) to assign their rights under the Finance Documents (other than any Hedging Agreement) (but not, without the consent of the relevant Obligor or unless in accordance with Clause 28.5 (Procedure for transfer), to obtain a release by that Obligor from the obligations owed to that Obligor by the Lenders nor the assumption of equivalent obligations by a New Lender) provided that they comply with the conditions set out in Clause 28.2 (Conditions of assignment or transfer).

 

	
28.7

	
Copy of Transfer Certificate or Assignment Agreement to Borrowers

 

The Facility Agent shall, as soon as reasonably practicable after it has executed a Transfer Certificate or an Assignment Agreement, send to the Borrowers a copy of that Transfer Certificate or Assignment Agreement.

 

	
28.8

	
Security over Lenders' rights

 

In addition to the other rights provided to Lenders under this Clause 28 (Changes to the Lenders), each Lender may without consulting with or obtaining consent from any Obligor, at any time charge, assign or otherwise create Security in or over (whether by way of collateral or otherwise) all or any of its rights under any Finance Document to secure obligations of that Lender including, without limitation:

 

	
(a)

	
any charge, assignment or other Security to secure obligations to a federal reserve or central bank; and

 

	
(b)

	
in the case of any Lender which is a fund, any charge, assignment or other Security granted to any holders (or trustee or representatives of holders) of obligations owed, or securities issued, by that Lender as security for those obligations or securities,

 

except that no such charge, assignment or Security shall:

 

	
  

	
(i)

	
release a Lender from any of its obligations under the Finance Documents or substitute the beneficiary of the relevant charge, assignment or Security for the Lender as a party to any of the Finance Documents; or

 

	
  

	
(ii)

	
require any payments to be made by an Obligor other than or in excess of, or grant to any person any more extensive rights than, those required to be made or granted to the relevant Lender under the Finance Documents.

 

  

87

  

	
28.9

	
Pro rata interest settlement

 

If the Facility Agent has notified the Lenders that it is able to distribute interest payments on a "pro rata basis" to Existing Lenders and New Lenders then (in respect of any transfer pursuant to Clause 28.5 (Procedure for transfer) or any assignment pursuant to Clause 28.6 (Procedure for assignment) the Transfer Date of which, in each case, is after the date of such notification and is not on the last day of an Interest Period):

 

	
(a)

	
any interest or fees in respect of the relevant participation which are expressed to accrue by reference to the lapse of time shall continue to accrue in favour of the Existing Lender up to but excluding the Transfer Date ("Accrued Amounts") and shall become due and payable to the Existing Lender (without further interest accruing on them) on the last day of the current Interest Period (or, if the Interest Period is longer than three Months, on the next of the dates which falls at three Monthly intervals after the first day of that Interest Period); and

 

	
(b)

	
The rights assigned or transferred by the Existing Lender will not include the right to the Accrued Amounts, so that, for the avoidance of doubt:

 

	
  

	
(i)

	
when the Accrued Amounts become payable, those Accrued Amounts will be payable to the Existing Lender; and

 

	
  

	
(ii)

	
the amount payable to the New Lender on that date will be the amount which would, but for the application of this Clause 28.9 (Pro rata interest settlement), have been payable to it on that date, but after deduction of the Accrued Amounts.

 

	
29

	
CHANGES TO THE OBLIGORS

 

No Obligor may assign any of its rights or transfer any of its rights or obligations under the Finance Documents.

 

  

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SECTION 10

 

THE FINANCE PARTIES

 

	
30

	
THE FACILITY AGENT AND THE ARRANGER

 

	
30.1

	
Appointment of the Facility Agent

 

	
(a)

	
Each other Finance Party appoints the Facility Agent to act as its agent under and in connection with the Finance Documents.

 

	
(b)

	
Each other Finance Party authorises the Facility Agent to exercise the rights, powers, authorities and discretions specifically given to the Facility Agent under, or in connection with, the Finance Documents together with any other incidental rights, powers, authorities and discretions.

 

	
30.2

	
Duties of the Facility Agent

 

	
(a)

	
Subject to paragraph (b) below, the Facility Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Facility Agent for that Party by any other Party.

 

	
(b)

	
Without prejudice to Clause 28.7 (Copy of Transfer Certificate or Assignment Agreement to Borrowers), paragraph (a) above shall not apply to any Transfer Certificate or to any Assignment Agreement.

 

	
(c)

	
Except where a Finance Document specifically provides otherwise, the Facility Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party.

 

	
(d)

	
If the Facility Agent receives notice from a Party referring to this Agreement, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the Finance Parties.

 

	
(e)

	
If the Facility Agent is aware of the non-payment of any principal, interest, commitment fee or other fee payable to a Finance Party (other than the Facility Agent or the Arranger or the Security Agent) under this Agreement it shall promptly notify the other Finance Parties.

 

	
(f)

	
The Facility Agent's duties under the Finance Documents are solely mechanical and administrative in nature.

 

	
30.3

	
Role of the Arranger

 

Except as specifically provided in the Finance Documents, the Arranger has no obligations of any kind to any other Party under, or in connection with, any Finance Document.

 

	
30.4

	
No fiduciary duties

 

	
(a)

	
The Facility Agent shall not have any duties or obligations to any person under the Finance Documents except to the extent that they are expressly set out in the Finance Documents.

 

	
(b)

	
The provisions of paragraph (a) above shall apply even if, notwithstanding and contrary to paragraph (a) above, any provision of this Agreement or any other Finance Document by operation of law has the effect of constituting the Facility Agent as a fiduciary.

 

	
(c)

	
Nothing in the Finance Documents constitutes the Facility Agent or the Arranger a trustee of any other person.

 

  

89

  

	
(d)

	
None of the Facility Agent, the Security Agent nor the Arranger shall be bound to account to any Lender for any sum or the profit element of any sum received by it for its own account.

 

	
30.5

	
Application of receipts

 

Except as expressly stated to the contrary in any Finance Document, any moneys which the Facility Agent receives or recovers in its capacity as Facility Agent shall be applied by the Facility Agent in accordance with Clause 34.5 (Application of receipts; partial payments).

 

	
30.6

	
Business with the Group

 

The Facility Agent and the Arranger may accept deposits from, lend money to, and generally engage in any kind of banking or other business with, any member of the Group.

 

	
30.7

	
Rights and discretions of the Facility Agent

 

	
(a)

	
The Facility Agent may rely on:

 

	
  

	
(i)

	
any representation, notice or document believed by it to be genuine, correct and appropriately authorised; and

 

	
  

	
(ii)

	
any statement made by a director, authorised signatory or employee of any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power to verify.

 

	
(b)

	
The Facility Agent may assume (unless it has received notice to the contrary in its capacity as agent for the Lenders) that:

 

	
  

	
(i)

	
no Default has occurred (unless it has actual knowledge of a Default arising under Clause 27.2 (Non-payment));

 

	
  

	
(ii)

	
any right, power, authority or discretion vested in any Party or the Majority Lenders has not been exercised; and

 

	
  

	
(iii)

	
any notice or request made by either Borrower (other than a Utilisation Request or a Selection Notice) is made on behalf of and with the consent and knowledge of all the Obligors.

 

	
(c)

	
The Facility Agent may engage, pay for and rely on the advice or services of any lawyers, accountants, surveyors or other experts.

 

	
(d)

	
The Facility Agent may act in relation to the Finance Documents through its personnel and agents.

 

	
(e)

	
The Facility Agent may disclose to any other Party any information it reasonably believes it has received as agent under this Agreement.

 

	
(f)

	
Notwithstanding any other provision of any Finance Document to the contrary, neither the Facility Agent nor the Arranger is obliged to do or omit to do anything if it would or might, in its reasonable opinion, constitute a breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality.

 

	
30.8

	
Majority Lenders' instructions

 

	
(a)

	
Unless a contrary indication appears in a Finance Document, the Facility Agent shall:

 

	
  

	
(i)

	
exercise any right, power, authority or discretion vested in it as Servicing Party in accordance with any instructions given to it by the Majority Lenders (or, if so

 

  

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instructed by the Majority Lenders, refrain from exercising any right, power, authority or discretion vested in it as a Servicing Party); and

 

	
  

	
(ii)

	
not be liable for any act (or omission) if it acts (or refrains from taking any action) in accordance with an instruction of the Majority Lenders.

 

	
(b)

	
Unless a contrary indication appears in a Finance Document, any instructions given by the Majority Lenders will be binding on all the Finance Parties.

 

	
(c)

	
The Facility Agent may refrain from acting in accordance with the instructions of the Majority Lenders (or, if appropriate, the Lenders) until it has received such security as it may require for any cost, loss or liability (together with any associated VAT) which it may incur in complying with the instructions.

 

	
(d)

	
In the absence of instructions from the Majority Lenders (or, if appropriate, the Lenders), the Facility Agent shall not be obliged to take any action (or refrain from taking action) (even if it considers acting or not acting to be in the best interests of the Lenders). The Facility Agent may act (or refrain from taking action) as it considers to be in the best interest of the Lenders.

 

	
(e)

	
The Facility Agent is not authorised to act on behalf of a Lender in any legal or arbitration proceedings relating to any Finance Document. This paragraph (e) shall not apply to any legal or arbitration proceedings relating to the perfection, preservation or protection of rights under the Transaction Security or Finance Documents creating Transaction Security.

 

	
30.9

	
Responsibility for documentation

 

Neither the Facility Agent nor the Arranger:

 

	
(a)

	
is responsible for the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by the Facility Agent, the Arranger, an Obligor or any other person given in, or in connection with, any Transaction Document;

 

	
(b)

	
is responsible for the legality, validity, effectiveness, adequacy or enforceability of any Transaction Document or the Transaction Security or any other agreement, arrangement or document entered into or made or executed in anticipation of, or in connection with, any Transaction Document or the Transaction Security including, without limitation, in respect of or following an assignment or transfer pursuant Clause 28 (Changes to the Lenders); or

 

	
(c)

	
is responsible for any determination as to whether any information provided or to be provided to any Finance Party is non-public information the use of which may be regulated or prohibited by applicable law or regulation relating to insider dealing or otherwise.

 

	
30.10

	
Exclusion of liability

 

	
(a)

	
Without limiting paragraph (b) below (and without prejudice to the provisions of paragraph (e) of Clause 34.11 (Disruption to Payment Systems etc.), the Facility Agent will not be liable (including, without limitation, for negligence or any other category of liability whatsoever but not including any claim based on fraud of the Facility Agent) for any action taken by it under or in connection with any Finance Document or the Transaction Security, unless directly caused by its gross negligence or wilful misconduct.

 

	
(b)

	
No Party other than the Facility Agent may take any proceedings against any officer, employee or agent of the Facility Agent in respect of any claim it might have against the Facility Agent or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document and each officer, employee or agent of the Facility Agent may rely on this Clause subject to Clause 1.5 (Third party rights) and the provisions of the Third Parties Act,

 

  

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(c)

	
The Facility Agent will not be liable for any delay (or any related consequences) in crediting an account with an amount required under the Finance Documents to be paid by it if it has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by it for that purpose.

 

	
(d)

	
Nothing in this Agreement shall oblige the Facility Agent or the Arranger to carry out any "know your customer" or other checks in relation to any person on behalf of any Lender and each Lender confirms to the Facility Agent and the Arranger that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in relation to such checks made by the Facility Agent or the Arranger.

 

	
30.11

	
Lenders' indemnity to the Facility Agent

 

Each Lender shall (in proportion to its share of the Total Commitments or, if the Total Commitments are then zero, to its share of the Total Commitments immediately prior to their reduction to zero) indemnify the Facility Agent, within three Business Days of demand, against any cost, loss or liability incurred by the Facility Agent (otherwise than by reason of its gross negligence or wilful misconduct) or, in the case of any cost, loss or liability pursuant to Clause 34.11 (Disruption to Payment Systems etc.) notwithstanding the Facility Agent's negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Facility Agent) in acting as Facility Agent under the Finance Documents (unless the Facility Agent has been reimbursed by an Obligor pursuant to a Finance Document).

 

	
30.12

	
Resignation of the Facility Agent

 

	
(a)

	
The Facility Agent may resign and appoint one of its Affiliates as successor by giving notice to the other Finance Parties and the Borrowers.

 

	
(b)

	
Alternatively, the Facility Agent may resign by giving 30 days' notice to the other Finance Parties and the Borrowers, in which case the Majority Lenders may appoint a successor Facility Agent.

 

	
(c)

	
If the Majority Lenders have not appointed a successor Facility Agent in accordance with paragraph (b) above within 20 days after notice of resignation was given, the retiring Facility Agent may appoint a successor Facility Agent.

 

	
(d)

	
The retiring Facility Agent shall, at its own cost, make available to the successor Facility Agent such documents and records and provide such assistance as the successor Facility Agent may reasonably request for the purposes of performing its functions Facility Agent under the Finance Documents.

 

	
(e)

	
The Facility Agent's resignation notice shall only take effect upon the appointment of a successor.

 

	
(f)

	
Upon the appointment of a successor, the retiring Facility Agent shall be discharged from any further obligation in respect of the Finance Documents but shall remain entitled to the benefit of this Clause 30 (The Facility Agent and the Arranger) and any other provisions of a Finance Document which are expressed to limit or exclude its liability in acting as Facility Agent. Any successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.

 

	
(g)

	
The Majority Lenders may, by notice to the Facility Agent, require it to resign in accordance with paragraph (b) above. In this event, the Facility Agent shall resign in accordance with paragraph (b) above.

 

  

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(h)

	
The consent of either Borrower (or any other Obligor) is not required for an assignment or transfer of rights and/or obligations by the Facility Agent.

 

	
(i)

	
The Facility Agent shall resign in accordance with paragraph (b) above (and, to the extent applicable, shall use reasonable endeavours to appoint a successor Facility Agent pursuant to paragraph (c) above) if on or after the date which is three months before the earliest FATCA Application Date relating to any payment to the Facility Agent under the Finance Documents, either:

 

	
  

	
(i)

	
the Facility Agent fails to respond to a request under Clause 12.7 (FATCA Information) and a Lender reasonably believes that the Facility Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date;

 

	
  

	
(ii)

	
the information supplied by the Facility Agent pursuant to Clause 12.7 (FATCA Information) indicates that the Facility Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date; or

 

	
  

	
(iii)

	
the Facility Agent notifies the Borrowers and the Lenders that the Facility Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date;

 

	
(j)

	
and (in each case) a Lender reasonably believes that a Party will be required to make a FATCA Deduction that would not be required if the Facility Agent were a FATCA Exempt Party, and that Lender, by notice to the Facility Agent, requires it to resign.

 

	
30.13

	
Confidentiality

 

	
(a)

	
In acting as Facility Agent for the Finance Parties, the Facility Agent shall be regarded as acting through its agency division which shall be treated as a separate entity from any other of its divisions or departments.

 

	
(b)

	
If information is received by a division or department of the Facility Agent other than that division or department responsible for complying with the obligations assumed by it under the Finance Documents, that information may be treated as confidential to that division or department, and the Facility Agent shall not be deemed to have notice of it nor shall it be obliged to disclose such information to any Party.

 

	
30.14

	
Relationship with the Lenders

 

	
(a)

	
Subject to Clause 28.9 (Pro rata interest settlement), the Facility Agent may treat the person shown in its records as Lender at the opening of business (in the place of the Facility Agent's principal office as notified to the Finance Parties from time to time) as the Lender acting through its Facility Office:

 

	
  

	
(i)

	
entitled to or liable for any payment due under any Finance Document on that day; and

 

	
  

	
(ii)

	
entitled to receive and act upon any notice, request, document or communication or make any decision or determination under any Finance Document made or delivered on that day,

 

unless it has received not less than five Business Days' prior notice from that Lender to the contrary in accordance with the terms of this Agreement.

 

	
(b)

	
Each Lender shall supply the Facility Agent with any information that the Security Agent may reasonably specify (through the Facility Agent) as being necessary or desirable to enable the Security Agent to perform its functions as Security Agent. Each Lender shall deal with the

 

  

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Security Agent exclusively through the Facility Agent and shall not deal directly with the Security Agent.

 

	
(c)

	
Any Lender may by notice to the Facility Agent appoint a person to receive on its behalf all notices, communications, information and documents to be made or despatched to that Lender under the Finance Documents. Such notice shall contain the address, fax number and (where communication by electronic mail or other electronic means is permitted under Clause 36.5 (Electronic communication)) electronic mail address and/or any other information required to enable the sending and receipt of information by that means (and, in each case, the department or officer, if any, for whose attention communication is to be made) and be treated as notification of a substitute address, fax number, electronic mail address, department and officer by that Lender for the purposes of Clause 36.2 (Addresses) and paragraph (a)(iii) of Clause 36.5 (Electronic communication) and the Facility Agent shall be entitled to treat such person as the person entitled to receive all such notices, communications, information and documents as though that person were that Lender.

 

	
30.15

	
Credit appraisal by the Lenders

 

Without affecting the responsibility of any Transaction Obligor for information supplied by it or on its behalf in connection with any Finance Document, each Lender confirms to the Facility Agent and the Arranger that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under, or in connection with, any Finance Document including but not limited to:

 

	
(a)

	
the financial condition, status and nature of each member of the Group;

 

	
(b)

	
the legality, validity, effectiveness, adequacy or enforceability of any Finance Document and the Transaction Security and any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document or the Transaction Security;

 

	
(c)

	
whether that Lender has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under, or in connection with, any Finance Document or the Transaction Security, the transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document;

 

	
(d)

	
the adequacy, accuracy and/or completeness of any information provided by the Facility Agent, any Party or by any other person under, or in connection with, any Finance Document, the transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document; and

 

	
(e)

	
the right or title of any person in or to or the value or sufficiency of any part of the Charged Property, the priority of any of the Transaction Security or the existence of any Security affecting the Charged Property.

 

	
30.16

	
Reference Banks

 

If a Reference Bank (or, if a Reference Bank is not a Lender, the Lender of which it is an Affiliate) ceases to be a Lender, the Facility Agent shall (in consultation with the Borrowers) appoint another Lender or an Affiliate of a Lender to replace that Reference Bank.

 

	
30.17

	
Facility Agent's management time

 

Any amount payable to the Facility Agent under Clause 14.3 (Indemnity to the Servicing Parties), Clause 16 (Costs and Expenses) and Clause 30.11 (Lenders' indemnity to the Facility Agent) shall include the cost of utilising the Facility Agent's management time or other

 

  

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resources and will be calculated on the basis of such reasonable daily or hourly rates as the Facility Agent may notify to the Borrowers and the Lenders, and is in addition to any fee paid or payable to the Facility Agent under Clause 11 (Fees).

 

	
30.18

	
Deduction from amounts payable by the Facility Agent

 

If any Party owes an amount to the Facility Agent under the Finance Documents, the Facility Agent may, after giving notice to that Party, deduct an amount not exceeding that amount from any payment to that Party which the Facility Agent would otherwise be obliged to make under the Finance Documents and apply the amount deducted in or towards satisfaction of the amount owed. For the purposes of the Finance Documents that Party shall be regarded as having received any amount so deducted.

 

	
30.19

	
Full freedom to enter into transactions

 

Notwithstanding arty rule of law or equity to the contrary, the Facility Agent shall be absolutely entitled:

 

	
(a)

	
to enter into and arrange banking, derivative, investment and/or other transactions of every kind with or affecting any Transaction Obligor or any person who is party to, or referred to in, a Finance Document (including, but not limited to, any interest or currency swap or other transaction, whether related to this Agreement or not, and acting as syndicate agent and/or security agent for, and/or participating in, other facilities to such Transaction Obligor or any person who is party to, or referred to in, a Finance Document);

 

	
(b)

	
to deal in and enter into and arrange transactions relating to:

 

	
  

	
(i)

	
any securities issued or to be issued by any Transaction Obligor or any other person; or

 

	
  

	
(ii)

	
any options or other derivatives in connection with such securities; and

 

	
(c)

	
to provide advice or other services to either Borrower or any person who is a party to, or referred to in, a Finance Document,

 

and, in particular, the Facility Agent shall be absolutely entitled, in proposing, evaluating, negotiating, entering into and arranging all such transactions and in connection with all other matters covered by paragraphs (a), (b) and (c) above, to use (subject only to insider dealing legislation) any information or opportunity, howsoever acquired by it, to pursue its own interests exclusively, to refrain from disclosing such dealings, transactions or other matters or any information acquired in connection with them and to retain for its sole benefit all profits and benefits derived from the dealings transactions or other matters.

 

	
31

	
THE SECURITY AGENT

 

	
31.1

	
Trust

 

	
(a)

	
The Security Agent declares that it shall hold the Security Property on trust for the Secured Parties on the terms contained in this Agreement and shall deal with the Security Property in accordance with this Clause 31 (The Security Agent) and the other provisions of the Finance Documents.

 

	
(b)

	
Each of the parties to this Agreement agrees that the Security Agent shall have only those duties, obligations and responsibilities expressly specified in this Agreement or in the Finance Documents (and no others shall be implied).

 

	
(c)

	
The Security Agent shall not have any liability to any person in respect of its duties, obligations and responsibilities under this Agreement or the other Finance Documents

 

  

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except as expressly set out in paragraph (a) of Clause 31.1 (Trust) and as excluded or limited by this Clause 31 (The Security Agent) including in particular Clause 31.8 (Instructions to Security Agent and exercise of discretion), Clause 31.13 (Responsibility for documentation), Clause 31.14 (Exclusion of liability). Clause 31.16 (Lenders' indemnity to the Security Agent), Clause 31.23 (Business with the Group) and Clause 31.29 (Full freedom to enter into transactions).

 

	
31.2

	
Parallel Debt (Covenant to pay the Security Agent)

 

	
(a)

	
Each Obligor irrevocably and unconditionally undertakes to pay to the Security Agent its Parallel Debt which shall be amounts equal to, and in the currency or currencies of, its Corresponding Debt subject to the terms of sub-paragraph (d) of this Clause 31.2 (Parallel Debt (Covenant to pay the Security Agent)).

 

	
(b)

	
The Parallel Debt of an Obligor:

 

	
  

	
(i)

	
shall become due and payable at the same time as its Corresponding Debt;

 

	
  

	
(ii)

	
is independent and separate from, and without prejudice to, its Corresponding Debt subject to the terms of sub-paragraph (d) of this Clause 31.2 (Parallel Debt (Covenant to pay the Security Agent)).

 

	
(c)

	
For purposes of this Clause 31.2 (Parallel Debt (Covenant to pay the Security Agent))), the Security Agent:

 

	
  

	
(i)

	
is the independent and separate creditor of each Parallel Debt;

 

	
  

	
(ii)

	
acts in its own name and not as agent, representative or trustee of the Finance Parties and its claims in respect of each Parallel Debt shall not be held on trust; and

 

	
  

	
(iii)

	
shall have the independent and separate right to demand payment of each Parallel Debt in its own name (including, without limitation, through any suit, execution, enforcement of security, recovery of guarantees and applications for and voting in any kind of insolvency proceeding).

 

	
(d)

	
The Parallel Debt of an Obligor shall be:

 

	
  

	
(i)

	
decreased to the extent that its Corresponding Debt has been irrevocably and unconditionally paid or discharged; and

 

	
  

	
(ii)

	
increased to the extent that its Corresponding Debt has increased, and the Corresponding Debt of an Obligor shall be:

 

	
  

	
(A)

	
decreased to the extent that its Parallel Debt has been irrevocably and unconditionally paid or discharged; and

 

	
  

	
(B)

	
increased to the extent that its Parallel Debt has increased,

 

in each case provided that the Parallel Debt of an Obligor shall never exceed its Corresponding Debt.

 

	
(e)

	
All amounts received or recovered by the Security Agent in connection with this Clause 31.2 (Parallel Debt (Covenant to pay the Security Agent)) to the extent permitted by applicable law, shall be applied in accordance with Clause 34.5 (Application of receipts; partial payments).

 

  

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(f)

	
This Clause 31.2 (Parallel Debt (Covenant to pay the Security Agent)) shall apply, with any necessary modifications, to each Finance Document.

 

	
31.3

	
No independent power

 

	
 

	
Other than expressly permitted by this Agreement, the Secured Parties shall not have any independent power to enforce, or have recourse to, any of the Transaction Security or to exercise any rights or powers arising under the Finance Documents creating the Transaction Security except through the Security Agent.

 

	
31.4

	
Application of receipts

 

	
(a)

	
Except as expressly stated to the contrary in any Finance Document, any moneys which the Security Agent receives or recovers and which are, or are attributable to, Security Property (for the purposes of this Clause 31 (The Security Agent), the "Recoveries") shall be transferred to the Facility Agent for application in accordance with Clause 34.5 (Application of receipts; partial payments).

 

	
(b)

	
Paragraph (a) above is without prejudice to the rights of the Security Agent, each Receiver and each Delegate:

 

	
  

	
(i)

	
under Clause 14.5 (Indemnity to the Security Agent) to be indemnified out of the Charged Property; and

 

	
  

	
(ii)

	
under any Finance Document to credit any moneys received or recovered by it to any suspense account.

 

	
(c)

	
Any transfer by the Security Agent to the Facility Agent in accordance with paragraph (a) above shall be a good discharge, to the extent of that payment, by the Security Agent.

 

	
(d)

	
The Security Agent is under no obligation to make the payments to the Facility Agent under paragraph (a) of this Clause 31.4 (Application of receipts) in the same currency as that in which the obligations and liabilities owing to the relevant Finance Party are denominated.

 

	
31.5

	
Deductions from receipts

 

	
(a)

	
Before transferring any moneys to the Facility Agent under Clause 31.4 (Application of receipts), the Security Agent may, in its discretion:

 

	
  

	
(i)

	
deduct any sum then due and payable under this Agreement or any other Finance Documents to the Security Agent or any Receiver or Delegate and retain that sum for itself or, as the case may require, pay it to another person to whom it is then due and payable;

 

	
  

	
(ii)

	
set aside by way of reserve amounts required to meet, and to make and pay, any deductions and withholdings (on account of Taxes or otherwise) which it is or may be required by any applicable law to make from any distribution or payment made by it under this Agreement; and

 

	
  

	
(iii)

	
pay all Taxes which may be assessed against it in respect of any of the Security Property, or as a consequence of performing its duties, or by virtue of its capacity as Security Agent under any of the Finance Documents or otherwise (other than in connection with its remuneration for performing its duties under this Agreement).

 

	
(b)

	
For the purposes of sub-paragraph (i) of paragraph (a) above, if the Security Agent has become entitled to require a sum to be paid to it on demand, that sum shall be treated as due and payable, even if no demand has yet been served.

 

  

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31.6

	
Prospective liabilities

 

Following acceleration of any of the Transaction Security, the Security Agent may, in its discretion, or at the request of the Facility Agent, hold any Recoveries in an interest bearing suspense or impersonal account(s) in the name of the Security Agent with such financial institution (including itself) and for so long as the Security Agent shall think fit (the interest being credited to the relevant account) for later payment to the Facility Agent for application in accordance with Clause 34.5 (Application of receipts; partial payments) in respect of:

 

	
(a)

	
any sum to the Security Agent, any Receiver or any Delegate; and

 

	
(b)

	
any part of the Secured Liabilities,

 

that the Security Agent or, in the case of paragraph (b) only, the Facility Agent, reasonably considers, in each case, might become due or owing at any time in the future.

 

	
31.7

	
Investment of proceeds

 

Prior to the payment of the proceeds of the Recoveries to the Facility Agent for application in accordance with Clause 34.5 (Application of receipts; partial payments) the Security Agent may, in its discretion, hold all or part of those proceeds in an interest bearing suspense or impersonal account(s) in the name of the Security Agent with such financial institution (including itself) and for so long as the Security Agent shall think fit (the interest being credited to the relevant account) pending the payment from time to time of those moneys in the Security Agent's discretion in accordance with the provisions of this Clause 31.7 (Investment of proceeds).

 

	
31.8

	
Instructions to Security Agent and exercise of discretion

 

	
(a)

	
Subject to paragraph (d) below, the Security Agent shall act in accordance with any instructions given to it by the Facility Agent (acting on the instructions of the Majority Lenders or all the Lenders (as appropriate)) or, if so instructed by the Facility Agent (acting on the instructions of the Majority Lenders or all the Lenders (as appropriate)), refrain from exercising any right, power, authority or discretion vested in it as Security Agent and shall be entitled to assume that:

 

	
  

	
(i)

	
any instructions received by it from the Facility Agent (acting on the instructions of the Majority Lenders or all the Lenders (as appropriate)) are duly given in accordance with the terms of the Finance Documents; and

 

	
  

	
(ii)

	
unless it has received actual notice of revocation, that those instructions or directions have not been revoked.

 

	
(b)

	
The Security Agent shall be entitled to request instructions, or clarification of any direction, from the Facility Agent (acting on the instructions of the Majority Lenders or all the Lenders (as appropriate)) as to whether, and in what manner, it should exercise or refrain from exercising any rights, powers, authorities and discretions and the Security Agent may refrain from acting unless and until those instructions or clarification are received by it.

 

	
(c)

	
Any instructions given to the Security Agent by the Facility Agent (acting on the instructions of the Majority Lenders or all the Lenders (as appropriate)) shall override any conflicting instructions given by any other Party.

 

	
(d)

	
Paragraph (a) above shall not apply:

 

	
  

	
(i)

	
where a contrary indication appears in this Agreement;

 

  

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(ii)

	
where this Agreement requires the Security Agent to act in a specified manner or to take a specified action;

 

	
  

	
(iii)

	
in respect of any provision which protects the Security Agent's own position in its personal capacity as opposed to its role of Security Agent for the Secured Parties including, without limitation, the provisions set out in Clauses 31.10 (Security Agent's discretions) to Clause 31.29 (Full freedom to enter into transactions); and

 

	
  

	
(iv)

	
in respect of the exercise of the Security Agent's discretion to exercise a right, power or authority under any of Clause 31.5 (Deductions from receipts) and Clause 31.6 (Prospective liabilities).

 

	
31.9

	
Security Agent's Actions

 

Without prejudice to the provisions of Clause 31.4 (Application of receipts), the Security Agent may (but shall not be obliged to), in the absence of any instructions to the contrary, take such action in the exercise of any of its powers and duties under the Finance Documents as it considers in its discretion to be appropriate.

 

	
31.10

	
Security Agent's discretions

 

	
(a)

	
The Security Agent may:

 

	
  

	
(i)

	
assume (unless it has received actual notice to the contrary from the Facility Agent) that (i) no Default has occurred and no Obligor is in breach of or default under its obligations under any of the Finance Documents and (ii) any right, power, authority or discretion vested by any Finance Document in any person has not been exercised;

 

	
  

	
(ii)

	
any notice or request made by either Borrower (other than the Utilisation Request or a Selection Notice) is made on behalf of and with the consent and knowledge of all the Obligors;

 

	
  

	
(iii)

	
if it receives any instructions or directions to take any action in relation to the Transaction Security, assume that all applicable conditions under the Finance Documents for taking that action have been satisfied;

 

	
  

	
(iv)

	
engage, pay for and rely on the advice or services of any legal advisers, accountants, tax advisers, surveyors or other experts (whether obtained by the Security Agent or by any other Secured Party) whose advice or services may at any time seem necessary, expedient or desirable;

 

	
  

	
(v)

	
act in relation to the Finance Documents through its personnel and agents;

 

	
  

	
(vi)

	
disclose to any other Party any information it reasonably believes it has received as security agent under this Agreement;

 

	
  

	
(vii)

	
rely upon any communication or document believed by it to be genuine and, as to any matters of fact which might reasonably be expected to be within the knowledge of a Secured Party or an Obligor, upon a certificate signed by or on behalf of that person; and

 

	
  

	
(viii)

	
refrain from acting in accordance with the instructions of any Party (including bringing any legal action or proceeding arising out of or in connection with the Finance Documents) until it has received any indemnification and/or security that it may in its discretion require (whether by way of payment in advance or otherwise) for all costs, losses and liabilities which it may incur in so acting.

 

  

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(b)

	
Notwithstanding any other provision of any Finance Document to the contrary, the Security Agent is not obliged to do or omit to do anything if it would or might, in its reasonable opinion, constitute a breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality.

 

	
31.11

	
Security Agent's obligations

 

The Security Agent shall promptly:

 

	
(a)

	
copy to the Facility Agent the contents of any notice or document received by it from any Obligor under any Finance Document;

 

	
(b)

	
forward to a Party the original or a copy of any document which is delivered to the Security Agent for that Party by any other Party provided that, except where a Finance Document expressly provides otherwise, the Security Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party; and

 

	
(c)

	
inform the Facility Agent of the occurrence of any Default or any default by a Debtor in the due performance of or compliance with its obligations under any Finance Document of which the Security Agent has received notice from any other party to this Agreement.

 

	
31.12

	
Excluded obligations

 

Notwithstanding anything to the contrary expressed or implied in the Finance Documents, the Security Agent shall not:

 

	
(a)

	
be bound to enquire as to (i) whether or not any Default has occurred or (ii) the performance, default or any breach by a Transaction Obligor of its obligations under any of the Finance Documents;

 

	
(b)

	
be bound to account to any other Party for any sum or the profit element of any sum received by it for its own account;

 

	
(c)

	
be bound to disclose to any other person (including but not limited to any Secured Party) (1) any confidential information or (ii) any other information if disclosure would, or might in its reasonable opinion, constitute a breach of any law or be a breach of fiduciary duty;

 

	
(d)

	
have or be deemed to have any relationship of trust or agency with, any Obligor.

 

	
31.13

	
Responsibility for documentation

 

None of the Security Agent, any Receiver nor any Delegate shall accept responsibility or be liable for:

 

	
(a)

	
the adequacy, accuracy or completeness of any information (whether oral or written) supplied by the Security Agent or any other person in or in connection with any Finance Document or the transactions contemplated in the Finance Documents, or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document;

 

	
(b)

	
the legality, validity, effectiveness, adequacy or enforceability of any Finance Document, the Security Property or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document or the Security Property;

 

	
(c)

	
any losses to any person or any liability arising as a result of taking or refraining from taking any action in relation to any of the Finance Documents, the Security Property or otherwise,

 

  

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whether in accordance with an instruction from the Facility Agent or otherwise unless directly caused by its gross negligence or wilful misconduct;

 

	
(d)

	
the exercise of, or the failure to exercise, any judgment, discretion or power given to it by or in connection with any of the Finance Documents, the Security Property or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with, the Finance Documents or the Security Property; or

 

	
(e)

	
any shortfall which arises on the enforcement or realisation of the Security Property.

 

	
31.14

	
Exclusion of liability

 

	
(a)

	
Without limiting Clause 31,15 (No proceedings), none of the Security Agent, any Receiver or any Delegate will be liable for any action taken by it or not taken by it under or in connection with any Finance Document or the Transaction Security, unless directly caused by its gross negligence or wilful misconduct.

 

	
(b)

	
The Security Agent will not be liable for any delay (or any related consequences) in crediting an account with an amount required under the Finance Documents to be paid by it if it has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by it for that purpose.

 

	
(c)

	
Nothing in this Agreement shall oblige the Security Agent to carry out any "know your customer" or other checks in relation to any person on behalf of any Lender and each Lender confirms to the Security Agent that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in relation to such checks made by the Security Agent.

 

	
31.15

	
No proceedings

 

No Party (other than the Security Agent, that Receiver or that Delegate) may take any proceedings against any officer, employee or agent of the Security Agent, a Receiver or a Delegate in respect of any claim it might have against the Security Agent, a Receiver or a Delegate or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document or any Security Property and any officer, employee or agent of the Security Agent, a Receiver or a Delegate may rely on this Clause subject to Clause 1.5 (Third party rights) and the provisions of the Third Parties Rights Act.

 

	
31.16

	
Lenders' indemnity to the Security Agent

 

Each Lender shall (in proportion to its share of the Total Commitments or, if the Total Commitments are then zero, to its share of the Total Commitments immediately prior to their reduction to zero) indemnify the Security Agent and every Receiver and every Delegate, within three Business Days of demand, against any cost, loss or liability incurred by any of them (otherwise than by reason of the relevant Security Agent's, Receiver's or Delegate's gross negligence or wilful misconduct) in acting as Security Agent, Receiver or Delegate under the Finance Documents (unless the relevant Security Agent, Receiver or Delegate has been reimbursed by a Transaction Obligor pursuant to a Finance Document).

 

	
31.17

	
Own responsibility

 

Without affecting the responsibility of any Transaction Obligor for information supplied by it or on its behalf in connection with any Finance Document, each Secured Party confirms to the Security Agent that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Finance Document including but not limited to:

 

  

101

  

	
(a)

	
the financial condition, status and nature of each member of the Group;

 

	
(b)

	
the legality, validity, effectiveness, adequacy and enforceability of any Finance Document, the Security Property and any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document or the Security Property;

 

	
(c)

	
whether that Secured Party has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under or in connection with any Finance Document, the Security Property, the transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document or the Security Property;

 

	
(d)

	
the adequacy, accuracy and/or completeness of any information provided by the Security Agent or by any other person under or in connection with any Finance Document, the transactions contemplated by any Finance Document or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document; and

 

	
(e)

	
the right or title of any person in or to, or the value or sufficiency of any part of the Charged Property, the priority of any of the Transaction Security or the existence of any Security affecting the Charged Property,

 

and each Secured Party warrants to the Security Agent that it has not relied on and will not at any time rely on the Security Agent in respect of any of these matters.

 

	
31.18

	
No responsibility to perfect Transaction Security

 

The Security Agent shall not be liable for any failure to:

 

	
(a)

	
require the deposit with it of any deed or document certifying, representing or constituting the title of any Transaction Obligor to any of the Charged Property;

 

	
(b)

	
obtain any licence, consent or other authority for the execution, delivery, legality, validity, enforceability or admissibility in evidence of any of the Finance Documents or the Transaction Security;

 

	
(c)

	
register, file or record or otherwise protect any of the Transaction Security (or the priority of any of the Transaction Security) under any applicable laws in any jurisdiction or to give notice to any person of the execution of any of the Finance Documents or of the Transaction Security;

 

	
(d)

	
take, or to require any of the Transaction Obligors to take, any steps to perfect its title to any of the Charged Property or to render the Transaction Security effective or to secure the creation of any ancillary Security under the laws of any jurisdiction; or

 

	
(e)

	
require any further assurances in relation to any of the Finance Documents creating the Transaction Security.

 

	
31.19

	
insurance by Security Agent

 

The Security Agent shall not be under any obligation to insure any of the Charged Property, to require any other person to maintain any insurance or to verify any obligation to arrange or maintain insurance contained in the Finance Documents. The Security Agent shall not be responsible for any loss which may be suffered by any person as a result of the lack of or inadequacy of any such insurance.

 

	
31.20

	
Custodians and nominees

 

  

102

  

The Security Agent may appoint and pay any person to act as a custodian or nominee on any terms in relation to any assets of the trust as the Security Agent may determine, including for the purpose of depositing with a custodian this Agreement or any document relating to the trust created under this Agreement and the Security Agent shall not be responsible for any loss, liability, expense, demand, cost, claim or proceedings incurred by reason of the misconduct, omission or default on the part of any person appointed by it under this Agreement or be bound to supervise the proceedings or acts of any person.

 

	
31.21

	
Acceptance of title

 

The Security Agent shall be entitled to accept without enquiry, and shall not be obliged to investigate, any right and title that any of the Transaction Obligors may have to any of the Charged Property and shall not be liable for or bound to require any Transaction Obligor to remedy any defect in its right or title.

 

	
31.22

	
Refrain from illegality

 

Notwithstanding anything to the contrary expressed or implied in the Finance Documents, the Security Agent may refrain from doing anything which in its opinion will or may be contrary to any relevant law, directive or regulation of any jurisdiction and the Security Agent may do anything which is, in its opinion, necessary to comply with any such law, directive or regulation.

 

	
31.23

	
Business with the Group

 

The Security Agent may accept deposits from, lend money to, and generally engage in any kind of banking or other business with, any member of the Group.

 

	
31.24

	
Perpetuity period

 

The trusts constituted by this Agreement are governed by English law and the perpetuity period under the rule against perpetuities, if applicable to this Agreement, shall be the period of 125 years from the date of this Agreement.

 

	
31.25

	
Winding up of trust

 

If the Security Agent, with the approval of the Facility Agent determines that (a) all of the Secured Liabilities and all other obligations secured by the Finance Documents creating the Transaction Security have been fully and finally discharged and (b) none of the Secured Parties is under any commitment, obligation or liability (actual or contingent) to make advances or provide other financial accommodation to any Obligor pursuant to the Finance Documents:

 

	
(a)

	
the trusts set out in this Agreement shall be wound up and the Security Agent shall release, without recourse or warranty, all of the Transaction Security and the rights of the Security Agent under each of the Finance Documents creating the Transaction Security; and

 

	
(b)

	
any Retiring Security Agent shall release, without recourse or warranty, all of its rights under each of the Finance Documents creating the Transaction Security.

 

	
31.26

	
Powers supplemental

 

The rights, powers and discretions conferred upon the Security Agent by this Agreement shall be supplemental to the Trustee Act 1925 and the Trustee Act 2000 and in addition to any which may be vested in the Security Agent by general law or otherwise.

 

	
31.27

	
Trustee division separate

 

  

103

  

	
(a)

	
In acting as trustee for the Secured Parties, the Security Agent shall be regarded as acting through its trustee division which shall be treated as a separate entity from any of its other divisions or departments.

 

	
(b)

	
If information is received by another division or department of the Security Agent, it may be treated as confidential to that division or department and the Security Agent shall not be deemed to have notice of it nor shall it be obliged to disclose such information to any Party.

 

	
31.28

	
Disapplication

 

In addition to its rights under or by virtue of this Agreement and the other Finance Documents, the Security Agent shall have all the rights conferred on a trustee by the Trustee Act 1925, the Trustee Delegation Act 1999, the Trustee Act 2000 and by general law or otherwise, provided that:

 

	
(a)

	
section 1 of the Trustee Act 2000 shall not apply to the duties of the Security Agent in relation to the trusts constituted by this Agreement and the other Finance Documents; and

 

	
(b)

	
where there are any inconsistencies between (i) the Trustee Acts 1925 and 2000 and (ii) the provisions of this Agreement and any other Finance Document, the provisions of this Agreement and any other Finance Document shall, to the extent allowed by law, prevail and, in the case of any inconsistency with the Trustee Act 2000, such provisions shall constitute a restriction or exclusion for the purposes of the Trustee Act 2000.

 

	
31.29

	
Full freedom to enter into transactions

 

Notwithstanding any rule of law or equity to the contrary, the Security Agent shall be absolutely entitled:

 

	
(a)

	
to enter into and arrange banking, derivative, investment and/or other transactions of every kind with or affecting any Transaction Obligor or any person who is party to, or referred to in, a Finance Document (including, but not limited to, any interest or currency swap or other transaction, whether related to this Agreement or not, and acting as syndicate agent and/or security agent for, and/or participating in, other facilities to such Transaction Obligor or any person who is party to, or referred to in, a Finance Document);

 

	
(b)

	
to deal in and enter into and arrange transactions relating to:

 

	
  

	
(i)

	
any securities issued or to be issued by any Transaction Obligor or any other person; or

 

	
  

	
(ii)

	
any options or other derivatives in connection with such securities; and

 

	
(c)

	
to provide advice or other services to either Borrower or any person who is a party to, or referred to in, a Finance Document,

 

and, in particular, each Servicing Party shall be absolutely entitled, in proposing, evaluating, negotiating, entering into and arranging all such transactions and in connection with all other matters covered by paragraphs (a), (b) and (c) above, to use (subject only to insider dealing legislation) any information or opportunity, howsoever acquired by it, to pursue its own interests exclusively, to refrain from disclosing such dealings, transactions or other matters or any information acquired in connection with them and to retain for its sole benefit all profits and benefits derived from the dealings transactions or other matters.

 

	
31.30

	
Resignation of the Security Agent

 

	
(a)

	
The Security Agent may resign and appoint one of its affiliates as successor by giving notice to the Borrowers and each Finance Party.

 

  

104

  

	
(b)

	
Alternatively the Security Agent may resign by giving notice to the other Parties in which case the Majority Lenders may appoint a successor Security Agent.

 

	
(c)

	
If the Majority Lenders have not appointed a successor Security Agent in accordance with paragraph (b) above within 30 days after the notice of resignation was given, the Security Agent (after consultation with the Facility Agent) may appoint a successor Security Agent.

 

	
(d)

	
The retiring Security Agent (the "Retiring Security Agent") shall, at its own cost, make available to the successor Security Agent such documents and records and provide such assistance as the successor Security Agent may reasonably request for the purposes of performing its functions as Security Agent under the Finance Documents.

 

	
(e)

	
The Security Agent's resignation notice shall only take effect upon (i) the appointment of a successor and (ii) the transfer, by way of a document expressed as a deed, of all of the Security Property to that successor.

 

	
(f)

	
Upon the appointment of a successor, the Retiring Security Agent shall be discharged, by way of a document executed as a deed, from any further obligation in respect of the Finance Documents (other than its obligations under paragraph (b) of Clause 31.25 (Winding up of trust) and under paragraph (d) above) but shall, in respect of any act or omission by it whilst it was the Security Agent, remain entitled to the benefit of Clause 31 (The Security Agent), Clause 14.5 (Indemnity to the Security Agent), Clause 31.16 (Lenders' indemnity to the Security Agent) and any other provisions of a Finance Document which are expressed to limit or exclude its liability in acting as Security Agent. Its successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if that successor had been an original Party.

 

	
(g)

	
The Majority Lenders may, by notice to the Security Agent, require it to resign in accordance with paragraph (b) above. In this event, the Security Agent shall resign in accordance with paragraph (b) above but the cost referred to in paragraph (d) above shall be for the account of the Borrowers.

 

	
(h)

	
The consent of either Borrower (or any other Obligor) is not required for an assignment or transfer of rights and/or obligations by the Security Agent.

 

	
31.31

	
Delegation

 

	
(a)

	
Each of the Security Agent, any Receiver and any Delegate may, at any time, delegate by power of attorney or otherwise to any person for any period, all or any of the rights, powers and discretions vested in it by any of the Finance Documents.

 

	
(b)

	
That delegation may be made upon any terms and conditions (including the power to sub delegate) and subject to any restrictions that the Security Agent, that Receiver or that Delegate (as the case may be) may, in its discretion, think fit in the interests of the Secured Parties and it shall not be bound to supervise, or be in any way responsible for any loss incurred by reason of any misconduct or default on the part of any such delegate or sub delegate.

 

	
31.32

	
Additional Security Agents

 

	
(a)

	
The Security Agent may at any time appoint (and subsequently remove) any person to act as a separate trustee or as a co-trustee jointly with it:

 

	
  

	
(i)

	
if it considers that appointment to be in the interests of the Secured Parties; or

 

	
  

	
(ii)

	
for the purposes of conforming to any legal requirements, restrictions or conditions which the Security Agent deems to be relevant; or

 

  

105

  

	
  

	
(iii)

	
for obtaining or enforcing any judgment in any jurisdiction,

 

and the Security Agent shall give prior notice to the Borrowers and the Facility Agent of that appointment.

 

	
(b)

	
Any person so appointed shall have the rights, powers and discretions (not exceeding those conferred on the Security Agent by this Agreement) and the duties and obligations that are conferred or imposed by the instrument of appointment.

 

	
(c)

	
The remuneration that the Security Agent may pay to that person, and any costs and expenses (together with any applicable VAT) incurred by that person in performing its functions pursuant to that appointment shall, for the purposes of this Agreement, be treated as costs and expenses incurred by the Security Agent.

 

	
32

	
CONDUCT OF BUSINESS BY THE FINANCE PARTIES

 

No provision of this Agreement will:

 

	
(a)

	
interfere with the right of any Finance Party to arrange its affairs (tax or otherwise) in whatever manner it thinks fit;

 

	
(b)

	
oblige any Finance Party to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or

 

	
(c)

	
oblige any Finance Party to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax.

 

	
33

	
SHARING AMONG THE FINANCE PARTIES

 

	
33.1

	
Payments to Finance Parties

 

If a Finance Party (a "Recovering Finance Party") receives or recovers any amount from an Obligor other than in accordance with Clause 34 (Payment Mechanics) (a "Recovered Amount") and applies that amount to a payment due to it under the Finance Documents then:

 

	
(a)

	
the Recovering Finance Party shall, within three Business Days, notify details of the receipt or recovery, to the Facility Agent;

 

	
(b)

	
the Facility Agent shall determine whether the receipt or recovery is in excess of the amount the Recovering Finance Party would have been paid had the receipt or recovery been received or made by the Facility Agent and distributed in accordance with Clause 34 (Payment Mechanics), without taking account of any Tax which would be imposed on the Facility Agent in relation to the receipt, recovery or distribution; and

 

	
(c)

	
the Recovering Finance Party shall, within three Business Days of demand by the Facility Agent, pay to the Facility Agent an amount (the "Sharing Payment") equal to such receipt or recovery less any amount which the Facility Agent determines may be retained by the Recovering Finance Party as its share of any payment to be made, in accordance with Clause 34.5 (Application of receipts; partial payments).

 

	
33.2

	
Redistribution of payments

 

The Facility Agent shall treat the Sharing Payment as if it had been paid by the relevant Obligor and distribute it among the Finance Parties (other than the Recovering Finance Party) (the "Sharing Finance Parties") in accordance with Clause 34.5 (Application of receipts; partial payments); partial payments) towards the obligations of that Obligor to the Sharing Finance Parties.

 

  

106

  

	
33.3

	
Recovering Finance Party 's rights

 

On a distribution by the Facility Agent under Clause 33.2 (Redistribution of payments) of a payment received by a Recovering Finance Party from an Obligor, as between the relevant Obligor and the Recovering Finance Party, an amount of the Recovered Amount equal to the Sharing Payment will be treated as not having been paid by that Obligor.

 

	
33.4

	
Reversal of redistribution

 

If any part of the Sharing Payment received or recovered by a Recovering Finance Party becomes repayable and is repaid by that Recovering Finance Party, then:

 

	
(a)

	
each Sharing Finance Party shall, upon request of the Facility Agent, pay to the Facility Agent for the account of that Recovering Finance Party an amount equal to the appropriate part of its share of the Sharing Payment (together with an amount as is necessary to reimburse that Recovering Finance Party for its proportion of any interest on the Sharing Payment which that Recovering Finance Party is required to pay) (the "Redistributed Amount"); and

 

	
(b)

	
as between the relevant Obligor and each relevant Sharing Finance Party, an amount equal to the relevant Redistributed Amount will be treated as not having been paid by that Obligor.

 

	
33.5

	
Exceptions

 

	
(a)

	
This Clause 33 (Sharing Among the Finance Parties) shall not apply to the extent that the Recovering Finance Party would not, after making any payment pursuant to this Clause, have a valid and enforceable claim against the relevant Obligor.

 

	
(b)

	
A Recovering Finance Party is not obliged to share with any other Finance Party any amount which the Recovering Finance Party has received or recovered as a result of taking legal or arbitration proceedings, if:

 

	
  

	
(i)

	
it notified that other Finance Party of the legal or arbitration proceedings; and

 

	
  

	
(ii)

	
that other Finance Party had an opportunity to participate in those legal or arbitration proceedings but did not do so as soon as reasonably practicable having received notice and did not take separate legal or arbitration proceedings.

 

  

107

  

SECTION 11

 

ADMINISTRATION

 

	
34

	
PAYMENT MECHANICS

 

	
34.1

	
Payments to the Facility Agent

 

	
(a)

	
On each date on which an Obligor or a Lender is required to make a payment under a Finance Document, that Obligor or Lender shall make an amount equal to such payment available to the Facility Agent (unless a contrary indication appears in a Finance Document) for value on the due date at the time and in such funds specified by the Facility Agent as being customary at the time for settlement of transactions in the relevant currency in the place of payment.

 

	
(b)

	
Payment shall be made to such account in the principal financial centre of the country of that currency and with such bank as the Facility Agent, in each case, specifies.

 

	
34.2

	
Distributions by the Facility Agent

 

Each payment received by the Facility Agent under the Finance Documents for another Party shall, subject to Clause 34.3 (Distributions to an Obligor) and Clause 34.4 (Clawback and pre-funding) be made available by the Facility Agent as soon as practicable after receipt to the Party entitled to receive payment in accordance with this Agreement (in the case of a Lender, for the account of its Facility Office), to such account as that Party may notify to the Facility Agent by not less than five Business Days' notice with a bank in the principal financial centre of the country of that currency, or, in the case of an Advance, to such account of such person as may be specified by the Borrowers in a Utilisation Request.

 

	
34.3

	
Distributions to an Obligor

 

The Facility Agent may (with the consent of the Obligor or in accordance with Clause 35 (Set-Off)) apply any amount received by it for that Obligor in or towards payment (on the date and in the currency and funds of receipt) of any amount due from that Obligor under the Finance Documents or in or towards purchase of any amount of any currency to be so applied.

 

	
34.4

	
Clawback and pre-funding

 

	
(a)

	
Where a sum is to be paid to the Facility Agent under the Finance Documents for another Party, the Facility Agent is not obliged to pay that sum to that other Party (or to enter into or perform any related exchange contract) until it has been able to establish to its satisfaction that it has actually received that sum.

 

	
(b)

	
Unless paragraph (c) below applies, if the Facility Agent pays an amount to another Party and it proves to be the case that the Facility Agent had not actually received that amount, then the Party to whom that amount (or the proceeds of any related exchange contract) was paid by the Facility Agent shall on demand refund the same to the Facility Agent together with interest on that amount from the date of payment to the date of receipt by the Facility Agent, calculated by the Facility Agent to reflect its cost of funds.

 

	
(c)

	
If the Facility Agent has notified the Lender that it is willing to make available amounts for the account of the Borrowers before receiving funds from the Lenders then if and to the extent that the Facility Agent does so but it proves to be the case that it does not then receive funds from a Lender in respect of a sum which it paid to the Borrowers:

 

  

108

  

	
  

	
(i)

	
the Facility Agent shall notify the Borrowers of that Lender's identity and the Borrowers shall on demand refund it to the Facility Agent; and

 

	
  

	
(ii)

	
the Lender by whom those funds should have been made available or, if the Lender fails to do so, the Borrowers to whom that sum was made available, shall on demand pay to the Facility Agent the amount (as certified by the Facility Agent) which will indemnify the Facility Agent against any funding cost incurred by it as a result of paying out that sum before receiving those funds from that Lender.

 

	
34.5

	
Application of receipts; partial payments

 

	
(a)

	
Subject to paragraph (b) below and except as any Finance Document may otherwise provide, any payment that is received or recovered by any Finance Party under, in connection with, or pursuant to any Finance Document shall be paid to the Facility Agent which shall apply the same in the following order:

 

	
  

	
(i)

	
first, in or towards payment of any amounts then due and payable under any of the Finance Documents;

 

	
  

	
(ii)

	
secondly, in retention by the Security Agent of an amount equal to any amount not then payable under any Finance Document but which the Facility Agent, by notice to the Borrowers and the other Finance Parties, states in its opinion will or may become payable in the future and, upon those amounts becoming due and payable, in or towards satisfaction of them; and

 

	
  

	
(iii)

	
thirdly, any surplus shall be paid to the Borrowers or to any other person who appears to be entitled to it.

 

	
(b)

	
If the Facility Agent receives a payment that is insufficient to discharge all the amounts then due and payable by an Obligor under the Finance Documents, the Facility Agent shall apply that payment towards the obligations of that Obligor under the Finance Documents in the following order:

 

	
  

	
(i)

	
first, in or towards payment pro rota of any unpaid fees, costs and expenses of, and any other amounts owing to, the Facility Agent, the Security Agent, any Receiver and any Delegate under the Finance Documents;

 

	
  

	
(ii)

	
secondly, in or towards payment pro rata of any accrued interest and fees due but unpaid to the Lenders under this Agreement;

 

	
  

	
(iii)

	
thirdly, in or towards payment pro rata of any principal due but unpaid to the Lenders under this Agreement; and

 

	
  

	
(iv)

	
fourthly, in or towards payment pro rata of any other sum due to any Finance Party but unpaid under the Finance Documents.

 

	
(c)

	
The Facility Agent shall, if so directed by the Majority Lenders, vary the order set out in sub-paragraphs (ii) to (iv) of paragraph (b) above.

 

	
(d)

	
Paragraphs (a), (b) and (c) above will override any appropriation made by an Obligor.

 

	
34.6

	
No set-off by Obligors

 

All payments to be made by an Obligor under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.

 

	
34.7

	
Business Days

 

  

109

  

	
(a)

	
Any payment which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not).

 

	
(b)

	
During any extension of the due date for payment of any principal or an Unpaid Sum under this Agreement interest is payable on the principal or Unpaid Sum at the rate payable on the original due date.

 

	
34.8

	
Currency of account

 

	
(a)

	
Subject to paragraphs (b) and (c) below, dollars is the currency of account and payment for any sum due from an Obligor under any Finance Document.

 

	
(b)

	
Each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are incurred.

 

	
(c)

	
Any amount expressed to be payable in a currency other than dollars shall be paid in that other currency.

 

	
34.9

	
Change of currency

 

	
(a)

	
Unless otherwise prohibited by law, if more than one currency or currency unit are at the same time recognised by the central bank of any country as the lawful currency of that country, then:

 

	
  

	
(i)

	
any reference in the Finance Documents to, and any obligations arising under the Finance Documents in, the currency of that country shall be translated into, or paid in, the currency or currency unit of that country designated by the Facility Agent (after consultation with the Borrowers); and

 

	
  

	
(ii)

	
any translation from one currency or currency unit to another shall be at the official rate of exchange recognised by the central bank for the conversion of that currency or currency unit into the other, rounded up or down by the Facility Agent (acting reasonably).

 

	
(b)

	
If a change in any currency of a country occurs, this Agreement will, to the extent the Facility Agent (acting reasonably and after consultation with the Borrowers) specifies to be necessary, be amended to comply with any generally accepted conventions and market practice in the Relevant Interbank Market and otherwise to reflect the change in currency.

 

	
34.10

	
Currency Conversion

 

	
(a)

	
For the purpose of, or pending any payment to be made by any Servicing Party under any Finance Document, such Servicing Party may convert any moneys received or recovered by it from one currency to another, at a market rate of exchange.

 

	
(b)

	
The obligations of any Obligor to pay in the due currency shall only be satisfied to the extent of the amount of the due currency purchased after deducting the costs of conversion.

 

	
34.11

	
Disruption to Payment Systems etc.

 

If either the Facility Agent determines (in its discretion) that a Disruption Event has occurred or the Facility Agent is notified by a Borrower that a Disruption Event has occurred:

 

	
(a)

	
the Facility Agent may, and shall if requested to do so by a Borrower, consult with the Borrowers with a view to agreeing with the Borrowers such changes to the operation or administration of the Facility as the Facility Agent may deem necessary in the circumstances;

 

  

110

  

	
(b)

	
the Facility Agent shall not be obliged to consult with the Borrowers in relation to any changes mentioned in paragraph (a) above if, in its opinion, it is not practicable to do so in the circumstances and, in any event, shall have no obligation to agree to such changes;

 

	
(c)

	
the Facility Agent may consult with the Finance Parties in relation to any changes mentioned in paragraph (a) above but shall not be obliged to do so if, in its opinion, it is not practicable to do so in the circumstances;

 

	
(d)

	
any such changes agreed upon by the Facility Agent and the Borrowers shall (whether or not it is finally determined that a Disruption Event has occurred) be binding upon the Parties as an amendment to (or, as the case may be, waiver of) the terms of the Finance Documents notwithstanding the provisions of Clause 42 (Amendments and Waivers);

 

	
(e)

	
the Facility Agent shall not be liable for any damages, costs or losses to any person, any diminution in value or any liability whatsoever (including, without limitation for negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Facility Agent) arising as a result of its taking, or failing to take, any actions pursuant to or in connection with this Clause 34.11 (Disruption to Payment Systems etc.); and

 

	
(f)

	
the Facility Agent shall notify the Finance Parties of all changes agreed pursuant to paragraph (d) above.

 

	
35

	
SET-OFF

 

A Finance Party may set off any matured obligation due from an Obligor under the Finance Documents (to the extent beneficially owned by that Finance Party) against any matured obligation owed by that Finance Party to that Obligor, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.

 

	
36

	
NOTICES

 

	
36.1

	
Communications in writing

 

Any communication to be made under or in connection with the Finance Documents shall be made in writing and, unless otherwise stated, may be made by fax or letter.

 

	
36.2

	
Addresses

 

The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each Party for any communication or document to be made or delivered under or in connection with the Finance Documents are:

 

	
{a)

	
in the case of the Borrowers, that specified in Schedule 1 (The Parties);

 

	
{b)

	
in the case of each Lender or any other Obligor, that specified in Schedule 1 (The Parties) or, if it becomes a Party after the date of this Agreement, that notified in writing to the Facility Agent on or before the date on which it becomes a Party;

 

	
(c)

	
in the case of the Facility Agent, that specified in Schedule 1 (The Parties); and

 

	
(d)

	
in the case of the Security Agent, that specified in Schedule 1 (The Parties),

 

or any substitute address, fax number or department or officer as the Party may notify to the Facility Agent (or the Facility Agent may notify to the other Parties, if a change is made by the Facility Agent) by not less than five Business Days' notice.

 

  

111

  

	
36.3

	
Delivery

 

	
(a)

	
Any communication or document made or delivered by one person to another under or in connection with the Finance Documents will only be effective:

 

	
  

	
(i)

	
if by way of fax, when received in legible form; or

 

	
  

	
(ii)

	
if by way of letter, when it has been left at the relevant address or five Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address,

 

and, if a particular department or officer is specified as part of its address details provided under Clause 36.2 (Addresses), if addressed to that department or officer.

 

	
(b)

	
Any communication or document to be made or delivered to a Servicing Party will be effective only when actually received by that Servicing Party and then only if it is expressly marked for the attention of the department or officer of that Servicing Party specified in Schedule 1 (The Parties) (or any substitute department or officer as that Servicing Party shall specify for this purpose).

 

	
(c)

	
All notices from or to an Obligor shall be sent through the Facility Agent unless otherwise specified in any Finance Document.

 

	
(d)

	
Any communication or document made or delivered to the Borrowers in accordance with this Clause will be deemed to have been made or delivered to each of the Obligors.

 

	
(e)

	
Any communication or document which becomes effective, in accordance with paragraphs (a) to (d) above, after 5.00 p.m. in the place of receipt shall be deemed only to become effective on the following day.

 

	
36.4

	
Notification of address and fax number

 

Promptly upon receipt of notification of an address and fax number or change of address or fax number pursuant to Clause 36.2 (Addresses) or changing its own address or fax number, the Facility Agent shall notify the other Parties.

 

	
36.5

	
Electronic communication

 

	
(a)

	
Any communication to be made between any two Parties under or in connection with the Finance Documents may be made by electronic mail or other electronic means, to the extent that those two Parties agree that, unless and until notified to the contrary, this is to be an accepted form of communication and if those two Parties:

 

	
  

	
(i)

	
notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and

 

	
  

	
(ii)

	
notify each other of any change to their address or any other such information supplied by them by not less than five Business Days' notice.

 

	
(b)

	
Any electronic communication made between those two Parties will be effective only when actually received in readable form and in the case of any electronic communication made by a Party to the Facility Agent only if it is addressed in such a manner as the Facility Agent shall specify for this purpose.

 

	
(c)

	
Any electronic communication which becomes effective, in accordance with paragraph (b) above, after 5.00 p.m. in the place of receipt shall be deemed only to become effective on the following day.

 

  

112

  

	
36.6

	
English language

 

	
(a)

	
Any notice given under or in connection with any Finance Document must be in English.

 

	
(b)

	
All other documents provided under or in connection with any Finance Document must be:

 

	
  

	
(i)

	
in English; or

 

	
  

	
(ii)

	
if not in English, and if so required by the Facility Agent, accompanied by a certified English translation prepared by a translator approved by the Facility Agent and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document.

 

	
37

	
CALCULATIONS AND CERTIFICATES

 

	
37.1

	
Accounts

 

In any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts maintained by a Finance Party are prima fade evidence of the matters to which they relate.

 

	
37.2

	
Certificates and determinations

 

Any certification or determination by a Finance Party of a rate or amount under any Finance Document is, in the absence of manifest error, conclusive evidence of the matters to which it relates.

 

	
37.3

	
Day count convention

 

Any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 360 days or, in any case where the practice in the Relevant Interbank Market differs, in accordance with that market practice.

 

	
38

	
PARTIAL INVALIDITY

 

If, at any time, any provision of the Finance Documents is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions under the law of that jurisdiction nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.

 

	
39

	
REMEDIES AND WAIVERS

 

No failure to exercise, nor any delay in exercising, on the part of any Secured Party, any right or remedy under the Finance Documents shall operate as a waiver of any such right or remedy or constitute an election to affirm any of the Finance Documents. No election to affirm any of the Finance Documents on the part of a Secured Party shall be effective unless it is in writing. No single or partial exercise of any right or remedy shall prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law.

 

	
40

	
SETTLEMENT OR DISCHARGE CONDITIONAL

 

Any settlement or discharge under any Finance Document between any Finance Party and any Obligor shall be conditional upon no security or payment to any Finance Party by any

 

  

113

  

Obligor or any other person being set aside, adjusted or ordered to be repaid, whether under any insolvency law or otherwise.

 

	
41

	
IRREVOCABLE PAYMENT

 

If the Facility Agent considers that an amount paid or discharged by, or on behalf of, an Obligor or by any other person in purported payment or discharge of an obligation of that Obligor to a Finance Party under the Finance Documents is capable of being avoided or otherwise set aside on the liquidation or administration of that Obligor or otherwise, then that amount shall not be considered to have been unconditionally and irrevocably paid or discharged for the purposes of the Finance Documents.

 

	
42

	
AMENDMENTS AND WAIVERS

 

	
42.1

	
Required consents

 

	
(a)

	
Subject to Clause 42.2 (All Lender matters) and Clause 42.3 (Other exceptions) any term of the Finance Documents may be amended or waived only with the consent of the Majority Lenders and, in the case of an amendment, the Obligors and any such amendment or waiver will be binding on all Parties.

 

	
(b)

	
The Facility Agent may effect, on behalf of any Finance Party, any amendment or waiver permitted by this Clause 42 (Amendments and Waivers).

 

	
(c)

	
No amendment or waiver may be made before the date falling ten Business Days after the terms of that amendment or waiver have been notified by the Facility Agent to the Lenders. The Facility Agent shall notify the Lenders reasonably promptly of any amendments or waivers proposed by the Borrower.

 

	
(d)

	
Without prejudice to the generality of Clause 30.7 (Rights and discretions of the Facility Agent) and Clause 31.10 (Security Agent's discretions), the Facility Agent may engage, pay for and rely on the services of lawyers in determining the consent level required for and effecting any amendment, waiver or consent under this Agreement.

 

	
42.2

	
All Lender matters

 

	
(a)

	
An amendment of or waiver or consent in relation to any term of any Finance Document that has the effect of changing or which relates to:

 

	
  

	
(i)

	
the definition of "Majority Lenders" in Clause 1.1 (Definitions);

 

	
  

	
(ii)

	
a postponement to or extension of the date of payment of any amount under the Finance Documents;

 

	
  

	
(iii)

	
a reduction in the Margin or the amount of any payment of principal, interest, fees or commission payable;

 

	
  

	
(iv)

	
a change in currency of payment of any amount under the Finance Documents;

 

	
  

	
(v)

	
an increase in any Commitment or the Total Commitments, an extension of any Availability Period or any requirement that a cancellation of Commitments reduces the Commitments rateably under the Facility;

 

	
  

	
(vi)

	
a change to any Obligor;

 

	
  

	
(vii)

	
any provision which expressly requires the consent of all the Lenders;

 

	
  

	
(viii)

	
this Clause 42 (Amendments and Waivers);

 

  

114

  

	
  

	
(ix)

	
any change to the preamble (Background), Clause 2 (The Facility), Clause 3 (Purpose), Clause 5 (Utilisation), Clause 8 (Interest), Clause 26 (Application of Earnings), Clause 28 (Changes to the Lenders) Clause 45 (Governing Law) or Clause 46 (Enforcement);

 

	
  

	
(x)

	
any release of, or material variation to, any Transaction Security, guarantee, indemnity or subordination arrangement set out in a Finance Document (except in the case of a release of Transaction Security as it relates to the disposal of an asset which is the subject of the Transaction Security and where such disposal is expressly permitted by the Majority Lenders or otherwise under a Finance Document);

 

	
  

	
(xi)

	
(other than as expressly permitted by the provisions of any Finance Document), the nature or scope of:

 

	
  

	
(A)

	
the guarantees and indemnities granted under Clause 17 (Guarantee and Indemnity — Parent Guarantor), the joint and several liability of the Borrowers under Clause 18 (Joint and Several Liability of the Borrowers);

 

	
  

	
(B)

	
the Charged Property; or

 

	
  

	
(C)

	
the manner in which the proceeds of enforcement of the Transaction Security are distributed,

 

(except in the case of sub-paragraphs (B) and (C) above, insofar as it relates to a sale or disposal of an asset which is the subject of the Transaction Security where such sale or disposal is expressly permitted under this Agreement or any other Finance Document); or

 

	
  

	
(xii)

	
the release of the guarantees and indemnities granted under Clause 17 (Guarantee and Indemnity — Parent Guarantor) or of any Transaction Security unless permitted under this Agreement or any other Finance Document or relating to a sale or disposal of an asset which is the subject of the Transaction Security where such sale or disposal is expressly permitted under this Agreement or any other Finance Document,

 

shall not be made, or given, without the prior consent of all the Lenders.

 

	
(b)

	
The Borrowers and the Facility Agent, the Arranger or the Security Agent, as applicable, may amend or waive a term of a Fee Letter to which they are party.

 

(c)

 

	
  

	
(i)

	
If the Facility Agent or a Lender reasonably believes that an amendment or waiver may constitute a "material modification" for the purposes of FATCA that may result (directly or indirectly) in a Party being required to make a FATCA Deduction and the Facility Agent or that Lender (as the case may be) notifies the Borrower and the Facility Agent accordingly, that amendment or waiver may, subject to paragraph (ii) below, not be effected without the consent of the Facility Agent or that Lender (as the case may be).

 

	
  

	
(ii)

	
The consent of a Lender shall not be required pursuant to paragraph (i) above if that Lender is a FATCA Protected Lender.

 

	
(d)

	
An amendment or waiver which relates to the rights or obligations of a Servicing Party or the Arranger (each in their capacity as such) may not be effected without the consent of that Servicing Party or, as the case may be, the Arranger.

 

  

115

  

	
42.3

	
Other exceptions

 

	
(a)

	
An amendment or waiver which relates to the rights or obligations of a Servicing Party or the Arranger (each in their capacity as such) may not be effected without the consent of that Servicing Party or, as the case may be, the Arranger.

 

	
(b)

	
The Borrowers and the Facility Agent, the Arranger or the Security Agent, as applicable, may amend or waive a term of a Fee Letter to which they are party.

 

	
43

	
CONFIDENTIALITY

 

	
43.1

	
Confidential Information

 

Each Finance Party agrees to keep all Confidential Information confidential and not to disclose it to anyone, save to the extent permitted by Clause 43.2 (Disclosure of Confidential Information) and Clause 43.3 (Disclosure to numbering service providers) and to ensure that all Confidential Information is protected with security measures and a degree of care that would apply to its own confidential information.

 

	
43.2

	
Disclosure of Confidential Information

 

Any Finance Party may disclose:

 

	
(a)

	
to any of its Affiliates and Related Funds and any of its or their officers, directors, employees, professional advisers, auditors, partners and Representatives such Confidential Information as that Finance Party shall consider appropriate if any person to whom the Confidential Information is to be given pursuant to this paragraph (a) is informed in writing of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no such requirement to so inform if the recipient is subject to professional obligations to maintain the confidentiality of the information or is otherwise bound by requirements of confidentiality in relation to the Confidential Information;

 

	
(b)

	
to any person:

 

	
  

	
(i)

	
to (or through) whom it assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Finance Documents or which succeeds (or which may potentially succeed) it as Facility Agent or Security Agent and, in each case, to any of that person's Affiliates, Related Funds, Representatives and professional advisers;

 

	
  

	
(ii)

	
with (or through) whom it enters into (or may potentially enter into), whether directly or indirectly, any sub-participation in relation to, or any other transaction under which payments are to be made or may be made by reference to, one or more Finance Documents and/or one or more Obligors and to any of that person's Affiliates, Related Funds, Representatives and professional advisers;

 

	
  

	
(ii)

	
appointed by any Finance Party or by a person to whom sub-paragraphs (i) or (ii) of paragraph (b) above applies to receive communications, notices, information or documents delivered pursuant to the Finance Documents on its behalf (including, without limitation, any person appointed under paragraph (b) of Clause 30.14 (Relationship with the Lenders));

 

	
  

	
(iv)

	
who invests in or otherwise finances (or may potentially invest in or otherwise finance), directly or indirectly, any transaction referred to in sub-paragraph (i) or (ii) of paragraph (b) above;

 

  

116

  

	
  

	
(v)

	
to whom information is required or requested to be disclosed by any court of competent jurisdiction or any governmental, banking, taxation or other regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation;

 

	
  

	
(vi)

	
to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitrations, administrative or other investigations, proceedings or disputes;

 

	
  

	
(vii)

	
to whom or for whose benefit that Finance Party charges, assigns or otherwise creates Security (or may do so) pursuant to Clause 28.8 (Security over Lenders' rights);

 

	
  

	
(viii)

	
who is a Party, a member of the Group or any related entity of an Obligor;

 

	
  

	
(ix)

	
as a result of the registration of any Finance Document as contemplated by any Finance Document or any legal opinion obtained in connection with any Finance Document; or

 

	
  

	
(x)

	
with the consent of the Parent Guarantor;

 

in each case, such Confidential Information as that Finance Party shall consider appropriate if:

 

	
  

	
(A)

	
in relation to sub-paragraphs (i), (ii) and (iii) of paragraph (b) above, the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking except that there shall be no requirement for a Confidentiality Undertaking if the recipient is a professional adviser and is subject to professional obligations to maintain the confidentiality of the Confidential Information;

 

	
  

	
(B)

	
in relation to sub-paragraph (iv) of paragraph (b) above, the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking or is otherwise bound by requirements of confidentiality in relation to the Confidential Information they receive and is informed that some or all of such Confidential Information may be price-sensitive information;

 

	
  

	
(C)

	
in relation to sub-paragraphs (v), (vi) and (vii) of paragraph (b) above, the person to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no requirement to so inform if, in the opinion of that Finance Party, it is not practicable so to do in the circumstances;

 

	
(c)

	
to any person appointed by that Finance Party or by a person to whom sub-paragraph (i) or (ii) of paragraph (b) above applies to provide administration or settlement services in respect of one or more of the Finance Documents including without limitation, in relation to the trading of participations in respect of the Finance Documents, such Confidential Information as may be required to be disclosed to enable such service provider to provide any of the services referred to in this paragraph (c) if the service provider to whom the Confidential Information is to be given has entered in to a confidentiality agreement substantially in the form of the LMA Master Confidentiality Undertaking for Use With Administration/Settlement Service Providers or such other form of confidentiality undertaking agreed between the Borrowers and the relevant Finance Party;

 

	
(d)

	
to any rating agency (including its professional advisers) such Confidential Information as may be required to be disclosed to enable such rating agency to carry out its normal rating

 

  

117

  

activities in relation to the Finance Documents and/or the Obligors if the rating agency to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information.

 

	
43.3

	
Disclosure to numbering service providers

 

	
(a)

	
Any Finance Party may disclose to any national or international numbering service provider appointed by that Finance Party to provide identification numbering services in respect of this Agreement, the Facility and/or one or more Obligors the following information:

 

	
  

	
(i)

	
names of Obligors;

 

	
  

	
(ii)

	
country of domicile of Obligors;

 

	
  

	
(iii)

	
place of incorporation of Obligors;

 

	
  

	
(iv)

	
date of this Agreement;

 

	
  

	
(v)

	
the names of the Facility Agent and the Arranger;

 

	
  

	
(vi)

	
date of each amendment and restatement of this Agreement;

 

	
  

	
(vii)

	
amount of Total Commitments;

 

	
  

	
(viii)

	
currency of the Facility;

 

	
  

	
(ix)

	
type of Facility;

 

	
  

	
(x)

	
ranking of Facility;

 

	
  

	
(xi)

	
Termination Date for Facility;

 

	
  

	
(xii)

	
changes to any of the information previously supplied pursuant to sub-paragraphs (i) to (xi) above; and

 

	
  

	
(xiii)

	
such other information agreed between such Finance Party and the Borrowers,

 

to enable such numbering service provider to provide its usual syndicated loan numbering identification services.

 

	
(b)

	
The Parties acknowledge and agree that each identification number assigned to this Agreement, the Facility and/or one or more Obligors by a numbering service provider and the information associated with each such number may be disclosed to users of its services in accordance with the standard terms and conditions of that numbering service provider.

 

	
(c)

	
Each Obligor represents that none of the information set out in sub-paragraphs (i) to (xiii) of paragraph (a) above is, nor will at any time be, unpublished price-sensitive information.

 

	
(d)

	
The Facility Agent shall notify the Parent Guarantor and the other Finance Parties of:

 

	
  

	
(i)

	
the name of any numbering service provider appointed by the Facility Agent in respect of this Agreement, the Facility and/or one or more Obligors; and

 

	
  

	
(ii)

	
the number or, as the case may be, numbers assigned to this Agreement, the Facility and/or one or more Obligors by such numbering service provider.

 

	
43.4

	
Entire agreement

 

  

118

  

This Clause 43 (Confidentiality) constitutes the entire agreement between the Parties in relation to the obligations of the Finance Parties under the Finance Documents regarding Confidential Information and supersedes any previous agreement, whether express or implied, regarding Confidential Information.

 

	
43.5

	
Inside information

 

Each of the Finance Parties acknowledges that some or all of the Confidential Information is or may be price-sensitive information and that the use of such information may be regulated or prohibited by applicable legislation including securities law relating to insider dealing and market abuse and each of the Finance Parties undertakes not to use any Confidential Information for any unlawful purpose.

 

	
43.6

	
Notification of disclosure

 

Each of the Finance Parties agrees (to the extent permitted by law and regulation) to inform the Borrowers:

 

	
(a)

	
of the circumstances of any disclosure of Confidential Information made pursuant to sub­paragraph (v) of paragraph (b) of Clause 43.2 (Disclosure of Confidential Information) except where such disclosure is made to any of the persons referred to in that paragraph during the ordinary course of its supervisory or regulatory function; and

 

	
(b)

	
upon becoming aware that Confidential Information has been disclosed in breach of this Clause 43 (Confidentiality).

 

	
43.7

	
Continuing obligations

 

The obligations in this 43 (Confidentiality) are continuing and, in particular, shall survive and remain binding on each Finance Party for a period of 12 months from the earlier of:

 

	
(a)

	
the date on which all amounts payable by the Obligors under or in connection with this Agreement have been paid in full and all Commitments have been cancelled or otherwise cease to be available; and

 

	
(b)

	
the date on which such Finance Party otherwise ceases to be a Finance Party.

 

	
44

	
COUNTERPARTS

 

Each Finance Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of the Finance Document.

 

  

119

  

SECTION 12

 

GOVERNING LAW AND ENFORCEMENT

 

	
45

	
GOVERNING LAW

 

This Agreement and any non-contractual obligations arising out of or in connection with it are governed by English law.

 

	
46

	
ENFORCEMENT

 

	
46.1

	
Jurisdiction

 

	
(a)

	
The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement (including a dispute regarding the existence, validity or termination of this Agreement or any non-contractual obligation arising out of or in connection with this Agreement) (a "Dispute").

 

	
(b)

	
The Obligors accept that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Obligor will argue to the contrary.

 

	
(c)

	
This Clause 46.1 (Jurisdiction) is for the benefit of the Secured Parties only. As a result, no Secured Party shall be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Secured Parties may take concurrent proceedings in any number of jurisdictions.

 

	
46.2

	
Service of process

 

	
(a)

	
Without prejudice to any other mode of service allowed under any relevant law, each Obligor (other than an Obligor incorporated in England and Wales):

 

	
  

	
(i)

	
irrevocably appoints Eurofin International Ltd at its registered office for the time being, presently at Chelsea Harbour, London SW1O OXD, England, as its agent for service of process in relation to any proceedings before the English courts in connection with any Finance Document; and

 

	
  

	
(ii)

	
agrees that failure by a process agent to notify the relevant Obligor of the process will not invalidate the proceedings concerned.

 

	
(b)

	
If any person appointed as an agent for service of process is unable for any reason to act as agent for service of process, the Borrowers (on behalf of all the Obligors) must immediately (and in any event within five days of such event taking place) appoint another agent on terms acceptable to the Facility Agent. Failing this, the Facility Agent may appoint another agent for this purpose.

 

This Agreement has been entered into on the date stated at the beginning of this Agreement.

 

  

120

  

SCHEDULE 1

 

THE PARTIES

 

PART A

 

THE OBLIGORS

 

	
Name of Borrower

	  	
Place of

Incorporation

	  	
Registration number

(or equivalent, if any)

	  	
Address for Communication

	  	  	  	  	  	  	  
	
STAR SIRIUS LLC

	  	
Marshall Islands

	  	
962792

	  	
40 Ag. Konstantinos Str.

151 24 Maroussi Athens,

Greece

	  	  	  	  	  	  	
Facsimile: +30 210 617 8378

	
STAR VEGA LLC

	  	
Marshall Islands

	  	
962793

	  	
40 Ag. Konstantinos Str.

151 24 Maroussi Athens,

Greece

	  	  	  	  	  	  	
Facsimile: +30 210 617 8378

	
Name of Parent

Guarantor

	  	
Place of

Incorporation

	  	
Registration number

(or equivalent, if any)

	  	  
	  	  	  	  	  	  	  
	
STAR BULK CARRIERS CORP.

	  	
Marshall Islands

	  	
21451

	  	
40 Ag. Konstantinos Str.

151 24 Maroussi Athens,

Greece

Facsimile: +30 210 617 8378

  

121

  

PART B

 

THE ORIGINAL LENDERS

 

	
Name of Original Lender  Commitment

	
Commitment ($)

	
Address for Communication

	  	  	  
	
Deutsche Bank AG Filiale

Deutschlandgeschaft

	
39,000,000

	
Adolphsplatz 7

D-20457 Hamburg

Germany

 

  

122

  

PART C

 

THE SERVICING PARTIES

 

	
Name of Facility Agent

	  	
Address for Communication

	  	  	  
	
Deutsche Bank AG Filiale Deutschlandgeschaft

	  	
Adolphsplatz 7

D-20457 Hamburg

Germany

	  	  	  
	  	  	  
	  	  	  
	  	  	  
	
Name of Security Agent

	  	
Address for Communication

	  	  	  
	
Deutsche Bank AG Filiale Deutschlandgeschaft

	  	
Adolphsplatz 7

D-20457 Hamburg

Germany

  

123

  

SCHEDULE 2

 

CONDITIONS PRECEDENT

 

PART A

 

CONDITIONS PRECDENT TO INITIAL UTILISATION REQUEST

 

	
1

	
Obligors

 

	
1.1

	
A copy of the constitutional documents of each Transaction Obligor.

 

	
1.2

	
A copy of a resolution of the board of directors of each Transaction Obligor:

 

	
(a)

	
approving the terms of, and the transactions contemplated by, the Finance Documents to which it is a party and resolving that it execute the Finance Documents to which it is a party;

 

	
(b)

	
authorising a specified person or persons to execute the Finance Documents to which it is a party on its behalf; and

 

	
(c)

	
authorising a specified person or persons, on its behalf, to sign and/or despatch all documents and notices (including, if relevant, a Utilisation Request and each Selection Notice) to be signed and/or despatched by it under, or in connection with, the Finance Documents to which it is a party.

 

	
1.3

	
An original of the power of attorney of any Transaction Obligor authorising a specified person or persons to execute the Finance Documents to which it is a party.

 

	
1.4

	
A specimen of the signature of each person authorised by the resolution referred to in paragraph 1.2 above.

 

	
1.5

	
A copy of a resolution signed by the Parent Guarantor as sole member in each Borrower, approving the terms of, and the transactions contemplated by, the Finance Documents to which that Borrower is a party.

 

	
1.6

	
A certificate of each Transaction Obligor (signed by a director) confirming that borrowing or guaranteeing, as appropriate, the Total Commitments would not cause any borrowing, guaranteeing or similar limit binding on that Transaction Obligor to be exceeded.

 

	
1.7

	
A certificate of each Transaction Obligor that is incorporated outside the UK (signed by a director) certifying either that (i) it has not delivered particulars of any UK Establishment to the Registrar of Companies as required under the Overseas Regulations or (ii) it has a UK Establishment and specifying the name and registered number under which it is registered with the Registrar of Companies.

 

	
1.8

	
A certificate of an authorised signatory of the relevant Transaction Obligor certifying that each copy document relating to it specified in this Part A of Schedule 2 (Conditions Precedent) is correct, complete and in full force and effect as at a date no earlier than the date of this Agreement.

 

	
2

	
Other Documents

 

	
2.1

	
Copies of the Approved Charters and of all documents signed or issued by the parties thereto under or in connection with it.

 

	
2.2

	
Such documentary evidence as the Facility Agent and its legal advisers may require in relation to the due authorisation and execution of the Approved Charters by each of the parties thereto.

 

  

124

  

	
3

	
Security

 

A duly executed original of the Accounts Security in relation to each Account and of the Shares Security in respect of each Borrower (and of each document to be delivered under each of them).

 

	
4

	
Legal opinions

 

A legal opinion of legal advisers to the Arranger, the Facility Agent and the Security Agent in The Marshall Islands, substantially in the form distributed to the Original Lenders before signing this Agreement.

 

	
5

	
Other documents and evidence

 

	
5.1

	
Evidence that any process agent referred to in Clause 46.2 (Service of process), has accepted its appointment.

 

	
5.2

	
A copy of any other Authorisation or other document, opinion or assurance which the Facility Agent considers to be necessary or desirable (if it has notified the Borrowers accordingly) in connection with the entry into and performance of the transactions contemplated by any Transaction Document, or for the validity and enforceability of any Transaction Document.

 

	
5.3

	
The Original Financial Statements of the Parent Guarantor.

 

	
5.4

	
The original of any mandates or other documents required in connection with the opening or operation of the Accounts.

 

	
5.5

	
Evidence that the fees, costs and expenses then due from the Borrowers pursuant to Clause 11 (Fees) and Clause 16 (Costs and Expenses) have been paid or will be paid by the first Utilisation Date.

 

	
5.6

	
Such evidence as the Facility Agent may require for the Finance Parties to be able to satisfy each of their "know your customer" or similar identification procedures in relation to the transactions contemplated by the Finance Documents (including, without limitation, detailed disclosure of the identity of the Borrowers' and the Parent Guarantor's ultimate beneficial owners and a written confirmation of ultimate beneficial ownership from the ultimate beneficial owner of the Borrowers).

 

  

125

  

PART B

 

CONDITIONS PRECEDENT TO UTILISATION OF A TRANCHE

 

The following definitions have the following meanings in this Part B of Schedule 2:

 

	
(a)

	
"Relevant Borrower" means the Borrower which is the owner of the Relevant Ship; and

 

	
(b)

	
"Relevant Ship" means the Ship which is relevant to the Tranche being advanced on the relevant Utilisation Date.

 

	
1

	
Borrowers

 

A certificate of an authorised signatory of each Borrower certifying that each copy document which it is required to provide under this Part B of Schedule 2 (Conditions Precedent) is correct, complete and in full force and effect as at the Utilisation Date of the Advance under the relevant Tranche.

 

	
2

	
Ship and other security

 

	
2.1

	
A duly executed original of the Mortgage, the Deed of Covenant or, as the case may be, General Assignment in respect of the Relevant Ship, the Charterparty Assignment in respect of the Approved Charter relative to that Relevant Ship and of each document to be delivered under or pursuant to each of them together with documentary evidence that the Mortgage in respect of the Relevant Ship has been duly registered as a valid first preferred or, as the case may be, priority ship mortgage in accordance with the laws of the relevant Approved Flag State.

 

	
2.2

	
Documentary evidence that the Relevant Ship:

 

	
(a)

	
is definitively and permanently registered in the name of the Relevant Borrower under the Approved Flag applicable to the Relevant Ship at the port of the relevant Approved flag state;

 

	
(b)

	
is in the absolute and unencumbered ownership of the Relevant Borrower save as contemplated by the Finance Documents;

 

	
(c)

	
maintains the Approved Classification with the Approved Classification Society free of all recommendations and conditions of the Approved Classification Society; and

 

	
(d)

	
is insured in accordance with the provisions of this Agreement and all requirements in this Agreement in respect of insurances have been complied with.

 

	
2.3

	
Documents establishing that the Relevant Ship will, as from the Utilisation Date of the Advance under the relevant Tranche, be managed commercially by the Approved Commercial Manager and managed technically by the Approved Technical Manager on terms acceptable to the Facility Agent acting with the authorisation of all of the Lenders, together with:

 

	
(a)

	
a Manager's Undertaking for each of the Approved Technical Manager and the Approved Commercial Manager of the Relevant Ship; and

 

	
(b)

	
copies of the Approved Technical Manager's Document of Compliance and of the Relevant Ship's Safety Management Certificate (together with any other details of the applicable safety management system which the Facility Agent requires) and of any other documents required under the ISM Code and the ISPS Code in relation to the Relevant Ship including without limitation an ISSC.

 

  

126

  

	
2.4

	
An opinion from an independent insurance consultant acceptable to the Facility Agent on such matters relating to the insurances as the Facility Agent may require.

 

	
2.5

	
Two valuations of the Relevant Ship, each addressed to the Facility Agent on behalf of the Finance Parties, stated to be for the purposes of this Agreement and dated not earlier than 10 days before the Utilisation Date for the Advance under the Tranche to which the Relevant Ship relates from an Approved Valuer.

 

	
3

	
Legal opinions

 

Legal opinions of the legal advisers to the Arranger, the Facility Agent and the Security Agent in the Approved Flag State of the Relevant Ship and such other relevant jurisdictions as the Facility Agent may require.

 

	
4

	
Other documents and evidence

 

Evidence that the fees, costs and expenses then due from the Borrowers pursuant to Clause 11 (Fees) and Clause 16 (Costs and Expenses) have been paid or will be paid by the Utilisation Date for the relevant Tranche.

 

  

127

  

SCHEDULE 3

 

REQUESTS

 

PART A

 

UTILISATION REQUEST

 

From:     [Borrowers]

 

To:         [Facility Agent]

 

Dated: [●]

 

Dear Sirs

 

Star Sirius LLC and Star Vega LLC— US$39,000,000 Facility Agreement dated [●] (the "Agreement")

 

	
1

	
We refer to the Agreement. This is a Utilisation Request. Terms defined in the Agreement have the same meaning in this Utilisation Request unless given a different meaning in this Utilisation Request.

 

	
2

	
We wish to borrow the Advance under Tranche [A][B] on the following terms:

 

	  	
Proposed Utilisation Date:

	  	
[●] (or, if that is not a Business Day, the next Business Day)

	  	  	  	  
	  	
Amount:

	  	
[●] or, if less, the Available Facility

	  	  	  	  
	  	
Interest Period for the first Advance:

	  	
[●]

 

	
3

	
We confirm that each condition specified in Clause 4.1 (Initial conditions precedent) and Clause 4.2 (Further conditions precedent) as they relate to the Advance to which this utilisation request refers of the Agreement is satisfied on the date of this Utilisation Request.

 

	
4

	
We represent and warrant that no Default has occurred.

 

	
5

	
The proceeds of this Advance should be credited to [account].

 

	
6

	
This Utilisation Request is irrevocable.

 

Yours faithfully

 

 

[●]

authorised signatory for

STAR SIRIUS LLC

 

 

 

[●]

authorised signatory for

STAR VEGA LLC

 

  

128

  

PART B

 

SELECTION NOTICE

 

From:     [Borrowers)

 

To:         [Facility Agent]

 

Dated: [●]

 

Dear Sirs

 

Star Sirius LLC and Star Vega LLC - US$39,000,000 Facility Agreement dated [●] (the "Agreement")

 

	
1

	
We refer to the Agreement. This is a Selection Notice. Terms defined in the Agreement have the same meaning in this Selection Notice unless given a different meaning in this Selection Notice.

 

	
2

	
We request that, subject to paragraph (f) of Clause 9.1 (Selection of Interest Periods) of the Agreement, the next Interest Period for the Loan be [●].

 

	
3

	
This Selection Notice is irrevocable.

 

Yours faithfully

 

 

 

[●]

authorised signatory for

STAR SIRIUS LLC

 

 

 

[●]

authorised signatory for

STAR VEGA LLC

 

  

129

  

SCHEDULE 4

 

FORM OF TRANSFER CERTIFICATE

 

	
To:

	
Deutsche Bank AG Finale Deutschlandgeschäft as Facility Agent

 

	
From:

	
[The Existing Lender] (the "Existing Lender") and [The New Lender] (the "New Lender")

 

Dated: [●]

 

Star Sirius LLC and Star Vega LLC — US$39,000,000 Facility Agreement dated [•j (the "Agreement")

 

	
1

	
We refer to the Agreement. This is a Transfer Certificate. Terms defined in the Agreement have the same meaning in this Transfer Certificate unless given a different meaning in this Transfer Certificate.

 

	
2

	
We refer to Clause 28.5 (Procedure for transfer) of the Agreement:

 

	
(a)

	
The Existing Lender and the New Lender agree to the Existing Lender transferring to the New Lender by novation all of the Existing Lender's rights and obligations under the Agreement and the other Finance Documents which relate to that portion of the Existing Lender's Commitment and participation in the Loan under the Agreement as specified in the Schedule in accordance with Clause 28.5 (Procedure for transfer) of the Agreement.

 

	
(b)

	
The proposed Transfer Date is [●].

 

	
(c)

	
The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of Clause 36.2 (Addresses) of the Agreement are set out in the Schedule.

 

	
3

	
The New Lender expressly acknowledges the limitations on the Existing Lender's obligations set out in paragraph (c) of Clause 28.4 (Limitation of responsibility of Existing Lenders) of the Agreement.

 

	
4

	
This Transfer Certificate may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Transfer Certificate.

 

	
5

	
This Transfer Certificate [and any non-contractual obligations arising out of or in connection with it] [is/are] " is governed by English law.

 

	
6

	
This Transfer Certificate has been entered into on the date stated at the beginning of this Transfer Certificate.

 

Note: The execution of this Transfer Certificate may not transfer a proportionate share of the Existing Lender's interest in the Transaction Security in all jurisdictions. It is the responsibility of the New Lender to ascertain whether any other documents or other formalities are required to perfect a transfer of such a share in the Existing Lender's Transaction Security in any jurisdiction and, if so, to arrange for execution of those documents and completion of those formalities.

 

  

130

  

THE SCHEDULE

 

Commitment/rights and obligations to be transferred

 

[insert relevant details]

 

[Facility Office address, fax number and attention details

 

for notices and account details for payments.]

 

 

	[Existing Lender] 	 	[New Lender] 	 
	 	 	 	 
	By:[●] 	 	By:[●] 	 

 

 

 

 

 

 

This Transfer Certificate is accepted by the Facility Agent and the Transfer Date is confirmed as [●].

 

[Facility Agent]

 

By:[●]

 

  

131

  

SCHEDULE 5

 

FORM OF ASSIGNMENT AGREEMENT

 

	
To:

	
Deutsche Bank AG Filiale Deutschlandgeschaft as Facility Agent and Star Sirius LLC and Star Vega LLC as Borrowers, for and on behalf of each Obligor

 

	
From:

	
[the Existing Lender] (the "Existing Lender") and [the New Lender] (the "New Lender")

 

Dated: [●]

 

Star Sirius LLC and Star Vega LLC - US$39,000,000 Facility Agreement dated [●] (the "Agreement")

 

	
1

	
We refer to the Agreement. This is an Assignment Agreement. Terms defined in the Agreement have the same meaning in this Assignment Agreement unless given a different meaning in this Assignment Agreement.

 

	
2

	
We refer to Clause 28.6 (Procedure for assignment):

 

	
(a)

	
The Existing Lender assigns absolutely to the New Lender all the rights of the Existing Lender under the Agreement, the other Finance Documents and in respect of the Transaction Security which correspond to that portion of the Existing Lender's Commitment and participations in the Loan under the Agreement as specified in the Schedule.

 

	
(b)

	
The Existing Lender is released from all the obligations of the Existing Lender which correspond to that portion of the Existing Lender's Commitments and participations in the Loan under the Agreement specified in the Schedule.

 

	
(c)

	
The New Lender becomes a Party as a Lender and is bound by obligations equivalent to those from which the Existing Lender is released under paragraph (b) above.

 

	
3

	
The proposed Transfer Date is [●].

 

	
4

	
On the Transfer Date the New Lender becomes Party to the Finance Documents as a Lender.

 

	
5

	
The Facility Office and address, fax, number and attention details for notices of the New Lender for the purposes of Clause 36.2 (Addresses) are set out in the Schedule.

 

	
6

	
The New Lender expressly acknowledges the limitations on the Existing Lender's obligations set out in paragraph (c) of Clause 28.4 (Limitation of responsibility of Existing Lenders).

 

	
7

	
This Assignment Agreement acts as notice to the Facility Agent (on behalf of each Finance Party) and, upon delivery in accordance with Clause 28.7 (Copy of Transfer Certificate or Assignment Agreement to Borrowers), to the Borrowers (on behalf of each Obligor) of the assignment referred to in this Assignment Agreement.

 

	
8

	
This Assignment Agreement may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Assignment Agreement.

 

	
9

	
This Assignment Agreement land any non-contractual obligations arising out of or in connection with it] [is/are] governed by English law.

 

  

132

  

	
10

	
This Assignment Agreement has been entered into on the date stated at the beginning of this Assignment Agreement.

 

Note: The execution of this Assignment Agreement may not transfer a proportionate share of the Existing Lender's interest in the Transaction Security in all jurisdictions. It is the responsibility of the New Lender to ascertain whether any other documents or other formalities are required to perfect a transfer of such a share in the Existing Lender's Transaction Security in any jurisdiction and, if so, to arrange for execution of those documents and completion of those formalities.

 

  

133

  

THE SCHEDULE

 

Commitment rights and obligations to be transferred by assignment, release and accession

 

[insert relevant details]

 

[Facility office address, fax number and attention details for notices

and account details for payments]

 

 

	[Existing Lender] 	 	[New Lender] 	 
	 	 	 	 
	By:[●] 	 	By:[●] 	 

 

 

 

 

 

 

 

This Assignment Agreement is accepted by the Facility Agent and the Transfer Date is confirmed as [●1.

 

Signature of this Assignment Agreement by the Facility Agent constitutes confirmation by the Facility Agent of receipt of notice of the assignment referred to herein, which notice the Facility Agent receives on behalf of each Finance Party.

 

[Facility Agent]

 

By:

 

  

134

  

SCHEDULE 6

 

FORM OF COMPLIANCE CERTIFICATE

 

To:         Deutsche Bank AG Filiale Deutschlandgeschaft as Facility Agent

 

	
From:

	
Star Bulk Carriers Corp.

 

Dated: [●]

 

Dear Sirs

 

Star Sirius LLC and Star Vega LLC — US$39,000,000 Facility Agreement dated [●] (the "Agreement")

 

	
1

	
We refer to the Agreement. This is a Compliance Certificate. Terms defined in the Agreement have the same meaning when used in this Compliance Certificate unless given a different meaning in this Compliance Certificate.

 

	
2

	
We confirm that:

 

	
(a)

	
the Market Adjusted Leverage is [●] per cent.;

 

	
(b)

	
the Market Adjusted Net Worth is $[●];

 

	
(c)

	
the ratio of Minimum Interest Coverage Ratio is [●]:1; and

 

	
(d)

	
the number of Fleet Vessels are [●] the aggregate Liquid Funds available to the Group are $[●] in aggregate.

 

	
3

	
We confirm that no Default is continuing.

 

	
4

	
The required financial information as per clause [●] of the Agreement are attached hereto.

 

	
5

	
A valuation of each Mortgaged Ship not older than 10 days is attached hereto.

 

 

 

 

	
Signed:

	  	  
	  	Chief financial officer
	  	of
	  	STAR BULK CARRIERS CORP.
	  	  	  
	  	  	  
	  	  	  
	  	  	  
	
[insert applicable certification language]

	  	  	  
	  	  	  
	  	  	  
	  	  
	
for and on behalf of

	
[name of Auditors of the Parent Guarantor]

 

  

135

  

SCHEDULE 7

 

DETAILS OF THE SHIPS

 

	
Ship name

	
Name of the Borrower owner

	
Type

	
GRT

	
NRT

	
Approved Flag and port of registration

	
Approved Classification Society

	
Approved Classification

	
Approved Commercial Manager

	
Approved

Technical

Manager

	
"STAR

SIRIUS"

	
Star Sirius LLC

	
Bulk Carrier

	
52,186

	
32,423

	
Marshall Islands

	
Nippon Kaiji Kyokai

	
NS* (CSR, Bulk Carrier-Type A, BC- Xil, GRAB 20, Performance Standard for Protective Coatings for Dedicated Seawater Ballast Tanks in All Types of Ships and Double-side Skin Spaces of Bulk Carriers)(ESP)(IWS) NINS*

(Strengthened for heavy cargo loading where hold nos. 2,4 & 6 may be empty)

 

	
Star Bulk Management Inc.

	
Starbulk  S.A.

	
"STAR

VEGA"

	
Star Vega LLC

	
Bulk Carrier

	
52,186

	
32,423

	
Marshall Islands

	
Nippon Kaiji Kyokai

	
NS* (CSR, Bulk Carrier-Type A, BC- Xll, GRAB 20, Performance Standard for Protective Coatings for Dedicated Seawater Ballast Tanks in All Types of Ships and Double-side Skin Spaces of Bulk Carriers)(ESP)(IWS) MNS*

(Strengthened for heavy cargo loading where hold nos, 2,4 & 6 may be empty)

 

	
Star Bulk Management Inc.

	
Starbulk S.A.

 

  

136

  

SCHEDULE 8

 

TIMETABLES

 

 

 

	
Delivery of a duly completed Utilisation Request (Clause 5.1 (Delivery of a Utilisation Request)) or a Selection Notice (Clause 9.1 (Selection of Interest Periods))

	  	
Five Business Days before the intended Utilisation Date (Clause 5,1 (Delivery of a Utilisation Request)) or the expiry of the preceding Interest Period (Clause 9.1 (Selection of Interest Periods))

	  	  	  
	
Facility Agent notifies the Lenders of the Advance in accordance with Clause 5.4 (Lenders' participation)

	  	
Three Business Days before the intended Utilisation Date.

	  	  	  
	
LIBOR is fixed

	  	
Quotation Day as of 11:00 am London time

	  	  	  
	  	  	
[Quotation Day as of 11:00 am Brussels time]

  

137

  

EXECUTION PAGES

 

 

	
BORROWERS

	
)

	  
	  	  	  
	
SIGNED by

	
)

	
/s/ Symeon Spyrou

	
Symeon Spyrou

	
)

	  
	
duly authorized

	
)

	  
	
for and on behalf of

	
)

	  
	
STAR SIRIUS LLC

	
)

	  
	
in the presence of:

	
)

	  
	  	  	  
	
Witness' signature:

	
)

	  
	
Witness' name:

	
)

	  
	
Witness' address:

	
)

	  
	
CHRISTOFOROS BISMPIKOS

SOLICITOR

WATSON, FARLEY WILLIAMS

348 SYNGROU AVENUE

17674 KALLITHEA

ATHENS - GREECE

	  	
/s/ CHRISTOFOROS BISMPIKOS

	  	  	  
	  	  	  
	
SIGNED by

	
)

	
/s/ Symeon Spyrou

	
Symeon Spyrou

	
)

	  
	
duly authorized

	
)

	  
	
for and on behalf of

	
)

	  
	
STAR VEGA LLC

	
)

	  
	
in the presence of:

	
)

	  
	  	  	  
	
Witness' signature:

	
)

	  
	
Witness' name:

	
)

	  
	
Witness' address:

	
)

	  
	
CHRISTOFOROS BISMPIKOS

SOLICITOR

WATSON, FARLEY WILLIAMS

348 SYNGROU AVENUE

17674 KALLITHEA

ATHENS - GREECE

	  	
/s/ CHRISTOFOROS BISMPIKOS

	
PARENT GUARANTOR

	
)

	  
	  	  	  
	
SIGNED by

	
)

	
/s/ Symeon Spyrou

	
Symeon Spyrou

	
)

	  
	
duly authorized

	
)

	  
	
for and on behalf of

	
)

	  
	
STAR BULK CARRIERS CORP.

	
)

	  
	
in the presence of:

	
)

	  
	  	  	  
	
Witness' signature:

	
)

	  
	
Witness' name:

	
)

	  
	
Witness' address:

	
)

	  
	
CHRISTOFOROS BISMPIKOS

SOLICITOR

WATSON, FARLEY WILLIAMS

348 SYNGROU AVENUE

17674 KALLITHEA

ATHENS - GREECE

	  	
/s/ CHRISTOFOROS BISMPIKOS

  

138

  

	
ORIGINAL LENDERS

	
)

	  
	  	  	  
	
SIGNED by

	
)

	  
	
VASILIKI KANELLOPOULOU

	
)

	
/s/ VASILIKI KANELLOPOULOU

	
duly authorized

	
)

	  
	
for and on behalf of

	
)

	  
	
DEUTSCHE BANK AG FILIALE 

DEUTSCHLANDGESHÄFT

	
)

	  
	
in the presence of:

	
)

	  
	  	  	  
	
Witness' signature:

	
)

	  
	
Witness' name:

	
)

	  
	
Witness' address:

	
)

	  
	
CHRISTOFOROS BISMPIKOS

SOLICITOR

WATSON, FARLEY WILLIAMS

348 SYNGROU AVENUE

17674 KALLITHEA

ATHENS - GREECE

	  	
/s/ CHRISTOFOROS BISMPIKOS

	
ARRANGER

	
)

	  
	  	  	  
	
SIGNED by

	
)

	
/s/ VASILIKI KANELLOPOULOU

	
VASILIKI KANELLOPOULOU

	
)

	  
	
duly authorized

	
)

	  
	
for and on behalf of

	
)

	  
	
DEUTSCHE BANK AG FILIALE 

DEUTSCHLANDGESHÄFT

	
)

	  
	
in the presence of:

	
)

	  
	  	  	  
	
Witness' signature:

	
)

	  
	
Witness' name:

	
)

	  
	
Witness' address:

	
)

	  
	
CHRISTOFOROS BISMPIKOS

SOLICITOR

WATSON, FARLEY WILLIAMS

348 SYNGROU AVENUE

17674 KALLITHEA

ATHENS - GREECE

	  	
/s/ CHRISTOFOROS BISMPIKOS

	
FACILITY AGENT

	
)

	  
	  	  	  
	
SIGNED by

	
)

	
/s/ VASILIKI KANELLOPOULOU

	
VASILIKI KANELLOPOULOU

	
)

	  
	
duly authorized

	
)

	  
	
for and on behalf of

	
)

	  
	
DEUTSCHE BANK AG FILIALE 

DEUTSCHLANDGESHÄFT

	
)

	  
	
in the presence of:

	
)

	  
	  	  	  
	
Witness' signature:

	
)

	  
	
Witness' name:

	
)

	  
	
Witness' address:

	
)

	  
	
CHRISTOFOROS BISMPIKOS

SOLICITOR

WATSON, FARLEY WILLIAMS

348 SYNGROU AVENUE

17674 KALLITHEA

ATHENS - GREECE

	  	
/s/ CHRISTOFOROS BISMPIKOS

  

139

  

 

	
SECIROTU AGENT

	
)

	  
	  	  	  
	
SIGNED by

	
)

	
/s/ VASILIKI KANELLOPOULOU

	
VASILIKI KANELLOPOULOU

	
)

	  
	
duly authorized

	
)

	  
	
for and on behalf of

	
)

	  
	
DEUTSCHE BANK AG FILIALE 

DEUTSCHLANDGESHÄFT

	
)

	  
	
in the presence of:

	
)

	  
	  	  	  
	
Witness' signature:

	
)

	  
	
Witness' name:

	
)

	  
	
Witness' address:

	
)

	  
	
CHRISTOFOROS BISMPIKOS

SOLICITOR

WATSON, FARLEY WILLIAMS

348 SYNGROU AVENUE

17674 KALLITHEA

ATHENS - GREECE

	  	
/s/ CHRISTOFOROS BISMPIKOS

 

  

140ex101to8k07428007_03192014.htm

Exhibit 10.1

 

	  

 

CREDIT AGREEMENT

 

 

dated as of March 19, 2014,

 

among

 

STEAK N SHAKE OPERATIONS, INC.,

 

as Borrower,

 

and

 

THE SUBSIDIARY GUARANTORS PARTY HERETO,

 

as Guarantors,

 

THE LENDERS PARTY HERETO,

 

JEFFERIES FINANCE LLC,

 

as Syndication Agent, Documentation Agent, Book Manager

Administrative Agent and Collateral Agent,

 

JEFFERIES FINANCE LLC and FIFTH THIRD BANK,

 

as Joint Lead Arrangers,

 

and

 

FIFTH THIRD BANK,

 

as Issuing Bank and Swingline Lender

	  

 

 

  

  

  

TABLE OF CONTENTS

Page

 

	
ARTICLE I    DEFINITIONS

	
1

	 	 
	
Section 1.01

	
Defined Terms

	
1

	
Section 1.02

	
Classification of Loans and Borrowings

	
42

	
Section 1.03

	
Terms Generally

	
42

	
Section 1.04

	
Accounting Terms; GAAP

	
43

	
Section 1.05

	
Pro Forma Calculations; Rounding

	
44

	
Section 1.06

	
Resolution of Drafting Ambiguities

	
44

	 	 	 
	
ARTICLE II    THE CREDITS

	
44

	 	 
	
Section 2.01

	
Commitments

	
44

	
Section 2.02

	
Loans

	
44

	
Section 2.03

	
Borrowing Procedure

	
45

	
Section 2.04

	
Evidence of Debt; Repayment of Loans

	
46

	
Section 2.05

	
Fees

	
47

	
Section 2.06

	
Interest on Loans

	
48

	
Section 2.07

	
Termination and Reduction of Commitments

	
49

	
Section 2.08

	
Interest Elections

	
49

	
Section 2.09

	
Amortization of Term Borrowings

	
50

	
Section 2.10

	
Optional and Mandatory Prepayments of Loans

	
51

	
Section 2.11

	
Alternate Rate of Interest

	
54

	
Section 2.12

	
Increased Costs; Change in Legality

	
54

	
Section 2.13

	
Breakage Payments

	
56

	
Section 2.14

	
Payments Generally; Pro Rata Treatment; Sharing of Setoffs

	
56

	
Section 2.15

	
Taxes

	
58

	
Section 2.16

	
Mitigation Obligations; Replacement of Lenders

	
61

	
Section 2.17

	
Swingline Loans

	
64

	
Section 2.18

	
Letters of Credit

	
66

	
Section 2.19

	
Increases of the Term Loan Commitments

	
71

	
Section 2.20

	
Amend and Extend Transactions

	
73

	 	 	 
	
ARTICLE III    REPRESENTATIONS AND WARRANTIES

	
75

	 	 
	
Section 3.01

	
Organization; Powers

	
75

	
Section 3.02

	
Authorization; Enforceability

	
75

	
Section 3.03

	
No Conflicts; No Default

	
75

	
Section 3.04

	
Financial Statements; Projections

	
76

	
Section 3.05

	
Properties

	
76

	
Section 3.06

	
Intellectual Property

	
77

	
Section 3.07

	
Equity Interests and Subsidiaries

	
78

	
Section 3.08

	
Litigation; Compliance with Legal Requirements

	
79

	
Section 3.09

	
Agreements

	
79

	
Section 3.10

	
Federal Reserve Regulations

	
79

	
Section 3.11

	
Investment Company Act, etc

	
80

	
Section 3.12

	
Use of Proceeds

	
80

	
Section 3.13

	
Taxes

	
80

	
Section 3.14

	
No Material Misstatements

	
80

	
Section 3.15

	
Labor Matters

	
80

	
Section 3.16

	
Solvency

	
80

	
Section 3.17

	
Employee Benefit Plans

	
81

 

  

-i-

  

 

TABLE OF CONTENTS

(continued)

Page

 

	
Section 3.18

	
Environmental Matters

	
81

	
Section 3.19

	
Insurance

	
82

	
Section 3.20

	
Security Documents

	
83

	
Section 3.21

	
Anti-Terrorism Law; Foreign Corrupt Practices Act

	
84

	 	 	 
	
ARTICLE IV    CONDITIONS TO CREDIT EXTENSIONS

	
84

	 	 
	
Section 4.01

	
Conditions to Initial Credit Extension

	
84

	
Section 4.02

	
Conditions to All Credit Extensions

	
87

	 	 	 
	
ARTICLE V    AFFIRMATIVE COVENANTS

	
88

	 	 
	
Section 5.01

	
Financial Statements, Reports, etc

	
88

	
Section 5.02

	
Litigation and Other Notices

	
90

	
Section 5.03

	
Existence; Businesses and Properties

	
91

	
Section 5.04

	
Insurance

	
91

	
Section 5.05

	
Obligations and Taxes

	
92

	
Section 5.06

	
Employee Benefits

	
92

	
Section 5.07

	
Maintaining Records; Access to Properties and Inspections; Annual Meetings

	
93

	
Section 5.08

	
Use of Proceeds

	
93

	
Section 5.09

	
Compliance with Environmental Laws; Environmental Reports

	
93

	
Section 5.10

	
Additional Collateral; Additional Guarantors

	
93

	
Section 5.11

	
Security Interests; Further Assurances

	
96

	
Section 5.12

	
Information Regarding Collateral

	
97

	
Section 5.13

	
Maintenance of Corporate Separateness

	
97

	
Section 5.14

	
Maintenance of Ratings

	
97

	
Section 5.15

	
Post-Closing Matters

	
97

	 	 	 
	
ARTICLE VI    NEGATIVE COVENANTS

	
97

	 	 
	
Section 6.01

	
Indebtedness

	
97

	
Section 6.02

	
Liens

	
99

	
Section 6.03

	
Sale and Leaseback Transactions

	
101

	
Section 6.04

	
Investments, Loans and Advances

	
102

	
Section 6.05

	
Mergers and Consolidations

	
103

	
Section 6.06

	
Asset Sales

	
104

	
Section 6.07

	
Acquisitions

	
105

	
Section 6.08

	
Dividends

	
106

	
Section 6.09

	
Transactions with Affiliates

	
107

	
Section 6.10

	
Financial Covenants

	
107

	
Section 6.11

	
Prepayments of Other Indebtedness; Modifications of Organizational Documents, Acquisition and Certain Other Documents, etc

	
108

	
Section 6.12

	
Limitation on Certain Restrictions on Subsidiaries

	
109

	
Section 6.13

	
Limitation on Issuance of Capital Stock

	
109

	
Section 6.14

	
Business

	
110

	
Section 6.15

	
Limitation on Accounting Changes

	
110

	
Section 6.16

	
Fiscal Periods

	
110

	
Section 6.17

	
No Further Negative Pledge

	
110

	
Section 6.18

	
Anti-Terrorism Law; Anti-Money Laundering

	
110

	
Section 6.19

	
Embargoed Person

	
111

 

  

-ii-

  

 

TABLE OF CONTENTS

(continued)

Page

 

	
ARTICLE VII    GUARANTEE

	
111

	 	 
	
Section 7.01

	
The Guarantee

	
111

	
Section 7.02

	
Obligations Unconditional

	
111

	
Section 7.03

	
Reinstatement

	
113

	
Section 7.04

	
Subrogation; Subordination

	
113

	
Section 7.05

	
Remedies

	
113

	
Section 7.06

	
Instrument for the Payment of Money

	
113

	
Section 7.07

	
Continuing Guarantee

	
113

	
Section 7.08

	
General Limitation on Guarantee Obligations

	
113

	
Section 7.09

	
Release of Guarantors

	
114

	
Section 7.10

	
Right of Contribution

	
114

	
Section 7.11

	
Qualified ECP Guarantors

	
114

	 	 	 
	
ARTICLE VIII    EVENTS OF DEFAULT

	
114

	 	 
	
Section 8.01

	
Events of Default

	
114

	
Section 8.02

	
Rescission

	
117

	
Section 8.03

	
[Reserved]

	
118

	
Section 8.04

	
Application of Proceeds

	
118

	 	 	 
	
ARTICLE IX    THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT

	
119

	 	 
	
Section 9.01

	
Appointment

	
119

	
Section 9.02

	
Agent in Its Individual Capacity

	
119

	
Section 9.03

	
Exculpatory Provisions

	
120

	
Section 9.04

	
Reliance by Agent

	
120

	
Section 9.05

	
Delegation of Duties

	
121

	
Section 9.06

	
Successor Agent

	
121

	
Section 9.07

	
Non-Reliance on Agent and Other Lenders

	
121

	
Section 9.08

	
Name Agents

	
122

	
Section 9.09

	
Indemnification

	
122

	
Section 9.10

	
[Reserved]

	
122

	
Section 9.11

	
Lender Action

	
122

	
Section 9.12

	
Withholding Taxes

	
123

	
Section 9.13

	
Lender’s Representations, Warranties and Acknowledgements

	
123

	
Section 9.14

	
Security Documents and Guarantee

	
123

	
Section 9.15

	
Administrative Agent May File Bankruptcy Disclosure and Proofs of Claim

	
125

	 	 	 
	
ARTICLE X    MISCELLANEOUS

	
126

	 	 
	
Section 10.01

	
Notices

	
126

	
Section 10.02

	
Waivers; Amendment

	
128

	
Section 10.03

	
Expenses; Indemnity; Damage Waiver

	
131

	
Section 10.04

	
Successors and Assigns

	
134

	
Section 10.05

	
Survival of Agreement

	
138

	
Section 10.06

	
Counterparts; Integration; Effectiveness

	
138

	
Section 10.07

	
Severability

	
138

	
Section 10.08

	
Right of Setoff; Marshalling; Payments Set Aside

	
138

	
Section 10.09

	
Governing Law; Jurisdiction; Consent to Service of Process

	
139

 

  

-iii-

  

 

TABLE OF CONTENTS

(continued)

Page

 

	
Section 10.10

	
Waiver of Jury Trial

	
140

	
Section 10.11

	
Headings

	
140

	
Section 10.12

	
Confidentiality

	
140

	
Section 10.13

	
Interest Rate Limitation

	
141

	
Section 10.14

	
Assignment and Assumption

	
141

	
Section 10.15

	
Obligations Absolute

	
141

	
Section 10.16

	
Waiver of Defenses; Absence of Fiduciary Duties

	
141

	
Section 10.17

	
Reinstatement

	
142

	
Section 10.18

	
USA Patriot Act

	
142

 

  

-iv-

  

 

ANNEXES

 

	
Annex I

	
Initial Lenders and Commitments

	
Annex II

	
Applicable Margins

 

SCHEDULES

 

	
Schedule 1.01(b)

	
Subsidiary Guarantors

	
Schedule 1.01(c)

	
Pledgors

	
Schedule 1.01(d)

	
Refinancing Indebtedness

	
Schedule 1.01(e)

	
Existing Letters of Credit

	
Schedule 3.05(c)

	
Real Property

	
Schedule 3.06(b)

	
Ownership; No Claims; Use of Intellectual Property; Protection of Trade Secrets

	
Schedule 3.07(a)

	
Subsidiaries

	
Schedule 3.07(c)

	
Organizational Chart

	
Schedule 3.09(c)

	
Material Agreements

	
Schedule 3.19

	
Insurance

	
Schedule 4.01(f)

	
Local Counsel

	
Schedule 6.01(b)

	
Existing Indebtedness

	
Schedule 6.02(c)

	
Existing Liens

	
Schedule 6.04(b)

	
Existing Investments

	
Schedule 6.12

	
Existing Restrictive Agreements

EXHIBITS

 

	
Exhibit A

	
Form of Assignment and Assumption

	
Exhibit B

	
Form of Borrowing Request

	
Exhibit C

	
Form of Compliance Certificate

	
Exhibit D

	
Form of Intercompany Note

	
Exhibit E

	
Form of Interest Election Request

	
Exhibit F

	
Form of Landlord Access Agreement

	
Exhibit G

	
Form of LC Request

	
Exhibit H

	
Form of Mortgage

	
Exhibit I-1

	
Form of Term Note

	
Exhibit I-2

	
Form of Revolving Note

	
Exhibit I-3

	
Form of Swingline Note

	
Exhibit J-1

	
Form of Perfection Certificate

	
Exhibit J-2

	
Form of Perfection Certificate Supplement

	
Exhibit K

	
Form of Security Agreement

	
Exhibit L

	
Form of Non-Bank Certificate

	
Exhibit M

	
Form of Solvency Certificate

	
Exhibit N-1

	
Form of Opinion of Borrower’s Special Counsel

	
Exhibit N-2

	
Form of Opinion of Borrower’s Local Counsel

 

  

-v-

  

 

CREDIT AGREEMENT

 

This CREDIT AGREEMENT (this “Agreement”), dated as of March 19, 2014, among Steak n Shake Operations, Inc., an Indiana corporation (“Borrower”), the Subsidiary Guarantors (such term and each other capitalized term used but not defined herein having the meaning given to it in Article I), the Lenders, Jefferies Finance LLC and Fifth Third Bank, as joint lead arrangers (in such capacity, the “Arrangers”), Jefferies Finance LLC, as book manager (in such capacity, the “Book Manager”), as documentation agent for the Lenders (in such capacity, the “Documentation Agent”), as syndication agent (in such capacity, the “Syndication Agent”), as administrative agent for the Lenders (in such capacity, the “Administrative Agent”) and as collateral agent for the Secured Parties (in such capacity, the “Collateral Agent”), and Fifth Third Bank, as swingline lender for the Lenders (in such capacity, the “Swingline Lender”) and as issuing bank for the Lenders (in such capacity, the “Issuing Bank”).

 

WITNESSETH:

 

WHEREAS, Borrower has requested that the Lenders extend credit in the form of (a) Initial Term Loans on the Closing Date, in an aggregate principal amount not in excess of $220,000,000, and (b) Revolving Loans at any time and from time to time prior to the Revolving Maturity Date, in an aggregate principal amount at any time outstanding not in excess of $30,000,000. Borrower has requested the Swingline Lender to extend credit, at any time and from time to time prior to the Revolving Maturity Date, in the form of Swingline Loans, in an aggregate principal amount at any time outstanding not in excess of $5,000,000.  Borrower has requested the Issuing Bank to issue Letters of Credit, in an aggregate face amount at any time outstanding not in excess of $20,000,000, to support payment obligations incurred in the ordinary course of business by Borrower and its Wholly Owned Subsidiaries.

 

WHEREAS, the proceeds of the Loans are to be used in accordance with Section 3.12.

 

WHEREAS, the Lenders are willing to extend such credit to Borrower, and the Issuing Bank is willing to issue Letters of Credit for the account of Borrower, in each case on the terms and subject to the conditions set forth herein.

 

Accordingly, the parties hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.01            Defined Terms.  As used in this Agreement, the following terms shall have the meanings specified below:

 

“ABR” when used in reference to any Loan or Borrowing, is used when such Loan comprising such Borrowing is, or the Loans comprising such Borrowing are, bearing interest at a rate determined by reference to the Alternate Base Rate in accordance with the provisions of Article II.

 

“ABR Borrowing” shall mean a Borrowing comprised of ABR Loans.

 

“ABR Loan” shall mean any ABR Term Loan or ABR Revolving Loan.

 

“ABR Revolving Loan” shall mean any Revolving Loan bearing interest at a rate determined by reference to the Alternate Base Rate in accordance with the provisions of Article II.

 

  

 

  

 

“ABR Term Loan” shall mean any Term Loan bearing interest at a rate determined by reference to the Alternate Base Rate in accordance with the provisions of Article II.

 

“Acquisition Consideration” shall mean the purchase consideration for a Permitted Acquisition or acquisition permitted pursuant to Section 6.07(f) and all other payments, directly or indirectly, by Borrower or any of its Subsidiaries in exchange for, or as part of, or in connection with, such acquisition, whether paid in cash or by exchange of Equity Interests or of properties or otherwise and whether payable at or prior to the consummation of such acquisition or deferred for payment at any future time, whether or not any such future payment is subject to the occurrence of any contingency, and includes any and all payments representing the purchase price and any assumptions of Indebtedness and/or Contingent Obligations, “earn-outs” and other agreements to make any payment the amount of which is, or the terms of payment of which are, in any respect subject to or contingent upon the revenues, income, cash flow or profits (or the like) of any Person or business; provided that any such future payment that is subject to a contingency shall be considered Acquisition Consideration only to the extent of the reserve, if any, required under GAAP (as determined at the time of the consummation of such acquisition) to be established in respect thereof by Borrower or any of its Subsidiaries.

 

“Additional Amounts” shall have the meaning assigned to such term in Annex II.

 

“Adjusted LIBOR Rate” shall mean, with respect to any Eurodollar Borrowing for any Interest Period, the greater of (a) (x) an interest rate per annum (rounded upward, if necessary, to the next 1/100th of 1%) determined by the Administrative Agent to be equal to the LIBOR Rate for such Eurodollar Borrowing in effect for such Interest Period divided by (y) 1 minus the Statutory Reserves (if any) for such Eurodollar Borrowing for such Interest Period and (b) 1.00% per annum.

 

“Administrative Agent” shall have the meaning assigned to such term in the preamble hereto and includes each other Person appointed as the successor administrative agent pursuant to Article IX.

 

“Administrative Agent Fees” shall have the meaning assigned to such term in Section 2.05(b).

 

“Administrative Questionnaire” shall mean an Administrative Questionnaire in the form supplied from time to time by the Administrative Agent.

 

“Advisors” shall mean legal counsel (including local, foreign and in-house counsel), auditors, accountants, consultants, appraisers, engineers or other advisors.

 

“Affiliate” shall mean, when used with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified; provided, however, that, (x) for purposes of Section 6.09, the term “Affiliate” shall also include (i) any Person that directly or indirectly owns more than 10% of any class of Equity Interests of the Person specified or (ii) any Person that is an officer or director of the Person specified and (y) for purposes of this Agreement, Jefferies LLC, and its Affiliates shall be deemed to be “Affiliates” of Jefferies Finance LLC.

 

“Agents” shall mean the Arrangers, the Documentation Agent, the Syndication Agent, the Administrative Agent, the Collateral Agent and the Book Manager; and “Agent” shall mean any of them as the context may require.

 

“Agreement” shall have the meaning assigned to such term in the preamble hereto.

 

  

2

  

 

“Alternate Base Rate” shall mean, for any day, a rate per annum (rounded upward, if necessary, to the next 1/100th of 1%) equal to the greatest of (a) the Base Rate in effect on such day, (b) the Adjusted LIBOR Rate for a Eurodollar Borrowing with a one-month Interest Period commencing on such day plus 1.00% and (c) the Federal Funds Effective Rate in effect on such day plus 0.50%.  If the Administrative Agent shall have determined (which determination shall be conclusive and binding absent 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 of the definition thereof, the Alternate Base Rate shall be determined without regard to clause (c) of the preceding sentence until the circumstances giving rise to such inability no longer exist.  Any change in the Alternate Base Rate due to a change in the Base Rate, the Adjusted LIBOR Rate or the Federal Funds Effective Rate shall be effective on the effective date of such change in the Base Rate, the Adjusted LIBOR Rate or the Federal Funds Effective Rate, respectively.

 

“Anti-Terrorism Laws” shall have the meaning assigned to such term in Section 3.21(a).

 

“Applicable Margin” shall mean, for any day, (i) with respect to any Term Loan that is an ABR Loan, 2.75% per annum, (ii) with respect to any Term Loan that is a Eurodollar Loan, 3.75% per annum, and (iii) with respect to any Revolving Loan or Swingline Loan, the applicable percentage set forth in Annex II under the applicable caption.

 

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

 

“Approved Fund” shall mean any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or investing in bank and other commercial loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

 

“Arrangers” shall have the meaning assigned to such term in the preamble hereto.

 

“Asset Sale” shall mean (a) any disposition of any property, by any Company and (b) any issuance or sale of any Equity Interests of any Subsidiary of Borrower, in each case, to any Person other than a Loan Party.  Notwithstanding the foregoing, none of the following shall constitute “Asset Sales”:  (i) any disposition of assets permitted by, or expressly referred to in, Section 6.04(c), 6.06(a), 6.06(f), 6.06(g), 6.06(h), 6.06(i), 6.06(j) or 6.06(k), (ii) solely for purposes of clause (a) above, any disposition of any property, by any Company for Fair Market Value resulting in not more than $2,500,000 in Net Cash Proceeds per asset sale (or series of related asset sales) and not more than $7,000,000 in Net Cash Proceeds in any fiscal year, and (iii) any disposition of any Cracker Barrel Shares or any Lion Fund Interests.

 

“Assignment and Assumption” shall mean an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required pursuant to Section 10.04(b)), and accepted by the Administrative Agent, substantially in the form of Exhibit A, or such other form as shall be approved by the Administrative Agent.

 

“Attributable Indebtedness” shall mean, when used with respect to any Sale and Leaseback Transaction, as at the time of determination, the present value (discounted at a rate equivalent to Borrower’s then-current weighted average cost of funds for borrowed money as at the time of determination, compounded on a semi-annual basis) of the total obligations of the lessee for rental payments (and substantially similar payments) during the remaining term of the lease included in any such Sale and Leaseback Transaction.

 

  

3

  

 

“Bankruptcy Code” means Chapter 11 of Title 11 of the United States Code, as amended from time to time and any successor statute and all rules and regulations promulgated thereunder.

 

“Base Amount” shall have the meaning assigned to such term in Section 6.10(b).

 

“Base Rate” shall mean, for any day, the prime rate published in The Wall Street Journal for such day; provided that if The Wall Street Journal ceases to publish for any reason such rate of interest, “Base Rate” shall mean the prime lending rate as set forth on the Bloomberg page PRIMBB Index (or successor page) for such day (or such other service as determined by the Administrative Agent from time to time for purposes of providing quotations of prime lending interest rates); each change in the Base Rate shall be effective on the date such change is effective.  The prime rate is not necessarily the lowest rate charged by any financial institution to its customers.

 

“Board” shall mean the Board of Governors of the Federal Reserve System of the United States.

 

“Board of Directors” shall mean, with respect to any Person, (i) in the case of any corporation, the board of directors of such Person, (ii) in the case of any limited liability company, the board of managers or board of directors, as applicable, of such Person, or if such limited liability company does not have a board of managers or board of directors, the functional equivalent of the foregoing, (iii) in the case of any partnership, the board of directors or board of managers, as applicable, of the general partner of such Person and (iv) in any other case, the functional equivalent of the foregoing.

 

“Book Manager” shall have the meaning assigned to such term in the preamble hereto.

 

“Borrower” shall have the meaning assigned to such term in the preamble hereto.

 

“Borrower Competitor” shall mean those Persons whose primary business consists of operating restaurants identified by name in writing by Borrower to the Administrative Agent prior to the Closing Date, as such list may be supplemented after the Closing Date as reasonably agreed by the Administrative Agent. Any such supplement to the list of Borrower Competitors will become effective two Business Days after delivery to the Administrative Agent.  In no event shall a supplement apply retroactively to disqualify any Lender as of the date of such supplement.

 

“Borrowing” shall mean (a) Loans of the same Class and Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect, or (b) a Swingline Loan.

 

“Borrowing Request” shall mean a request by Borrower in accordance with the terms of Section 2.03 and substantially in the form of Exhibit B, or such other form as shall be approved by the Administrative Agent.

 

“Business Day” shall mean any day other than a Saturday, Sunday or other day on which banks in New York City, New York or Cincinnati, Ohio, are authorized or required by law or other governmental action to close; provided, however, that when used in connection with a Eurodollar Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in Dollar deposits in the London interbank market.

 

  

4

  

 

“Capital Expenditures” shall mean, without duplication, for any period (a) any expenditure or commitment to expend money made during such period for any purchase or other acquisition of any asset including capitalized leasehold improvements, which would be classified as a fixed or capital asset on a consolidated balance sheet of Borrower and its Subsidiaries prepared in accordance with GAAP, and (b) Capital Lease Obligations incurred by such Persons during such period with respect to real or personal property acquired during such period, or Synthetic Lease Obligations incurred by such Persons during such period, but excluding (i) expenditures made in connection with the replacement, substitution or restoration of property pursuant to Section 2.10(e), (ii) the purchase price of equipment that is purchased substantially contemporaneously with the trade-in of existing equipment to the extent that the gross amount of such purchase price is reduced by the credit granted by the seller of such equipment for the equipment being traded in at such time, (iii) any Permitted Acquisitions; and (iv) any acquisitions pursuant to Section 6.07(f).

 

“Capital Lease” shall mean, with respect to any Person, any lease of, or other arrangement conveying the right to use, any property by such Person as lessee that has been or should be accounted for as a capital lease on a balance sheet of such Person prepared in accordance with GAAP.

 

“Capital Lease Obligations” of any Person shall mean the obligations of such Person to pay rent or other amounts under any Capital Lease, any lease entered into as part of any Sale and Leaseback Transaction or any Synthetic Lease, or a combination thereof, which obligations are (or would be, if such Synthetic Lease or other lease were accounted for as a Capital Lease) required to be classified and accounted for as Capital Leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof (or the amount that would be capitalized, if such Synthetic Lease or other lease were accounted for as a Capital Lease) determined in accordance with GAAP.

 

“Capital Requirements” shall mean, as to any Person, any matter, directly or indirectly, (i) regarding capital adequacy, capital ratios, capital requirements, the calculation of such Person’s capital or similar matters, or (ii) affecting the amount of capital required to be obtained or maintained by such Person or any Person controlling such Person (including any direct or indirect holding company), or the manner in which such Person or any Person controlling such Person (including any direct or indirect holding company), allocates capital to any of its contingent liabilities (including letters of credit), advances, acceptances, commitments, assets or liabilities.

 

“Cash Equivalents” shall mean (a) securities issued, or directly, unconditionally and fully guaranteed or insured, by the United States or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than one year from the date of acquisition by such Person, (b) time deposits and certificates of deposit of any Lender or any commercial bank having, or which is the principal banking subsidiary of a bank holding company organized under the laws of the United States, any state thereof or the District of Columbia having, capital and surplus aggregating in excess of $500,000,000 and a rating of “BBB+” (or such other similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act) with maturities of not more than one year from the date of acquisition by such Person, (c) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (a) above entered into with any Person meeting the qualifications specified in clause (b) above, (d) commercial paper issued by any Person incorporated in the United States having one of the two highest ratings obtainable from Standard & Poor’s Rating Service or Moody’s Investors Service Inc., in each case maturing not more than one year after the date of acquisition by such Person, (e) investments in money market funds or overnight sweep accounts with a Lender or an Affiliate thereof, in each case, at least 95% of whose assets are comprised of securities of the types described in clauses (a) through (d) above, and (f) demand deposit accounts maintained in the ordinary course of business with any bank meeting the qualifications specified in clause (b) above.

 

  

5

  

 

“Cash Collateralized” shall mean, with respect to any Letter of Credit, as of any date, that Borrower shall have deposited with the Collateral Agent for the benefit of the Revolving Lenders, an amount in cash equal to 105% of the LC Exposure as of such date plus any accrued and unpaid interest thereon.  “Cash Collateralize” shall have the correlative meaning.

 

“Cash Interest Expense” shall mean, for any period, Consolidated Interest Expense for such period, less the sum of (a) interest on any debt paid by the increase in the principal amount of such debt including by issuance of additional debt of such kind or the accretion or capitalization of interest as principal for such period; and (b) items described in clause (c) or, other than to the extent paid in cash or Cash Equivalents, clause (f) of the definition of “Consolidated Interest Expense” for such period.

 

“Casualty Event” shall mean any loss of title (other than through a consensual disposition of such property in accordance with this Agreement) or any loss of or damage to or any destruction of, or any condemnation or other taking (including by any Governmental Authority) of, any property of any Company; provided that any such event (or series of related events) resulting in Net Cash Proceeds (i) not exceeding $1,000,000 for any such event (or series of related events) and (ii) not exceeding in the aggregate for all such events (or series of related events) $2,000,000 in any fiscal year, shall not be deemed a “Casualty Event.”  “Casualty Event” shall include any taking of all or any part of any Real Property of any Person or any part thereof, in or by condemnation or other eminent domain proceedings pursuant to any Legal Requirement, or by reason of the temporary requisition of the use or occupancy of all or any part of any Real Property of any Person or any part thereof by any Governmental Authority, or any settlement in lieu thereof.

 

“CERCLA” shall mean the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. § 9601 et seq.

 

A “Change in Control” shall mean the occurrence of any of the following:

 

(a)      Holdings at any time ceases to own directly 100% of the Equity Interests of Borrower or ceases to have the power to vote, or direct the voting of, any such Equity Interests;

 

(b)      any “Person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit plan of such Person or group or its respective subsidiaries, and any Person acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan), other than (i) Sardar Biglari or any of his Affiliates and (ii) any direct or indirect Subsidiary of Holdings, is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this clause such Person or group shall be deemed to have “beneficial ownership” of all securities that such Person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option right”)), directly or indirectly, of the Voting Stock of Holdings representing more than 33% of the voting power of the total outstanding Voting Stock of Holdings on a fully diluted basis (and taking into account all such securities that such Person or group has the right to acquire (whether pursuant to an option right or otherwise));

 

(c)      during any period of 12 consecutive months, a majority of the members of the Board of Directors of Holdings cease to be composed of individuals (i) who were members of that Board of Directors at the commencement of such period, (ii) whose election or nomination to that Board of Directors was approved by individuals referred to in preceding clause (i) constituting at the time of such election or nomination at least a majority of that Board of Directors or (iii) whose election or nomination to that Board of Directors was approved by individuals referred to in preceding clauses (i) and (ii) constituting at the time of such election or nomination at least a majority of that Board of Directors (excluding, in the case of both preceding clauses (i) and (ii), any individual whose initial nomination for, or assumption of office as, a member of that Board of Directors occurs as a result of an actual (or threatened) solicitation of proxies or consents for the election or removal of one or more directors by any Person or group other than a solicitation for the election of one or more directors by or on behalf of the Board of Directors), or

 

  

6

  

 

(d)      any Person or two or more Persons acting in concert, other than (i) Sardar Biglari or any of his Affiliates and (ii) any direct or indirect Subsidiary of Holdings, shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation thereof, will result in its or their acquisition of the power to exercise, directly or indirectly, a controlling influence over the management or policies of Holdings, or control over the Voting Stock of Holdings on a fully-diluted basis (and taking into account all such securities that such Person or Persons have the right to acquire (whether pursuant to an option right or otherwise)) representing 33% or more of the combined voting power of such Voting Stock.

 

“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, order, rule, regulation, policy, or treaty by any Governmental Authority, (b) any change in any law, order, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

 

“Charges” shall have the meaning assigned to such term in Section 10.13.

 

“Claims” shall have the meaning assigned to such term in Section 10.03(b).

 

“Class,” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans, Term Loans or Swingline Loans and, when used in reference to any Commitment, refers to whether such Commitment is a Revolving Commitment, Term Loan Commitment or Swingline Commitment.

 

“Closing Date” shall mean the date of the initial Credit Extension hereunder.

 

“Closing Date Dividend” shall mean a cash Dividend made by Borrower to Holdings on the Closing Date in an amount not to exceed $50,000,000.00.

 

“Closing Date Senior Secured Leverage Ratio” shall mean 4.40:1.00.

 

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

 

  

7

  

 

“Collateral” shall mean, collectively, all of the Security Agreement Collateral, the Mortgaged Property and all other property of whatever kind and nature, whether now existing or hereafter acquired, pledged or purported to be pledged as collateral or otherwise subject to a security interest or purported to be subject to a security interest under any Security Document.

 

“Collateral Account” shall have the meaning assigned to such term in the Security Agreement.

 

“Collateral Agent” shall have the meaning assigned to such term in the preamble hereto.

 

“Commitment” shall mean, with respect to any Lender, such Lender’s Revolving Commitment, Term Loan Commitment or Swingline Commitment.

 

“Commitment Fee” shall have the meaning assigned to such term in Section 2.05(a).

 

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

 

“Communications” shall have the meaning assigned to such term in Section 10.01(b).

 

“Companies” shall mean Borrower and its Subsidiaries; and “Company” shall mean any one of them.

 

“Company Headquarters” means the property owned by Indianapolis Office Building and located at 107 S. Pennsylvania Street, Indianapolis, Indiana 46204.

 

“Compliance Certificate” shall mean a certificate of a Financial Officer of Borrower substantially in the form of Exhibit C or such other form as may be approved by the Administrative Agent and Borrower.

 

“Confidential Information Memorandum” shall mean that certain confidential information memorandum dated February 2014.

 

“Consolidated Amortization Expense” shall mean, for any period, the amortization expense of Borrower and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP.

 

“Consolidated Current Assets” shall mean, as at any date of determination, the total assets of Borrower and its Subsidiaries (other than cash, cash equivalents, marketable securities and deferred taxes) which may properly be classified as current assets on a consolidated balance sheet of Borrower and its Subsidiaries in accordance with GAAP; provided, however, that “Consolidated Current Assets” shall not include any real property assets held for sale regardless of whether those assets are classified as current assets in accordance with GAAP.

 

“Consolidated Current Liabilities” shall mean, as at any date of determination, the total liabilities of Borrower and its Subsidiaries which may properly be classified as current liabilities (other than deferred taxes and the current portion of any Loans) on a consolidated balance sheet of Borrower and its Subsidiaries in accordance with GAAP.

 

“Consolidated Depreciation Expense” shall mean, for any period, the depreciation expense of Borrower and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP.

 

  

8

  

 

“Consolidated EBITDA” shall mean, for any period, Consolidated Net Income for such period, adjusted by (x) adding thereto, without duplication, in each case only to the extent (and in the same proportion) deducted in determining such Consolidated Net Income (and with respect to the portion of Consolidated Net Income attributable to any Subsidiary of Borrower only if a corresponding amount of cash would be permitted to be distributed to Borrower by such Subsidiary by operation of the terms of its Organizational Documents and all agreements, instruments, Orders and other Legal Requirements applicable to such Subsidiary or its equityholders during such period:

 

(a)      Consolidated Interest Expense for such period;

 

(b)      Consolidated Amortization Expense for such period;

 

(c)      Consolidated Depreciation Expense for such period;

 

(d)      Consolidated Tax Expense for such period; and

 

(e)      the aggregate amount of all other non-cash items reducing Consolidated Net Income (excluding any non-cash charge that results in an accrual of a reserve for cash charges in any future period or the amortization of a prepaid cash item that was paid in a prior period or any write-down or write-off of assets for such period); and

 

(y) subtracting therefrom the aggregate amount of all non-cash items increasing Consolidated Net Income (other than the accrual of revenue or recording of receivables in the ordinary course of business) for such period.

 

“Consolidated Fixed Charge Coverage Ratio” shall mean, for any Test Period, the ratio of:  (a) Consolidated EBITDA for such Test Period minus the aggregate amount of Capital Expenditures for such Test Period, to the extent paid in cash plus the Consolidated Rental Expense for such Test Period; to (b) Consolidated Fixed Charges for such Test Period.

 

“Consolidated Fixed Charges” shall mean, for any period, the sum, without duplication, of

 

(a)      Consolidated Interest Expense for such period (net of the consolidated interest income of Borrower and its Subsidiaries for such period);

 

(b)      the principal amount of all scheduled amortization payments on all Indebtedness (including the principal component of all Capital Lease Obligations of Borrower and its Subsidiaries for such period) as determined on the first day of the respective period (or, with respect to a given issuance of Indebtedness incurred thereafter, on the date of the incurrence thereof);

 

(c)      all cash payments in respect of Taxes (including federal, state, local and foreign income taxes) made during such period (net of any cash refund in respect of income taxes actually received by Borrower and its Subsidiaries during such period);

 

(d)      all cash Dividends paid to Holdings by Borrower during such period (excluding the Closing Date Dividend); and

 

(e)      Consolidated Rental Expense for such period.

 

  

9

  

 

In determining the Consolidated Fixed Charges for any period (1) pro forma effect will be given to: the acquisition (whether by purchase, merger or otherwise) or disposition (whether by sale, merger or otherwise) of any property or assets acquired or disposed of by Borrower and/or any of its Subsidiaries since the first day of such period, as if such acquisition or disposition occurred on the first day of such period; (2) interest on Indebtedness bearing a floating interest rate will be computed as if the rate as of the last day of the period had been the applicable rate for the entire period; (3) if such Indebtedness bears, at the option of Borrower and/or any of its Subsidiaries, a fixed or floating rate of interest, interest thereon will be computed by applying, at the option of Borrower, either the fixed or floating rate; and (4) interest on Indebtedness under a revolving credit facility will be computed based upon the average daily balance of such Indebtedness during such period.

 

“Consolidated Indebtedness” shall mean, as at any date of determination, without duplication, the aggregate amount of all Indebtedness and all LC Exposure of Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP.

 

“Consolidated Interest Expense” shall mean, for any period, the total consolidated interest expense of Borrower and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP plus, without duplication:

 

(a)      imputed interest on Capital Lease Obligations and Attributable Indebtedness of Borrower and its Subsidiaries for such period;

 

(b)      commissions, discounts and other fees and charges owed by Borrower or any of its Subsidiaries with respect to letters of credit securing financial obligations, bankers’ acceptance financing, receivables financings and similar credit transactions for such period;

 

(c)      amortization of debt issuance costs, debt discount or premium and other financing fees and expenses incurred by Borrower or any of its Subsidiaries for such period;

 

(d)      cash contributions to any employee stock ownership plan or similar trust made by Borrower or any of its Subsidiaries to the extent such contributions are used by such plan or trust to pay interest or fees to any Person (other than Borrower or any of its Wholly Owned Subsidiaries) in connection with Indebtedness incurred by such plan or trust for such period;

 

(e)      all interest paid or payable with respect to discontinued operations of Borrower or any of its Subsidiaries for such period;

 

(f)      the interest portion of any payment obligations of Borrower or any of its Subsidiaries for such period deferred for payment at any future time, whether or not such future payment is subject to the occurrence of any contingency, and includes any and all payments representing the purchase price and any assumptions of Indebtedness and/or Contingent Obligations, “earn-outs” and other agreements to make any payment the amount of which is, or the terms of payment of which are, in any respect subject to or contingent upon the revenues, income, cash flow or profits (or the like) of any Person or business; and

 

(g)      all interest on any Indebtedness of Borrower or any of its Subsidiaries of the type described in clause (e) or (j) of the definition of “Indebtedness” for such period;

 

provided that (a) to the extent directly related to the Transactions, debt issuance costs, debt discount or premium and other financing fees and expenses shall be excluded from the calculation of Consolidated Interest Expense and (b) Consolidated Interest Expense shall be calculated after giving effect to Hedging Agreements (including associated costs) intended to protect against fluctuations in interest rates, but excluding unrealized gains and losses with respect to any such Hedging Agreements.

 

  

10

  

 

“Consolidated Net Income” shall mean, for any period, the consolidated net income (or loss) of Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded from such net income (to the extent otherwise included therein), without duplication:

 

(a)      the net income (or loss) of any Person (other than a Subsidiary of Borrower) in which any Person other than Borrower or any of its Subsidiaries has an ownership interest, except to the extent that cash in an amount equal to any such income has actually been received by Borrower or (subject to clause (b) below) any of its Wholly Owned Subsidiaries from such Person during such period; provided that, Consolidated Net Income shall not include any (i) net income (or loss) of Borrower on account of any Lion Fund Interests or (ii) any gain (or loss) on the sale or other disposition of any Cracker Barrel Shares;

 

(b)      the net income of any Subsidiary of Borrower during such period to the extent that the declaration and/or payment of dividends or similar distributions by such Subsidiary of that income is not permitted by operation of the terms of its Organizational Documents or any agreement, instrument, Order or other Legal Requirement applicable to that Subsidiary or its equityholders during such period, except that Borrower’s equity in net loss of any such Subsidiary for such period shall be included in determining Consolidated Net Income;

 

(c)      any non-cash gain (or loss), together with any related provisions for taxes on any such gain (or the tax effect of any such loss), realized during such period by Borrower or any of its Subsidiaries upon any disposition of assets by Borrower or any of its Subsidiaries;

 

(d)      non-cash gains and losses due solely to fluctuations in currency values and the related tax effects determined in accordance with GAAP for such period;

 

(e)      earnings resulting from any reappraisal, revaluation or write-up of assets;

 

(f)      any extraordinary non cash gain (or extraordinary non cash loss), together with any related provision for taxes on any such non cash gain (or the tax effect of any such non cash loss), recorded or recognized by Borrower or any of its Subsidiaries during such period;

 

(g)      non-cash gains and losses resulting from any reappraisal, revaluation, write-down or write-up of assets (including intangible assets, goodwill and deferred financing costs);

 

(h)      unrealized gains and losses with respect to Hedging Obligations for such period;

 

(i)      any non-cash extraordinary or non-cash nonrecurring gain (or extraordinary or nonrecurring loss), together with any related provision for taxes on any such gain (or the tax effect of any such loss), recorded or recognized by Borrower or any of its Subsidiaries during such period (for the avoidance of doubt, the write-off of capitalized expenses incurred in connection with the indebtedness listed on Schedule 1.01(d) and the transactions related thereto shall be included as a nonrecurring loss pursuant to this clause (i)); and

 

  

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(j)      with respect to each fiscal quarter set forth in the table below, the amount of emerging business expansion expenses set forth opposite such fiscal quarter in the table below:

 

	
Fiscal Quarter

	
Expense Amount

	
April 10, 2013

	
$3,000,000.00

	
July 3, 2013

	
$3,000,000.00

	
September 25, 2013

	
$3,500,000.00

	
December 18, 2013

	
$1,500,000.00

	
April 9, 2014

	
$1,500,000.00

	
July 2, 2014

	
$1,500,000.00

	
September 24, 2014

	
$1,500,000.00

 

For purposes of this definition of “Consolidated Net Income,” “nonrecurring” means any gain or loss as of any date that (i) did not occur in the ordinary course of Borrower’s or its Subsidiaries’ business and (ii) is of a nature and type that has not occurred in the prior twelve month period and is not reasonably expected to occur in the future.

 

“Consolidated Rental Expense” shall mean, for any period, the aggregate amount of all fixed payments that Borrower and its Subsidiaries are required to make as lessee under, or by the terms of, any lease during such period.

 

“Consolidated Senior Secured Indebtedness” shall mean, as at any date of determination, without duplication, the aggregate amount of all senior Indebtedness of Borrower and its Subsidiaries that is secured by a Lien on any asset of Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP.

 

“Consolidated Tax Expense” shall mean, for any period, the tax expense (including federal, state, local and foreign income taxes) of Borrower and its Subsidiaries, for such period, determined on a consolidated basis in accordance with GAAP.

 

“Contingent Obligation” shall mean, as to any Person, any obligation, agreement, understanding or arrangement of such Person guaranteeing or intended to guarantee any Indebtedness, leases, dividends or other obligations (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including any obligation, agreement, understanding or arrangement of such Person, whether or not contingent, (a) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (b) to advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth, net equity, liquidity, level of income, cash flow or solvency of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the primary obligor of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, (d) with respect to bankers’ acceptances, letters of credit and similar credit arrangements, until a reimbursement or equivalent obligation arises (which reimbursement obligation shall constitute a primary obligation), or (e) otherwise to assure or hold harmless the primary obligor of any such primary obligation against loss (in whole or in part) in respect thereof; provided, however, that the term “Contingent Obligation” shall not include endorsements of instruments for deposit or collection in the ordinary course of business or any product warranties given in the ordinary course of business.  The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation, or portion thereof, in respect of which such Contingent Obligation is made (or, if less, the maximum amount of such primary obligation for which such Person may be liable, whether singly or jointly, pursuant to the terms of the instrument, agreements or other documents or, if applicable, unwritten agreement, evidencing such Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith.

 

  

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“Control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise, and the terms “Controlling” and “Controlled” shall have meanings correlative thereto.

 

“Control Agreement” shall have the meaning assigned to such term in the Security Agreement.

 

“Corrective Extension Amendment”  has the meaning set forth in Section 2.20(f).

 

“Cracker Barrel” shall mean Cracker Barrel Old Country Store, Inc., a Tennessee corporation.

 

“Cracker Barrel Shares” shall mean the shares of common stock of Cracker Barrel owned by Borrower on the Closing Date.

 

“Credit Extension” shall mean, as the context may require, (i) the making of a Loan by a Lender or (ii) the issuance of any Letter of Credit, or the extension of the expiry date or renewal, or any amendment or other modification to increase the amount, of any existing Letter of Credit, by the Issuing Bank.

 

“Credit Facilities” shall mean the revolving credit, swingline, letter of credit and term loan facilities provided for hereunder (including any increases in such facilities pursuant to Section 2.19 and extensions of such term loan facilities pursuant to Section 2.20).

 

“Cumulative Credit Availability” means, as of any date, an amount (which shall not be less than zero), determined on a cumulative basis, equal to, without duplication:

 

	
  

	
(a)

	
$10,000,000; plus

 

	
  

	
(b)

	
the Retained Excess Cash Flow Amount; plus

 

	
  

	
(c)

	
the cumulative amount of Net Cash Proceeds received after the Closing Date that have been contributed as a capital contribution to Borrower, or otherwise received by Borrower in respect of the issuance of Qualified Capital Stock by Borrower, but excluding any such sale or issuance by Borrower of its Equity Interests upon exercise of any warrant or option to directors, officers or employees of any Company; provided that such proceeds were not obtained in connection with the Transactions; plus

 

	
  

	
(d)

	
an amount equal to any cash actually received by Borrower or any Subsidiary in respect of any Investments made pursuant to Section 6.04(m) to the extent constituting a return of capital or other return with respect to such Investment; provided, that in no case shall such amount exceed the amount of such Investment made pursuant to Section 6.04(m); minus

 

	
  

	
(e)

	
the cumulative amount of Investments made in reliance on Section 6.04(m) minus

 

	
  

	
(f)

	
the cumulative amount of Dividends made in reliance on Section 6.08(g) minus

 

  

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(g)

	
the cumulative amount of Capital Expenditures made in reliance on Section 6.10(b) minus

 

	
  

	
(h)

	
the cumulative amount of Subordinated Indebtedness repayments made in reliance on Section 6.11(a).

 

“Debt Issuance” shall mean the incurrence by any Company of any Indebtedness after the Closing Date (other than as permitted by Section 6.01).

 

“Debt Service” shall mean, for any period, Cash Interest Expense for such period plus scheduled principal amortization and mandatory principal repayments (whether pursuant to this Agreement or otherwise) of all Indebtedness for such period.

 

“Debtor Relief Laws” means 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 event, occurrence or condition which is, or upon notice, lapse of time or both would constitute, an Event of Default.

 

“Default Excess” shall have the meaning assigned to such term in Section 2.16(c).

 

“Default Period” shall have the meaning assigned to such term in Section 2.16(c).

 

“Default Rate” shall have the meaning assigned to such term in Section 2.06(c).

 

“Defaulted Loan” has the meaning set forth in Section 2.16(c).

 

“Defaulting Lender” shall mean any Lender that has (a) failed to fund its portion of any Borrowing, or any portion of its participation in any Letter of Credit or Swingline Loan, within one Business Day of the date on which it shall have been required to fund the same, unless the subject of a good faith dispute between Borrower and such Lender related hereto, (b) notified Borrower, the Administrative Agent, any Issuing Bank, the Swingline Lender or any other Lender in writing that it does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement or under agreements in which it commits to extend credit generally, (c) failed, within three Business Days after written request by the Administrative Agent or Borrower, to confirm that it will comply with the terms of this Agreement relating to its obligations to fund prospective Loans (unless the subject of a good faith dispute between Borrower and such Lender) and participations in then outstanding Letters of Credit and Swingline Loans; provided that any such Lender shall cease to be a Defaulting Lender under this clause (c) upon receipt of such confirmation by the Administrative Agent or Borrower, (d) otherwise failed to pay over to Borrower, the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within one Business Day of the date when due (unless the subject of a good faith dispute), or (e) after the Closing Date (i) been adjudicated as, or determined by any Governmental Authority having regulatory authority over such Person or its Properties or assets to be, insolvent or (ii) become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or custodian, appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment, unless, in the case of any Lender referred to in this clause (e), Borrower, the Administrative Agent, the Swingline Lender and each Issuing Bank shall be satisfied that such Lender intends, and has all approvals required to enable it, to continue to perform its obligations as a Lender hereunder; provided, however, that no Lender shall be deemed to be a Defaulting Lender under this clause (e) solely by virtue of an Undisclosed Administration. For the avoidance of doubt, a Lender shall not be deemed to be a Defaulting Lender solely by virtue of the ownership or acquisition of any Equity Interest in such Lender or its parent by a Governmental Authority; provided that, as of any date of determination, the determination of whether any Lender is a Defaulting Lender hereunder shall not take into account, and shall not otherwise impair, any amounts funded by such Lender which have been assigned by such Lender to an SPC pursuant to Section 10.04(h).  Any determination by the Administrative Agent that a Lender is a Defaulting Lender shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender upon delivery of written notice of such determination by the Administrative Agent to Borrower and each other Lender.

 

  

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“disposition” shall mean, with respect to any property, any conveyance, sale, lease, sublease, assignment, transfer or other disposition of such property (including (i) by way of merger or consolidation or amalgamation, (ii) any Sale and Leaseback Transaction and (iii) any Synthetic Lease).

 

“Disqualified Capital Stock” shall mean any Equity Interest which, by its terms (or by the terms of any security or instrument into which it is convertible or for which it is exchangeable or exercisable), or upon the happening of any event, (a) matures (excluding any maturity as the result of an optional redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the first anniversary of the Final Maturity Date, (b) is convertible into or exchangeable or exercisable (unless at the sole option of the issuer thereof) for (i) debt securities or other indebtedness or (ii) any Equity Interests referred to in (a) above, in each case at any time on or prior to the first anniversary of the Final Maturity Date, or (c) contains any repurchase or payment obligation which may come into effect prior to the first anniversary of the Final Maturity Date.

 

“Dividend” shall mean, with respect to any Person, that such Person has declared or paid a dividend or returned any equity capital to the holders of its Equity Interests or authorized or made any other distribution, payment or delivery of property (other than Qualified Capital Stock of such Person) or cash to the holders of its Equity Interests as such, or redeemed, retired, purchased or otherwise acquired, directly or indirectly, for consideration any of its Equity Interests outstanding (or any options or warrants issued by such Person with respect to its Equity Interests), or set aside or otherwise reserved, directly or indirectly, any funds for any of the foregoing purposes, or shall have permitted any of its Subsidiaries to purchase or otherwise acquire for consideration any of the outstanding Equity Interests of such Person (or any options or warrants issued by such Person with respect to its Equity Interests).  Without limiting the foregoing, “Dividends” with respect to any Person shall also include all payments made or required to be made by such Person with respect to any stock appreciation rights, plans, equity incentive or achievement plans or any similar plans or setting aside of or otherwise reserving any funds for the foregoing purposes.

 

“Documentation Agent” shall have the meaning assigned to such term in the preamble hereto.

 

“Dollars” or “$” shall mean lawful money of the United States.

 

“ECP” has the meaning assigned to such term in the definition of Excluded Swap Obligation.

 

“Eligible Assignee” means any Person that meets the requirements to be an assignee under Section 10.04(b) (subject to such consents, if any, as may be required under Section 10.04(b)).

 

“Embargoed Person” shall have the meaning assigned to such term in Section 6.19.

 

  

15

  

 

“Employee Benefit Plan” shall mean any “employee benefit plan” as defined in Section 3(3) of ERISA which is or was maintained, contributed to, or required to be maintained or contributed to by any Company or any of its ERISA Affiliates.

 

“Environment” shall mean any surface or subsurface physical medium or natural resource, including air, land, soil, surface waters, ground waters, stream and river sediments, biota and any indoor area, surface or physical medium.

 

“Environmental Claim” shall mean any claim, notice, demand, Order, action, suit, proceeding, or other communication alleging or asserting liability or obligations under or relating to Environmental Law, including liability or obligation for investigation, assessment, remediation, removal, cleanup, response, corrective action, monitoring, post-remedial or post-closure studies, investigations, operations and maintenance, injury, damage, destruction or loss to natural resources, personal injury, wrongful death, property damage, fines, penalties or other costs resulting from, related to or arising out of (i) the presence, Release or threatened Release of Hazardous Material in, on, into or from the Environment at any location or (ii) any violation of or non-compliance with Environmental Law, and shall include any claim, notice, demand, Order, action, suit or proceeding seeking damages (including the costs of remediation), contribution, indemnification, cost recovery, penalties, fines, indemnities, compensation or injunctive relief resulting from, related to or arising out of the presence, Release or threatened Release of Hazardous Material or alleged injury or threat of injury to human health, safety or the Environment.

 

“Environmental Law” shall mean any and all applicable current and future Legal Requirements relating to human health or safety or the Environment, the Release or threatened Release of Hazardous Material, natural resources or natural resource damages, or, to the extent relating to exposure to Hazardous Materials, occupational safety or health.

 

“Environmental Permit” shall mean any permit, license, approval, consent, registration, notification, exemption or other authorization required by or from a Governmental Authority under any Environmental Law.

 

“Equity Interest” shall mean, with respect to any Person, any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents, including membership interests (however designated, whether voting or nonvoting), of equity of such Person, including, if such Person is a partnership, partnership interests (whether general or limited), or if such Person is a limited liability company, membership interests and 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 property of, such partnership, whether outstanding on the date hereof or issued on or after the Closing Date, but excluding debt securities convertible or exchangeable into such equity.

 

“Equity Issuance” shall mean, without duplication, (i) any issuance or sale by Borrower after the Closing Date of any Equity Interests in Borrower (including any Equity Interests issued upon exercise of any warrant or option or equity-based derivative) or any warrants or options or equity-based derivatives to purchase Equity Interests in Borrower, (ii) any Preferred Stock Issuance or (iii) any contribution to the capital of Borrower.

 

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

 

“ERISA Affiliate” shall mean, with respect to any Person, any trade or business (whether or not incorporated) that, together with such Person, is treated as a single employer under Section 414(b) or (c) of the Code, or solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.  Any former ERISA Affiliate of a Person or any of its Subsidiaries shall continue to be considered an ERISA Affiliate of such Person or such Subsidiary within the meaning of this definition with respect to the period such entity was an ERISA Affiliate of such Person or such Subsidiary and with respect to liabilities arising after such period for which such Person or such Subsidiary could reasonably be expected to be liable under the Code or ERISA, but in no event for more than six years after such period if no such liability has been asserted against such Person or such Subsidiary; provided, however, that such Person or such Subsidiary shall continue to be an ERISA Affiliate of such Person or such Subsidiary after the expiration of the six-year period solely with respect to any liability asserted against such Person or such Subsidiary prior to the expiration of such six-year period.

 

  

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“ERISA Event” shall mean (i) a “reportable event” within the meaning of Section 4043 of ERISA and the regulations issued thereunder with respect to any Pension Plan; (ii) the failure to meet the minimum funding standard of Section 412 of the Code with respect to any Pension Plan (whether or not waived) or the failure to make by its due date a required installment of a material amount under Section 430(j) of the Code with respect to any Pension Plan or the failure to make any required contribution of a material amount to a Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress termination described in Section 4041(c) of ERISA; (iv) the withdrawal by any Company or any of its ERISA Affiliates from any Pension Plan with two or more contributing sponsors or the termination of any such Pension Plan resulting in liability to any Company pursuant to Section 4063 or 4064 of ERISA; (v) the institution by the PBGC of proceedings to terminate any Pension Plan, or the occurrence of any event or condition which could reasonably be expected to constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (vi) the imposition of liability of a material amount on any Company or any of its ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA; (vii) the withdrawal of any Company or any of its ERISA Affiliates in a complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan, or the receipt by any Company or any of its ERISA Affiliates of notice from any Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to terminate or has terminated under Section 4041A or 4042 of ERISA, if, in any such case, there is potential liability of a material amount of any Company therefor; (viii) the assertion of a material claim (other than routine claims for benefits) against any Employee Benefit Plan, or the assets thereof, or against any Company or any of its ERISA Affiliates in connection with any Employee Benefit Plan; (ix) receipt from the Internal Revenue Service of notice of the failure of any Pension Plan (or any other Employee Benefit Plan intended to be qualified under Section 401(a) of the Code) to qualify under Section 401(a) of the Code, or the failure of any trust forming part of any Pension Plan to qualify for exemption from taxation under Section 501(a) of the Code; (x) the imposition of a Lien pursuant to Section 401(a)(29) or 430(k) of the Code or pursuant to ERISA with respect to any Pension Plan; or (xi) the occurrence of a non-exempt prohibited transaction (within the meaning of Section 4975 of the Code or Section 406 of ERISA) which could reasonably be expected to result in liability of a material amount to any Company or any of its ERISA Affiliates.

 

“Eurodollar Borrowing” shall mean a Borrowing comprised of Eurodollar Loans.

 

“Eurodollar Loan” shall mean any Eurodollar Revolving Loan or Eurodollar Term Loan.

 

“Eurodollar Revolving Borrowing” shall mean a Borrowing comprised of Eurodollar Revolving Loans.

 

“Eurodollar Revolving Loan” shall mean any Revolving Loan bearing interest at a rate determined by reference to the Adjusted LIBOR Rate.

 

  

17

  

 

“Eurodollar Term Loan” shall mean any Term Loan bearing interest at a rate determined by reference to the Adjusted LIBOR Rate.

 

“Event of Default” shall have the meaning assigned to such term in Section 8.01, and shall include any Default.

 

“Excess Cash Flow” shall mean, for any Excess Cash Flow Period, the sum, without duplication, of:

 

(a)           the sum, without duplication, of:

 

(i)           Consolidated EBITDA for such Excess Cash Flow Period;

 

(ii)           cash items of income during such Excess Cash Flow Period not included in calculating Consolidated EBITDA;

 

(iii)          the decrease, if any, in the Net Working Capital from the beginning to the end of such Excess Cash Flow Period; and

 

(iv)         the reversal, during such Excess Cash Flow Period, of any reserve established pursuant to clause (b)(i) below; minus

 

(b)           the sum, without duplication, of:

 

(i)           the amount of any cash Consolidated Tax Expense paid or payable by Borrower and its Subsidiaries with respect to such Excess Cash Flow Period and for which, to the extent required under GAAP, reserves have been established;

 

(ii)           the amount of any cash Permitted Tax Distributions paid during such Excess Cash Flow Period;

 

(iii)          the amount of any distributions from Lion Fund in respect of any Lion Fund Interests and any dividends from Cracker Barrel in respect of any Cracker Barrel Shares, in each case during such Excess Cash Flow Period;

 

(iv)         the amount of any net proceeds from any sale or other disposition of any Lion Fund Interests or any Cracker Barrel Shares during such Excess Cash Flow Period;

 

(v)           the amount of Debt Service for such Excess Cash Flow Period;

 

(vi)         permanent repayments and prepayments of Indebtedness made by Borrower and its Subsidiaries during such Excess Cash Flow Period but only to the extent that (A) (i) such repayments and prepayments by their terms cannot be reborrowed or redrawn, and (ii) such repayments and prepayments do not occur in connection with a refinancing of all or a portion of such Indebtedness, (B) the amounts used to make such payments are funded from Internally Generated Funds, and (C) the amount of such repayments and prepayments of Indebtedness (other than the Term Loans) do not exceed $10,000,000;

 

(vii)        the sum of (i) Capital Expenditures made in cash in accordance with Section 6.10 during such Excess Cash Flow Period, to the extent funded from Internally Generated Funds, (ii) cash consideration paid during such Excess Cash Flow Period to make Permitted Acquisitions to the extent funded from Internally Generated Funds, and (iii) cash consideration paid during such Excess Cash Flow Period to make acquisitions permitted pursuant to Section 6.07(f) to the extent funded from Internally Generated Funds;

 

  

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(viii)       the increase, if any, in the Net Working Capital from the beginning to the end of such Excess Cash Flow Period; and

 

(ix)          cash items of expense (including losses) during such Excess Cash Flow Period not deducted in calculating Consolidated EBITDA.

 

 “Excess Cash Flow Period” shall mean (i) the period, taken as one accounting period, beginning on April 10, 2014 and ending on September 24, 2014, and (ii) each fiscal year of Borrower thereafter.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934.

 

“Excluded Swap Obligation” means, with respect to any Subsidiary Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Guarantee of such Subsidiary Guarantor of, or the grant by such Subsidiary Guarantor of a security interest to secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Subsidiary Guarantor’s failure for any reason not to constitute an “eligible contract participant” as defined in the Commodity Exchange Act (an “ECP”) at the time the Guarantee of such Subsidiary Guarantor or the grant of such security interest becomes effective with respect to such related Swap Obligation.  If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guarantee or security interest is or becomes illegal.

 

“Excluded Taxes” shall mean, with respect to the Administrative Agent, any Lender, the Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) net income imposed as a result of such recipient being organized under the laws of, or having its principal office located in, or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such tax and (b) in the case of a Foreign Lender (other than an Eligible Assignee pursuant to a request by Borrower under Section 2.16), any United States federal withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Foreign Lender’s failure or inability (other than as a result of a Change in Law) to comply with Section 2.15(f), except, in each case, to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from Borrower with respect to such withholding tax pursuant to Section 2.15(a) (it being understood and agreed, for the avoidance of doubt, that any withholding tax imposed on a Foreign Lender as a result of a Change in Law occurring after the time such Foreign Lender became a party to this Agreement shall not be an Excluded Tax) and (c) any United States federal withholding tax imposed as a result of FATCA.

 

“Executive Order” shall have the meaning assigned to such term in Section 3.21(a).

 

“Existing Letter of Credit” shall mean each letter of credit previously issued by Fifth Third Bank that (a) is outstanding on the Closing Date and (b) is listed on Schedule 1.01(e).

 

“Existing Hedge Agreement” shall mean, collectively, (i) the Master Agreement, dated as of January 25, 2011, between Borrower and Fifth Third Bank, (ii) the Confirmation, dated as of February 1, 2011, between Borrower and Fifth Third Bank, and (iii) the Confirmation, dated as of October 11, 2012, between Borrower and Fifth Third Bank.

 

  

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“Existing Lien” shall have the meaning assigned to such term in Section 6.02(c).

 

“Existing Term Loan Class” has the meaning set forth in Section 2.20(a).

 

“Extended Term Loan Maturity Date” means with respect to any tranche of Extended Term Loans, the final maturity date applicable thereto as specified in the applicable Extension Notice accepted by the respective Extending Lender or Extending Lenders.

 

“Extended Term Loans” has the meaning set forth in Section 2.20(a).

 

“Extending Lender” has the meaning set forth in Section 2.20(a).

 

“Extension”  has the meaning set forth in Section 2.20(a).

 

“Extension Amendment” has the meaning set forth in Section 2.20(a).

 

“Extension Notice” has the meaning set forth in Section 2.20(a).

 

“Extension Offer” has the meaning set forth in Section 2.20(a).

 

“Extension Series” means all Extended Term Loans that are established pursuant to the same Extension Amendments (or any subsequent Extension Amendment to the extent such Extension Amendment expressly provides that the Extended Term Loans provided for therein are intended to be part of any previously established Extension Series) and that provide for the same interest margins, extension fees, if any, and amortization schedule.

 

 “Fair Market Value” shall mean, with respect to any asset (including any Equity Interests of any Person), the price at which a willing buyer, not an Affiliate of the seller, and a willing seller who does not have to sell, would agree to purchase and sell such asset, as determined in good faith by the Board of Directors or, pursuant to a specific delegation of authority by such Board of Directors or a designated senior executive officer, of Borrower, or the Subsidiary of Borrower selling such asset.

 

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.

 

“Federal Funds Effective Rate” shall mean, for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System of the United States arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary to the next 1/100th of 1%) of the quotations for the day for such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it.

 

“Fee Letter” shall mean (i) Section 4 of the Engagement Letter, dated February 25, 2014, between Borrower and Jefferies Finance LLC and (ii) the Fee Letter, dated March 13, 2014, between Borrower and Fifth Third Bank.

 

  

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“Fees” shall mean the Commitment Fees, the Administrative Agent Fees, the LC Participation Fees, the Fronting Fees and the other fees referred to in Section 2.05(d).

 

“Final Maturity Date” shall mean the later of (i) the Revolving Maturity Date, (ii) the Initial Term Loan Maturity Date and (iii) each Extended Term Loan Maturity Date.

 

“Financial Covenant Default” shall mean (i) a failure to comply with the financial covenant set forth in Section 6.10(a) or (ii) the taking of any action by Borrower or its Subsidiaries if such action was prohibited hereunder solely due to the existence of a Financial Covenant Default of the type described in clause (i) of this definition.  It is understood and agreed that this definition may not be amended without the written consent of the Required Revolving Lenders.

 

“Financial Officer” of any Person shall mean the chief financial officer, principal accounting officer, treasurer or controller of such Person.

 

“Foreign Lender” shall mean any Lender that is not, for United States federal income tax purposes, (i) a citizen or resident of the United States, (ii) a corporation or entity treated as a corporation created or organized in or under the laws of the United States, or any political subdivision thereof, (iii) an estate whose income is subject to U.S. federal income taxation regardless of its source or (iv) a trust if a court within the United States is able to exercise primary supervision over the administration of such trust and one or more United States Persons have the authority to control all substantial decisions of such trust.

 

“Foreign Plan” means each “employee pension benefit plan” (within the meaning of Section 3(2) of ERISA, whether or not subject to ERISA) that is not subject to U.S. law and is maintained, contributed to, or required to be maintained or contributed to, by any Company.

 

“Foreign Subsidiary” shall mean a Subsidiary that is organized under the laws of a jurisdiction other than the United States or any state thereof or the District of Columbia.

 

“Fronting Fee” shall have the meaning assigned to such term in Section 2.05(c).

 

“Funding Default” shall have the meaning assigned to such term in Section 2.16(c).

 

“GAAP” shall mean generally accepted accounting principles in the United States, or successors thereto (e.g., subject to Section 1.04, IFRS) applied on a consistent basis.

 

“Governmental Authority” shall mean any federal, state, local or foreign (whether civil, criminal, military or otherwise) court, central bank or governmental agency, tribunal, authority, instrumentality or regulatory body or any subdivision thereof or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

 

“Governmental Real Property Disclosure Requirements” shall mean any Legal Requirement of any Governmental Authority requiring notification of the buyer, lessee, mortgagee, assignee or other transferee of any Real Property, facility, establishment or business, or any notification, registration or filing to or with any Governmental Authority, in connection with the disposition (including any transfer of control) of any Real Property, facility, establishment or business, as may be required under any applicable Environmental Law or of any actual or threatened presence or Release in, on, into or from the Environment, or the use, disposal or handling of Hazardous Material on, at, under, from or near the Real Property, facility, establishment or business to be sold, acquired, leased, mortgaged, assigned or transferred.

 

  

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“Granting Lender” shall have the meaning assigned to such term in Section 10.04(h).

 

“Guaranteed Obligations” shall have the meaning assigned to such term in Section 7.01.  Notwithstanding anything to the contrary contained herein or in any other Loan Document, in no event will Guaranteed Obligations include any Excluded Swap Obligations.

 

“Guarantees” shall mean the guarantees issued pursuant to Article VII by the Subsidiary Guarantors.

 

“Hazardous Materials” shall mean hazardous substances, hazardous wastes, hazardous materials, polychlorinated biphenyls (“PCBs”) or any substance or compound containing PCBs, asbestos or any asbestos-containing materials in any form or condition, lead-based paint, urea formaldehyde, pesticides, radon or any other radioactive materials including any source, special nuclear or by-product material, petroleum, petroleum products, petroleum-derived substances, crude oil or any fraction thereof, any toxic mold, microbial or fungal contamination that could pose a risk to human health or the Environment or would negatively impact the condition of the Real Property in any material respect or any other pollutants, contaminants, chemicals, wastes, materials, compounds, constituents or substances subject to regulation under, or which can give rise to liability or obligations under, any Environmental Laws.

 

“Hedging Agreement” shall mean (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, currency swap transactions, cross-currency rate swap transactions, currency options, cap transactions, floor transactions, collar transactions, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options or warrants to enter into any of the foregoing), whether or not any such transaction is governed by, or otherwise subject to, any master agreement or any netting agreement, and (b) any and all transactions or arrangements of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement (or similar documentation) published from time to time by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such agreement or documentation, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

 

“Hedging Obligations” shall mean obligations (not including any Excluded Swap Obligations) under or with respect to Hedging Agreements.

 

“Hedging Termination Value” shall mean, in respect of any one or more Hedging Agreements, after taking into account the effect of any netting agreements relating to such Hedging Agreements (to the extent, and only to the extent, such netting agreements are legally enforceable in Insolvency Proceedings against the applicable counterparty obligor thereunder), (i) for any date on or after the date such Hedging Agreements have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (ii) for any date prior to the date referenced in preceding clause (i), the amount(s) determined as the mark-to-market value(s) for such Hedging Agreements, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Hedging Agreements (which may include a Lender or any Affiliate of a Lender).

 

“Holdings” shall mean Biglari Holdings Inc., an Indiana corporation.

 

  

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“IFRS” means International Financial Reporting Standards issued by the International Accounting Standards Board (or the Financial Accounting Standards Board of the American Institute of Certified Public Accountants or the SEC, as the case may be), as in effect from time to time.

 

“Immaterial Subsidiary” shall mean, as of any date of determination, any Wholly Owned Subsidiary of Borrower whose Consolidated EBITDA attributable to such Subsidiary (on a consolidated basis including its Subsidiaries) for such Test Period does not exceed 1% of the Consolidated EBITDA attributable to Borrower and its Subsidiaries on a consolidated basis; provided, however, that (x) a Wholly Owned Subsidiary of Borrower that no longer meets the foregoing requirements of this definition or is otherwise required to become a Loan Party pursuant to Section 5.10 shall no longer constitute an Immaterial Subsidiary for purposes of this Agreement and (y) notwithstanding the foregoing, Borrower may elect to cause an Immaterial Subsidiary to become a Loan Party pursuant to Section 4.01 or 5.10, as the case may be, in which case such Immaterial Subsidiary shall, upon satisfaction of the provisions of either such Section, no longer constitute an Immaterial Subsidiary.  Notwithstanding the foregoing, (i) if the Consolidated EBITDA attributable to all Immaterial Subsidiaries as of such Test Period exceeds 5% of the Consolidated EBITDA attributable to Borrower and its Subsidiaries on a consolidated basis, Borrower shall designate sufficient Immaterial Subsidiaries as no longer constituting Immaterial Subsidiaries to eliminate such excess (or, if Borrower shall have failed to designate such Subsidiaries within 20 Business Days of such excess arising, Subsidiaries shall automatically be deemed not to constitute Immaterial Subsidiaries in descending order based on the amounts of their contributions to Consolidated EBITDA until such excess shall have been eliminated), and the Subsidiaries so designated or deemed designated shall not constitute Immaterial Subsidiaries for any purpose of the Loan Documents, (ii) any Subsidiary of Borrower that guarantees or is an obligor of the Indebtedness incurred under this Agreement and the other Loan Documents shall not be deemed an Immaterial Subsidiary and (iii) Steak n Shake LLC and any other Subsidiary of Borrower that is the owner of material Intellectual Property shall not be deemed an Immaterial Subsidiary. The Immaterial Subsidiaries on the Closing Date are Steak n Shake 3rd Street Promenade, LLC, Steak n Shake Alamo Ranch, LLC, Steak n Shake International, Inc., Steak n Shake Signature Tempe LLC, Steak n Shake Sports and Entertainment Group LLC and Steak n Shake License LLC.

 

“Increasing Lenders” shall have the meaning assigned to such term in Section 2.19(b).

 

“Incremental Loan Amendment” shall have the meaning assigned to such term in Section 2.19(d).

 

“Incremental Term Loans” means term loans made pursuant to Section 2.19.

 

“Indebtedness” of any Person shall mean, without duplication, (a) all obligations of such Person for borrowed money or advances; (b) all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or similar instruments; (c) all obligations of such Person under conditional sale or other title retention agreements relating to property purchased by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property); (d) all obligations of such Person issued or assumed as part of the deferred purchase price of property or services (excluding trade accounts payable and accrued obligations incurred in the ordinary course of business on normal trade terms and not overdue by more than 90 days); (e) all Indebtedness secured by any Lien on property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, but limited to the lower of (i) the Fair Market Value of such property and (ii) the amount of the Indebtedness secured; (f) all Capital Lease Obligations, Purchase Money Obligations and Synthetic Lease Obligations of such Person; (g) all obligations of such Person, contingent or otherwise, to purchase, redeem, retire or otherwise acquire for value any Equity Interests of such Person, valued, in the case of a redeemable preferred Equity Interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; (h) all Hedging Obligations to the extent required to be reflected on a balance sheet of such Person, valued at the Hedging Termination Value thereof; (i) all obligations of such Person for the reimbursement of any obligor in respect of letters of credit, letters of guaranty, bankers’ acceptances and similar credit transactions, but excluding obligations with respect to letters of credit (including trade letters of credit) securing obligations of such Person described in clause (c) above or entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon; and (j) all Contingent Obligations of such Person in respect of Indebtedness or obligations of others of the kinds referred to in clauses (a) through (i) above.  The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except (other than in the case of general partner liability) to the extent that terms of such Indebtedness expressly provide that such Person is not liable therefor.

 

  

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“Indemnified Taxes” shall mean Taxes other than Excluded Taxes.

 

“Indemnitee” shall have the meaning assigned to such term in Section 10.03(b).

 

“Indianapolis Office Building” shall mean Steak n Shake Indianapolis Office Inc., an Indiana corporation.

 

“Information” shall have the meaning assigned to such term in Section 10.12.

 

“Initial Term Loan Maturity Date” shall mean March 19, 2021, the date which is seven years after the Closing Date or, if such date is not a Business Day, the first Business Day thereafter.

 

“Initial Term Loans” means the Term Loans made on the Closing Date pursuant to Section 2.02.

 

“Insolvency Laws” shall mean the Bankruptcy Code and all other insolvency, bankruptcy, receivership, liquidation, conservatorship, assignment for the benefit of creditors, moratorium, rearrangement, reorganization, or similar federal or state Legal Requirements of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

 

“Insolvency Proceeding” shall mean (i) any case, action or proceeding before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors, or (ii) any general assignment for the benefit of creditors, formal or informal moratorium, composition, marshaling of assets for creditors or other, similar arrangement in respect of its creditors generally or any substantial portion of its creditors, in each case, undertaken under United States federal or state or non-United States Legal Requirements, including the Bankruptcy Code of the United States.

 

“Insurance Policies” shall mean the insurance policies and coverages required to be maintained by each Loan Party that is an owner or lessee of Mortgaged Property with respect to the applicable Mortgaged Property pursuant to Section 5.04 and all renewals and extensions thereof.

 

“Insurance Requirements” shall mean, collectively, all provisions of the Insurance Policies, all requirements of the issuer of any of the Insurance Policies and all Orders, rules, regulations and any other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) binding upon any Loan Party that is an owner of Mortgaged Property and applicable to the Mortgaged Property or any use or condition thereof.

 

  

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“Intellectual Property” shall have the meaning assigned to such term in Section 3.06(a).

 

“Intercompany Note” shall mean the intercompany demand promissory note substantially in the form of Exhibit D.

 

“Interest Election Request” shall mean a request by Borrower to convert or continue a Revolving Borrowing or Term Borrowing in accordance with Section 2.08(b), substantially in the form of Exhibit E.

 

“Interest Payment Date” shall mean (a) with respect to any ABR Loan (including Swingline Loans), the last Business Day of each March, June, September and December to occur during any period in which such Loan is outstanding, (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Loan with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period, (c) with respect to any Revolving Loan or Swingline Loan, the Revolving Maturity Date (or such earlier date on which the Revolving Commitments are terminated) and, after such maturity (or termination as the case may be), on each date on which demand for payment is made, (d) with respect to any Initial Term Loan, the Initial Term Loan Maturity Date and, after such maturity, on each date on which demand for payment is made and (e) with respect to any Extended Term Loan, the applicable Extended Term Loan Maturity Date and, after such maturity, on each date on which demand for payment is made.

 

“Interest Period” shall mean, with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months (or, if each affected Lender so agrees, twelve months) thereafter, as Borrower may elect; provided that (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, and (b) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period.  For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

 

“Internally Generated Funds” shall mean funds not constituting the proceeds of any Indebtedness, Debt Issuance, Equity Issuance, Asset Sale or Casualty Event (in each case, without regard to the exclusions from the definitions thereof, other than in the case of an Asset Sale only, any disposition of assets permitted by Section 6.04(c), 6.06(a), 6.06(g), or 6.06(h)).

 

“Investments” shall have the meaning assigned to such term in Section 6.04.

 

“ISP” shall mean, with respect to any Letter of Credit, the ‘International Standby Practices 1998’ (or ‘ISP 98’) published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of issuance of such Letter of Credit).

 

“Issuing Bank” shall mean, as the context may require, (a) each of Fifth Third Bank and any other Lender reasonably acceptable to the Administrative Agent and Borrower which agrees to issue Letters of Credit hereunder, with respect to Letters of Credit issued by it; (b) any other Lender that may become an Issuing Bank pursuant to Sections 2.18(j) and (k) with respect to Letters of Credit issued by such Lender; (c) with respect to each Existing Letter of Credit, the Lender that issued such Existing Letter of Credit, and/or (d) collectively, all of the foregoing.  Any Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by one or more Affiliates of such Issuing Bank (and such Affiliate shall be deemed to be an “Issuing Bank” for all purposes of the Loan Documents).  In the event that there is more than one Issuing Bank at any time, references herein and in the other Loan Documents to the Issuing Bank shall be deemed to refer to the Issuing Bank in respect of the applicable Letter of Credit or to all Issuing Banks, as the context requires.

 

  

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“Joinder Agreement” shall mean a joinder agreement substantially in the form of Exhibit 3 to the Security Agreement.

 

“Landlord Access Agreement” shall mean a Landlord Access Agreement, substantially in the form of Exhibit F, or such other form as may reasonably be acceptable to the Administrative Agent.

 

“LC Commitment” shall mean the commitment of the Issuing Bank to issue Letters of Credit pursuant to Section 2.18; provided that at no time shall the LC Commitment exceed the Revolving Commitment.  The amount of the LC Commitment shall be $20,000,000 on the Closing Date.

 

“LC Disbursement” shall mean a payment or disbursement made by the Issuing Bank pursuant to a Letter of Credit.

 

“LC Exposure” shall mean, as at any date of determination, the sum of (a) the aggregate amount available to be drawn under all outstanding Letters of Credit at such time plus (b) the aggregate principal amount of all Reimbursement Obligations outstanding at such time.  The LC Exposure of any Revolving Lender at any time shall mean its Pro Rata Percentage of the aggregate LC Exposure at such time.  For all purposes of this Agreement and the other Loan Documents, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP (or any other equivalent applicable rule with respect to force majeure events), such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.

 

“LC Participation Fee” shall have the meaning assigned to such term in Section 2.05(c).

 

“LC Request” shall mean a request by Borrower in accordance with the terms of Section 2.18(b) and substantially in the form of Exhibit G, or such other form as shall be approved by the Issuing Bank.

 

“Leases” shall mean any and all leases, subleases, tenancies, options, concession agreements, rental agreements, occupancy agreements, franchise agreements, access agreements and any other agreements (including all amendments, extensions, replacements, renewals, modifications and/or guarantees thereof), whether or not of record and whether now in existence or hereafter entered into, affecting the use or occupancy of all or any portion of any Real Property.

 

“Legal Requirements” shall mean, as to any Person, the Organizational Documents of such Person, and any treaty, law (including the common law), statute, ordinance, code, rule, regulation, guidelines, license, permit requirement, Order or determination of an arbitrator or a court or other Governmental Authority, and any interpretation thereof published by the applicable Governmental Authority or administrative procedures relating thereto established by the applicable 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, in each case whether or not having the force of law.  For purposes of Section 2.15, the term “applicable Legal Requirements” shall include FATCA.

 

  

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“Lenders” shall mean (a) the financial institutions and other Persons party hereto as “Lenders” on the date hereof, and (b) each financial institution or other Person that becomes a party hereto pursuant to an Assignment and Assumption (including pursuant to Section 2.19), other than, in each case, any such financial institution or Person that has ceased to be a party hereto pursuant to an Assignment and Assumption.  Unless the context clearly indicates otherwise, the term “Lenders” shall include the Swingline Lender.

 

“Letter of Credit” shall mean any Existing Letter of Credit and any standby letter of credit issued or to be issued by an Issuing Bank for the account of Borrower or one of its Subsidiaries pursuant to Section 2.18.

 

“Letter of Credit Expiration Date” shall mean the date which is five Business Days prior to the Revolving Maturity Date.

 

“LIBOR Rate” shall mean, with respect to any Eurodollar Borrowing for any Interest Period therefor, the rate per annum equal to the arithmetic mean (rounded to the nearest 1/100th of 1%) of the offered rates for deposits in Dollars with a term comparable to such Interest Period that appears on Reuters Screen LIBOR01 Page (or such other page as may replace such page on such service for the purpose of displaying the rates at which Dollar deposits are offered by leading banks in the London interbank deposit market as designated by the Administrative Agent from time to time) (the “Screen Rate”) at approximately 11:00 a.m., London, England time, on the second full Business Day preceding the first day of such Interest Period; provided, however, that (i) if the Screen Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement, (ii) if no comparable term for an Interest Period (the “Impacted Interest Period”) is available, the LIBOR Rate shall be determined by the Administrative Agent (which determination shall be conclusive and binding absent manifest error) to be equal to the rate that results from interpolating on a linear basis between: (a) the applicable Screen Rate (for the longest period for which the applicable Screen Rate is available) that is shorter than the Impacted Interest Period and (b) the applicable Screen Rate for the shortest period (for which such Screen Rate is available) that exceeds the Impacted Interest Period, in each case, for such Interest Period (such rate, the “Interpolated Rate”) and (iii) if Reuters Screen LIBOR01 Page shall at any time no longer exist, “LIBOR Rate” shall mean, with respect to each day during each Interest Period pertaining to Eurodollar Borrowings comprising part of the same Borrowing, the rate per annum equal to the rate at which the Administrative Agent is offered deposits in Dollars at approximately 11:00 a.m., London, England time, two Business Days before the first day of such Interest Period in the London interbank market for delivery on the first day of such Interest Period for the number of days comprised therein and in an amount comparable to its portion of the amount of such Eurodollar Borrowing to be outstanding during such Interest Period.  In no event, with respect to the Term Loans issued on the Closing Date, notwithstanding the rate determined pursuant to the foregoing, shall the LIBOR Rate be less than 1.00%.  “Reuters Screen LIBOR01 Page” shall mean the display designated on the Reuters 3000 Xtra Page (or such other page as may replace such page on such service for the purpose of displaying the rates at which Dollar deposits are offered by leading banks in the London interbank deposit market).

 

“Lien” shall mean, with respect to any property, (a) any mortgage, deed of trust, lien (statutory or other), judgment liens, pledge, encumbrance, claim, charge, assignment, hypothecation, deposit arrangement, security interest or encumbrance of any kind or any arrangement to provide priority or preference or any filing of any financing statement under the UCC or any other similar notice of Lien under any similar notice or recording statute of any Governmental Authority, including any easement, servitude, right-of-way or other encumbrance on title to Real Property, in each of the foregoing cases whether voluntary or imposed or arising by operation of law, and any agreement to give any of the foregoing, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such property, and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

 

  

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“Lion Fund” shall mean Lion Fund II, L.P., a Delaware limited partnership.

 

“Lion Fund Interests” shall mean the limited partnership interests of Lion Fund owned by Borrower on the Closing Date and any additional limited partnership interests of Lion Fund received by Borrower directly as a result of the contribution or other transfer of any Cracker Barrel Shares to Lion Fund following the Closing Date.

 

“Loan” shall mean, as the context may require, a Revolving Loan, a Term Loan or a Swingline Loan.

 

 “Loan Documents” shall mean this Agreement, the Letters of Credit, the Notes (if any), the Security Documents, each Joinder Agreement, the Existing Hedge Agreement, any other document executed in connection with this Agreement, and, except for purposes of Section 10.02(b), the Fee Letter.

 

“Loan Parties” shall mean Borrower and the Subsidiary Guarantors.

 

“Margin Stock” shall have the meaning assigned to such term in Regulation U.

 

“Material Adverse Effect” shall mean (a) a material adverse effect on, or material adverse change in, the condition (financial or otherwise), results of operations, assets, liabilities (contingent or otherwise), properties, solvency, business or value of the Companies, taken as a whole, or the Loan Parties, taken as a whole, (b) material impairment of the ability of the Loan Parties to fully and timely perform any of their obligations under any Loan Document, (c) a material impairment of the rights of or benefits or remedies available to the Lenders, the Issuing Bank or any Agent under any Loan Document, or (d) a material adverse effect on the Collateral (or any portion thereof) or the Liens in favor of the Collateral Agent (for its benefit and for the benefit of the other Secured Parties) on the Collateral or the validity, enforceability, perfection or priority of such Liens.

 

“Material Agreement” shall mean any agreement, contract or instrument to which any Company is a party or by which any Company or any of its properties is bound (i) pursuant to which any Company is required to make payments or other consideration, or will receive payments or other consideration, in excess of $2,500,000 in any twelve month period, or (ii) the termination or suspension of which, or the failure of any party thereto to perform its obligations thereunder, could reasonably be expected to have a Material Adverse Effect.

 

“Maximum Rate” shall have the meaning assigned to such term in Section 10.13.

 

“Mortgage” shall mean an agreement, including a mortgage, deed of trust or any other document, creating and evidencing a first priority Lien (subject to Permitted Collateral Liens) on a Mortgaged Property, which shall be substantially in the form of Exhibit H or other form reasonably satisfactory to the Collateral Agent, in each case, with such schedules and including such provisions as shall be necessary to conform such document to applicable local or foreign law or as shall be customary under applicable local or foreign Legal Requirements.

 

“Mortgaged Property” shall mean each Real Property, if any, which shall be subject to a Mortgage delivered after the Closing Date pursuant to Section 5.10(d) or Section 5.11.

 

  

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“Mortgage Trigger Date” shall mean (i) the first date on which Borrower’s Consolidated Fixed Charge Coverage Ratio, calculated as of the last day of the most recent Test Period, is less than 1.00:1.00, or (ii) the date specified as the Mortgage Trigger Date by the Administrative Agent (a) at any time after any Default or Event of Default has occurred and is continuing under Sections 8.01(a), (b), (g) or (h) or (b) at any time after any Default or Event of Default (other than one specified in clause (ii)(a) above) has occurred and is continuing for a period of ten Business Days.

 

“Multiemployer Plan” shall mean a multiemployer plan within the meaning of Section 4001(a)(3) or Section 3(37) of ERISA, (a) to which any Company or any of its ERISA Affiliates is then making or accruing an obligation to make contributions, (b) to which any Company or any of its ERISA Affiliates has within the preceding six plan years made or been obligated to make contributions, or (c) with respect to which any Company could incur liability.

 

“Net Cash Proceeds” shall mean:

 

(a)      with respect to any Asset Sale (other than any issuance or sale of Equity Interests), the proceeds thereof in the form of cash, cash equivalents and marketable securities (including any such proceeds received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable, or by the sale, transfer or other disposition of any non-cash consideration received in connection therewith or otherwise, but only as and when received) received by any Company (including cash proceeds subsequently received (as and when received by any Company) in respect of non-cash consideration initially received) net of (i) reasonable and customary selling expenses (including reasonable brokers’ fees or commissions, legal, accounting and other professional and transactional fees, transfer and similar taxes (but excluding any such amounts payable to any Affiliate of Borrower) and Borrower’s good faith estimate of income taxes paid or payable in connection with such sale (after taking into account any available tax credits or deductions and any tax sharing arrangements)), (ii) amounts provided as a reserve, in accordance with GAAP, against (x) any liabilities under any indemnification obligations associated with such Asset Sale or (y) any other liabilities retained by any Company associated with the properties sold in such Asset Sale (provided that, to the extent and at the time any such amounts are released from such reserve, such amounts shall constitute Net Cash Proceeds), and (iii) the principal amount, premium or penalty, if any, interest and other amounts on any Indebtedness for borrowed money that is secured by a Lien on the properties sold in such Asset Sale (so long as such Lien was permitted to encumber such properties under the Loan Documents at the time of such sale) and which is repaid with such proceeds (other than any such Indebtedness assumed by the purchaser of such properties);

 

(b)      with respect to any (i) Debt Issuance, (ii) Equity Issuance or (iii) other issuance or sale of Equity Interests by Borrower or any of its Subsidiaries, the cash proceeds thereof received by any Company, net of reasonable and customary fees (including legal, accounting and other professional and transaction fees and brokers’ fees), commissions, costs and other expenses incurred in connection therewith; and

 

(c)      with respect to any Casualty Event, the cash insurance proceeds, condemnation awards and other compensation received by any Company in respect thereof, net of all reasonable costs and expenses (including legal, accounting and other professional and transaction fees and brokers’ fees) incurred in connection with the collection of such proceeds, awards or other compensation in respect of such Casualty Event (including legal, accounting and other professional and transaction fees and brokers’ fees).

 

  

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“Net Working Capital” shall mean, at any time, Consolidated Current Assets at such time minus Consolidated Current Liabilities at such time.

 

“New Lender” shall have the meaning assigned to such term in Section 2.19(c).

 

“Non-Public Information” shall mean (i) material non-public information (within the meaning of United States federal, state or other applicable securities laws) with respect to Borrower or its Subsidiaries or their securities and (ii) information of a type that would be material non-public information (within the meaning of United States federal, state or other applicable securities laws) relating to Borrower if Borrower were a public reporting company with respect to Borrower or its Subsidiaries or their respective securities.

 

 “Notes” shall mean any notes evidencing the Term Loans, Revolving Loans or Swingline Loans, in each case issued pursuant to Section 2.04(e), if any, substantially in the form of Exhibit I-1, I-2 or I-3, respectively.

 

“Obligations” shall mean (a) all obligations of Borrower and the other Loan Parties from time to time arising under or in respect of the due and punctual payment of (i) the principal of and premium, if any, and interest (including interest accruing during the pendency of any Insolvency Proceeding, regardless of whether allowed or allowable in such Insolvency Proceeding) on the Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) each payment required to be made by Borrower and the other Loan Parties under this Agreement in respect of any Letter of Credit, when and as due, including payments in respect of Reimbursement Obligations, interest thereon and obligations to provide cash collateral and (iii) all other monetary obligations, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any Insolvency Proceeding, regardless of whether allowed or allowable in such Insolvency Proceeding), of Borrower and the other Loan Parties under this Agreement and the other Loan Documents, and (b) the due and punctual performance of all covenants, agreements, obligations and liabilities of Borrower and the other Loan Parties under or pursuant to this Agreement and the other Loan Documents, in each case, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising.  Notwithstanding the foregoing, the Obligations shall not include any Excluded Swap Obligations.

 

“OFAC” shall have the meaning assigned to such term in Section 3.21(b).

 

“Officer’s Certificate” shall mean a certificate executed by the chairman of the Board of Directors (if an officer), the chief executive officer, the president or one of the Financial Officers, each in his or her official (and not individual) capacity.

 

“OID” shall have the meaning assigned to such term in Section 2.19(a)(viii).

 

“Order” shall mean any judgment, decree, verdict, order, consent order, consent decree, writ, declaration or injunction.

 

“Organizational Documents” shall mean, with respect to any Person, (i) in the case of any corporation, the certificate of incorporation or deed of incorporation and by-laws (or similar documents) of such Person, (ii) in the case of any limited liability company, the certificate or articles of formation or organization and operating agreement or memorandum and articles of association (or similar constitutive documents) of such Person, (iii) in the case of any limited partnership, the certificate of formation and limited partnership agreement (or similar constitutive documents) of such Person (and, where applicable, the equityholders or shareholders registry of such Person), (iv) in the case of any general partnership, the partnership agreement (or similar constitutive document) of such Person, (v) in any other case, the functional equivalent of the foregoing, and (vi) any shareholder, voting trust or similar agreement between or among any holders of Equity Interests of such Person.

 

  

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“Other Taxes” shall mean any and all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes or any excise or property Taxes, charges (including fees and expenses to the extent incurred with respect to any such Taxes or charges) or similar levies (including interest, fines, penalties and additions with respect to any of the foregoing) arising from any payment made or required to be made under any Loan Document or from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document.

 

“Participant” shall have the meaning assigned to such term in Section 10.04(e).

 

“Participant Register” shall have the meaning assigned to such term in Section 10.04(e).

 

“Patriot Act” shall have the meaning assigned to such term in Section 3.21(a).

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA.

 

“Pension Plan” shall mean any Employee Benefit Plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA which is maintained, contributed to, or required to be maintained or contributed to by any Company or any of its ERISA Affiliates or with respect to which any Company could reasonably be expected to incur liability, contingent or otherwise, under ERISA (including under Section 4069 of ERISA).

 

“Perfection Certificate” shall mean a perfection certificate in the form of Exhibit J-1 or any other form approved by the Collateral Agent, as the same shall be supplemented from time to time by a Perfection Certificate Supplement or otherwise.

 

“Perfection Certificate Supplement” shall mean a perfection certificate supplement in the form of Exhibit J-2 or any other form approved by the Collateral Agent.

 

“Permitted Acquisition” shall mean any transaction or series of related transactions for the direct or indirect (a) acquisition of all or substantially all of the property of any Person, or of any business or division of any Person, (b) acquisition of in excess of 50% of the Equity Interests of any Person, and otherwise causing such Person to become a Subsidiary of such Person, or (c) merger or consolidation or any other combination with any Person, if each of the following conditions is met:

 

(i)           no Default or Event of Default then exists or would result therefrom;

 

(ii)           to the extent that the transaction involves Acquisition Consideration in excess of $5,000,000, the Person or business to be acquired shall have generated positive cash flow for the Test Period most recently ended prior to the date of consummation of such acquisition unless expressly approved by the Administrative Agent in its sole discretion;

 

(iii)          after giving effect to such transaction on a Pro Forma Basis, the Senior Secured Leverage Ratio shall not exceed the Closing Date Senior Secured Leverage Ratio;

 

  

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(iv)         after giving effect to such transaction on a Pro Forma Basis, the aggregate amount of (A) all unrestricted cash and Cash Equivalents of the Loan Parties and (B) the undrawn and available portion of the Revolving Commitments shall be at least $10,000,000;

 

(v)           no Company shall, in connection with any such transaction, assume or remain liable with respect to any Indebtedness or Contingent Obligation (including any material tax or ERISA liability) of the related seller or the business, Person or properties acquired, except (A) to the extent permitted under Section 6.01 and (B) obligations not constituting Indebtedness incurred in the ordinary course of business (and not in anticipation of such acquisition) and necessary or desirable to the continued operation of the underlying business, Persons or properties being so acquired, and any other such liabilities or obligations not permitted to be assumed or otherwise supported by any Company hereunder shall be paid in full or released as to the business, Persons or properties being so acquired on or before the consummation of such acquisition;

 

(vi)          the Person or business to be acquired shall be, or shall be engaged in, a business of the type that Borrower and its Subsidiaries are permitted to be engaged in under Section 6.14 and the property acquired in connection with any such transaction shall be made subject to the Lien of the Security Documents in accordance with Section 5.10 and shall be free and clear of any Liens, other than Permitted Collateral Liens;

 

(vii)         the Board of Directors of the Person to be acquired shall not have indicated its opposition to the consummation of such acquisition (which opposition has not been publicly withdrawn);

 

(viii)        all transactions in connection therewith shall be consummated, in all material respects, in accordance with all applicable Legal Requirements;

 

(ix)           with respect to any transaction involving Acquisition Consideration of more than $10,000,000, Borrower shall have provided the Administrative Agent and the Lenders with (A) historical financial statements for the last three fiscal years (or, if less, the number of years since formation) of the Person or business to be acquired (audited if available without undue cost or delay) and unaudited financial statements thereof for the most recent interim period that is available, (B) quarterly projections for the year following such Permitted Acquisition and annual projections for the year immediately following such year (or, if sooner, through the Final Maturity Date) pertaining to the Person or business to be acquired and updated projections for Borrower after giving effect to such transaction, (C) a reasonably detailed description of all material information relating thereto and copies of all material documentation pertaining to such transaction, and (D) all such other information and data relating to such transaction or the Person or business to be acquired as may be reasonably requested by the Administrative Agent or any Lender, to the extent made available to or otherwise obtainable by Borrower or any Subsidiary Guarantor;

 

(x)           such transaction could not reasonably be expected to result in a Material Adverse Effect;

 

(xi)          at least five Business Days prior to the proposed date of consummation of the transaction, Borrower shall have delivered to the Administrative Agent and the Lenders an Officer’s Certificate certifying that such transaction complies with this definition (which shall have attached thereto reasonably detailed backup data and calculations showing such compliance);

 

(xii)         the aggregate amount of the Acquisition Consideration for all Permitted Acquisitions, when taken together with the aggregate amount of Acquisition Consideration for all acquisitions permitted pursuant to Section 6.07(f), in each case, since the Closing Date shall not exceed $50,000,000 (provided that such amount shall be increased dollar-for dollar by the amount of any Incremental Term Loans made pursuant to Section 2.19); provided that no Equity Interests constituting all or a portion of such Acquisition Consideration shall require any payments or other distributions of cash or property in respect thereof, or any purchases, redemptions or other acquisitions thereof for cash or property, in each case prior to the 91st day following payment in full and performance of the Obligations; and

 

  

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(xiii)        (a) in the case of an acquisition of all or substantially all of the property of any Person, (A) the Person making such acquisition is Borrower or a Subsidiary Guarantor, and (B) to the extent required under the Loan Documents, including Section 5.10, upon consummation of the Permitted Acquisition, the Person being so acquired becomes a Subsidiary Guarantor, (b) in the case of an acquisition of in excess of 50% of the Equity Interests of any Person, (A) the Person making such acquisition is Borrower or a Subsidiary Guarantor, and (B) to the extent required under the Loan Documents, including Section 5.10, upon consummation of the Permitted Acquisition, the Person the Equity Interests of which are being so acquired becomes a Subsidiary Guarantor, and (c) in the case of a merger or consolidation or any other combination with any Person, the Person surviving such merger, consolidation or other combination (x) is Borrower or a Subsidiary Guarantor or (y) to the extent required under the Loan Documents, including Section 5.10, upon consummation of the Permitted Acquisition becomes a Subsidiary Guarantor.

 

“Permitted Collateral Liens” shall mean (a) in the case of Collateral other than Mortgaged Property, Permitted Liens and (b) in the case of Mortgaged Property, “Permitted Collateral Liens” shall mean the Liens described in clauses (a), (b), (d), (e), (g) and (l) of Section 6.02; provided, however, upon the date of delivery of each Mortgage under Section 5.10 or 5.11, Permitted Collateral Liens shall mean only those Liens that are (i) identified on a schedule to the applicable Mortgage, (ii) excepted as being prior to the Lien of such Mortgage as set forth in the title insurance policy (or commitment) relating to such Mortgaged Property issued by the applicable Title Company and (iii) otherwise Permitted Liens.

 

“Permitted Hedging Agreement” shall mean any Hedging Agreement to the extent constituting a swap, cap, collar, forward purchase or similar agreements or arrangements dealing with interest rates, currency exchange rates or commodity prices, either generally or under specific contingencies, in each case entered into in the ordinary course of business and not for speculative purposes or taking a “market view.”

 

“Permitted Liens” shall have the meaning assigned to such term in Section 6.02.

 

“Permitted Tax Distributions” shall mean payments, dividends or distributions by Borrower to Holdings in order to permit Holdings to pay consolidated or combined federal, state or local income taxes for which Holdings is liable for any taxable period during which Holdings is the common parent of a group of companies filing a consolidated, unitary or combined corporate tax return that includes Borrower, which payments by Borrower are not in excess of the income tax liabilities that would have been payable by Borrower and its Subsidiaries on a separate group basis if Borrower and such Subsidiaries had paid income tax on a consolidated, combined, affiliated or unitary basis on behalf of a group consisting only of Borrower and its Subsidiaries, as reduced by any such taxes directly paid by Borrower or any Subsidiary thereof.

 

“Person” shall mean any natural person, corporation, business trust, joint venture, trust, association, company (whether limited in liability or otherwise), partnership (whether limited in liability or otherwise) or Governmental Authority, or any other entity, in any case, whether acting in a personal, fiduciary or other capacity.

 

  

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“Platform” shall have the meaning assigned to such term in Section 10.01(d).

 

“Pledgor” shall mean each Company listed on Schedule 1.01(c), and each other Subsidiary of any Loan Party that is or becomes a party to this Agreement (in its capacity as a Subsidiary Guarantor) and the Security Documents pursuant to Section 5.10.

 

“Preferred Stock” shall mean, with respect to any Person, any and all preferred or preference Equity Interests (however designated) of such Person whether now outstanding or issued after the Closing Date.

 

“Preferred Stock Issuance” shall mean the issuance or sale by any Company of any Preferred Stock after the Closing Date.

 

“Premises” shall have the meaning assigned thereto in the applicable Mortgage.

 

“Pro Forma Basis” shall mean, with respect to compliance with any test or covenant hereunder, compliance with such covenant or test after giving effect to (a) any Permitted Acquisition (to the extent not subsequently disposed of during such period), (b) any Asset Sale or (c) any Dividend, as if such Permitted Acquisition, Asset Sale or Dividend, and all other Permitted Acquisitions, Asset Sales or Dividends consummated during the applicable period, and any Indebtedness or other liabilities incurred in connection with such Permitted Acquisitions, Asset Sales or Dividends had been consummated and incurred at the beginning of such period.  For purposes of this definition, if any Indebtedness to be so incurred bears interest at a floating rate and is being given pro forma effect, the interest on such Indebtedness will be calculated as if the rate in effect on the date of incurrence had been the applicable rate for the entire period (taking into account any applicable interest rate Hedging Agreements).

 

“Pro Rata Percentage” of any Revolving Lender at any time shall mean the percentage of the total Revolving Commitments of all Revolving Lenders represented by such Lender’s Revolving Commitment.

 

“Projections” shall have the meaning assigned to such term in Section 3.04(c).

 

“property” shall mean any right, title or interest in or to property or assets of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible and including Equity Interests of any Person and whether now in existence or owned or hereafter entered into or acquired, including all Real Property, cash, securities, accounts, revenues and contract rights.

 

“Public Lenders” shall mean Lenders that do not wish to receive Non-Public Information with respect to Borrower or its Subsidiaries.

 

“Purchase Money Obligation” shall mean, for any Person, the obligations of such Person in respect of Indebtedness (including Capital Lease Obligations) incurred for the purpose of financing all or any part of the purchase price of any fixed or capital assets (including Equity Interests of any Person owning fixed or capital assets) or the cost of installation, construction or improvement of any fixed or capital assets.

 

“Qualified Capital Stock” of any Person shall mean any Equity Interests of such Person that are not Disqualified Capital Stock.

 

“Qualified ECP Guarantor” means, in respect of any Hedging Obligation under (or in respect of) a Permitted Hedging Agreement, each Loan Party that has total assets exceeding $10,000,000 at the time the relevant Guarantee or grant of the relevant security interest becomes effective with respect to such Hedging Obligation or such other Person as constitutes an “ECP” under the Commodity Exchange Act (7 U.S.C. 1, et seq.) or any regulations promulgated thereunder and can cause another Person to qualify as an ECP at such time by entering into a keepwell under Section 1a(A)(v)(II) of the Commodity Exchange Act (7 U.S.C. 1, et seq.).

 

  

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 “Real Property” shall mean, collectively, all right, title and interest (including any leasehold, fee, mineral or other estate) in and to any and all parcels of or interests in real property owned, leased or operated by any Person, whether by lease, license or other means, together with, in each case, all easements, hereditaments and appurtenances relating thereto, all improvements and appurtenant fixtures and equipment, all general intangibles and contract rights and other property and rights incidental to the ownership, lease or operation thereof.

 

“Refinancing” shall mean the repayment in full of, and the termination of any commitment to make extensions of credit under, all of the outstanding indebtedness of any Company as of the Closing Date listed on Schedule 1.01(d), including the payment of all principal, prepayment premiums, accrued interest, fees and any commissions, costs and expenses in connection with the foregoing and the release of all guarantees and security in respect thereof.

 

“Register” shall have the meaning assigned to such term in Section 10.04(c).

 

“Regulation D” shall mean Regulation D of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

 

“Regulation T” shall mean Regulation T of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

 

“Regulation U” shall mean Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

 

“Regulation X” shall mean Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

 

“Reimbursement Obligations” shall mean Borrower’s obligations under Section 2.18(e) to reimburse LC Disbursements.

 

“Related Person” shall mean, with respect to any Person, (a) each Affiliate of such Person and each of the officers, directors, partners, trustees, employees, affiliates, shareholders, Advisors, agents, attorneys-in-fact and Controlling Persons of each of the foregoing, and (b) if such Person is an Agent, each other Person designated, nominated or otherwise mandated by or assisting such Agent pursuant to Section 9.05 or any comparable provision of any Loan Document.

 

“Release” shall mean any spilling, leaking, seepage, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, dispersing, emanating or migrating of any Hazardous Materials in, into, onto, from or through the Environment or any Real Property (including the abandonment or discarding of barrels, containers and other closed receptacles containing any Hazardous Materials).

 

“Required Revolving Lenders” shall mean, Lenders having Revolving Loans, L/C Exposure and unused Revolving Commitments representing more than 50% of the sum of all Revolving Loans outstanding, L/C Exposure and Unused Revolving Commitments at such time.

 

  

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“Required Lenders” shall mean, at any date of determination (and subject to Section 2.16(c)), Lenders having Loans, LC Exposure and unused Revolving Commitments and Term Loan Commitments representing more than 50% of the sum of all Loans outstanding, LC Exposure and unused Revolving Commitments and Term Loan Commitments at such time; provided that “Required Lenders” shall exclude the Term Loan Lenders (in their capacities as such) and shall be determined without giving effect to outstanding Term Loans, in each case solely in connection with any amendment, waiver, consent or approval with respect to (i) Section 4.02 for extensions of credit under the Revolving Commitments, (ii) the financial covenant set forth in Section 6.10(a) or any Financial Covenant Default, (iii) any extension of the Revolving Maturity Date, (iv) the termination of the Revolving Commitments, any acceleration of Revolving Loans and any requirement to Cash Collateralize the obligations under any Letter of Credit, (v) interest rates or fees payable in connection with the Revolving Commitments, (vi) any provision of Article 2 relating to payments required to be made (including any Cash Collateral required to be provided) by the Company or any of its Subsidiaries solely with respect to the Revolving Commitments and (vii) any provision requiring that any payments be made or shared on a pro rata basis solely between or among Revolving Lenders.

 

“Response” shall mean (a) “response” as such term is defined in CERCLA, 42 U.S.C. § 9601(25) or any other applicable Environmental Law, or (b) all other actions required by any Governmental Authority or voluntarily undertaken to (i) clean up, remove, treat, remediate, contain, assess, abate, monitor or in any other way address any Hazardous Materials at, in, on, under or from any Real Property, or otherwise in the Environment, (ii) prevent, stop, control or minimize the Release or threat of Release, or minimize the further Release, of any Hazardous Material, or (iii) perform studies, investigations, maintenance or monitoring in connection with, following, or as a precondition to or to determine the necessity of, the actions set forth in clause (i) or (ii) above.

 

“Restricted Indebtedness” shall mean Indebtedness of any Company, the payment, prepayment, repurchase, defeasance or acquisition for value of which is restricted under Section 6.11.

 

“Responsible Officer” of any Person shall mean any executive officer or Financial Officer of such Person and any other officer or similar official thereof with significant responsibility for the administration of the obligations of such Person in respect of this Agreement.

 

“Retained Excess Cash Flow Amount” shall mean, at any date of determination, an amount equal to (a) the sum of the amounts of Excess Cash Flow for all Excess Cash Flow Periods ending on or before the date of determination for which the amount of Excess Cash Flow shall have been calculated as provided in Section 5.01(c) and with respect to which any payment required under Section 2.10(f) has been paid, minus (b) the sum at the time of determination of the aggregate amount of prepayments required to be made pursuant to Section 2.10(f) through the date of determination.

 

“Revolving Availability Period” shall mean the period from and including the Closing Date to but excluding the earlier of (i) the Business Day preceding the Revolving Maturity Date and (ii) the date of termination of the Revolving Commitments.

 

“Revolving Borrowing” shall mean a Borrowing comprised of Revolving Loans.

 

“Revolving Commitment” shall mean, with respect to each Lender, the commitment, if any, of such Lender to make Revolving Loans hereunder up to the amount set forth on Annex I or on Schedule 1 to the Assignment and Assumption pursuant to which such Lender assumed its Revolving Commitment, as applicable, as the same may be (a) reduced from time to time pursuant to Section 2.07 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 10.04.  The aggregate principal amount of the Lenders’ Revolving Commitments on the Closing Date is $30,000,000.

 

  

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“Revolving Exposure” shall mean, with respect to any Lender at any time, the aggregate principal amount at such time of all outstanding Revolving Loans of such Lender, plus the aggregate amount at such time of such Lender’s LC Exposure, plus the aggregate amount at such time of such Lender’s Swingline Exposure.

 

“Revolving Lender” shall mean a Lender with a Revolving Commitment.

 

“Revolving Loan” shall mean a Loan made by the Lenders to Borrower pursuant to Section 2.01(b).  Each Revolving Loan shall either be an ABR Revolving Loan or a Eurodollar Revolving Loan.

 

“Revolving Maturity Date” shall mean March 19, 2019, or, if such date is not a Business Day, the first Business Day thereafter.

 

 “Sale and Leaseback Transaction” shall have the meaning assigned to such term in Section 6.03.

 

“Sarbanes-Oxley Act” shall mean the United States Sarbanes-Oxley Act of 2002, as amended from time to time, and any successor statute.

 

“Screen Rate” has the meaning set forth in the definition of “LIBOR Rate.”

 

“SEC” means, the Securities and Exchange Commission (or successors thereto or an analogous Governmental Authority).

 

“Secured Obligations” shall mean (a) the Obligations, (b) the due and punctual payment and performance of all obligations of Borrower and the other Loan Parties under (i) each Permitted Hedging Agreement intended to protect against fluctuations in interest rates or foreign currency exchange rates entered into with any counterparty that is a Secured Party and (ii) the Existing Hedge Agreement so long as Fifth Third Bank is a Lender or is otherwise a Secured Party and (c) the due and punctual payment and performance of all obligations of Borrower and the other Loan Parties in respect of overdrafts and related liabilities owed to any Secured Party arising from treasury, depositary and cash management services, commercial credit card, stored value card and merchant card services, or in connection with any automated clearinghouse transfer of funds.  Notwithstanding anything to the contrary contained herein or in any other Loan Document, in no event will Secured Obligations include any Excluded Swap Obligations.

 

“Secured Parties” shall mean, collectively:

 

(a)           with respect to the Obligations, the Administrative Agent, the Collateral Agent, each other Agent, each Issuing Bank and the Lenders;

 

(b)           with respect to obligations under Permitted Hedging Agreements intended to protect against fluctuations in interest rates, the Administrative Agent, the Collateral Agent, each other Agent, the Lenders and each counterparty to a Permitted Hedging Agreement relating to the Loans if (i) at the date of entering into such Hedging Agreement such counterparty was an Agent, a Lender or an Affiliate of an Agent or Lender, and (ii) such counterparty executes and delivers to the Administrative Agent a letter agreement in form and substance acceptable to the Administrative Agent pursuant to which such counterparty (x) appoints the Administrative Agent and the Collateral Agent as its agents under the applicable Loan Documents and (y) agrees to be bound by the provisions of Sections 9.03, 10.03 and 10.09 as if it were a Lender; and

 

  

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(c)           with respect to overdrafts and related liabilities arising from treasury, depositary and cash management services, commercial credit card, stored value card and merchant card services, or in connection with any automated clearinghouse transfer of funds, the Administrative Agent, the Collateral Agent, each other Agent, each Lender, and each Affiliate of an Agent or Lender that, in each case, provides treasury, depositary and/or cash management services to a Loan Party; provided that such Affiliate executes and delivers to the Administrative Agent a letter agreement in form and substance acceptable to the Administrative Agent pursuant to which such Affiliate (x) appoints the Administrative Agent and the Collateral Agent as its agents under the applicable Loan Documents and (y) agrees to be bound by the provisions of Sections 9.03, 10.03 and 10.09 as if it were a Lender.

 

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

 

“Securities Collateral” shall have the meaning assigned to such term in the Security Agreement.

 

“Security Agreement” shall mean a Security Agreement substantially in the form of Exhibit K among the Loan Parties and the Collateral Agent for the benefit of the Secured Parties, as the same may be amended, restated, modified or supplemented from time to time.

 

“Security Agreement Collateral” shall mean all property pledged or granted as collateral pursuant to the Security Agreement delivered on the Closing Date or thereafter pursuant to Section 5.10.

 

“Security Documents” shall mean the Security Agreement, the Mortgages, each Control Agreement and each other security document or pledge agreement delivered in accordance with applicable local or foreign Legal Requirements to grant a valid, enforceable, perfected security interest (with the priority required under the Loan Documents) in any property as collateral for the Secured Obligations, and all UCC or other financing statements (including fixture filings) or instruments of perfection required by this Agreement, the Security Agreement, any Mortgage, any Control Agreement or any other such security document or pledge agreement to be filed or registered with respect to the security interests in property created pursuant to the Security Agreement, any Mortgage, any Control Agreement and any other document or instrument utilized to pledge any property as collateral for the Secured Obligations.

 

“Senior Secured Leverage Ratio” shall mean, at any date of determination, the ratio of (i) Consolidated Senior Secured Indebtedness on such date to (ii) Consolidated EBITDA for the Test Period then most recently ended.

 

“Solvency Certificate” shall have the meaning assigned to such term in Section 4.01(g).

 

“SPC” shall have the meaning assigned to such term in Section 10.04(h).

 

“Statutory Reserves” shall mean, for any day during any Interest Period for any Eurodollar Borrowing, the average maximum rate at which reserves (including any marginal, supplemental or emergency reserves) are required to be maintained, during such Interest Period under regulations issued from time to time (including “Regulation D,” issued by the Board of Governors of the Federal Reserve Bank of the United States (the “Reserve Regulations”) by member banks of the United States Federal Reserve System in New York City with deposits exceeding one billion Dollars against Eurocurrency funding liabilities (currently referred to as “Eurocurrency liabilities” (as such term is used in Regulation D)).  Eurodollar Borrowings shall be deemed to constitute Eurodollar liabilities and to be subject to such reserve requirements without benefit of or credit for proration, exceptions or offsets which may be available from time to time to any Lender under the Reserve Regulations.

 

  

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“Subordinated Indebtedness” shall mean Indebtedness of any Company that is by its terms subordinated in right of payment to all or any portion of the Secured Obligations.

 

“Subsidiary” shall mean, with respect to any Person (the “parent”) at any date, (i) any Person the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, (ii) any other corporation, limited liability company, association or other business entity of which securities or other ownership interests representing more than 50% of the voting power of all Equity Interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Board of Directors thereof are, as of such date, owned, controlled or held by the parent and/or one or more subsidiaries of the parent, (iii) any partnership (a) the sole general partner or the managing general partner of which is the parent and/or one or more subsidiaries of the parent or (b) the only general partners of which are the parent and/or one or more subsidiaries of the parent and (iv) any other Person that is otherwise Controlled by the parent and/or one or more subsidiaries of the parent; provided, however, Indianapolis Office Building shall not be deemed a “Subsidiary” hereunder so long as the only reason it meets the foregoing requirement is on account of clause (i) of this definition.  Unless the context requires otherwise, “Subsidiary” refers to a Subsidiary of Borrower.

 

“Subsidiary Guarantor” shall mean each Subsidiary listed on Schedule 1.01(b), and each other Subsidiary of any Loan Party other than (i) any Immaterial Subsidiary or Foreign Subsidiary and (ii) any Subsidiary that is or becomes a party to this Agreement and the Security Documents pursuant to Section 5.10.

 

“Survey” shall mean a survey of any Mortgaged Property (and all improvements thereon) which is (a) (i) prepared by a surveyor or engineer licensed to perform surveys in the state where such Mortgaged Property is located, (ii) dated (or redated) not earlier than six months prior to the date of delivery thereof unless there shall have occurred within six months prior to such date of delivery any exterior construction on the site of such Mortgaged Property or any easement, right of way or other interest in the Mortgaged Property has been granted or become effective through operation of applicable Legal Requirements or otherwise with respect to such Mortgaged Property which, in either case, can be depicted on a survey, in which events, as applicable, such survey shall be dated (or redated) after the completion of such construction or if such construction shall not have been completed as of such date of delivery, not earlier than 20 days prior to such date of delivery, or after the grant or effectiveness of any such easement, right of way or other interest in the Mortgaged Property, (iii) certified by the surveyor (in a manner reasonably acceptable to the Administrative Agent) to the Administrative Agent, the Collateral Agent and the Title Company, (iv) complying in all respects with the minimum detail requirements of the American Land Title Association as such requirements are in effect on the date of preparation of such survey and (v) sufficient for the Title Company to remove all standard survey exceptions from the title insurance policy (or commitment) relating to such Mortgaged Property and issue the endorsements of the type required by Section 5.10(d)(i)(C) or (b) otherwise reasonably acceptable to the Collateral Agent.

 

“Swap Obligation” means, with respect to any Subsidiary Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.

 

  

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“Swingline Commitment” shall mean the commitment of the Swingline Lender to make loans pursuant to Section 2.17, as the same may be reduced from time to time pursuant to Section 2.07 provided that at no time shall the Swingline Commitment exceed the Revolving Commitment.  The aggregate principal amount of the Swingline Commitment shall be $5,000,000 on the Closing Date.

 

“Swingline Exposure” shall mean at any time the aggregate principal amount at such time of all outstanding Swingline Loans.  The Swingline Exposure of any Revolving Lender at any time shall equal its Pro Rata Percentage of the aggregate Swingline Exposure at such time.

 

“Swingline Lender” shall have the meaning assigned to such term in the preamble hereto.

 

“Swingline Loan” shall mean any loan made by the Swingline Lender pursuant to Section 2.17.

 

“Syndication Agent” shall have the meaning assigned to such term in the preamble hereto.

 

“Synthetic Lease” shall mean, as to any Person, (a) any lease (including leases that may be terminated by the lessee at any time) of any property (i) that is accounted for as an operating lease under GAAP and (ii) in respect of which the lessee retains or obtains ownership of the property so leased for U.S. federal income tax purposes, other than any such lease under which such Person is the lessor or (b) (i) a synthetic, off-balance sheet or tax retention lease, or (ii) an agreement for the use or possession of property (including a Sale and Leaseback Transaction), in each case under this clause (b), creating obligations that do not appear on the balance sheet of such Person but which, upon the application of any Insolvency Laws to such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).

 

“Synthetic Lease Obligations” shall mean, as to any Person, an amount equal to the capitalized amount of the remaining lease payments under any Synthetic Lease that would appear on a balance sheet of such Person in accordance with GAAP if such obligations were accounted for as Capital Lease Obligations.

 

“Synthetic Purchase Agreement” shall mean any swap, derivative or other agreement or combination of agreements pursuant to which any Company is or may become obligated to make (a) any payment in connection with a purchase by any third party from a Person other than a Company of any Equity Interest or Restricted Indebtedness or (b) any payment (other than on account of a permitted purchase by it of any Equity Interest or Restricted Indebtedness) the amount of which is determined by reference to the price or value at any time of any Equity Interest or Restricted Indebtedness.

 

“Tax Returns” shall mean all returns, statements, filings, attachments and other documents or certifications filed or required to be filed in respect of Taxes.

 

“Taxes” shall mean (i) any and all present or future taxes, duties, levies, imposts, assessments, fees, deductions, withholdings or other similar charges, whether computed on a separate, consolidated, unitary, combined or other basis and any and all liabilities (including interest, fines, penalties or additions with respect to any of the foregoing) with respect to the foregoing, and (ii) solely for purposes of Sections 3.13 and 5.05, any transferee, successor, joint and several, contractual or other liability (including liability pursuant to Treasury Regulation § 1.1502-6 (or any similar provision of state, local or non-U.S. law)) in respect of any item described in clause (i).

 

“Term Borrowing” shall mean a Borrowing comprised of Term Loans.

 

  

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“Term Loan Commitment” shall mean, with respect to each Lender, the commitment, if any, of such Lender to make a Term Loan hereunder in the amount set forth on Annex I to this Agreement or on Schedule 1 to the Assignment and Assumption pursuant to which such Lender assumed its Term Loan Commitment, as applicable, as the same may be (a) increased from time to time pursuant to Section 2.19 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 10.04.  The aggregate principal amount of the Lenders’ Term Loan Commitments on the Closing Date is $220,000,000.

 

“Term Loan Lender” shall mean a Lender with a Term Loan Commitment or an outstanding Term Loan.

 

“Term Loan Repayment Date” shall have the meaning assigned to such term in Section 2.09(a).

 

“Term Loans” means the Initial Term Loans, an Incremental Term Loan or an Extended Term Loan, as applicable.  Each Term Loan shall be either an ABR Term Loan or a Eurodollar Term Loan.

 

“Test Period” shall mean, at any time, the four consecutive fiscal quarters of Borrower then last ended (in each case taken as one accounting period) for which financial statements have been or are required to be delivered pursuant to Section 5.01(a) or (b).

 

“Title Company” shall mean any title insurance company as shall be retained by Borrower and reasonably acceptable to the Administrative Agent.

 

“Title Policy” shall have the meaning assigned to such term in Section 5.10(d)(i)(C).

 

“Total Leverage Ratio” shall mean, at any date of determination, the ratio of (i) Consolidated Indebtedness on such date to (ii) Consolidated EBITDA for the Test Period then most recently ended.

 

“Total Net Leverage Ratio” shall mean, at any date of determination, the ratio of (i) Consolidated Indebtedness on such date minus the Unrestricted Cash as of such date in an aggregate amount not to exceed $35,000,000 to (ii) Consolidated EBITDA for the Test Period then most recently ended.

 

“Transactions” shall mean, collectively, (a) the execution, delivery and performance of the Loan Documents and the initial Credit Extensions hereunder, (b) the Refinancing, (c) payment of the Closing Date Dividend and (d) the payment of all fees, costs and expenses to be paid on or prior to the Closing Date owing in connection with the foregoing.

 

“Transferred Guarantor” shall have the meaning assigned to such term in Section 7.09.

 

“Treasury Rate” shall mean the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year.

 

“Type” shall mean, when used in reference to any Loan or Borrowing, a reference to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined on the basis of Adjusted LIBOR Rate or the Alternate Base Rate.

 

“UCC” shall mean the Uniform Commercial Code as in effect from time to time (except as otherwise specified) in any applicable state or jurisdiction.

 

  

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“Undisclosed Administration” means, in relation to a Lender or its direct or indirect parent company, the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official by a supervisory authority or regulator under or based on the law in the country where such Lender or parent company is subject to home jurisdiction supervision if applicable Legal Requirements require that such appointment is not to be publicly disclosed.

 

“Unfunded Pension Liability” shall mean the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets, determined in accordance with the actuarial assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year.

 

“United States” and “U.S.” shall mean the United States of America.

 

“Unrestricted Cash” shall mean unrestricted cash and Cash Equivalents owned by Borrower and its Subsidiaries and not controlled by or subject to any Lien or other preferential arrangement in favor of any creditor (other than Liens created by or pursuant to this Agreement and the Loan Documents).

 

“Voting Stock” shall mean, with respect to any Person, any class or classes of Equity Interests pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the Board of Directors of such Person.

 

“Wholly Owned Subsidiary” shall mean, with respect to any Person, (a) any corporation 100% of whose capital stock (other than directors’ qualifying shares to the extent required under applicable Legal Requirements) is at the time owned by such Person and/or one or more Wholly Owned Subsidiaries of such Person and (b) any partnership, association, joint venture, limited liability company or other entity in which such Person and/or one or more Wholly Owned Subsidiaries of such Person have a 100% Equity Interest (other than directors’ qualifying shares to the extent required under applicable Legal Requirements) at such time.

 

“Yield Differential” shall mean, with respect to any Term Loans made pursuant to Section 2.19, (i) the interest rate applicable to such Term Loans minus (ii) the interest rate applicable to the Initial Term Loans set forth in Section 2.06, minus (iii) 50 basis points.

 

Section 1.02            Classification of Loans and Borrowings.  For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving Loan”) or by Type (e.g., a “Eurodollar Loan”) or by Class and Type (e.g., a “Eurodollar Revolving Loan”).  Borrowings also may be classified and referred to by Class (e.g., a “Revolving Borrowing,” “Borrowing of Term Loans”) or by Type (e.g., a “Eurodollar Borrowing”) or by Class and Type (e.g., a “Eurodollar Revolving Borrowing”).

 

Section 1.03            Terms Generally.  The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.  The phrase “Material Adverse Effect” shall be deemed to be followed by the phrase “, individually or in the aggregate”.  The words “asset” and “property” shall be construed to have the same meaning and effect.  The word “will” shall be construed to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise (a) any definition of or reference to any Loan Document, agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth in any Loan Document), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, and (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, unless otherwise indicated and (e) any reference to any law or regulation shall (i) include all statutory and regulatory provisions consolidating, amending, replacing or interpreting or supplementing such law or regulation, and (ii) unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time.  This Section 1.03 shall apply, mutatis mutandis, to all Loan Documents.

 

  

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Section 1.04            Accounting Terms; GAAP.  Except as otherwise expressly provided herein, all financial statements to be delivered pursuant to this Agreement shall be prepared in accordance with and all terms of an accounting or financial nature shall be construed and interpreted in accordance with GAAP as in effect from time to time.  If at any time any change in GAAP would affect the computation of any financial ratio set forth in any Loan Document or any financial definition of any other provision of any Loan Document, and Borrower or the Required Lenders shall so request, the Administrative Agent and Borrower shall 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 approval by the Required Lenders and Borrower); provided that, until so amended, such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein, and Borrower shall provide to the Administrative Agent and the Lenders within five days after delivery of each certificate or financial report required hereunder that is affected thereby a written statement of a Financial Officer of Borrower setting forth in reasonable detail the differences (including any differences that would affect any calculations relating to the financial covenants as set forth in Section 6.10) that would have resulted if such financial statements had been prepared without giving effect to such change.  Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made (i) without giving effect to any election under Accounting Standards Codification 825-10-25 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of Borrower or any Subsidiary at “fair value”, as defined therein and (ii) without giving effect to any treatment of Indebtedness in respect of convertible debt instruments under Accounting Standards Codification 470-20 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof.  Notwithstanding the foregoing, all liabilities under or in respect of any lease (whether now outstanding or at any time entered into or incurred) that, under GAAP as in effect on the Closing Date, would be accrued as rental and lease expense and would not constitute a capital lease obligation in accordance with GAAP as in effect on the Closing Date shall continue to not constitute a capital lease obligation, in each case, for purposes of the covenants set forth herein and all defined terms as used therein.

 

Without limiting the foregoing, if at any time the SEC permits or requires United States reporting companies to use IFRS in lieu of GAAP for reporting purposes, Borrower may notify the Administrative Agent that it has elected to so use IFRS in lieu of GAAP and, upon any such notice, references herein to GAAP shall thereafter be construed to mean IFRS as in effect from time to time; provided that, to the extent that such election would affect any financial ratio set forth in this Agreement or any requirement set forth in Section 5.01, (i) Borrower shall provide to the Administrative Agent financial statements and other documents reasonably requested by the Administrative Agent or any Lender setting forth a reconciliation with respect to such ratio or requirement made before and after giving effect to such election and (ii) if Borrower, the Administrative Agent or the Required Lenders shall so request, the Administrative Agent, the Required Lenders and Borrower shall negotiate in good faith to amend such ratio to preserve the original intent thereof in light of such change.

 

  

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Section 1.05            Pro Forma Calculations; Rounding.  With respect to any applicable period during which any Permitted Acquisition or Asset Sale occurs as permitted pursuant to the terms hereof, the financial covenants set forth in Section 6.10 and the Total Net Leverage Ratio for purposes of determining the Applicable Margin (if applicable) shall be calculated with respect to such period and such Permitted Acquisition or Asset Sale on a Pro Forma Basis.  Any financial ratios required to be satisfied in order for a specific action to be permitted under this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

 

Section 1.06            Resolution of Drafting Ambiguities.  Each Loan Party acknowledges and agrees that it was represented by counsel in connection with the execution and delivery of the Loan Documents to which it is a party, that it and its counsel reviewed and participated in the preparation and negotiation hereof or thereof and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation hereof or thereof.

 

ARTICLE II

THE CREDITS

 

Section 2.01            Commitments.  Subject to the terms and conditions and relying upon the representations and warranties herein set forth:

 

(a)            each Term Loan Lender agrees, severally and not jointly, to make an Initial Term Loan to Borrower on the Closing Date in the principal amount equal to its Term Loan Commitment; and

 

(b)            each Revolving Lender agrees, severally and not jointly, to make Revolving Loans to Borrower, at any time and from time to time after the Closing Date until the earlier of the Revolving Maturity Date and the termination of the Revolving Commitment of such Lender in accordance with the terms hereof, in an aggregate principal amount at any time outstanding that will not result in such Lender’s Revolving Exposure exceeding such Lender’s Revolving Commitment.

 

Amounts paid or prepaid in respect of Term Loans, including any Extended Term Loans, may not be reborrowed.  Within the limits set forth in clause (b) above and subject to the terms, conditions and limitations set forth herein, Borrower may borrow, pay or prepay and reborrow Revolving Loans.

 

Section 2.02            Loans.  (a) Each Loan (other than Swingline Loans) shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their applicable Commitments; provided that the failure of any Lender to make any Loan shall not in itself relieve any other Lender of its obligation to lend hereunder (it being understood, however, that no Lender shall be responsible for the failure of any other Lender to make any Loan required to be made by such other Lender).  Except for Loans deemed made pursuant to Section 2.18(e)(ii), (x) any Borrowing shall be in an aggregate principal amount that is (i) an integral multiple of $100,000 and not less than $250,000 or (ii) equal to the remaining available balance of the applicable Commitments.

 

(b)            Subject to Sections 2.11 and 2.12, each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as Borrower may request pursuant to Section 2.03.  Each Lender may at its option make any Eurodollar Loan by causing any domestic or foreign branch of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Lender to make such Loan and Borrower to repay such Loan in accordance with the terms of this Agreement.  Borrowings of more than one Type may be outstanding at the same time; provided that Borrower shall not be entitled to request any Borrowing that, if made, would result in more than five Eurodollar Borrowings outstanding hereunder at any one time.  For purposes of the foregoing, Borrowings having different Interest Periods, regardless of whether they commence on the same date, shall be considered separate Borrowings.

 

  

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(c)            Except with respect to Loans made pursuant to Section 2.18(e)(ii), each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds to such account in New York City as the Administrative Agent may designate from time to time not later than 10:00 a.m., New York City time, and the Administrative Agent shall promptly credit the amounts so received to an account as directed by Borrower in the applicable Borrowing Request maintained with the Administrative Agent or, if a Borrowing shall not occur on such date because any condition precedent herein specified shall not have been met, return the amounts so received to the respective Lenders within two Business Days.

 

(d)            Unless the Administrative Agent shall have received written notice from a Lender prior to the date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s portion of such Borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the date of such Borrowing in accordance with Section 2.02(c), and the Administrative Agent may (but shall not be obligated to), in reliance upon such assumption, make available to Borrower on such date a corresponding amount.  If the Administrative Agent shall have so made funds available, then, to the extent that such Lender shall not have made such portion available to the Administrative Agent, each of such Lender and Borrower severally agrees to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to Borrower until the date such amount is repaid to the Administrative Agent at (i) in the case of such Lender, (A) from the date such amount is required to be paid to the date that is two Business Days after payment by such Lender is due hereunder, the greater of, for each such day, (1) the Federal Funds Effective Rate and (2) an overnight rate determined by the Administrative Agent in accordance with banking industry rules or practices on interbank compensation plus any standard administrative or processing fees charged by the Administrative Agent in connection with such Lender’s non-payment and (B) from the date that is two Business Days after the date such amount is required to be paid to the date such payment is made by such Lender, the interest rate applicable at the time to ABR Loans.  If such Lender shall repay to the Administrative Agent such corresponding amount, such amount shall constitute such Lender’s Loan as part of such Borrowing for purposes of this Agreement, and Borrower’s obligation to repay the Administrative Agent such corresponding amount pursuant to this Section 2.02(d) shall cease.

 

(e)            Notwithstanding any other provision of this Agreement, Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Revolving Maturity Date or in the case of the Initial Term Loans, the Initial Term Loan Maturity Date, or in the case of any Extended Term Loans, the applicable Extended Term Loan Maturity Date.

 

Section 2.03            Borrowing Procedure.  To request a Revolving Borrowing or Term Borrowing, Borrower shall deliver, by hand delivery or telecopy (or transmit by other electronic transmission, if arrangements for doing so have been approved in writing by the Administrative Agent), a duly completed and executed Borrowing Request to the Administrative Agent (i) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of the proposed Borrowing (except that in the case of proposed Eurodollar Borrowings on the Closing Date, such Borrowing Request may be delivered not later than 3:00 p.m., New York City time, on the Business Day prior to the Closing Date) or (ii) in the case of an ABR Borrowing, not later than 9:00 a.m., New York City time, on the date of the proposed Borrowing.  Each Borrowing Request shall be irrevocable and shall specify the following information in compliance with Section 2.02:

 

  

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(a)            whether the requested Borrowing is to be a Borrowing of Revolving Loans or Term Loans;

 

(b)            the aggregate principal amount of such Borrowing;

 

(c)            the date of such Borrowing, which shall be a Business Day;

 

(d)            whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;

 

(e)            in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto;

 

(f)            the location and number of Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.02(c); and

 

(g)            that the conditions set forth in Sections 4.02(b)-(d) are satisfied as of the date of the notice.

 

If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing.  If no Interest Period is specified with respect to any requested Eurodollar Revolving Borrowing, then Borrower shall be deemed to have selected an Interest Period of one month’s duration.  Promptly following receipt of a Borrowing Request in accordance with this Section 2.03, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.

 

Section 2.04            Evidence of Debt; Repayment of Loans.  (a) Borrower hereby unconditionally promises to pay to (i) the Administrative Agent for the account of each Term Loan Lender, the principal amount of each Term Loan of such Term Loan Lender as provided in Section 2.09, (ii) the Administrative Agent for the account of each Revolving Lender, the then unpaid principal amount of each Revolving Loan of such Revolving Lender on the Revolving Maturity Date and (iii) the Swingline Lender for its own account, the then unpaid principal amount of each Swingline Loan on the earlier of the Revolving Maturity Date and the date that is no later than five (5) Business Days after such Swingline Loan is made; provided that, on each date that a Revolving Borrowing is made, Borrower shall repay all Swingline Loans that were outstanding on the date such Borrowing was requested.

 

(b)            Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement.

 

(c)            The Administrative Agent shall maintain accounts in which it will record (i) the amount of each Loan made hereunder, the Type and Class thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from Borrower to each Lender hereunder, and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.

 

  

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(d)            The entries made in the accounts maintained pursuant to Sections 2.04(b) and (c) shall be prima facie evidence of the existence and amounts of the obligations therein recorded; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligations of Borrower and the other Loan Parties to pay, and perform, the Obligations in accordance with the Loan Documents.  In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such entries, the accounts and records of the Administrative Agent shall control in the absence of manifest error.

 

(e)            Any Lender by written notice to Borrower (with a copy to the Administrative Agent) may request that Loans of any Class made by it be evidenced by a promissory note.  In such event, Borrower shall promptly (and, in all events, within five Business Days of receipt of such request) prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) in the form of Exhibit I-1, I-2 or I-3, as the case may be.  Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 10.04) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

 

Section 2.05            Fees.

 

(a)            Commitment Fee.  Subject to Section 2.16(c), Borrower agrees to pay to the Administrative Agent for the account of each Revolving Lender a commitment fee (a “Commitment Fee”), at a rate per annum equal to the applicable percentage set forth in Annex II under the caption “Commitment Fee Rate,” on the average daily unused amount of each Revolving Commitment of such Revolving Lender during the period from and including the date hereof to but excluding the date on which such Revolving Commitment terminates.  Accrued Commitment Fees shall be payable in arrears (A) on the last Business Day of March, June, September and December of each year, commencing on the first such date to occur after the date hereof, and (B) on the date on which such Revolving Commitment terminates.  Commitment Fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).  For purposes of computing Commitment Fees, a Revolving Commitment of a Revolving Lender shall be deemed to be used to the extent of the outstanding Revolving Loans and LC Exposure of such Revolving Lender (and the Swingline Commitment of the Swingline Lender shall be deemed to be used to the extent of its Swingline Exposure).

 

(b)            Administrative Agent Fees.  Borrower agrees to pay to the Administrative Agent, for its own account, the administrative fees set forth in the Fee Letter and such other fees payable in the amounts and at the times separately agreed upon between Borrower and the Administrative Agent (the “Administrative Agent Fees”).

 

(c)            LC and Fronting Fees.  Subject to Section 2.16(c), Borrower agrees to pay to (i) the Administrative Agent for the account of each Revolving Lender a participation fee (“LC Participation Fee”) with respect to its participations in Letters of Credit, which shall accrue at a rate per annum equal to the Applicable Margin from time to time used to determine the interest rate on Eurodollar Revolving Loans pursuant to Section 2.06 on the average daily amount of such Lender’s LC Exposure (excluding any portion thereof attributable to Reimbursement Obligations) during the period from and including the Closing Date to but excluding the later of the date on which such Lender’s Revolving Commitment terminates and the date on which such Lender ceases to have any LC Exposure, and (ii) the Issuing Bank a fronting fee (“Fronting Fee”), which shall accrue at the rate of 0.125% per annum (or such lesser rate per annum as the Issuing Bank may from time to time agree) on the average daily amount of the LC Exposure (excluding any portion thereof attributable to Reimbursement Obligations) during the period from and including the Closing Date to but excluding the later of the date of termination of the Revolving Commitments and the date on which there ceases to be any LC Exposure, as well as the Issuing Bank’s customary fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder.  Accrued LC Participation Fees and Fronting Fees shall be payable in arrears (i) on the last Business Day of March, June, September and December of each year, commencing on the first such date to occur after the Closing Date, and (ii) on the date on which the Revolving Commitments terminate.  Any such fees accruing after the date on which the Revolving Commitments terminate shall be payable on demand.  Any other fees payable to the Issuing Bank pursuant to this Section 2.05(c) shall be payable within five Business Days after demand therefor.  All LC Participation Fees and Fronting Fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

 

  

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(d)            Other Fees.  Borrower agrees to pay the Agents, for their own account, fees payable in the amounts and at the times separately agreed upon between Borrower and the applicable Agents.

 

(e)            Payment of Fees.  All Fees shall be paid on the dates due, in immediately available funds in Dollars, to the Administrative Agent for distribution, if and as appropriate, among the Lenders, except that Borrower shall pay (i) the Fronting Fees directly to the Issuing Bank, and (ii) the Fees provided under Section 2.05(d) directly to the Agents.  Once paid, none of the Fees shall be refundable under any circumstances.

 

Section 2.06            Interest on Loans.  (a) Subject to the provisions of Section 2.06(c), the Loans comprising each ABR Borrowing, including each Swingline Loan, shall bear interest at a rate per annum equal to the Alternate Base Rate plus the Applicable Margin in effect from time to time.

 

(b)            Subject to the provisions of Section 2.06(c) and Section 2.19, the Loans comprising each Eurodollar Borrowing shall bear interest at a rate per annum equal to the Adjusted LIBOR Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin in effect from time to time.

 

(c)            Notwithstanding the foregoing, during an Event of Default, all Obligations shall, bear interest, after as well as before judgment, at a per annum rate equal to (i) in the case of principal of or interest on any Loan, 2.0% plus the rate otherwise applicable to such Loan as provided in Sections 2.06(a) and (b) or (ii) in the case of any other Obligation, 2.0% plus the rate applicable to ABR Revolving Loans as provided in Section 2.06(a) (in either case, the “Default Rate”).

 

(d)            Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan; provided that (i) interest accrued pursuant to Section 2.06(c) (including interest on past due interest) and all interest accrued but unpaid on or after the Revolving Maturity Date or, in the case of the Initial Term Loans, the Initial Term Loan Maturity Date or, in the case of any Extended Term Loans, the applicable Extended Term Loan Maturity Date, as applicable, shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan or a Swingline Loan), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.

 

  

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(e)            All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day); provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.14, bear interest for one day.  The applicable Alternate Base Rate or Adjusted LIBOR Rate shall be determined by the Administrative Agent in accordance with the provisions of this Agreement and such determination shall be conclusive absent manifest error.  Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any Insolvency Proceeding.

 

Section 2.07            Termination and Reduction of Commitments.  (a) Subject to the provisions of Sections 2.19 and 2.20, the Term Loan Commitments shall automatically terminate at 5:00 p.m., New York City time, on the Closing Date.  The Revolving Commitments, the Swingline Commitment and the LC Commitment shall automatically terminate on the Revolving Maturity Date.

 

(b)            At its option, Borrower may at any time terminate, or from time to time permanently reduce, the Commitments of any Class; provided that (i) each reduction of the Commitments of any Class shall be in an amount that is an integral multiple of $500,000 and not less than $1,000,000 and (ii) the Revolving Commitments shall not be terminated or reduced if, after giving effect to any concurrent prepayment of the Revolving Loans in accordance with Section 2.10, the aggregate amount of Revolving Exposures would exceed the aggregate amount of Revolving Commitments.

 

(c)            Borrower shall notify the Administrative Agent in writing of any election to terminate or reduce the Commitments under Section 2.07(b) at least five Business Days prior to the effective date of such termination or reduction (which effective date shall be a Business Day), specifying such election and the effective date thereof.  Promptly following receipt of any such notice, the Administrative Agent shall advise the Lenders of the contents thereof.  Each notice delivered by Borrower pursuant to this Section 2.07 shall be irrevocable, provided that a notice of termination of the Commitments delivered by Borrower in accordance with this Section 2.07 may, if the Administrative Agent (in its reasonable discretion) has previously agreed to a customary pay-off letter with Borrower, expressly state that such notice is conditioned upon the effectiveness of new credit facilities or similar new Indebtedness and which effectiveness will result in the immediate payment in full of all Obligations and the Cash Collateralization of all outstanding Letters of Credit, in which case such notice may be revoked by Borrower (by notice to the Administrative Agent on or prior to 2:00 p.m., New York City time, one Business Day prior to the specified notice effective date) if such condition is not satisfied (or is then unlikely to be satisfied).   Any termination or reduction of the Commitments of any Class shall be permanent.  Each reduction of the Commitments of any Class shall be made ratably among the Lenders in accordance with their respective Commitments of such Class.

 

Section 2.08            Interest Elections.  (a) Each Revolving Borrowing and Term Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request.  Thereafter, Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section 2.08.  Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.  Notwithstanding anything to the contrary, Borrower shall not be entitled to request any conversion or continuation that, if made, would result in more than five Eurodollar Borrowings outstanding hereunder at any one time. This Section 2.08 shall not apply to Swingline Borrowings, which may not be converted or continued.

 

  

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(b)            To make an election pursuant to this Section 2.08, Borrower shall deliver, by hand delivery or telecopy (or transmit by other electronic transmission, if arrangements for doing so have been approved in writing by the Administrative Agent), a duly completed and executed Interest Election Request to the Administrative Agent not later than the time that a Borrowing Request would be required under Section 2.03 if Borrower were requesting a Revolving Borrowing or Term Borrowing of the Type resulting from such election to be made on the effective date of such election.  Each Interest Election Request shall be irrevocable.

 

(c)            Each Interest Election Request shall specify the following information in compliance with Section 2.02:

 

(i)            the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, or if outstanding Borrowings are being combined, allocation to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);

 

(ii)            the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

 

(iii)            whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

 

(iv)            if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period”.

 

If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then Borrower shall be deemed to have selected an Interest Period of one month’s duration.

 

(d)            Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

 

(e)            If an Interest Election Request with respect to a Eurodollar Borrowing is not timely delivered prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing.  Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing, the Administrative Agent or the Required Lenders may require, by notice to Borrower, that (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto.

 

Section 2.09            Amortization of Term Borrowings.  (a) Subject to Sections 2.19 and 2.20, Borrower shall pay to the Administrative Agent, for the account of the Term Loan Lenders, on each March 31, June 30, September 30 and December 31, beginning with June 30, 2014 or if any such date is not a Business Day, on the immediately following Business Day (each such date, a “Term Loan Repayment Date”), a principal amount of the Term Loans equal to 0.25% of the initial aggregate principal amount of such Term Loans (as adjusted from time to time pursuant to Section 2.10), together in each case with accrued and unpaid interest on the principal amount to be paid to but excluding the date of such payment.

 

  

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(b)            To the extent not previously irrevocably paid in full in cash, all Initial Term Loans shall be due and payable on the Initial Term Loan Maturity Date and any Extended Term Loans shall be due and payable on the applicable Extended Term Loan Maturity Date.

 

Section 2.10            Optional and Mandatory Prepayments of Loans.  (a) Optional Prepayments.  Borrower shall have the right at any time and from time to time to prepay any Borrowing, in whole or in part, without premium or penalty, subject to the requirements of this Section 2.10 (including, if applicable, any amounts payable under Section 2.10(h)); provided that each partial prepayment shall be in an amount that is an integral multiple of $100,000 and not less than $250,000 or, if less, the outstanding principal amount of such Borrowing.

 

(b)            Revolving Loan Prepayments.  (i) In the event of the termination of all the Revolving Commitments, Borrower shall, on the date of such termination, repay or prepay all its outstanding Revolving Borrowings and all outstanding Swingline Loans and either (A) replace all outstanding Letters of Credit or (B) Cash Collateralize all outstanding Letters of Credit in accordance with the procedures set forth in Section 2.18(i).

 

(ii)            In the event of any partial reduction of the Revolving Commitments, then (x) at or prior to the effective date of such reduction, the Administrative Agent shall notify Borrower and the Revolving Lenders of the sum of the Revolving Exposures after giving effect thereto and (y) if the sum of the Revolving Exposures would exceed the aggregate amount of Revolving Commitments after giving effect to such reduction, then Borrower shall, on the date of such reduction, first, repay or prepay Swingline Loans, second, repay or prepay Revolving Borrowings and third, replace outstanding Letters of Credit or Cash Collateralize outstanding Letters of Credit in accordance with the procedures set forth in Section 2.18(i) in an aggregate amount sufficient to eliminate such excess.

 

(iii)           In the event that the sum of all Lenders’ Revolving Exposures exceeds the Revolving Commitments then in effect, Borrower shall, without notice or demand, immediately first, repay or prepay Swingline Loans, second, repay or prepay Revolving Borrowings, and third, replace outstanding Letters of Credit or Cash Collateralize outstanding Letters of Credit in accordance with the procedures set forth in Section 2.18(i) in an aggregate amount sufficient to eliminate such excess.

 

(iv)          In the event that the aggregate LC Exposure exceeds the LC Commitment then in effect, Borrower shall, without notice or demand, immediately replace outstanding Letters of Credit or Cash Collateralize outstanding Letters of Credit  in accordance with the procedures set forth in Section 2.18(i) in an aggregate amount sufficient to eliminate such excess.

 

(c)            Asset Sales.  Not later than three Business Days following the receipt of any Net Cash Proceeds of any Asset Sale by any Company, Borrower shall apply 100% of such Net Cash Proceeds to make prepayments in accordance with Section 2.10(g) provided that:

 

(i)            so long as no Default or Event of Default shall then exist or would arise therefrom, such proceeds shall not be required to be so applied on such date to the extent that Borrower shall have delivered an Officer’s Certificate to the Administrative Agent on or prior to such date stating that such Net Cash Proceeds are reasonably expected to be reinvested in fixed or capital assets of any Loan Party within 360 days following the date of such Asset Sale (which Officer’s Certificate shall set forth the estimates of the proceeds to be so expended); provided that, if the property subject to such Asset Sale constituted Collateral, then all property purchased or otherwise acquired with the Net Cash Proceeds thereof pursuant to this subsection shall be made subject to the first priority perfected Lien (subject to Permitted Liens) of the applicable Security Documents in favor of the Collateral Agent, for its benefit and for the benefit of the other Secured Parties in accordance with Sections 5.11 and 5.12; and

 

  

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(ii)            if all or any portion of such Net Cash Proceeds is not so reinvested within such 360-day period, such unused portion shall be applied on the last day of such period as a mandatory prepayment as provided in this Section 2.10(c).

 

(d)            Debt Issuance or Equity Issuance.  Not later than three Business Days following the receipt of any Net Cash Proceeds of any Debt Issuance or Equity Issuance by any Company, Borrower shall make prepayments in accordance with Section 2.10(g) in an aggregate principal amount equal to 100% of such Net Cash Proceeds.

 

(e)            Casualty Events.  Not later than three Business Days following the receipt of any Net Cash Proceeds from a Casualty Event by any Company, Borrower shall apply an amount equal to 100% of such Net Cash Proceeds to make prepayments in accordance with Section 2.10(g); provided that:

 

(i)            so long as no Default or Event of Default shall then exist or arise therefrom, such proceeds shall not be required to be so applied on such date to the extent that the Administrative Agent has elected by notice to Borrower on or prior to such date to require such proceeds to be used to repair, replace or restore any property in respect of which such Net Cash Proceeds were paid or to reinvest in fixed or capital assets of any Loan Party, no later than 360 days following the date of receipt of such proceeds (which Officer’s Certificate shall set forth the estimates of the proceeds to be so expended); provided that if the property subject to such Casualty Event constituted Collateral, then all property purchased or otherwise acquired with the Net Cash Proceeds thereof pursuant to this subsection shall be made subject to the first priority perfected Lien (subject to Permitted Liens) of the applicable Security Documents in favor of the Collateral Agent, for its benefit and for the benefit of the other Secured Parties in accordance with Sections 5.11 and 5.12; and

 

(ii)            if all or any portion of such Net Cash Proceeds shall not be so applied within such 360-day period, such unused portion shall be applied on the last day of such period as a mandatory prepayment as provided in this Section 2.10(e).

 

(f)            Excess Cash Flow.  No later than each December 31 occurring prior to the Final Maturity Date, Borrower shall make prepayments in accordance with Section 2.10(g) in an aggregate principal amount equal to (x) 50% of Excess Cash Flow for the Excess Cash Flow Period most recently ended if the Total Leverage Ratio at the end of such period is greater than or equal to 3.75:1.00, (y) 25% of Excess Cash Flow for the Excess Cash Flow Period most recently ended if the Total Leverage Ratio at the end of such period is less than 3.75:1.00 but greater than or equal to 3.00:1.00 and (z) 0.0% of Excess Cash Flow for the Excess Cash Flow Period most recently ended if the Total Leverage Ratio at the end of such period is less than 3.00:1:00.

 

(g)            Application of Prepayments.

 

(i)            Prior to any optional prepayment hereunder, Borrower shall select the Borrowing or Borrowings to be prepaid and shall specify such selection in the notice of such prepayment pursuant to Section 2.10(g)(iii), subject to the provisions of this Section 2.10(g)(i).  Any prepayments required pursuant to Section 2.10 (c)-(f) shall be applied (x) first to reduce the next four scheduled payments of Initial Term Loans, Extended Term Loans and Incremental Term Loans required to be made under Section 2.09(a) in direct order of maturity, on a pro rata basis among such Term Loans, (y) second on a pro rata basis among the payments on account of Initial Term Loans, Extended Term Loans and Incremental Term Loans remaining to be made on each Term Loan Repayment Date and the Final Maturity Date and and then to reduce payments required under Section 2.09(b), and (z) third to the extent there are prepayment amounts remaining after the application of such prepayments under clauses first and second, such excess amounts shall be applied to the prepayment of outstanding Revolving Loans and to Cash Collateralize outstanding Letters of Credit (and with a corresponding reduction in Revolving Commitments if, and only if, a Default or Event of Default has occurred and is continuing at the time such prepayment is made) and Borrower shall comply with Section 2.10(b).  Any prepayments of Term Loans pursuant to Section 2.10(a) shall be applied to the remaining scheduled payments of Initial Term Loans, Extended Term Loans and Incremental Term Loans required to be made under Section 2.09(a) on a pro rata basis among such Term Loans as directed by Borrower (or, in the absence of any such direction, in direct order of maturity) unless otherwise agreed by the adversely affected Lenders.

 

  

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(ii)            Amounts to be applied pursuant to this Section 2.10 to the prepayment of Term Loans and Revolving Loans shall be applied, as applicable, first to reduce outstanding ABR Term Loans and ABR Revolving Loans, respectively.  Any amounts remaining after each such application shall be applied to prepay Eurodollar Term Loans or Eurodollar Revolving Loans, as applicable.

 

(iii)           Notice of Prepayment.  Borrower shall notify the Administrative Agent (and, in the case of prepayment of a Swingline Loan, the Swingline Lender) by written notice of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of prepayment, (ii) in the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time, one Business Day before the date of prepayment; provided that a notice of optional prepayment delivered by Borrower in accordance with this Section 2.10(g) and Section 2.10(a) that contemplates payment in full of the Loans may, if the Administrative Agent (in its reasonable discretion) has previously agreed to a customary pay-off letter with Borrower, expressly state that such notice is conditioned upon the effectiveness of new credit facilities or similar new Indebtedness and which effectiveness will result in the immediate payment in full of all Obligations and the Cash Collateralization of all outstanding Letters of Credit, in which case such notice may be revoked by Borrower (by notice to the Administrative Agent on or prior to 2:00 p.m., New York City time, one Business Day prior to the specified notice effective date) if such condition is not satisfied (or is then unlikely to be satisfied) and (iii) in the case of prepayment of a Swingline Loan, not later than 11:00 a.m., New York City time, on the date of prepayment.  Each such notice shall be irrevocable.  Each such notice shall specify the prepayment date, the principal amount of each Borrowing or portion thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably detailed calculation of the amount of such prepayment.  Promptly following receipt of any such notice (other than a notice relating solely to Swingline Loans), the Administrative Agent shall advise the Lenders of the contents thereof.  Such notice to the Lenders may be by electronic communication.  Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of a Borrowing of the same Type as provided in Section 2.02, except as necessary to apply fully the required amount of a mandatory prepayment.  Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing and otherwise in accordance with this Section 2.10.  Prepayments shall be accompanied by accrued interest to the extent required by Section 2.06.

 

(h)            Call Protection.  In the event that, prior to the first anniversary of the Closing Date, there shall occur (x) any optional prepayment of the Loans, in whole or in part, under Section 2.10(a) or (y) any mandatory prepayment of the Loans, in whole or in part, under Section 2.10(c) or Section 2.10(d), each such prepayment in clause (x) or (y) above shall be accompanied by a fee or prepayment premium, as applicable, equal to the present value at such prepayment date of all interest that would accrue on the prepaid Loans through the first anniversary of the Closing Date, computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points, computed using Adjusted LIBOR for an Interest Period of three months plus the Applicable Margin for LIBOR Loans in effect on such date.

 

  

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Section 2.11            Alternate Rate of Interest.  If prior to the commencement of any Interest Period for a Eurodollar Borrowing:

 

(a)            the Administrative Agent determines (which determination shall be final and conclusive absent manifest error) either (i) that Dollar deposits in the principal amounts of Loans comprising the applicable Borrowing are not generally available in the London interbank market or (ii) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBOR Rate for such Interest Period; or

 

(b)            the Administrative Agent is advised in writing by the Required Lenders that the Adjusted LIBOR Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period;

 

then the Administrative Agent shall give written notice thereof to Borrower and the Lenders as promptly as practicable thereafter and, until the Administrative Agent notifies Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective and any Eurodollar Borrowing shall be converted into an ABR Borrowing on the last day of the then current Interest Period applicable thereto and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing.

 

Section 2.12            Increased Costs; Change in Legality.  (a) If any Change in Law shall:

 

(i)            impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against property of, deposits with or for the account of, or credit extended by or participated in by, any Lender (except any such reserve requirement reflected in the Adjusted LIBOR Rate) or the Issuing Bank; or

 

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

 

and the result of any of the foregoing shall be to increase the cost to such Lender of making, converting to or from, continuing or maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender, the Issuing Bank or such Lender’s or the Issuing Bank’s holding company, if any, of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit) or to reduce the amount of any sum received or receivable by such Lender or the Issuing Bank hereunder (whether of principal, interest or otherwise), then Borrower shall, upon the written request of such Lender or the Issuing Bank, pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered, it being understood that, to the extent duplicative of the provisions of Section 2.15, this Section 2.12 shall not apply to Taxes.  The protection of this Section 2.12 shall be available to each Lender and the Issuing Bank regardless of any possible contention of the invalidity or inapplicability of the Change in Law that shall have occurred or been imposed.

 

  

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(b)            If any Lender or the Issuing Bank determines (in good faith, but in its sole absolute discretion) that any Change in Law regarding Capital Requirements has or would have the effect of reducing the rate of return on such Lender’s or the Issuing Bank’s capital or on the capital of such Lender’s or the Issuing Bank’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit or Swingline Loans held by such Lender, or the Letters of Credit issued by the Issuing Bank, to a level below that which such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or the Issuing Bank’s policies and the policies of such Lender’s or the Issuing Bank’s holding company with respect to capital adequacy), then from time to time Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company, for any such reduction suffered.

 

(c)            A certificate of a Lender or the Issuing Bank setting forth in reasonable detail the amount or amounts necessary to compensate such Lender or the Issuing Bank or its holding company, as the case may be, as specified in Sections 2.12(a) or (b) shall be delivered to Borrower (with a copy to the Administrative Agent) and shall be conclusive and binding absent manifest error.; provided, however, that such certificate need not include any confidential or price sensitive information or any information that is prohibited by applicable Legal Requirements from being disclosed.  Borrower shall pay such Lender or the Issuing Bank, as the case may be, the amount shown as due on any such certificate within three Business Days after receipt thereof.

 

(d)            Failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this Section 2.12 shall not constitute a waiver of such Lender’s or the Issuing Bank’s right to demand such compensation; provided that Borrower shall not be required to compensate a Lender or the Issuing Bank pursuant to this Section 2.12 for any increased costs incurred or reductions suffered more than 12 months prior to the earlier of (x) the date on which such Lender or the Issuing Bank, as the case may be, notifies Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the Issuing Bank’s intention to claim compensation therefor and (y) the date on which such Change in Law becomes effective; provided that if such Change in Law is retroactive, then the 12 month period referred to above shall be extended to indicate the period of retroactive effect thereof.

 

(e)            Notwithstanding any other provision of this Agreement, if any Change in Law shall make it unlawful for any Lender to make or maintain any Eurodollar Loan or to give effect to its obligations as contemplated hereby with respect to any Eurodollar Loan, then, by written notice to Borrower and to the Administrative Agent:

 

(i)            such Lender may declare that Eurodollar Loans will not thereafter (for the duration of such unlawfulness (as determined in good faith by such Lender)) be made by such Lender hereunder (or be continued for additional Interest Periods and ABR Loans will not thereafter (for such duration) be converted into Eurodollar Loans), whereupon any request for a Eurodollar Loan (or to convert an ABR Loan to a Eurodollar Loan or to continue a Eurodollar Loan for an additional Interest Period) shall, as to such Lender only, be deemed a request for an ABR Loan (or a request to continue an ABR Loan as such for an additional Interest Period or to convert a Eurodollar Loan into an ABR Loan, as the case may be), unless such declaration shall be subsequently withdrawn by such Lender by written notice to Borrower and to the Administrative Agent; and

 

  

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(ii)           such Lender may require that all outstanding Eurodollar Loans made by it be converted to ABR Loans, in which event all such Eurodollar Loans shall be automatically converted to ABR Loans as of the effective date of such notice as provided in Section 2.12(f).

 

In the event any Lender shall exercise its rights under clause (i) or (ii) above, all payments and prepayments of principal that would otherwise have been applied to repay the Eurodollar Loans that would have been made by such Lender or the converted Eurodollar Loans of such Lender shall instead be applied to repay the ABR Loans made by such Lender in lieu of, or resulting from the conversion of, such Eurodollar Loans.

 

(f)            For purposes of Section 2.12(e), a notice to Borrower by any Lender shall be effective as to each Eurodollar Loan made by such Lender, if lawful, on the last day of the Interest Period then applicable to such Eurodollar Loan; in all other cases such notice shall be effective on the date of receipt by Borrower.

 

Section 2.13            Breakage Payments.  In the event of (a) the payment or prepayment, whether optional or mandatory, of any principal of any Eurodollar Loan earlier than the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan earlier than the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Revolving Loan or Term Loan on the date specified in any notice delivered pursuant hereto or (d) the assignment of any Eurodollar Loan earlier than the last day of the Interest Period applicable thereto as a result of a request by Borrower pursuant to Section 2.16, then, in any such event, Borrower shall compensate each Lender for the loss, cost and expense attributable to such event.  In the case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest that would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBOR Rate plus the Applicable Margin (together with any interest payable at the Default Rate, if then applicable) that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest that would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for Dollar deposits of a comparable amount and period from other banks in the Eurodollar market.  A certificate of any Lender setting forth in reasonable detail any amount or amounts that such Lender is entitled to receive pursuant to this Section 2.13 shall be delivered to Borrower (with a copy to the Administrative Agent) and shall be conclusive and binding absent manifest error.  Borrower shall pay such Lender the amount shown as due on any such certificate within three Business Days after receipt thereof; provided, however,  that such certificate need not include any confidential or price sensitive information or any information that is prohibited by applicable Legal Requirements from being disclosed.

 

Section 2.14            Payments Generally; Pro Rata Treatment; Sharing of Setoffs.  (a) Borrower shall make each payment required to be made by it hereunder or under any other Loan Document (whether of principal, interest, fees or Reimbursement Obligations, or of amounts payable under Section 2.10(h),  2.12, 2.13 or 2.15, or otherwise) on or before the time expressly required hereunder or under such other Loan Document for such payment (or, if no such time is expressly required, prior to 1:00 p.m., New York City time), on the date when due, in immediately available funds, without setoff, deduction or counterclaim.  Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon.  All such payments shall be made to the Administrative Agent at its offices at 520 Madison Avenue, New York, New York 10022 Attn: Steak n Shake Operations, Inc. Account Manager, except payments to be made directly to the Issuing Bank or Swingline Lender as expressly provided herein and except that payments pursuant to Sections 2.12, 2.13, 2.15 and 10.03 shall be made directly to the Persons entitled thereto and payments pursuant to other Loan Documents shall be made to the Persons specified therein.  The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof.  If any payment under any Loan Document shall be due on a day that is not a Business Day, unless specified otherwise, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension.  All payments under each Loan Document shall be made in Dollars.

 

  

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(b)            If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, Reimbursement Obligations, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, (ii) second, towards payment of principal and Reimbursement Obligations then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and Reimbursement Obligations then due to such parties, and (iii) third, towards the payment of all other Obligations then due hereunder, ratably among the parties entitled thereto in accordance with the amount of such amounts then due to such parties.  It is understood that the foregoing does not apply to any adequate protection payments under any federal, provincial, state or foreign bankruptcy, insolvency, receivership or similar proceeding, and that the Administrative Agent may, subject to any applicable federal, provincial, state or foreign bankruptcy, insolvency, receivership or similar orders, distribute any adequate protection payments it receives on behalf of the Lenders to the Lenders in its sole discretion (i.e., whether to pay the earliest accrued interest, all accrued interest on a pro rata basis or otherwise).

 

(c)            If any Lender shall, by exercising any right of setoff or counterclaim (including pursuant to Section 10.08) or otherwise (including by exercise of its rights under the Security Documents), obtain payment in respect of any principal of or interest on any of its Revolving Loans, Term Loans or participations in LC Disbursements or Swingline Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Revolving Loans, Term Loans and participations in LC Disbursements and Swingline Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Revolving Loans, Term Loans and participations in LC Disbursements and Swingline Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Revolving Loans, Term Loans and participations in LC Disbursements and Swingline Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this Section 2.14(c) shall not be construed to apply to any payment made by Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Revolving Loans, Term Loans or participations in LC Disbursements or Swingline Loans to any Eligible Assignee or participant, other than to any Company or any Affiliates thereof (as to which the provisions of this Section 2.14(c) shall apply).  Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable Legal Requirements, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against each Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of such participation.  If under applicable Insolvency Law any Secured Party receives a secured claim in lieu of a setoff or counterclaim to which this Section 2.14(c) applies, such Secured Party shall to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights to which the Secured Party is entitled under this Section 2.14(c) to share in the benefits of the recovery of such secured claim.

 

  

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(d)            Unless the Administrative Agent shall have received written notice from Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Bank hereunder that Borrower will not make such payment, the Administrative Agent may assume that Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Bank, as the case may be, the amount due.  In such event, if Borrower has not in fact made such payment, then each of the Lenders or the Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or the Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules or practices on interbank compensation.

 

(e)            If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.02(c), 2.14(d), 2.17(d), 2.18(d), 2.18(e) or 10.03(e), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.

 

Section 2.15            Taxes.  (a)  Any and all payments by or on account of any obligation of the Loan Parties hereunder or under any other Loan Document shall be made without setoff, counterclaim or other defense and free and clear of and without deduction, reduction or withholding for any and all Taxes, except as required by applicable Legal Requirements; provided that if any Taxes shall be required by applicable Legal Requirements (as determined in the good faith discretion of an applicable withholding agent) to be deducted or withheld from such payments, then (i) if such Tax is an Indemnified Tax or Other Tax, the sum payable by the relevant Loan Party shall be increased as necessary so that after making all required deductions, reductions or withholdings (including deductions, reductions or withholdings applicable to additional sums payable under this Section 2.15) the Administrative Agent, any Lender or the Issuing Bank, as the case may be, receives an amount equal to the sum it would have received had no such deductions, reductions or withholdings been made, (ii) the applicable withholding agent shall be entitled to make such deductions, reductions or withholdings and (iii) the applicable withholding agent shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable Legal Requirements.

 

(b)            In addition, the Loan Parties shall timely pay to the relevant Governmental Authority in accordance with applicable Legal Requirements, or at the option of the Administrative Agent timely reimburse it for payment of, any Other Taxes.

 

(c)            The Loan Parties shall jointly and severally indemnify the Administrative Agent, each Lender and the Issuing Bank, within ten Business Days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid or payable by the Administrative Agent, such Lender or the Issuing Bank, as the case may be, on or with respect to any payment by or on account of any obligation of any Loan Party hereunder or under any other Loan Document or required to be withheld or deducted from a payment to such recipient (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 2.15) and any penalties, interest and expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability and setting forth in reasonable detail the calculation of and basis for such payment or liability delivered to Borrower by a Lender or the Issuing Bank (in each case, with a copy delivered concurrently to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender or the Issuing Bank, shall be conclusive absent manifest error.

 

  

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(d)            Each Lender shall severally indemnify the Administrative Agent, within ten days after demand therefor, for (i) any Indemnified Taxes or Other Taxes attributable to such Lender (but only to the extent that a Loan Party has not already indemnified the Administrative Agent for such Indemnified Taxes or Other Taxes and without limiting the obligation of the Loan Parties to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 10.04(e) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error.  Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph (d).

 

(e)            As soon as practicable after any payment of Taxes and in any event within 20 Business Days following any such payment being due, by any Loan Party to a Governmental Authority, Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the Tax Return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.  If any Loan Party fails to pay any Indemnified Taxes or Other Taxes when due to the appropriate Governmental Authority or Borrower fails to remit to the Administrative Agent the required receipts or other documentary evidence, the Loan Parties shall jointly and severally indemnify the Administrative Agent, each Lender and the Issuing Bank for any incremental Taxes or expenses that may become payable by the Administrative Agent, such Lender or the Issuing Bank, as the case may be, as a result of any such failure.

 

(f)            Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which Borrower is resident for tax purposes, or under any treaty to which such jurisdiction is a party, with respect to payments under any Loan Document shall deliver to Borrower (with a copy to the Administrative Agent), at the time or times reasonably requested by Borrower or the Administrative Agent and at the time or times prescribed by applicable Legal Requirements, such properly completed and executed documentation prescribed by applicable Legal Requirements or reasonably requested by Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding.  Notwithstanding anything to the contrary in the preceding sentence, the completion, execution, and submission of such documentation (other than such documentation set forth in part (i) of the following sentence or in Section 2.15(g)) shall not be required if in the Foreign Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.  Without limiting the generality of the foregoing, each Foreign Lender shall, to the extent it is legally entitled to do so, (i) furnish to Borrower and the Administrative Agent whichever of the following is applicable: (a) two accurate and complete executed originals of U.S.  Internal Revenue Service Form W-8BEN (or successor form), provided that any Foreign Lender that is relying on the so-called “portfolio interest exemption” within the meaning of Section 881(c) of the Code shall also furnish a “Non-Bank Certificate” in the form of Exhibit L, (b) two accurate and complete executed originals of U.S.  Internal Revenue Service Form W-8ECI (or successor form), (c) two accurate and complete executed originals of U.S. Internal Revenue Service Form W-8EXP (or successor form), or (d) two accurate and complete executed originals of U.S. Internal Revenue Service Form W-8IMY (or successor form) (with any required attachments), certifying, in each case, to such Foreign Lender’s legal entitlement to an exemption or reduction from U.S. federal withholding tax with respect to all withholdable payments under any Loan Document, and (ii) to the extent it may lawfully do so at such times, upon reasonable request by Borrower or the Administrative Agent, provide a new Form W-8BEN (or successor form), Form W-8ECI (or successor form), Form W-8EXP (or successor form), Form W-8IMY (or successor form), and/or certification upon the expiration or obsolescence of any previously delivered form or certification to reconfirm any complete exemption from, or any entitlement to a reduction in, U.S. federal withholding tax with respect to any withholdable payment under any Loan Document.  Any Lender that is not a Foreign Lender shall (i) furnish to Borrower and the Administrative Agent two accurate and complete originally executed U.S. Internal Revenue Service Form W-9 (or successor form), or shall otherwise establish an exemption from U.S. backup withholding and (ii) to the extent it may lawfully do so at such times, upon reasonable request by Borrower or the Administrative Agent, provide a new Form W-9 (or successor form) upon the expiration or obsolescence of any previously delivered form.

 

  

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(g)            If a payment made to a Lender hereunder would be subject to U.S. federal withholding Tax under FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to Borrower and the Administrative Agent, at the time or times prescribed by law and at such time or times reasonably requested by Borrower or the Administrative Agent, such documentation prescribed by applicable Legal Requirements (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by Borrower or the Administrative Agent as may be necessary for Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment.  Solely for purposes of this Section 2.15(g), the term “FATCA” shall include any amendments to FATCA after the date hereof.

 

(h)            If the Administrative Agent or a Lender (or an assignee) determines in its sole discretion exercised in good faith, that it has received a refund of any Indemnified Taxes or Other Taxes as to which it has been indemnified by Borrower or with respect to which Borrower has paid additional amounts pursuant to this Section 2.15, it shall pay over an amount equal to such refund to Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by Borrower under this Section 2.15 with respect to the Indemnified Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of the Administrative Agent or such Lender (or assignee) and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided, however, that if the Administrative Agent or such Lender (or assignee) is required to repay all or a portion of such refund to the relevant Governmental Authority, Borrower, upon the request of the Administrative Agent or such Lender (or assignee), shall repay the amount paid over to Borrower that is required to be repaid (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender (or assignee) within 5 Business Days after receipt of written notice that the Administrative Agent or such Lender (or assignee) is required to repay such refund (or a portion thereof) to such Governmental Authority.  Nothing contained in this Section 2.15(h) shall require the Administrative Agent or any Lender (or assignee) to make available its Tax Returns or any other information which it deems confidential or privileged to Borrower or any other Person.  Notwithstanding anything to the contrary, in no event will the Administrative Agent or any Lender (or assignee) be required to pay any amount to Borrower the payment of which would place the Administrative Agent or such Lender (or assignee) in a less favorable net after-tax position than the Administrative Agent or such Lender (or assignee) would have been in if the Indemnified Taxes or Other Taxes subject to indemnification and giving rise to such refund had not been deducted, withheld, or otherwise imposed and the indemnification payments or additional amounts with respect to such Taxes had never been paid.

 

  

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Section 2.16            Mitigation Obligations; Replacement of Lenders.  (a) Mitigation of Obligations.  If any Lender requests compensation under Section 2.12(a) or (b), or if Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.15, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the reasonable judgment of such Lender, such designation or assignment (i) would eliminate or reduce materially amounts payable pursuant to Section 2.12(a), 2.12(b) or 2.15, as the case may be, in the future, (ii) would not subject such Lender to any unreimbursed cost or expense, (iii) would not require such Lender to take any action inconsistent with its internal policies or legal or regulatory restrictions, and (iv) would not otherwise be disadvantageous to such Lender.  Borrower shall pay all reasonable out-of-pocket costs and expenses incurred by any Lender in connection with any such designation or assignment.  A certificate setting forth such costs and expenses submitted by such Lender to the Administrative Agent shall be conclusive and binding absent manifest error.

 

(b)            Replacement of Lenders.  In the event (i) any Lender or the Issuing Bank delivers a certificate requesting compensation pursuant to Section 2.12(a) or (b), (ii) any Lender or the Issuing Bank delivers a notice described in Section 2.12(e), (iii) Borrower is required to pay any additional amount to any Lender or the Issuing Bank or any Governmental Authority on account of any Lender or the Issuing Bank pursuant to Section 2.15, (iv) any Lender fails to consent to any amendment, waiver or other modification of any Loan Document requested by Borrower that requires the consent of 100% of the Lenders or 100% of all affected Lenders and, which, in each case, has been consented to by all other Lenders or all other affected Lenders, as the case may be, or (v) any Lender or the Issuing Bank defaults in its obligations to make Loans or issue Letters of Credit, as the case may be, or other extensions of credit hereunder, Borrower may, at its sole expense and effort (including with respect to the processing and recordation fee referred to in Section 10.04(b)), upon notice to such Lender or the Issuing Bank and the Administrative Agent, require such Lender or the Issuing Bank to transfer and assign, without recourse (in accordance with and subject to the restrictions contained in Section 10.04), all of its interests, rights and obligations under this Agreement to an Eligible Assignee which shall assume such assigned obligations (which Eligible Assignee may be another Lender, if a Lender accepts such assignment); provided that (w) except in the case of clause (iv) above if the effect of such amendment, waiver or other modification of the applicable Loan Document would cure any Default or Event of Default then ongoing, no such Default or Event of Default shall have occurred and be continuing, (x) such assignment shall not conflict with any applicable Legal Requirement, (y) Borrower shall have received the prior written consent of the Administrative Agent (and, if a Revolving Commitment is being assigned, the prior written consent of the Issuing Bank and the Swingline Lender), which consent shall not unreasonably be withheld or delayed, and (z) Borrower or such assignee shall have paid to the affected Lender or the Issuing Bank in immediately available funds an amount equal to the sum of the principal of and interest and any prepayment premium or penalty (if any) accrued to the date of such payment on the outstanding Loans or LC Disbursements of such Lender or the Issuing Bank, respectively, affected by such assignment plus all Fees and other amounts owing to or accrued for the account of such Lender or such Issuing Bank hereunder (including any amounts under Sections 2.12 and 2.13); provided further that, if prior to any such transfer and assignment the circumstances or event that resulted in such Lender’s or the Issuing Bank’s claim for compensation under Section 2.12(a) or (b) or notice under Section 2.12(e) or the amounts paid pursuant to Section 2.15, as the case may be, cease to cause such Lender or the Issuing Bank to suffer increased costs or reductions in amounts received or receivable or reduction in return on capital, or cease to have the consequences specified in Section 2.12(e), or cease to result in amounts being payable under Section 2.15, as the case may be (including as a result of any action taken by such Lender or the Issuing Bank pursuant to Section 2.16(a)), or if such Lender or the Issuing Bank shall waive its right to claim further compensation under Section 2.12(a) or (b) in respect of such circumstances or event or shall withdraw its notice under Section 2.12(e) or shall waive its right to further payments under Section 2.15 in respect of such circumstances or event or shall consent to the proposed amendment, waiver, consent or other modification, as the case may be, then such Lender or the Issuing Bank shall not thereafter be required to make any such transfer and assignment hereunder.  Each Lender and the Issuing Bank hereby grants to the Administrative Agent an irrevocable power of attorney (which power is coupled with an interest) to execute and deliver, on behalf of such Lender and the Issuing Bank as assignor, any Assignment and Assumption necessary to effectuate any assignment of such Lender’s or the Issuing Bank’s interests hereunder in the circumstances contemplated by this Section 2.16(b).

 

  

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(c)            Defaulting Lenders.  Anything contained herein to the contrary notwithstanding, in the event that any Lender becomes a Defaulting Lender, then (i) during any Default Period (as defined below) with respect to such Defaulting Lender, such Defaulting Lender shall be deemed not to be a “Lender”, and the amount of such Defaulting Lender’s Revolving Commitment and Revolving Loans and/or Term Loan Commitments and Term Loans shall be excluded for purposes of voting, and the calculation of voting, on any matters (including the granting of any consents or waivers) with respect to any of the Loan Documents; provided, however, that such Defaulting Lender shall continue to be deemed a Lender for purposes of Section 10.02(b)(i), (ii) and (iii); (ii) to the extent permitted by applicable Legal Requirements, until such time as the Default Excess (as defined below) with respect to such Defaulting Lender shall have been reduced to zero, (A) any voluntary prepayment of the Loans pursuant to Section 2.10(a) shall, if Borrower so directs at the time of making such voluntary prepayment, be applied to the Loans and the Revolving Exposure of other Lenders in accordance with Section 2.10(a) as if such Defaulting Lender had no Loans outstanding and the Revolving Exposure of such Defaulting Lender were zero, and (B) any mandatory prepayment of the Loans pursuant to Section 2.10 shall, if Borrower so directs at the time of making such mandatory prepayment, be applied to the Loans and Revolving Exposure of other Lenders (but not to the Loans and Revolving Exposure of such Defaulting Lender) in accordance with Section 2.10 as if such Defaulting Lender had funded all Defaulted Revolving Loans of such Defaulting Lender, it being understood and agreed that Borrower shall be entitled to retain any portion of any mandatory prepayment of the Loans that is not paid to such Defaulting Lender solely as a result of the operation of the provisions of this clause (B); (iii) the amount of such Defaulting Lender’s Revolving Commitment, Revolving Loans and LC Exposure shall be excluded for purposes of calculating the Commitment Fee payable to Revolving Lenders pursuant to Section 2.05(a) in respect of any day during any Default Period with respect to such Defaulting Lender, and such Defaulting Lender shall not be entitled to receive any Commitment Fee pursuant to Section 2.05(a) with respect to such Defaulting Lender’s Revolving Commitment in respect of any Default Period with respect to such Defaulting Lender; (iv) if any Swingline Exposure or LC Exposure exists at the time a Lender becomes a Defaulting Lender then: (A) all or any part of such Swingline Exposure and LC Exposure shall be reallocated among the Revolving Lenders that are not Defaulting Lenders in accordance with their respective Revolving Commitments but, in any case, only to the extent the sum of the Revolving Exposures of all Revolving Lenders that are not Defaulting Lenders does not exceed the total of the Revolving Commitments of all Revolving Lenders that are not Defaulting Lenders; (B) if the reallocation described in clause (A) above cannot, or can only partially, be effected (as reasonably determined by the Administrative agent), Borrower shall within one Business Day following notice by the Administrative Agent (x) prepay such Swingline Exposure of such Defaulting Lender and (y) cash collateralize such Defaulting Lender’s LC Exposure (after giving effect to any partial reallocation pursuant to clause (A) above) in accordance with the procedures set forth in Section 2.18(i) for so long as such LC Exposure is outstanding; (C) if Borrower cash collateralizes any portion of such Defaulting Lender’s LC Exposure pursuant to this paragraph (iv), Borrower shall not be required to pay any LC Participation Fee to such Defaulting Lender pursuant to Section 2.05(c) with respect to such Defaulting Lender’s LC Exposure during the period such Defaulting Lender’s LC Exposure is cash collateralized; (D) if the LC Exposure of the non-Defaulting Lenders is reallocated pursuant to this paragraph (iv), then the fees payable to the Lenders pursuant to Section 2.05 shall be adjusted in accordance with such non-Defaulting Lenders’ reallocated LC Exposure; and (E) if any Defaulting Lender’s LC Exposure is neither cash collateralized nor reallocated pursuant to this paragraph (iv), then, without prejudice to any rights or remedies of the Issuing Banks or any Lender hereunder, all Commitment Fees that otherwise would have been payable to such Defaulting Lender (solely with respect to the portion of such Defaulting Lender’s Commitment that was utilized by such LC Exposure) and LC Participation Fee payable under Section 2.05 with respect to such Defaulting Lender’s LC Exposure shall be payable to the applicable Issuing Banks until such LC Exposure is cash collateralized and/or reallocated; (v) the Revolving Exposure of all Lenders as at any date of determination shall be calculated as if such Defaulting Lender had funded all Defaulted Revolving Loans of such Defaulting Lender; and (vi) so long as any Lender is a Defaulting Lender, the Swingline Lender shall not be required to fund any Swingline Loan and no Issuing Bank shall be required to issue, amend or increase any Letter of Credit, unless it is satisfied that the related exposure will be 100% covered by the Commitments of the non-Defaulting Lenders and/or cash collateral will be provided by Borrower in accordance with paragraph (iv) of this Section 2.16(c), and participating interests in any such newly issued or increased Letter of Credit or newly made Swingline Loan shall be allocated among non-Defaulting Lenders in a manner consistent with paragraph (iv)(A) of this Section 2.16(c) (and Defaulting Lenders shall not participate therein).  In the event that each of the Administrative Agent, the Issuing Banks and the Swingline Lender agree that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the Swingline Exposure, LC Exposure and Revolving Exposure of the Lenders shall be readjusted to reflect the inclusion of such Lender’s Commitment and on such date such Lender shall purchase at par such of the Loans of the other Lenders (other than Swingline Loans) as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Revolving Commitment.

 

  

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For purposes of this Agreement, (i) “Funding Default” means, with respect to any Defaulting Lender, the occurrence of any of the events set forth in the definition of “Defaulting Lender,” (ii) “Defaulted Loan” means the Loans of a Defaulting Lender, (iii) “Default Period” means, with respect to any Defaulting Lender, the period commencing on the date of the applicable Funding Default and ending on the earliest of the following dates: (a) the date on which all Commitments are cancelled or terminated and/or the Secured Obligations are declared or become immediately due and payable, (b) with respect to any Funding Default (other than any such Funding Default arising pursuant to clause (e) of the definition of “Defaulting Lender”), the date on which (1) the Default Excess with respect to such Defaulting Lender shall have been reduced to zero (whether by the funding by such Defaulting Lender of any Defaulted Loans of such Defaulting Lender or by the non-pro rata application of any voluntary or mandatory prepayments of the Loans in accordance with the terms hereof or any combination thereof) and (2) such Defaulting Lender shall have delivered to Borrower and the Administrative Agent a written reaffirmation of its intention to honor its obligations under this Agreement with respect to its Commitment(s), and (c) the date on which Borrower, the Administrative Agent and the Required Lenders waive all Funding Defaults of such Defaulting Lender in writing, and (iv) “Default Excess” means, with respect to any Defaulting Lender, the excess, if any, of such Defaulting Lender’s Pro Rata Percentage of the aggregate outstanding principal amount of Loans of all Lenders (calculated as if all Defaulting Lenders (including such Defaulting Lender) had funded all of their respective Defaulted Loans) over the aggregate outstanding principal amount of Loans of such Defaulting Lender.

 

No amount of the Commitment of any Lender shall be increased or otherwise affected, and, except as otherwise expressly provided in Section 2.16(c), performance by Borrower of its obligations under this Agreement and the other Loan Documents shall not be excused or otherwise modified, as a result of any Funding Default or the operation of Section 2.16(c).  The rights and remedies against a Defaulting Lender under Section 2.16(c) are in addition to other rights and remedies that Borrower may have against such Defaulting Lender with respect to any Funding Default and that the Administrative Agent or any Lender may have against such Defaulting Lender with respect to any Funding Default.

 

Section 2.17            Swingline Loans.  (a) Swingline Commitment.  Subject to the terms and conditions set forth herein, the Swingline Lender agrees to make Swingline Loans to Borrower from time to time during the Revolving Availability Period, in an aggregate principal amount at any time outstanding that will not result in (and upon each such Borrowing of Swingline Loans, Borrower shall be deemed to represent and warrant that such Borrowing will not result in) (i) the aggregate principal amount of outstanding Swingline Loans exceeding the Swingline Commitment or (ii) the sum of the total Revolving Exposures exceeding the total Revolving Commitments; provided that the Swingline Lender shall not be required to make a Swingline Loan to refinance, in whole or in part, an outstanding Swingline Loan.  Within the foregoing limits and subject to the terms and conditions set forth herein, Borrower may borrow, repay and reborrow Swingline Loans.

 

(b)            Swingline Loans.  To request a Swingline Loan, Borrower shall deliver, by hand delivery or telecopy (or transmit by other electronic transmission, if arrangements for doing so have been approved in writing by the Swingline Lender), a duly completed and executed Borrowing Request to the Administrative Agent and the Swingline Lender, not later than 10:00 a.m., New York City time, on the day of a proposed Swingline Loan.  Each such notice shall be irrevocable and shall specify the requested date (which shall be a Business Day) and the amount of the requested Swingline Loan.  Each Swingline Loan shall be (and maintained as) an ABR Loan.  The Swingline Lender shall make each Swingline Loan available to Borrower by means of a credit to the general deposit account of Borrower with the Swingline Lender, if any, or otherwise to an account as directed by Borrower in the applicable Borrowing Request (or, in the case of a Swingline Loan made to finance the reimbursement of an LC Disbursement as provided in Section 2.18(e), by remittance to the Issuing Bank) by 3:00 p.m., New York City time, on the requested date of such Swingline Loan.  Borrower shall not request a Swingline Loan if at the time of or immediately after giving effect to the Credit Extension contemplated by such request a Default or Event of Default has occurred and is continuing or would result therefrom.  Swingline Loans shall be made in minimum amounts of $250,000 and integral multiples of $100,000 above such amount.

 

(c)            Prepayment.  Borrower shall have the right at any time and from time to time to repay any Swingline Loan, in whole or in part, upon giving written notice to the Swingline Lender and the Administrative Agent before 12:00 p.m., New York City time, on the proposed date of repayment.

 

  

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(d)            Participations.  The Swingline Lender (i) may at any time in its discretion, and (ii) no less frequently than every five Business Days or as directed by the Administrative Agent from time to time on not less than one Business Day’s written notice to the Swingline Lender, shall by written notice given to the Administrative Agent (provided such notice requirements shall not apply if the Swingline Lender and the Administrative Agent are the same entity) not later than 11:00 a.m., New York City time, on the next succeeding Business Day following such notice require the Revolving Lenders to acquire participations on such Business Day in all or a portion of the Swingline Loans then outstanding.  Such notice shall specify the aggregate amount of Swingline Loans in which Revolving Lenders will participate.  Promptly upon receipt of such notice, the Administrative Agent will give notice thereof to each Revolving Lender, specifying in such notice such Lender’s Pro Rata Percentage of such Swingline Loan or Loans.  Each Revolving Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to pay to the Administrative Agent, for the account of the Swingline Lender, such Lender’s Pro Rata Percentage of such Swingline Loan or Loans.  Each Revolving Lender acknowledges and agrees that its obligation to acquire participations in Swingline Loans pursuant to this Section 2.17(d) is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or Event of Default, the failure of any condition in Article IV to be satisfied or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever (so long as such payment shall not cause such Lender’s Revolving Exposure to exceed such Lender’s Revolving Commitment).  Each Revolving Lender shall comply with its obligation under this Section 2.17(d) by wire transfer of immediately available funds, in the same manner as provided in Section 2.02(c) with respect to Loans made by such Lender (and Section 2.02 shall apply, mutatis mutandis, to the payment obligations of the Revolving Lenders), and the Administrative Agent shall promptly pay to the Swingline Lender the amounts so received by it from the Revolving Lenders.  The Administrative Agent shall notify Borrower of any participations in any Swingline Loan acquired by the Revolving Lenders pursuant to this Section 2.17(d), and thereafter payments in respect of such Swingline Loan shall be made to the Administrative Agent and not to the Swingline Lender.  Any amounts received by the Swingline Lender from Borrower (or other party on behalf of Borrower) in respect of a Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Administrative Agent.  Any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to the Revolving Lenders that shall have made their payments pursuant to this Section 2.17(d), as their interests may appear.  The purchase of participations in a Swingline Loan pursuant to this Section 2.17(d) shall not relieve Borrower of any default in the payment thereof.

 

(e)            Resignation or Removal of the Swingline Lender.  The Swingline Lender may resign as the Swingline Lender hereunder at any time upon at least 30 days’ prior written notice to the Lenders, the Administrative Agent and Borrower.  The Swingline Lender may be replaced at any time by written agreement among Borrower, the Administrative Agent and the successor Swingline Lender.  The Administrative Agent shall notify the Lenders of any such replacement of the Swingline Lender.  At the time any such resignation or replacement shall become effective, Borrower shall pay all unpaid fees accrued for the account of the replaced Swingline Lender.  From and after the effective date of any such resignation or replacement, (i) the successor Swingline Lender shall have all the rights and obligations of the Swingline Lender under this Agreement with respect to Swingline Loans to be made by it thereafter and (ii) references herein and in the other Loan Documents to the term “Swingline Lender” shall be deemed to refer to such successor or to any previous Swingline Lender, or to such successor and all previous Swingline Lenders, as the context shall require.  After the resignation or replacement of the Swingline Lender hereunder, the replaced Swingline Lender shall remain a party hereto and shall continue to have all the rights and obligations of the Swingline Lender under this Agreement with respect to Swingline Loans made by it prior to such resignation or replacement, but shall not be required to make additional Swingline Loans.  Notwithstanding anything to the contrary in this Section 2.17(e) or otherwise, the Swingline Lender may not resign until such time as a successor Swingline Lender has been appointed.

 

  

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Section 2.18            Letters of Credit.  (a) General.  Subject to the terms and conditions set forth herein, Borrower may request the Issuing Bank, and the Issuing Bank agrees, to issue Letters of Credit for its own account or the account of a Wholly Owned Subsidiary in a form reasonably acceptable to the Administrative Agent and the Issuing Bank, at any time and from time to time during the Revolving Availability Period (provided that Borrower shall be a co-applicant, and be jointly and severally liable, with respect to each Letter of Credit issued for the account of a Wholly Owned Subsidiary).  The Issuing Bank shall have no obligation to issue, and Borrower shall not request the issuance of, any Letter of Credit at any time if after giving effect to such issuance, the LC Exposure would exceed the LC Commitment or the total Revolving Exposure would exceed the total Revolving Commitments.  In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by Borrower to, or entered into by Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control.

 

(b)            Request for Issuance, Amendment, Renewal, Extension; Certain Conditions.  To request the issuance of a Letter of Credit or the amendment, renewal or extension of an outstanding Letter of Credit, Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved in writing by the Issuing Bank) an LC Request to the Issuing Bank and the Administrative Agent not later than 11:00 a.m., New York City time, on the third Business Day preceding the requested date of issuance, amendment, renewal or extension (or such later date and time as is acceptable to the Issuing Bank).

 

A request for an initial issuance of a Letter of Credit shall specify in form and detail reasonably satisfactory to the Issuing Bank:

 

(i)            the proposed issuance date of the requested Letter of Credit (which shall be a Business Day);

 

(ii)            the face amount thereof;

 

(iii)           the expiry date thereof (which shall not be later than the date set forth in Section 2.18(c));

 

(iv)          the name and address of the beneficiary thereof;

 

(v)            whether the Letter of Credit is to be issued for its own account or for the account of one of its Wholly Owned Subsidiaries (provided that Borrower shall be a co-applicant, and be jointly and severally liable, with respect to each Letter of Credit issued for the account of a Wholly Owned Subsidiary);

 

(vi)           the documents to be presented by such beneficiary in connection with any drawing thereunder;

 

(vii)         the full text of any certificate to be presented by such beneficiary in connection with any drawing thereunder; and

 

(viii)        such other matters as the Issuing Bank may require.

 

A request for an amendment, renewal or extension of any outstanding Letter of Credit shall specify in form and detail reasonably satisfactory to the Issuing Bank:

 

  

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(ix)           the Letter of Credit to be amended, renewed or extended;

 

(x)            the proposed date of amendment, renewal or extension thereof (which shall be a Business Day);

 

(xi)           the nature of the proposed amendment, renewal or extension; and

 

(xii)          such other matters as the Issuing Bank may require.

 

If requested by the Issuing Bank, Borrower also shall submit a letter of credit application or execute a reimbursement agreement, in each case, on the Issuing Bank’s standard form, in connection with any request for a Letter of Credit.  A Letter of Credit shall be issued, amended, renewed or extended only if (and, upon issuance, amendment, renewal or extension of each Letter of Credit, Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension, (i) the LC Exposure shall not exceed the LC Commitment, (ii) the total Revolving Exposures shall not exceed the total Revolving Commitments and (iii) the conditions set forth in Article IV in respect of such issuance, amendment, renewal or extension shall have been satisfied.  Unless the Issuing Bank shall agree otherwise, no Letter of Credit shall be in an initial amount less than $50,000.

 

(c)            Expiration Date.  Each Letter of Credit shall expire at or prior to the close of business on the earlier of (x) the date which is one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (y) the Letter of Credit Expiration Date; provided that this Section 2.18(c) shall not prevent any Issuing Bank from agreeing that a Letter of Credit will automatically be extended for one or more successive periods not to exceed one year each (and, in any case, not to extend beyond the Letter of Credit Expiration Date) unless each such Issuing Bank elects not to extend for any such additional period.

 

(d)            Participations.  By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby irrevocably grants to each Revolving Lender, and each Revolving Lender hereby acquires from the Issuing Bank, a participation in such Letter of Credit equal to such Revolving Lender’s Pro Rata Percentage of the aggregate amount available to be drawn under such Letter of Credit.  In consideration and in furtherance of the foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Revolving Lender’s Pro Rata Percentage of each LC Disbursement made by the Issuing Bank and not reimbursed by Borrower on the date due as provided in Section 2.18(e), or of any reimbursement payment required to be refunded to Borrower for any reason.  Each Revolving Lender acknowledges and agrees that its obligation to acquire participations pursuant to this Section 2.18(d) in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever (so long as such payment shall not cause such Lender’s Revolving Exposure to exceed such Lender’s Revolving Commitment).

 

(e)            Reimbursement.

 

(i)            If the Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, Borrower shall reimburse such LC Disbursement by paying to the Issuing Bank an amount equal to such LC Disbursement not later than 1:00 p.m., New York City time, on the date that such LC Disbursement is made if Borrower shall have received notice of such LC Disbursement prior to 11:00 a.m., New York City time, on such date, or, if such notice has not been received by Borrower prior to such time on such date, then not later than 1:00 p.m., New York City time, on the Business Day immediately following the day that Borrower receives such notice; provided that Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.03 that such payment be financed with ABR Revolving Loans in an equivalent amount and, to the extent so financed, Borrower’s obligation to make such payment shall be discharged and replaced by the resulting ABR Revolving Loans.

 

  

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(ii)            If Borrower fails to make such payment when due, or if the amount is not financed pursuant to the proviso to Section 2.18(e)(i), the Issuing Bank shall notify the Administrative Agent and the Administrative Agent shall notify each Revolving Lender of the applicable LC Disbursement, the payment then due from Borrower in respect thereof and such Revolving Lender’s Pro Rata Percentage thereof.  Each Revolving Lender shall pay by wire transfer of immediately available funds to the Administrative Agent not later than 12:00 p.m., New York City time, on such date (or, if such Revolving Lender shall have received such notice later than 12:00 p.m., New York City time, on any day, not later than 11:00 a.m., New York City time, on the immediately following Business Day), an amount equal to such Revolving Lender’s Pro Rata Percentage of the unreimbursed LC Disbursement in the same manner as provided in Section 2.02(c) with respect to Revolving Loans made by such Revolving Lender, and the Administrative Agent will promptly pay to the Issuing Bank the amounts so received by it from the Revolving Lenders.  The Administrative Agent will promptly pay to the Issuing Bank any amounts received by it from Borrower pursuant to the above paragraph prior to the time that any Revolving Lender makes any payment pursuant to the preceding sentence and any such amounts received by the Administrative Agent from Borrower thereafter will be promptly remitted by the Administrative Agent to the Revolving Lenders that shall have made such payments and to the Issuing Bank, as appropriate.

 

(iii)           If any Revolving Lender shall not have made its Pro Rata Percentage of such LC Disbursement available to the Administrative Agent as provided above, each of Borrower and such Revolving Lender severally agrees to pay interest on such amount, for each day from and including the date such amount is required to be paid in accordance with the foregoing to but excluding the date such amount is paid, to the Administrative Agent for the account of the Issuing Bank at (i) in the case of Borrower, the Default Rate and (ii) in the case of such Lender, (A) from the date such amount is required to be paid to the date that is two Business Days after payment by such Lender is due hereunder, the greater of, for each such day, (1) the Federal Funds Effective Rate and (2) an overnight rate determined by the Administrative Agent in accordance with banking industry rules or practices on interbank compensation plus any standard administrative or processing fees charged by the Administrative Agent in connection with such Lender’s non-payment and (B) from the date that is two Business Days after the date such amount is required to be paid to the date such payment is made by such Lender, the interest rate applicable at the time to ABR Loans.

 

(f)            Obligations Absolute.  The Reimbursement Obligation of Borrower as provided in Section 2.18(e) shall be absolute, unconditional and irrevocable, and shall be paid and performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein; (ii) any draft or other document presented under a Letter of Credit being proved to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (iii) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that fails to comply with the terms of such Letter of Credit; (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section 2.18, constitute a legal or equitable discharge of, or provide a right of setoff against, the obligations of Borrower hereunder; (v) the fact that a Default shall have occurred and be continuing; (vi) any material adverse change in the condition (financial or otherwise), results of operations, assets, liabilities (contingent or otherwise), material agreements, properties, solvency, business, management, prospects or value of any Company; or (vii) any other fact, circumstance or event whatsoever.  None of the Agents, the Lenders, the Issuing Bank or any of their Affiliates shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Issuing Bank; provided that the foregoing shall not be construed to excuse the Issuing Bank from liability to Borrower to the extent of any direct damages (as opposed to consequential, exemplary, special, punitive or other indirect damages, claims in respect of which are hereby waived by Borrower to the extent permitted by applicable Legal Requirements) suffered by Borrower that are caused by the Issuing Bank’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof.  The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the Issuing Bank (as finally determined by a court of competent jurisdiction) with respect to such a determination, the Issuing Bank shall be deemed to have exercised care in each such determination.  In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

 

  

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(g)            Disbursement Procedures.  The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit.  The Issuing Bank shall promptly give written notice to the Administrative Agent and Borrower of such demand for payment and whether the Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve Borrower of its Reimbursement Obligation to the Issuing Bank and the Revolving Lenders with respect to any such LC Disbursement (other than with respect to the timing of such Reimbursement Obligation set forth in Section 2.18(e)).

 

(h)            Interim Interest.  If the Issuing Bank shall make any LC Disbursement, then, unless Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest payable on demand, for each day from and including the date such LC Disbursement is made to but excluding the date that Borrower reimburses such LC Disbursement, at the Default Rate.  Interest accrued pursuant to this Section 2.18(h) shall be for the account of the Issuing Bank, except that interest accrued on and after the date of payment by any Revolving Lender pursuant to Section 2.18(e) to reimburse the Issuing Bank shall be for the account of such Lender to the extent of such payment.

 

(i)             Cash Collateralization.  If any Event of Default shall occur and be continuing, on the Business Day that Borrower receives notice from the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, Revolving Lenders with LC Exposure representing greater than 50% of the total LC Exposure) demanding the deposit of cash collateral pursuant to this Section 2.18(i), Borrower shall deposit in the Collateral Account, in the name of the Collateral Agent and for the benefit of the Revolving Lenders, an amount in cash equal to 105% of the LC Exposure as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to Borrower described in paragraph (g) or (h) of Article VIII.  Funds in the LC Sub-Account shall be applied by the Collateral Agent to reimburse the Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of outstanding Reimbursement Obligations or, if the maturity of the Loans has been accelerated (but subject to the consent of Revolving Lenders with LC Exposure representing greater than 50% of the total LC Exposure), be applied to satisfy other Obligations of Borrower in accordance with Article IX.  If Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount plus any accrued interest with respect to such amounts (to the extent not applied as aforesaid) shall, in accordance with Article IX, be returned to Borrower within ten Business Days after all Events of Default have been cured or waived.

 

  

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(j)             Additional Issuing Banks.  Borrower may, at any time and from time to time, designate one or more additional Revolving Lenders or Affiliates of Revolving Lender to act as an issuing bank under the terms of this Agreement, with the consent of each of the Administrative Agent (which consent shall not be unreasonably withheld), the Issuing Bank (which consent shall not be unreasonably withheld) and such Revolving Lender(s).  Any Revolving Lender designated as an issuing bank pursuant to this Section 2.18(j) shall be deemed (in addition to being a Revolving Lender) to be the Issuing Bank with respect to Letters of Credit issued or to be issued by such Revolving Lender, and all references herein and in the other Loan Documents to the term “Issuing Bank” shall, with respect to such Letters of Credit, be deemed to refer to such Revolving Lender in its capacity as Issuing Bank, as the context shall require.

 

(k)             Resignation or Removal of the Issuing Bank.  The Issuing Bank may resign as Issuing Bank hereunder at any time upon at least 30 days’ prior written notice to the Lenders, the Administrative Agent and Borrower.  The Issuing Bank may be replaced at any time by written agreement among Borrower, the Administrative Agent and the successor Issuing Bank.  The Administrative Agent shall notify the Lenders of any such replacement of the Issuing Bank or any such additional Issuing Bank.  At the time any such resignation or replacement shall become effective, Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.05(c).  From and after the effective date of any such resignation or replacement or addition, as applicable, (i) the successor or additional Issuing Bank shall have all the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit to be issued by it thereafter and (ii) references herein and in the other Loan Documents to the term “Issuing Bank” shall be deemed to refer to such successor or such addition or to any previous Issuing Bank, or to such successor or such addition and all previous Issuing Banks, as the context shall require.  After the resignation or replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such resignation or replacement, but shall not be required to issue additional Letters of Credit.  If at any time there is more than one Issuing Bank hereunder, Borrower may, in its discretion, select which Issuing Bank is to issue any particular Letter of Credit.

 

  

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(l)             Other.  The Issuing Bank shall be under no obligation to issue any Letter of Credit if:

 

(i)            any Order of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the Issuing Bank from issuing such Letter of Credit, or any Legal Requirement applicable to the Issuing Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the Issuing Bank shall prohibit, or request that the Issuing Bank refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the Issuing Bank with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the Issuing Bank is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the Issuing Bank any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the Issuing Bank deems material to it; or

 

(ii)            the issuance of such Letter of Credit would violate one or more policies of general application of the Issuing Bank.

 

(m)            The Issuing Bank shall be under no obligation to amend any Letter of Credit if (A) the Issuing Bank would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.

 

Section 2.19            Increases of the Term Loan Commitments.

 

(a)            Borrower may at any time or from time to time after the Closing Date, increase, at Borrower's request to the Administrative Agent, the then effective aggregate principal amount of the Term Loan Commitments; provided that:

 

(i)             the aggregate principal amount of all the increases in the Term Loan Commitments pursuant to this Section 2.19 shall not exceed $70,000,000 and the aggregate principal amount of any requested increase shall be (i) in an integral multiple of $1,000,000 and (ii) not less than $5,000,000 (or such lower amount that represents all remaining availability pursuant to this Section 2.19);

 

(ii)            the proceeds of such increases shall be used by Borrower for working capital and general corporate purposes of Borrower and its Subsidiaries (including, without limitation, Permitted Acquisitions, Capital Expenditures and Dividends permitted by this Agreement);

 

(iii)           Borrower shall execute and deliver such agreements, instruments and documents and take such other actions as may be reasonably requested by the Administrative Agent in connection with such increases and at the time of any such proposed increase;

 

(iv)          no Default or Event of Default shall have occurred and be continuing or would occur after giving effect to such increase and the application of proceeds therefrom;

 

(v)           each of the representations and warranties made by any Loan Party set forth in Article III or in any other Loan Document shall be true and correct in all material respects on and as of the date of such increase with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties shall be true and correct in all material respects on and as of such earlier date); provided that any representation and warranty that is qualified as to “materiality”, “Material Adverse Effect” or similar language shall be true and correct (after giving effect to any qualification therein) in all respects on such respective dates.

 

  

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(vi)          on the date of such increase and as of the last day of the most recently ended fiscal quarter after giving effect to such increase, the Senior Secured Leverage Ratio shall not exceed the Closing Date Senior Secured Leverage Ratio;

 

(vii)          the Term Loans made under this Section 2.19 shall have a maturity date no earlier than the Initial Term Loan Maturity Date and shall have a weighted average life to maturity no shorter than the Initial Term Loans made under Section 2.02;

 

(viii)         if the weighted average interest rates applicable to the Term Loans made pursuant to this Section 2.19 exceed the interest rates set forth in Section 2.06 by more than 50 basis points, then the interest rates set forth in Section 2.06 shall increase by the Yield Differential (it being understood that any increase in the weighted average interest rates may (i) take the form of original issue discount (“OID”) or upfront fees, with such OID or upfront fees being equated to such interest margins in a manner determined by the Administrative Agent and consistent with generally accepted financial practice based on an assumed four-year life to maturity or (ii) be accomplished by a combination of an increase in the weighted average interest rates, OID and/or upfront fees);

 

(ix)            all other terms and conditions with respect to the Incremental Term Loans made pursuant to this Section 2.19 shall be substantially the same as those with respect to the Initial Term Loans;

 

(b)            Any request under this Section 2.19 shall be submitted by Borrower in writing to the Administrative Agent (which shall promptly forward copies to the Lenders).  Borrower may also specify any fees offered to those Lenders (the “Increasing Lenders”) that agree to increase the principal amount of their Term Loan Commitments, which fees may be variable based upon the amount by which any such Lender is willing to increase the principal amount of its Term Loan Commitment.  No Lender shall have any obligation, express or implied, to offer to increase the aggregate principal amount of its Term Loan Commitment.  Only the consent of each Increasing Lender shall be required for an increase in the aggregate principal amount of the Term Loan Commitments pursuant to this Section 2.19.  No Lender which declines to increase the principal amount of its Term Loan Commitment may be replaced with respect to its existing Term Loan Commitment as a result thereof without such Lender’s consent.

 

(c)            Each Increasing Lender shall as soon as reasonably practicable specify in writing the amount of the proposed increase of the Term Loan Commitments that it is willing to assume (provided that any Lender not so responding within five Business Days (or such shorter period as may be specified by the Administrative Agent) shall be deemed to have declined such a request).  Borrower may accept some or all of the offered amounts or designate new lenders that are reasonably acceptable to the Administrative Agent as additional Lenders hereunder in accordance with this Section 2.19 (each such new lender being a “New Lender”), which New Lenders may assume all or a portion of the increase in the aggregate principal amount of the applicable Term Loan Commitments.  The Administrative Agent, in consultation with Borrower, shall have discretion jointly to adjust the allocation of the increased aggregate principal amount of the Term Loan Commitments among Increasing Lenders and New Lenders.

 

(d)            Subject to the foregoing, any increase requested by Borrower shall be effective upon (A) delivery to the Administrative Agent of each of the following documents:  (i) an originally executed copy of a Joinder Agreement signed by a duly authorized officer of each New Lender; (ii) a notice to the Increasing Lenders and New Lenders, in form and substance reasonably acceptable to the Administrative Agent, signed by a Financial Officer of Borrower; (iii) an Officer’s Certificate of Borrower, in form and substance reasonably acceptable to the Administrative Agent, certifying that, among other things, any increase in the Term Loan Commitments pursuant to this Section 2.19 and the making of the Term Loans under the applicable Incremental Term Loan Amendment (as defined below) is not in violation of this Agreement; (iv) to the extent requested by any New Lender or Increasing Lender, executed Notes evidencing such Term Loans issued by Borrower in accordance with Section 2.04(e); (v) an amendment to, or an amendment and restatement of, this Agreement (in each case, an “Incremental Loan Amendment”), and, as appropriate, the other Loan Documents, executed by Borrower, each Increasing Lender (if any), each New Lender (if any) and the Administrative Agent; and (vi) any other certificates or documents that the Administrative Agent shall reasonably request, in form and substance reasonably satisfactory to the Administrative Agent, and (B) satisfaction on the effective date of the Incremental Loan Amendment of (x) each of the conditions specified in Section 4.02 (it being understood that all references to “the date of such Credit Extension” or similar language in Section 4.02 shall be deemed to refer to the effective date of the Incremental Loan Amendment), and (y) such other conditions as the parties thereto shall agree.  Any such increase shall be in an aggregate principal amount equal to (A) the principal amount that Increasing Lenders are willing to assume as increases to the principal amount of their Term Loan Commitments plus (B) the principal amount offered by New Lenders with respect to the Term Loan Commitments, in either case as adjusted by Borrower and the Administrative Agent pursuant to this Section 2.19.  Notwithstanding anything to the contrary in Section 10.02, the Administrative Agent is expressly permitted, without the consent of the other Lenders, to amend the Loan Documents to the extent necessary or appropriate in the reasonable opinion of the Administrative Agent to give effect to any increases pursuant to this Section 2.19.

 

  

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Section 2.20            Amend and Extend Transactions.  (a) At any time after the Closing Date, Borrower and any Term Loan Lender (any such Term Loan Lender, an “Extending Lender”) may agree, by notice to the Administrative Agent for further distribution to the Term Loan Lenders (each such notice, an “Extension Notice”), to extend (an “Extension”) the maturity date of such Lender’s Term Loans of a Class (which term, for purposes of this provision, shall also include any Term Loans outstanding hereunder pursuant to a previous amend and extend transaction pursuant to the terms of this Section 2.20 or any Class of Incremental Term Loans) (the “Existing Term Loan Class”) to the extended maturity date specified in such Extension Notice and Extension Amendment (each tranche Term Loans so extended, in each case as well as the original Term Loans not so extended, being deemed a separate Class; any Extended Term Loans shall constitute a separate Class of Term Loans from the Class of Term Loans from which they were converted; any Class of Term Loans the maturity of which shall have been extended pursuant to this Section 2.20, “Extended Term Loans”); provided, that (i) Borrower shall have offered to all Term Loan Lenders under the applicable Term Loan Facility that is the subject of the proposed Extension the opportunity to participate in such Extension on a pro rata basis and on the same terms and conditions to each such Term Loan Lender (each such offer, an “Extension Offer”), (ii) subject to clauses (iv) and (v), the Extended Term Loans shall have the same terms as the Class or Class of Term Loans that was the subject of the Extension Notice; provided that the Extension Offer and/or Extension Amendment may provide for other covenants and terms that apply to any period after the Final Maturity Date then in effect, (iii) any Extended Term Loans may participate on a pro rata basis or on a less than pro rata basis (but not on a greater than pro rata basis) in any mandatory prepayments or commitment reductions hereunder, as specified in the applicable Extension Offer, (iv) the interest rates, rate floors, fees, original issue discounts, premiums, final maturity date, and scheduled amortization (subject to the limitations set forth in clause (v) of this Section 2.20(a)) applicable to any Extended Term Loans shall be determined by Borrower and the Extending Lenders, (v) before the Final Maturity Date then in effect, the amortization of any Extended Term Loans shall not exceed equal quarterly installments in an aggregate annual amount equal to 1% of the original principal amount of the Extended Term Loans and (vi)  all documentation in respect of such Extension Offer (including any Extension Notice and any amendment to this Agreement implementing the terms of such Extension Offer (each such amendment, an “Extension Amendment”)) shall be consistent with the foregoing.  In connection with any such Extension, Borrower and the Administrative Agent, with the approval of the Extending Lenders of the applicable Extension Series, may effect such amendments (including any Extension Amendment) to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent and Borrower, to implement the terms of any such Extension Offer, including any amendments necessary to establish new Classes, tranches or sub-tranches in respect of the Extended Term Loans and such technical amendments as may be necessary or appropriate in the reasonable opinion of the Administrative Agent and Borrower in connection with the establishment of such new tranches or sub-tranches (including to preserve the pro rata treatment of the extended and non-extended tranches), in each case on terms not inconsistent with this Section 2.20.

 

  

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(b)             Notwithstanding anything to the contrary contained in this Agreement, on any date on which any Existing Term Loan Class is converted to extend the related scheduled maturity date(s) in accordance with Section 2.20(a) (an “Extension Date”), the aggregate principal amount of the existing Term Loans shall be deemed reduced by an amount equal to the aggregate principal amount of Extended Term Loans so converted by such Lender on such date, and the Extended Term Loans shall be established as a separate Class of Term Loans (together with any other Extended Term Loans so established on such date).  If the aggregate principal amount of Term Loans (calculated on the face amount thereof) in respect of which Extending Lenders shall have accepted the relevant Extension Offer shall exceed the maximum aggregate principal amount of Term Loans offered to be extended by Borrower pursuant to such Extension Offer, then the Term Loans of such Extending Lenders shall be extended ratably up to such maximum amount based on the respective principal amounts (but not to exceed actual holdings of record) with respect to which such Extending Lenders have accepted such Extension Offer.

 

(c)            With respect to all Extensions consummated by Borrower pursuant to this Section 2.20, (i) such Extensions shall not constitute voluntary or mandatory payments or prepayments for purposes of Section 2.10 and (ii) any Extension Offer is required to be in a minimum amount of $30,000,000. Borrower may at its election specify as a condition to consummating any such Extension that a minimum amount (to be determined and specified in the relevant Extension Offer in Borrower’s sole discretion and may be waived by Borrower) of Term Loans of any or all applicable tranches accept the applicable Extension Offer.

 

(d)            In connection with any Extension, Borrower shall provide the Administrative Agent at least ten (10) Business Days’ (or such shorter period as may be agreed by the Administrative Agent) prior written notice thereof, and shall agree to such procedures, if any, as may be established by, or acceptable to, the Administrative Agent, in each case acting reasonably, to accomplish the purposes of this Section 2.20.

 

(e)            In connection with any Extension Amendment, Borrower shall deliver (i) an opinion of counsel reasonably acceptable to the Administrative Agent as to the enforceability of such Extension Amendment and the Loan Documents as amended thereby, that such Extension Amendment, including the Extended Term Loans provided for therein, does not breach or cause a Default or Event of Default under the terms and provisions of Section 10.02 of this Agreement and such other opinions reasonably requested by the Administrative Agent, (ii) customary reaffirmations and/or such amendments to the Collateral Documents as may be reasonably requested by the Administrative Agent in order to ensure that such Extended Term Loans are provided with the benefit of the applicable Loan Documents and (iii) board resolutions and other closing certificates and documentation to the extent reasonably requested by the Administrative Agent.

 

  

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(f)            In the event that the Administrative Agent determines in its sole discretion that the allocation of Extended Term Loans of a given Extension Series to a given Lender was incorrectly determined as a result of manifest administrative error, then the Administrative Agent, Borrower and such affected Lender may (and hereby are authorized to), in their sole discretion and without the consent of any other Lender, enter into an amendment to this Agreement and the other Loan Documents (each, a “Corrective Extension Amendment”) within 15 days following the effective date of the applicable Extension Amendment, as the case may be, which Corrective Extension Amendment shall (i) provide for the conversion and extension of Term Loans under the Existing Term Loan Class in such amount as is required to cause such Lender to hold Extended Term Loans of the applicable Extension Series into which such other Term Loans were initially converted in the amount such Lender would have held had such administrative error not occurred and had such Lender received the minimum allocation of the applicable Extended Term Loans to which it was entitled under the terms of such Extension Amendment, in the absence of such error, (ii) be subject to the satisfaction of such conditions as the Administrative Agent, Borrower and such Lender may agree (including conditions of the type required to be satisfied for the effectiveness of an Extension Amendment described in Section 2.20(a)), and (iii) effect such other amendments of the type (with appropriate reference and nomenclature changes) described in the penultimate sentence of Section 2.20(a).

 

(g)            This Section 2.20 shall supersede any provisions in 10.02 to the contrary. For the avoidance of doubt, any of the provisions of this Section 2.20 may be amended with the consent of the Required Lenders; provided that no such amendment shall require any Lender to provide any Extended Term Loans without such Lender’s consent.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES

 

Each Loan Party represents and warrants to the Administrative Agent, the Collateral Agent, the Issuing Bank and each of the Lenders (with references in this Article III to the Companies being references thereto after giving effect to the Transactions unless otherwise expressly stated) on the Closing Date and on the date of each Credit Extension that:

 

Section 3.01            Organization; Powers.  Each Company (a) is duly organized and validly existing under the laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority to carry on its business as now conducted and (c) is qualified, licensed and in good standing (to the extent such concept is legally recognized in the applicable jurisdiction) to do business in every jurisdiction where such qualification is required, except in such jurisdictions where the failure to so qualify, be licensed or be in good standing could not reasonably be expected to result in a Material Adverse Effect.

 

Section 3.02            Authorization; Enforceability.  The Transactions to be entered into by each Loan Party are within such Loan Party’s powers and have been duly authorized by all necessary corporate or other organizational action on the part of each such Loan Party.  This Agreement has been duly executed and delivered by each Loan Party and constitutes, and each other Loan Document to which any Loan Party is to be a party, when executed and delivered by such Loan Party, will constitute, a legal, valid and binding obligation of such Loan Party, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally, regardless of whether considered in a proceeding in equity or at law.

 

Section 3.03            No Conflicts; No Default.  The Transactions (a) do not require any consent, exemption, authorization or approval of, registration or filing with, or any other action by, any Governmental Authority, except (i) such as have been obtained or made and are in full force and effect, (ii) filings necessary to perfect or maintain the perfection or priority of the Liens created by the Security Documents and (iii) consents, approvals, exemptions, authorizations, registrations, filings, permits or actions the failure of which to obtain or perform could not reasonably be expected to result in a Material Adverse Effect, (b) will not violate the Organizational Documents of any Company, (c) will not violate or result in a default or require any consent or approval (other than such as have been obtained and are in full force and effect) under (x) any indenture, instrument, agreement, or other document binding upon any Company or its property or to which any Company or its property is subject, or give rise to a right thereunder to require any payment to be made by any Company, except for violations, defaults or the creation of such rights that could not reasonably be expected to result in a Material Adverse Effect or (y) any Organizational Document, (d) will not violate any Legal Requirement in any material respect, and (e) will not result in the creation or imposition of any Lien on any property of any Company, except Liens created by the Security Documents.  No Default or Event of Default has occurred and is continuing.

 

  

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Section 3.04            Financial Statements; Projections.  (a)  Borrower has heretofore delivered to the Lenders the consolidated balance sheets and related statements of income, stockholders’ equity and cash flows of Borrower (i) as of and for the fiscal years ended September 28, 2011, September 26, 2012 and September 25, 2013, audited by and accompanied by the unqualified opinion of Deloitte & Touche LLP, independent public accountants, and (ii) as of and for the quarter ended December 18, 2013 and for the comparable period of the preceding fiscal year, in each case, certified by the chief financial officer of Borrower.  Such financial statements and all financial statements delivered pursuant to Sections 5.01(a) and (b) have been prepared in accordance with GAAP consistently applied throughout the applicable period covered, respectively, thereby and present fairly and accurately the financial condition and results of operations and cash flows of Borrower as of the dates and for the periods to which they relate (subject to normal year-end audit adjustments and the absence of footnotes).  Except as set forth in such financial statements, there are no material liabilities of any Company of any kind, whether accrued, contingent, absolute, determined, determinable or otherwise, and there is no existing condition, situation or set of circumstances which could reasonably be expected to result in such a liability.

 

(b)            [Reserved.]

 

(c)            Borrower has heretofore delivered to the Lenders the forecasts of financial performance of Borrower and its Subsidiaries for the fiscal years 2014 – 2018, including forecasts of financial performance on a quarterly basis for each fiscal quarter occurring during such period (the “Projections”).  The Projections have been prepared in good faith by the Loan Parties and based upon (i) the assumptions stated therein (which assumptions are believed by the Loan Parties on the date hereof and the Closing Date to be reasonable), (ii) accounting principles consistent with the historical audited financial statements delivered pursuant to Section 3.04(a) above consistently applied throughout the fiscal years covered thereby, and (iii) the best information available to the Loan Parties as of the date hereof and the Closing Date.

 

(d)            Since December 18, 2013, there has been no event, change, circumstance or occurrence that has had, or could reasonably be expected to result in, a Material Adverse Effect.

 

Section 3.05            Properties.  (a)  Each Company has good title to, or valid leasehold interests in, all its property material to its business, free and clear of all Liens and irregularities, deficiencies and defects in title except for Permitted Liens (or, in the case of Collateral, Permitted Collateral Liens) and minor irregularities, deficiencies and defects in title that, individually or in the aggregate, do not, and could not reasonably be expected to, interfere in any material respect with its ability to conduct its business as currently conducted or to utilize such property for its intended purpose.

 

  

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(b)            The property of the Companies, taken as a whole, (i) is in good operating order, condition and repair (ordinary wear and tear excepted), and (ii) constitutes all the property which is required for the business and operations of the Companies as presently conducted.

 

(c)            Schedule 3.05(c) contains a true and complete list of each ownership and leasehold interest in Real Property (i) owned by any Company as of the Closing Date and describes the type of interest therein held by such Company and (ii) leased, subleased or otherwise occupied or utilized by any Company, as lessee, sublessee, franchisee or licensee, as of the Closing Date and describes the type of interest therein held by such Company.

 

(d)            No Mortgage encumbers improved Real Property that is located in an area that has been identified by the Secretary of Housing and Urban Development as an area having special flood hazards within the meaning of the National Flood Insurance Act of 1968 unless flood insurance available under such Act has been obtained in accordance with Section 5.04.

 

(e)            Each Company owns or has rights to use all of its property and all rights with respect to any of the foregoing used in or necessary for each Company’s business as currently conducted, except for those the failure to own or have rights to use which, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.  The use by each Company of its property and all such rights with respect to the foregoing do not infringe on the rights or other interests of any Person, other than any infringement that could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.  No claim has been made and remains outstanding that any Company’s use of any of its property does or may violate the rights of any third party that, individually or in the aggregate, has had, or could reasonably be expected to result in, a Material Adverse Effect.  The Real Property is zoned in all material respects to permit the uses for which such Real Property is currently being used.  The present uses of the Real Property and the current operations of each Company’s business do not violate in any material respect any provision of any applicable building codes, subdivision regulations, fire regulations, health regulations or building and zoning by-laws.

 

(f)            Except for exceptions to the following that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, there is no pending or threatened condemnation or eminent domain proceeding with respect to, or that could affect any of the Real Property of the Companies.

 

(g)            Each parcel of Real Property is taxed as a separate tax lot and is currently being used in a manner that is consistent with and in compliance in all material respects with the property classification assigned to it for real estate tax assessment purposes.

 

Section 3.06            Intellectual Property.  (a)  Each Company owns or is licensed to use, free and clear of all Liens (other than Permitted Liens), all patents and patent applications, trademarks, trade names, service marks, copyrights, domain names and applications for registration thereof, and technology, trade secrets, proprietary information, inventions, know-how and processes, in each case necessary for the conduct of its business as currently conducted (the “Intellectual Property”), except for those the failure to own or license which, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

 

(b)            No claim has been asserted in writing and is pending by any Person challenging or questioning any Company’s right to use any such Intellectual Property or the validity of any Company’s Intellectual Property, except to the extent that such claims, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.  The use of such Intellectual Property by each Company does not infringe the rights of any Person, except for such claims and infringements which, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.  Except pursuant to franchise agreements, samples of which have been provided to the Administrative Agent, and other licenses, supply agreements, and other user agreements entered into by each Company in the ordinary course of business which, to the extent material and in existence on the Closing Date, are listed in Schedule 3.06(b), no Company has authorized any other Person to use any such Intellectual Property, which use, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.  Each Company has taken commercially reasonable actions to protect the secrecy, confidentiality and value of all material trade secrets used in such Company’s business.

 

 

  

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(c)            No Violations or Proceedings.  (i) No Company is aware of any violation by others of any right of any Company with respect to any Intellectual Property, other than such violations that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, (ii) no Company is infringing upon or misappropriating any copyright, patent, trademark, trade secret or other intellectual property right of any other Person except such as individually or in the aggregate could not reasonably be expected to result in a Material Adverse Effect, (iii) no Company is in breach of, or in default under, any license of Intellectual Property by any other Person, to such Company, except in any case where such breach or default, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, and (iv) no proceedings have been instituted or are pending against any Company, or to such Company’s knowledge, threatened, and no claim against any Company has been received by any Company, alleging any such infringement or misappropriation, except to the extent that such proceedings or claims, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

 

(d)            No Impairment.  Neither the execution, delivery or performance of this Agreement and the other Loan Documents, nor the consummation of the Transactions and the other transactions contemplated hereby and thereby, will alter or impair any right of any Company in any Intellectual Property, except for such alterations or impairments which result from any Company’s compliance with, or the Agent’s enforcement of its rights under, the Loan Documents, and except to the extent that such alterations or impairments, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

 

(e)            No Agreement or Order Materially Affecting Intellectual Property.  No Company is subject to any settlement, covenant not to sue or other instrument, agreement or other document, or any outstanding Order, which could reasonably be expected to materially affect any Company’s use or licensing of its Intellectual Property in its business as currently conducted.

 

Section 3.07            Equity Interests and Subsidiaries.  (a)  Schedule 3.07(a) sets forth a list of (i) Borrower and each Subsidiary of Borrower and its jurisdiction of incorporation or organization as of the Closing Date and (ii) the number of each class of its Equity Interests authorized, and the number outstanding, on the Closing Date and the number of Equity Interests covered by all outstanding options, warrants, rights of conversion or purchase and similar rights on the Closing Date.  All Equity Interests of each Company are duly and validly issued and are fully paid and non-assessable, and, other than the Equity Interests of Borrower, are owned by Borrower, directly or indirectly, through Wholly Owned Subsidiaries.  All Equity Interests of Borrower are owned directly by Holdings.  Each Loan Party is the record and beneficial owner of, and has good and marketable title to, the Equity Interests pledged by (or purporting to be pledged by) it under the Security Documents, free of any and all Liens, rights or claims of other Persons, except the security interest created by the Security Documents and any Permitted Liens that arise by operation of applicable Legal Requirements and are not voluntarily granted, and, as of the Closing Date, there are no outstanding warrants, options or other rights (including derivatives) to purchase, or shareholder, voting trust or similar agreements outstanding with respect to, or property that is convertible into, or that requires the issuance or sale of, any such Equity Interests (or any economic or voting interests therein).

 

  

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(b)            Other than consents that have been obtained, no consent of any Person, including any general or limited partner, any other member or manager of a limited liability company, any shareholder, any other trust beneficiary or derivative counterparty, is necessary in connection with the creation, perfection or first priority status (or the maintenance thereof) of the security interest of the Collateral Agent in any Equity Interests pledged to the Collateral Agent under the Security Documents or the exercise by the Collateral Agent or any Lender of the voting or other rights provided for in the Security Documents or the exercise of remedies in respect of such Equity Interests.

 

(c)            An accurate organizational chart, showing Borrower and each Subsidiary as of the date hereof and as of the Closing Date, and after giving effect to the Transactions, is set forth on Schedule 3.07(c) (which shall be permitted to be updated by Borrower before the Closing Date).

 

Section 3.08            Litigation; Compliance with Legal Requirements.  (a)  There are no actions, suits, claims, disputes or proceedings at law or in equity by or before any Governmental Authority now pending or, to the best of the knowledge of any Loan Party, threatened against or affecting any Company or any business, property or rights of any Company (i) that purport to affect or involve any Loan Document or any of the Transactions or (ii) that have resulted, or as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.

 

Section 3.09            Agreements.  (a)  No Company is a party to any agreement, instrument or other document or subject to any corporate or other constitutional restriction, or any restriction under its Organizational Documents, that has resulted, or could reasonably be expected to result, in a Material Adverse Effect.

 

(b)            No Company is in default in any manner under any provision of any indenture or other agreement or instrument evidencing Indebtedness, or any other agreement or instrument to which it is a part or by which it or any of its property is or may be bound or subject, where such default could reasonably be expected to result in a Material Adverse Effect.

 

(c)            Schedule 3.09(c) accurately and completely lists all Material Agreements (other than leases of Real Property set forth on Schedule 3.05(c) and franchise agreements, samples of which have been provided to the Administrative Agent on or before the date hereof) to which any Loan Party is a party which are in effect on the Closing Date in connection with the operation of the business conducted thereby and Borrower has delivered to the Administrative Agent (or expressly made available in a reasonable manner to the Administrative Agent and the Lenders for review on or before the date hereof), complete and correct copies of all such Material Agreements, including any amendments, supplements or modifications with respect thereto, and all such Material Agreements are in full force and effect.

 

Section 3.10            Federal Reserve Regulations.  (a)  No Company is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing, buying or carrying Margin Stock.

 

(b)            No part of the proceeds of any Credit Extension will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, for any purpose that entails a violation of, or that is inconsistent with, the provisions of the regulations of the Board, including Regulation T, U or X.  The pledge of the Securities Collateral pursuant to the Security Agreement does not violate such regulations.

 

  

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Section 3.11            Investment Company Act, etc.  No Company is (a) an “investment company” or a company “controlled” by an “investment company,” as defined in, or subject to regulation under, or required to be registered pursuant to, the Investment Company Act of 1940, as amended, or (b) subject to regulation under any Legal Requirement (other than Regulation X) that limits its ability to incur, create, assume or permit to exist Indebtedness or grant any Contingent Obligation in respect of Indebtedness.

 

Section 3.12            Use of Proceeds.  Borrower will use the proceeds of (a) the Initial Term Loans to finance the Transactions and pay any related fees and expenses and (b) the Revolving Loans and Swingline Loans for working capital and general corporate purposes (including to effect Permitted Acquisitions, to refinance indebtedness of the business acquired pursuant to any such Permitted Acquisition and to pay fees and expenses in connection with any such Permitted Acquisition).

 

Section 3.13            Taxes.  Each Company has (a) timely filed or caused to be timely filed all material federal, state, local and foreign Tax Returns required to have been filed by it and all such Tax Returns are true and correct in all material respects and (b) duly and timely paid or caused to be duly and timely paid all material Taxes (whether or not shown on any Tax Return) due and payable by it and all assessments received by it, except Taxes that are being contested in good faith by appropriate proceedings and for which such Company has set aside on its books adequate reserves in accordance with GAAP.  Each Company has made adequate provision in accordance with GAAP for all Taxes not yet due and payable.  No Company has knowledge of any proposed or pending tax assessments, deficiencies, audits or other proceedings and no proposed or pending tax assessments, deficiencies, audits or other proceedings have resulted, or could, individually or in the aggregate, reasonably be expected to result, in a Material Adverse Effect.  No Company has ever “participated” in a “reportable transaction” within the meaning of Treasury Regulation Section 1.6011-4.  No Company is party to any tax sharing or similar agreement.

 

Section 3.14            No Material Misstatements.  Borrower has disclosed to the Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.  Neither the Confidential Information Memorandum nor any of the other reports, financial statements, certificates or other information furnished by or on behalf of Borrower to the Administrative Agent or any Lender in connection with the negotiation of any Loan Document or delivered pursuant thereto (as modified or supplemented by other information so furnished) contained or contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading as of the date such information is dated or certified; provided that, with respect to projected financial information, Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.

 

Section 3.15            Labor Matters.  There are no strikes, lockouts or slowdowns against any Company pending or, to the best of the knowledge of the Loan Parties, threatened that have resulted in, or could reasonably be expected to result in, a Material Adverse Effect.  The hours worked by and payments made to employees of any Company have not been in violation of the Fair Labor Standards Act of 1938, as amended, or any other applicable Legal Requirement dealing with such matters in any manner that has resulted in, or could reasonably be expected to result in, a Material Adverse Effect.

 

Section 3.16            Solvency.  Both immediately before and immediately after the consummation of the Transactions to occur on the Closing Date and immediately following the making of each Credit Extension and after giving effect to the application of the proceeds of each Credit Extension, (a) the fair value of the properties of each Loan Party will exceed its debts and liabilities, subordinated, contingent or otherwise, (b) the present fair saleable value of the property of each Loan Party will be greater than the amount that will be required to pay the probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured, (c) each Loan Party will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (d) each Loan Party will not have unreasonably small capital with which to conduct its business in which it is engaged as such business is now conducted and is proposed, contemplated or about to be conducted following the Closing Date.

 

  

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Section 3.17            Employee Benefit Plans.  (a)  Except to the extent the failure to comply could reasonably be expected to result in a Material Adverse Effect, each Company and each of its ERISA Affiliates is in compliance with all applicable Legal Requirements, including all applicable provisions of ERISA and the Code and the regulations and published interpretations thereunder, with respect to all Employee Benefit Plans.  Each Employee Benefit Plan complies in all material respects, and is operated and maintained in compliance in all material respects, with all applicable Legal Requirements, including all applicable provisions of ERISA and the Code and the regulations and published interpretations thereunder.  Each Employee Benefit Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination from the Internal Revenue Service for all required amendments and nothing has occurred which could reasonably be expected to prevent, or cause the loss of, such qualification.

 

(b)            No ERISA Event has occurred or is expected to occur.  No Pension Plan has any Unfunded Pension Liability.  Except as could not reasonably be expected to result in a Material Adverse Effect (either individually or in the aggregate), within the last six years, no Pension Plan has been terminated, whether or not in a “standard termination” as that term is used in Section 4041 of ERISA, nor has any Pension Plan (determined at any time within the last six years) with an Unfunded Pension Liability been transferred outside of the “controlled group” (within the meaning of Section 4001(a)(14) of ERISA) of any Company or any of its ERISA Affiliates.  Using actuarial assumptions and computation methods consistent with subpart I of subtitle E of Title IV of ERISA, the aggregate liabilities of any Company or any of its ERISA Affiliates to all Multiemployer Plans in the event of a complete withdrawal therefrom, as of the close of the most recent fiscal year of each such Multiemployer Plan, have not resulted in, and could not reasonably be expected to result in, a Material Adverse Effect.

 

(c)            All Foreign Plans are in material compliance with, and have been established, administered and operated in accordance with, the terms of such Foreign Plans and applicable law.  All contributions or other payments which are due with respect to each Foreign Plan have been made in full and there are no funding deficiencies thereunder, except as would not reasonably be expected to result in a material liability to any Company.  All amounts payable under any Foreign Plan are properly reflected on the financial statements of the applicable Company.

 

Section 3.18            Environmental Matters.

 

(a)            Except as could not reasonably be expected to result in loss to the condition (financial or otherwise), results of operations, assets, properties, solvency, business, prospects or value of the Companies, individually or in the aggregate, in excess of $5,000,000:

 

(i)             the Companies and their businesses, operations and Real Property are and have at all times during the Companies' ownership or lease thereof been in compliance with, and the Companies have no liability under, any applicable Environmental Law;

 

  

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(ii)            the Companies have obtained all Environmental Permits required for the conduct of their businesses and operations, and the ownership, operation and use of their Real Property, under all applicable Environmental Laws.  The Companies are in compliance with the terms and conditions of such Environmental Permits, and all such Environmental Permits are valid and in good standing;

 

(iii)           there has been no Release or threatened Release or any handling, management, generation, treatment, storage or disposal of Hazardous Materials on, at, under or from any Real Property or facility presently or formerly owned, leased or operated by any of the Companies or their predecessors in interest that has resulted in, or is reasonably likely to result in, liability or obligations by any of the Companies under Environmental Law or in an Environmental Claim;

 

(iv)          there is no Environmental Claim pending or, to the knowledge of the Loan Parties, threatened against any of the Companies, or relating to the Real Property currently or formerly owned, leased or operated by any of the Companies or relating to the operations of the Companies, and, to the knowledge of the Loan Parties, there are no actions, activities, circumstances, conditions, events or incidents that are reasonably likely to form the basis of such an Environmental Claim;

 

(v)           no Company is obligated to perform any action or otherwise incur any expense under Environmental Law, including pursuant to any Order or agreement by which it is bound or has assumed by contract or agreement, and no Company is conducting or financing any Response pursuant to any Environmental Law with respect to any Real Property or any other location;

 

(vi)          no Real Property or facility owned, operated or leased by the Companies and, to the knowledge of the Loan Parties, no Real Property or facility formerly owned, operated or leased by any of the Companies or any of their predecessors in interest is (i) listed or proposed for listing on the National Priorities List as defined in and promulgated pursuant to CERCLA or (ii) listed on the Comprehensive Environmental Response, Compensation and Liability Information System promulgated pursuant to CERCLA or (iii) included on any similar list maintained by any Governmental Authority that indicates that any Company has or is reasonably likely to have an obligation to undertake investigatory or remediation obligations under applicable Environmental Laws;

 

(vii)         there are no underground or aboveground storage tanks, whether empty or containing any Hazardous Material, located on any Real Property; and

 

(viii)         the execution, delivery and performance of this Agreement and the other Loan Documents and the consummation of the Transactions and the other transactions contemplated hereby and thereby will not require any notification, registration, filing, reporting, disclosure, investigation, remediation or cleanup obligations pursuant to any Governmental Real Property Disclosure Requirements or any other Environmental Law.

 

Section 3.19            Insurance.  Schedule 3.19 sets forth a true, complete and accurate description in reasonable detail of all insurance maintained by each Company as of the Closing Date.  Each Company has insurance in such amounts and covering such risks and liabilities as are customary for companies of a similar size engaged in similar businesses in similar locations or as are otherwise deemed prudent by Borrower, in the exercise of its reasonable business judgment.  All material insurance maintained by the Companies is in full force and effect, all premiums have been duly paid, no Company has received notice of violation, invalidity or cancellation thereof, the Premises, and the use, occupancy and operation thereof, comply in all material respects with all Insurance Requirements, and there exists no default under any Insurance Requirement.

 

  

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Section 3.20            Security Documents.  (a)  The Security Agreement is effective to create in favor of the Collateral Agent for the benefit of the Secured Parties, legal, valid and enforceable Liens on, and security interests in, the Security Agreement Collateral and, when (i) financing statements and other filings in appropriate form are filed in the Office of the Secretary of State of the jurisdiction of incorporation or organization of the applicable Loan Party (or in such other applicable central filing office as shall be specified under the Uniform Commercial Code as in effect in the jurisdiction of incorporation or organization of the applicable Loan Party) and (ii) upon the taking of possession or control by the Collateral Agent of the Security Agreement Collateral with respect to which a security interest may be perfected only by possession or control (which possession or control shall be given to the Collateral Agent to the extent possession or control by the Collateral Agent is required by each Security Document), the Liens created by the Security Agreement shall constitute fully perfected Liens on, and security interests in, all right, title and interest of the grantors thereunder in the Security Agreement Collateral (other than (A) the Intellectual Property constituting Collateral and (B) such Security Agreement Collateral in which a security interest cannot be perfected under the UCC as in effect at the relevant time in the relevant jurisdiction), in each case subject to no Liens other than Permitted Liens.

 

(b)            When (i) the Security Agreement or a short form thereof is filed in the United States Patent and Trademark Office and the United States Copyright Office, and (ii) financing statements and other filings in appropriate form are filed in the Office of the Secretary of State of the jurisdiction of incorporation or organization of the applicable Loan Party (or in such other applicable central filing office as shall be specified under the Uniform Commercial Code as in effect in the jurisdiction of incorporation or organization of the applicable Loan Party), the Liens created by the Security Agreement shall constitute fully perfected Liens on, and security interests in, all right, title and interest of the grantors thereunder in the Intellectual Property constituting Collateral, in each case subject to no Liens other than Permitted Liens.

 

(c)            Each Mortgage delivered pursuant to Sections 5.10 and 5.11 will, upon execution and delivery thereof, be effective to create, in favor of the Collateral Agent, for its benefit and the benefit of the Secured Parties, legal, valid and enforceable first priority Liens on, and security interests in, all of the Loan Parties’ right, title and interest in and to the Mortgaged Properties thereunder and the proceeds thereof, subject only to Permitted Collateral Liens, and when such Mortgage is filed in the offices specified in the local counsel opinion delivered with respect thereto in accordance with the provisions of Sections 5.10 and 5.11), such Mortgage shall constitute fully perfected first priority Liens on, and security interests in, all right, title and interest of the Loan Parties in the Mortgaged Properties thereunder and the proceeds thereof, in each case prior and superior in right to any other Person, other than Permitted Collateral Liens.

 

(d)            Each Security Document delivered pursuant to Sections 5.11 and 5.12 will, upon execution and delivery thereof, be effective to create in favor of the Collateral Agent, for the benefit of the Secured Parties, legal, valid and enforceable Liens on, and security interests in, all of the Loan Parties’ right, title and interest in and to the Collateral thereunder, and (i) when all appropriate filings or recordings are made in the appropriate offices as may be required under applicable Legal Requirements and (ii) upon the taking of possession or control by the Collateral Agent of such Collateral with respect to which a security interest may be perfected only by possession or control (which such possession or control shall be given to the Collateral Agent to the extent required by any Security Document), the Liens in favor of the Collateral Agent created under such Security Document will constitute valid, enforceable and fully perfected first priority Liens on, and security interests in, all right, title and interest of the Loan Parties in such Collateral, in each case subject to no Liens other than Permitted Liens.

 

  

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Section 3.21            Anti-Terrorism Law; Foreign Corrupt Practices Act.  (a)  No Company and, to the knowledge of each Company, none of its Affiliates is in violation of, or shall use any proceeds of the Loans or the Letters of Credit in violation of, any Legal Requirements relating to terrorism or money laundering (“Anti-Terrorism Laws”), including Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001 (the “Executive Order”), and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56 (the “Patriot Act”).

 

(b)            No Company and to the knowledge of each Company, no Affiliate or broker or other agent of any Company acting or benefiting in any capacity in connection with the Credit Extensions, is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and Borrower will not directly or indirectly use the proceeds of the Loans or the Letters of Credit or otherwise make available such proceeds to any Person, for the purpose of financing the activities of any Person currently subject to any U.S. sanctions administered by OFAC.

 

(c)            No Company and, to the knowledge of each Company, no Affiliate or broker or other agent of any Company acting in any capacity in connection with the Loans (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Person described in Section 3.21(b), (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked or frozen pursuant to the Executive Order, or (iii) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.

 

(d)            No Company nor any director or officer, nor to the knowledge of any Company, any agent, employee or other Person acting, directly or indirectly, on behalf of any Company, has, in the course of its actions for, or on behalf of, any Company, directly or indirectly (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

 

ARTICLE IV

CONDITIONS TO CREDIT EXTENSIONS

 

Section 4.01            Conditions to Initial Credit Extension.  The obligation of each Lender and, if applicable, each Issuing Bank to fund the initial Credit Extension requested to be made by it shall be subject to the prior or concurrent satisfaction of each of the conditions precedent set forth in this Section 4.01.

 

(a)            Loan Documents.  All legal matters incident to this Agreement, the Credit Extensions hereunder and the other Loan Documents shall be satisfactory to the Lenders, to the Issuing Bank and to the Administrative Agent and there shall have been delivered to the Administrative Agent a properly executed counterpart of each of the Loan Documents and the Perfection Certificate.

 

  

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(b)            Corporate Documents.  The Administrative Agent shall have received:

 

(i)            a certificate of the secretary or assistant secretary of each Loan Party dated the Closing Date, certifying (A) that attached thereto is a true and complete copy of each Organizational Document of such Loan Party certified (to the extent applicable) as of a recent date by the Secretary of State of the state of its organization, (B) that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors of such Loan Party authorizing the execution, delivery and performance of the Loan Documents to which such Person is a party and, in the case of Borrower, the Credit Extensions hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect and (C) as to the incumbency and specimen signature of each officer executing any Loan Document or any other document delivered in connection herewith on behalf of such Loan Party (together with a certificate of another officer as to the incumbency and specimen signature of the secretary or assistant secretary executing the certificate required by this clause (i)); and

 

(ii)            a certificate as to the good standing (to the extent such concept is legally recognized in the applicable jurisdiction) of each Loan Party (in so-called “long-form” if available) as of a recent date, from such Secretary of State.

 

(c)            Officer’s Certificate.  The Administrative Agent shall have received a certificate, dated the Closing Date and signed by the chief executive officer and the chief financial officer of Borrower, confirming compliance with the conditions precedent set forth in this Section 4.01 and Sections 4.02(b), (c) and (d).

 

(d)            Financings and Other Transactions, Etc.  (i) The Transactions shall have been consummated or shall be consummated simultaneously on the Closing Date, in accordance with the terms hereof; and

 

   (ii)            The Refinancing shall have been consummated in full to the satisfaction of the Lenders with all liens in favor of the existing lenders being unconditionally released; the Administrative Agent shall have received a “pay-off” letter in form and substance reasonably satisfactory to the Administrative Agent with respect to all Indebtedness being refinanced in the Refinancing; and the Administrative Agent shall have received from any Person holding any Lien securing any such Indebtedness, such UCC (or equivalent) termination statements, mortgage releases, releases of assignments of leases and rents, releases of security interests in Intellectual Property and other instruments, in each case in proper form for recording or filing, as the Administrative Agent shall have reasonably requested to release and terminate of record the Liens securing such Indebtedness.

 

(e)            Indebtedness and Minority Interests.  After giving effect to the Transactions and the other transactions contemplated hereby, no Company shall have outstanding any Indebtedness for borrowed money or Preferred Stock other than (i) the Loans and Credit Extensions hereunder, (ii) the Indebtedness listed on Schedule 6.01(b) and (iii) Indebtedness owed to any Loan Party.

 

(f)            Opinions of Counsel.  The Administrative Agent shall have received, on behalf of itself, the other Agents, the Arrangers, the Lenders and the Issuing Bank, a favorable written opinion of (i) Olshan Grundman Frome Rosenzweig & Wolosky LLP, special counsel for the Loan Parties, substantially to the effect set forth in Exhibit N-1, (ii) each local counsel listed on Schedule 4.01(f), substantially to the effect set forth in Exhibit N-2, in each case (A) dated the Closing Date, (B) addressed to the Agents, the Issuing Bank and the Lenders.

 

(g)            Solvency Certificate.  The Administrative Agent shall have received a solvency certificate (a “Solvency Certificate”) in the form of Exhibit M, dated the Closing Date and signed by the chief financial officer of Borrower.

 

  

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(h)            Legal Requirements.  The Lenders shall be satisfied that each Company, and the Transactions shall be in full compliance with all material Legal Requirements, including Regulations T, U and X of the Board, and shall have received satisfactory evidence of such compliance reasonably requested by them.

 

(i)             Consents.  The Lenders shall be satisfied that all requisite Governmental Authorities, equityholders and third parties shall have approved, authorized or consented to the Transactions, and there shall be no governmental or judicial action, actual or threatened, that has or would have, individually or in the aggregate, a reasonable likelihood of restraining, preventing or imposing burdensome conditions on the Transactions or the other transactions contemplated hereby.

 

(j)             Litigation.  There shall not exist any claim, action, suit, investigation, litigation or proceeding pending or threatened by or before any court, or any governmental, administrative or regulatory agency or authority, domestic or foreign, that, in the opinion of the Administrative Agent or any Lender (a) has had, or could reasonably be expected to result in, a Material Adverse Effect, (b) calls into question in any material respect the Projections or any of the material assumptions on which the Projections were prepared, or (c) the ability of any Company to perform its obligations under the Loan Documents or the ability of the parties to consummate the financings contemplated hereby or the other Transactions.

 

(k)            Sources and Uses.  The sources and uses of the Credit Extensions on the Closing Date shall be as set forth in Section 3.12.

 

(l)             Fees.  The Arrangers and Administrative Agent shall have received all Fees and other amounts due and payable on or prior to the Closing Date, including, to the extent invoiced, reimbursement or payment of all reasonable out-of-pocket expenses (including the premiums, survey charges and recording taxes and fees and the legal fees and expenses of Jones Day, special counsel to the Administrative Agent and the Arrangers, and the fees and expenses of any local counsel, foreign counsel, appraisers, consultants and other advisors) required to be reimbursed or paid by the Loan Parties hereunder or under any other Loan Document.

 

(m)            Personal Property Requirements.  The Collateral Agent shall have received:

 

(i)            all certificates, agreements or instruments representing or evidencing the Securities Collateral accompanied by instruments of transfer and stock powers undated and endorsed in blank;

 

(ii)            the Intercompany Note executed by and among the Companies, accompanied by an endorsement to the Intercompany Note in the form attached thereto, undated and endorsed in blank by each of the Loan Parties;

 

(iii)          all other certificates, agreements or instruments necessary to perfect the Collateral Agent’s security interest in all Chattel Paper, all Instruments and all Investment Property of each Loan Party (as each such term is defined in, and to the extent required by, the Security Agreement) (excluding the stock certificates and stock powers listed in Section 5.15(b) and (c) and any Control Agreement necessary to perfect the Collateral Agent’s security interest in the Deposit Accounts identified in Schedule 16 to the Perfection Certificate, all of which shall be delivered after the Closing Date in accordance with Section 5.15 hereof);

 

(iv)          UCC financing statements in appropriate form for filing under the UCC, filings with the United States Patent and Trademark Office and United States Copyright Office and such other documents under applicable Legal Requirements in each jurisdiction as may be necessary or appropriate or, in the opinion of the Collateral Agent, desirable to perfect the Liens created, or purported to be created, by the Security Documents;

 

  

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(v)           copies, each as of a recent date, of (w) the UCC searches required by the Perfection Certificate, (x) United States Patent and Trademark Office and United States Copyright Office searches with respect to each Company, (y) tax and judgment lien searches, bankruptcy and pending lawsuit searches or equivalent reports or searches listing all effective lien notices or comparable documents that name any Company as debtor and that are filed in the state and county jurisdictions in which any Company is organized or maintains its principal place of business, and (z) such other searches that the Collateral Agent deems necessary or appropriate;

 

(vi)          a Landlord Access Agreement with respect to the Company Headquarters; and

 

(vii)         evidence reasonably acceptable to the Collateral Agent of payment or arrangements for payment by the Loan Parties of all applicable filing or recording taxes, fees, charges, costs and expenses required for the filing or recording of the Security Documents.

 

(n)            Insurance.  The Administrative Agent shall have received a copy of, or a certificate as to coverage under, the insurance policies required by Section 5.04 and the applicable provisions of the Security Documents, each of which shall be endorsed or otherwise amended to include a “standard” or “New York” lender’s loss payable or mortgagee endorsement (as applicable) and shall name the Collateral Agent, on behalf of the Secured Parties, as additional insured, in form and substance satisfactory to the Administrative Agent and the Collateral Agent.

 

(o)            Bank Regulatory Documentation.  The Administrative Agent and the Lenders shall have received, in form and substance satisfactory to them, all documentation and other information required by bank regulatory authorities or reasonably requested by the Administrative Agent or any Lender under or in respect of applicable Anti-Terrorism Laws or “know-your-customer” Legal Requirements, including the Executive Order.

 

(p)            Maximum Revolving Exposure.  Immediately after giving effect to the Borrowings made on the Closing Date, the aggregate amount of the Lenders’ Revolving Exposure shall not be greater than $10,200,000.

 

Section 4.02            Conditions to All Credit Extensions.  The obligation of each Lender and each Issuing Bank to make any Credit Extension (including the initial Credit Extension on the Closing Date) shall be subject to, and to the satisfaction of, each of the conditions precedent set forth below.

 

(a)            Notice.  The Administrative Agent shall have received a Borrowing Request as required by Section 2.03 (or such notice shall have been deemed given in accordance with Section 2.03) if Loans are being requested or, in the case of the issuance, amendment, extension or renewal of a Letter of Credit, the Issuing Bank and the Administrative Agent shall have received a notice requesting the issuance, amendment, extension or renewal of such Letter of Credit as required by Section 2.18(b) or, in the case of the Borrowing of a Swingline Loan, the Swingline Lender and the Administrative Agent shall have received a Borrowing Request as required by Section 2.17(b).

 

(b)            No Default.  Borrower and each other Loan Party shall be in compliance in all material respects with all the terms and provisions set forth herein and in each other Loan Document on its part to be observed or performed, and, at the time of and immediately after giving effect to such Credit Extension and the application of the proceeds thereof, no Default or Event of Default shall have occurred and be continuing on such date.

 

  

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(c)            Representations and Warranties.  Each of the representations and warranties made by any Loan Party set forth in Article III or in any other Loan Document shall be true and correct in all material respects on and as of the date of such Credit Extension with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties shall be true and correct in all material respects on and as of such earlier date); provided that any representation and warranty that is qualified as to “materiality”, “Material Adverse Effect” or similar language shall be true and correct (after giving effect to any qualification therein) in all respects on such respective dates.

 

(d)            No Legal Bar.  No Order of any Governmental Authority shall purport to restrain (i) any Lender from making any Loans to be made by it or (ii) the Issuing Bank from issuing any Letters of Credit to be issued by it.  No injunction or other restraining Order shall have been issued, shall be pending or noticed with respect to any action, suit or proceeding seeking to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the transactions contemplated by this Agreement or the making of Loans or the issuance of Letters of Credit hereunder.

 

Each of the delivery of a Borrowing Request or notice requesting the issuance, amendment, extension or renewal of a Letter of Credit and the acceptance by Borrower of the proceeds of such Credit Extension shall constitute a representation and warranty by Borrower and each other Loan Party that on the date of such Credit Extension (both immediately before and after giving effect to such Credit Extension and the application of the proceeds thereof) the conditions contained in this Section 4.02 (and, for the initial Credit Extensions on the Closing Date, Section 4.01) have been satisfied.  Borrower shall provide such information (including calculations in reasonable detail of the covenants in Section 6.10) as the Administrative Agent may reasonably request to confirm that the conditions in this Section 4.02 have been satisfied.  For purposes of determining satisfaction of the conditions specified in Section 4.01 and, Section 4.02, by releasing its signature page hereto or to an Assignment and Assumption, each Agent and each Lender that has signed this Agreement or an Assignment and Assumption shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required hereunder to be consented to or approved by or acceptable or satisfactory to such Agent or such Lender, as the case may be.

 

ARTICLE V

AFFIRMATIVE COVENANTS

 

Each Loan Party warrants, covenants and agrees with the Administrative Agent, the Collateral Agent, the Issuing Bank and each Lender that so long as this Agreement shall remain in effect and until the Commitments have been terminated and the principal of and interest and premium (if any) on each Loan, all Fees and all other expenses or amounts payable under any Loan Document shall have been paid in full and all Letters of Credit have been canceled or have expired and all amounts drawn thereunder have been reimbursed in full, each Loan Party will, and will cause each of its Subsidiaries to:

 

Section 5.01            Financial Statements, Reports, etc.  Furnish to the Administrative Agent and each Lender:

 

(a)            Annual Reports.  As soon as available and in any event within 90 days after the end of each fiscal year, (i) the audited consolidated balance sheet of Borrower as of the end of such fiscal year and related consolidated statements of income, cash flows and stockholders’ equity for such fiscal year, in comparative form with such financial statements as of the end of, and for, the preceding fiscal year, and notes thereto (including a note with a consolidating balance sheet and statements of income and cash flows separating out Borrower and its Subsidiaries), all prepared in accordance with GAAP and accompanied by an opinion of Deloitte & Touche LLP or other independent public accountants of recognized national standing reasonably satisfactory to the Administrative Agent (which opinion shall not be qualified as to scope or contain any going concern or other material qualification or exemption), stating that such financial statements fairly present, in all material respects, the consolidated financial condition, results of operations and cash flows of Borrower as of the dates and for the periods specified in accordance with GAAP, and (ii) a management report in a form reasonably satisfactory to the Administrative Agent setting forth the financial condition, results of operations and cash flows of Borrower as of the end of and for such fiscal year, compared to the end of and for the previous fiscal year;

 

  

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(b)            Quarterly Reports.  As soon as available and in any event within 45 days after the end of each of the first three fiscal quarter of each fiscal year, the consolidated balance sheet of Borrower as of the end of such fiscal quarter and related consolidated statements of income and cash flows for such fiscal quarter and for the then elapsed portion of the fiscal year, in comparative form with the consolidated statements of income and cash flows for the comparable periods in the previous fiscal year, all prepared in accordance with GAAP and accompanied by a certificate of a Financial Officer stating that such financial statements fairly present, in all material respects, the consolidated financial condition, results of operations and cash flows of Borrower as of the date and for the periods specified in accordance with GAAP consistently applied, and on a basis consistent with audited financial statements referred to in clause (a) of this Section 5.01, subject to normal year-end audit adjustments and the absence of footnotes;

 

(c)            Financial Officer’s Certificate.  (i) Concurrently with any delivery of financial statements under Section 5.01(a) or (b) above, a Compliance Certificate (x) certifying that no Default has occurred or, if such a Default has occurred, specifying in reasonable detail the nature and extent thereof and any corrective action taken or proposed to be taken with respect thereto and (y) setting forth computations in reasonable detail satisfactory to the Administrative Agent demonstrating compliance with the covenants set forth in Section 6.10 and the Cumulative Credit Availability; and (ii) in the case of delivery of financial statements under Section 5.01(a) above, (x) Borrower’s calculation of Excess Cash Flow and Retained Excess Cash Flow Amount and (y) a report of the accounting firm opining on or certifying such financial statements stating that in the course of its regular audit of the financial statements of Borrower and its Subsidiaries, which audit was conducted in accordance with GAAP, such accounting firm obtained no knowledge that any Default has occurred or, if in the opinion of such accounting firm such a Default has occurred, specifying in reasonable detail the nature and extent thereof in each case insofar as such Default relates to financial or accounting matters (provided, however, that such report may indicate that the accounting firm’s audit was not directed primarily toward obtaining knowledge of such noncompliance);

 

(d)            Financial Officer’s Certificate Regarding Collateral.  Concurrently with any delivery of financial statements under Section 5.01(a) above, a certificate of a Financial Officer certifying that as of the date thereof (i) all UCC financing statements (including fixture filings, as applicable) or other appropriate filings, recordings or registrations, including all refilings, rerecordings and reregistrations, containing a sufficient description of the Collateral have been filed of record in each governmental, municipal or other appropriate office in each jurisdiction necessary to protect, perfect or maintain the perfection or priority of the Liens under the Security Documents for a period of not less than 18 months after the date of such certificate (except as noted therein with respect to any continuation statements to be filed within such period), and (ii) all possessory Collateral required to be delivered to the Collateral Agent or the Administrative Agent pursuant to the Security Documents has been so delivered;

 

  

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(e)            Management Letters.  Promptly after the receipt thereof by any Company, a copy of any “management letter” or similar document received by any such Person from its certified public accountants and the management’s responses thereto;

 

(f)             Budgets.  No later than the 45th day of each fiscal year of Borrower, a budget in form reasonably satisfactory to the Administrative Agent (including budgeted statements of income for each of Borrower’s and its Subsidiaries’ business units and sources and uses of cash and balance sheets, in each case on a consolidated basis) prepared by Borrower for (i) each fiscal quarter of such fiscal year prepared in detail and (ii) the fiscal year immediately following such fiscal year prepared in summary form, accompanied by a certificate of the chief financial officer of Borrower certifying that the budget is a reasonable estimate for the period covered thereby;

 

(g)            Certification of Public Information.  Borrower and each Lender acknowledge that certain of the Lenders may be Public Lenders and, if documents or notices required to be delivered pursuant to this Section 5.01 or otherwise are being distributed through a Platform, any document or notice that Borrower has not specifically labeled “Public—Contains Only Public Information” shall not be posted on that portion of the Platform designated for such Public Lenders.  If Borrower has not so labeled a document or notice delivered pursuant to this Section 5.01, the Administrative Agent reserves the right to post such document or notice solely on that portion of the Platform designated for Lenders who wish to receive material Non-Public Information with respect to Borrower, its Subsidiaries and their securities.  Notwithstanding anything in any Loan Document to the contrary, documents required to be delivered pursuant to Section 5.01(a)(i) and (b) may be posted on that portion of the Platform designated for Public Lenders regardless of whether Borrower has or has not specifically labeled any such document “Public—Contains Only Public Information”; and

 

(h)            Other Information.  Promptly, from time to time, such other information regarding the operations, business affairs and financial condition of any Company, or compliance with the terms of any Loan Document, or the environmental condition of any Real Property, as the Administrative Agent or any Lender may reasonably request.  Each Lender acknowledges that the Administrative Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to in this Section 5.01, and in any event shall have no responsibility to monitor compliance by Borrower with any such request for delivery, and each Lender shall be solely responsible for requesting delivery (from the Administrative Agent) of or maintaining its copies of such documents.            

 

Section 5.02            Litigation and Other Notices.  Furnish to the Administrative Agent and each Lender written notice of the following promptly (and, in any event, within five Business Days following the date on which a Responsible Officer obtains knowledge thereof):

 

(a)            any Default or Event of Default, specifying the nature and extent thereof and the corrective action (if any) taken or proposed to be taken with respect thereto;

 

(b)            the filing or commencement of, or any threat or notice of intention of any Person to file or commence, any action, suit, litigation or proceeding, whether at law or in equity or otherwise by or before any Governmental Authority, (i) against any Company or any Affiliate thereof that has had, or could reasonably be expected to result in, a Material Adverse Effect, (ii) with respect to any Loan Document or (iii) with respect to any of the other Transactions;

 

  

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(c)            any development that has resulted, or could reasonably be expected to result, in a Material Adverse Effect;

 

(d)            the occurrence of a Casualty Event in excess of $2,000,000 (whether or not covered by insurance);

 

(e)            the occurrence of any ERISA Event or any event with respect to a Foreign Plan, that, alone or together with any other ERISA Events or any other events with respect to a Foreign Plan that have occurred, could reasonably be expected to result in liability of Borrower and its Subsidiaries in an aggregate amount exceeding $2,000,000;

 

(f)             the receipt by any Company of any notice of any Environmental Claim or violation of or potential liability under, or knowledge by any Company that there exists a condition that has resulted, or could reasonably be expected to result, in an Environmental Claim or a violation of or liability under, any Environmental Law, except for Environmental Claims, violations and liabilities the consequence of which, in the aggregate, have not and could not be reasonably likely to subject the Companies collectively to liabilities exceeding $2,000,000; and

 

(g)            (i) the incurrence of any Lien (other than Permitted Collateral Liens) on, or claim asserted against, all or any substantial portion of the Collateral or (ii) the occurrence of any other event which could reasonably be expected to materially and adversely affect the value of the Collateral.

 

Section 5.03            Existence; Businesses and Properties.  (a)  Do or cause to be done all things necessary to preserve, renew and maintain in full force and effect its legal existence and all rights and franchises, licenses and permits material to the conduct of its business, except as otherwise expressly permitted under Section 6.05 or Section 6.06.

 

(b)            Do or cause to be done all things necessary to maintain or cause to be maintained in good repair, working order and condition, ordinary wear and tear excepted, all properties material to the conduct of the business of Borrower and its Subsidiaries and from time to time will make or cause to be made all appropriate repairs, renewals and replacements thereof necessary in order that the business carried on in connection therewith may be properly conducted at all times; provided that nothing in this Section 5.03(b) shall prevent any abandonment or other disposition of property or assets permitted to be made pursuant to Section 6.06.

 

Section 5.04            Insurance.  (a)  Maintain such insurance, to such extent and against such risks as is customary with companies in the same or similar businesses operating in the same or similar locations or as is otherwise deemed prudent by Borrower in the exercise of its reasonable business judgment, including (i) physical hazard insurance on an “all risk” basis, (ii) commercial general liability against claims for bodily injury, death or property damage covering any and all insurable claims, (iii) business interruption insurance, (v) worker’s compensation insurance and such other insurance as may be required by any Legal Requirement and (vi) such other insurance against risks (including “key-man” life insurance) as the Administrative Agent may from time to time require (in each case, such policies to be in such form and amounts and having such coverage as may be reasonably satisfactory to the Administrative Agent and the Collateral Agent); provided that with respect to physical hazard insurance, (x) neither the Collateral Agent nor the applicable Company shall agree to the adjustment of any claim thereunder without the consent of the other (such consent not to be unreasonably conditioned, withheld or delayed), and (y) no consent of any Company shall be required during an Event of Default.

 

  

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(b)            Notify the Administrative Agent and the Collateral Agent immediately whenever any separate insurance concurrent in form or contributing in the event of loss with that required to be maintained under this Section 5.04 is taken out by any Company; and promptly (and, in any event, within five Business Days) deliver to the Administrative Agent and the Collateral Agent a duplicate original copy of such policy or policies.

 

(c)            With respect to each Mortgaged Property, obtain flood insurance in such total amount as the Administrative Agent or the Required Lenders may from time to time reasonably require, if at any time the area in which any improvements located on any Mortgaged Property is designated a “flood hazard area” in any Flood Insurance Rate Map published by the Federal Emergency Management Agency (or any successor agency), and otherwise comply with the National Flood Insurance Program as set forth in the Flood Disaster Protection Act of 1973.

 

(d)            No Loan Party that is an owner of any Mortgaged Property shall take any action that is reasonably likely to be the basis for termination, revocation or denial of any insurance coverage required to be maintained under such Loan Party’s respective Mortgage or that could reasonably be the basis for a defense to any claim under any Insurance Policy maintained in respect of the Premises, and each Loan Party shall otherwise comply in all material respects with all Insurance Requirements in respect of the Premises; provided, however, that each Loan Party may, at its own expense and after written notice to the Administrative Agent, (i) contest the applicability or enforceability of any such Insurance Requirements by appropriate legal proceedings, the prosecution of which does not constitute a basis for cancellation or revocation of any insurance coverage required under this Section 5.04 or (ii) cause the Insurance Policy containing any such Insurance Requirement to be replaced by a new policy complying with the provisions of this Section 5.04.

 

Section 5.05            Obligations and Taxes.  (a)  Pay its Indebtedness and other material obligations promptly and in accordance with their terms and pay and discharge promptly when due all material Taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or in respect of its property, before the same shall become delinquent or in default, as well as all lawful claims for labor, services, materials and supplies or otherwise that, if unpaid, might give rise to a Lien other than a Permitted Lien upon such properties or any part thereof; provided that such payment and discharge shall not be required with respect to any such Tax, assessment, charge, levy or claim so long as (i) the validity or amount thereof shall be contested in good faith by appropriate proceedings timely instituted and diligently conducted and the applicable Company shall have set aside on its books adequate reserves or other appropriate provisions with respect thereto in accordance with GAAP, and (ii) such contest operates to suspend collection of the contested obligation, Tax, assessment or charge and enforcement of a Lien other than a Permitted Lien.

 

Section 5.06            Employee Benefits.  (a)  Comply in all material respects with all applicable Legal Requirements, including the applicable provisions of ERISA and the Code with respect to all Employee Benefit Plans and Foreign Plans and (b) furnish to the Administrative Agent (x) as soon as possible after, and in any event within five Business Days after any Responsible Officer of any Company or any ERISA Affiliate of any Company knows or has reason to know that, any ERISA Event or other event with respect to an Employee Benefit Plan or Foreign Plan has occurred that, alone or together with any other ERISA Event could reasonably be expected to result in liability of the Companies or any of their ERISA Affiliates in an aggregate amount exceeding $1,000,000 or the imposition of a Lien, a statement of a Financial Officer of Borrower setting forth details as to such ERISA Event and the action, if any, that the Companies propose to take with respect thereto, and (y) upon request by the Administrative Agent, copies of (i) annual report (Form 5500 Series) filed by any Company or any of its ERISA Affiliates with the Employee Benefits Security Administration with respect to each Employee Benefit Plan; (ii) the most recent actuarial valuation report for each Pension Plan; (iii) all notices received by any Company or any of its ERISA Affiliates from a Multiemployer Plan sponsor or any governmental agency concerning an ERISA Event; and (iv) such other information, documents or governmental reports or filings relating to any Employee Benefit Plan or Foreign Plan as the Administrative Agent shall reasonably request.

 

  

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Section 5.07            Maintaining Records; Access to Properties and Inspections; Annual Meetings.  (a)  Keep proper books of record and account in which full, true and correct entries in conformity with GAAP and all Legal Requirements are made of all dealings and transactions in relation to its business and activities.  Each Company will permit any representatives designated by the Administrative Agent or any Lender (i) to visit and inspect the financial records and the property of such Company upon reasonable prior notice and at reasonable times (such visits and inspections to be limited to one visit and inspection coordinated by the Administrative Agent per fiscal year so long as no Default or Event of Default has occurred and is continuing), and (ii) to make extracts from and copies of such financial records, and permit any representatives designated by the Administrative Agent or, upon the occurrence and during the continuation of any Event of Default, any Lender to discuss the affairs, finances, accounts and condition of any Company with the officers and employees thereof and advisors therefor (including independent accountants) in the presence of representatives of such Company.

 

(b)            Borrower shall, or shall cause Holdings to, permit each Lender and the Administrative Agent to attend the annual general stockholders meeting of Holdings.

 

Section 5.08            Use of Proceeds.  Use the proceeds of the Loans only for the purposes set forth in Section 2.19(a) and Section 3.12 and request the issuance of Letters of Credit only to support obligations of Borrower or its Wholly Owned Subsidiaries and (ii) in the case of Existing Letters of Credit, for the purposes set forth in the documentation governing such Existing Letters of Credit.

 

Section 5.09            Compliance with Environmental Laws; Environmental Reports.  (a) Comply, and use commercially reasonable efforts to cause all lessees and other Persons occupying its properties to comply, in all material respects with all Environmental Laws applicable to its operations and properties; obtain and renew all material environmental permits necessary for its operations and properties; and conduct any remedial action in accordance with Environmental Laws; provided, however, that none of Borrower or any Subsidiary shall be required to undertake any remedial action required by Environmental Laws to the extent that its obligation to do so is being contested in good faith and by proper proceedings and appropriate reserves are being maintained with respect to such circumstances in accordance with GAAP.

 

Section 5.10            Additional Collateral; Additional Guarantors.  (a)  Subject to this Section 5.10, with respect to any property acquired after the Closing Date by any Loan Party that is intended to be subject to the Lien created by any of the Security Documents but is not so subject (but, in any event, excluding any Equity Interest of a Foreign Subsidiary not required to be pledged pursuant to Section 5.10(b)), promptly (and in any event within 15 Business Days after the acquisition thereof, unless extended by the Administrative Agent in writing in its sole discretion) (i) execute and deliver to the Administrative Agent and the Collateral Agent such amendments or supplements to the relevant Security Documents or such other documents as the Administrative Agent or the Collateral Agent shall deem necessary or advisable to grant to the Collateral Agent, for its benefit and for the benefit of the other Secured Parties, a Lien on such property subject to no Liens other than Permitted Collateral Liens, (ii) if requested by the Administrative Agent, deliver opinions of counsel to Borrower in form and substance, and from counsel, reasonably acceptable to the Administrative Agent, and (iii) take all actions necessary to cause such Lien to be duly perfected to the extent required by such Security Documents in accordance with all applicable Legal Requirements, including the filing of financing statements in such jurisdictions as may be reasonably requested by the Administrative Agent or the Collateral Agent.  Notwithstanding anything to the contrary herein, the Loan Parties shall not have any obligation to perfect Liens on the Intellectual Property constituting Collateral in any jurisdiction other than in the United States.  Borrower and the other Loan Parties shall otherwise take such actions and execute and/or deliver to the Collateral Agent such documents as the Administrative Agent or the Collateral Agent shall require to confirm the validity, perfection and priority of the Lien of the Security Documents against such after-acquired properties.

 

  

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(b)            With respect to (x) any Person that is or becomes a Subsidiary of a Loan Party after the Closing Date (other than an Immaterial Subsidiary) or (y) any Subsidiary of Borrower that is an Immaterial Subsidiary that ceases to be an Immaterial Subsidiary pursuant to the definition thereof or otherwise, promptly (and in any event within 30 days after such Person becomes a Subsidiary, unless extended by the Administrative Agent in writing in its sole discretion) (i) deliver to the Collateral Agent the certificates, if any, representing all of the Equity Interests of such Subsidiary, together with undated stock powers or other appropriate instruments of transfer executed and delivered in blank by a duly authorized officer of the holder(s) of such Equity Interests, and all intercompany notes owing from such Subsidiary to any Loan Party together with instruments of transfer executed and delivered in blank by a duly authorized officer of such Loan Party and (ii) cause such new Subsidiary (A) to execute a Joinder Agreement to become a Subsidiary Guarantor or, in the case of a Foreign Subsidiary, execute a security document compatible with the laws of such Foreign Subsidiary’s jurisdiction (and in form and substance reasonably satisfactory to the Collateral Agent) to cause such Subsidiary to become a Subsidiary Guarantor and a Pledgor, (B) deliver opinions of counsel to Borrower in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent, and (C) to take all actions necessary or advisable in the opinion of the Administrative Agent or the Collateral Agent to cause the Lien created by the applicable Security Document to be duly perfected to the extent required by such Security Document in accordance with all applicable Legal Requirements, including the filing of financing statements (or equivalent registrations) in such jurisdictions as may be reasonably requested by the Administrative Agent or the Collateral Agent.  Notwithstanding the foregoing, (1) the Equity Interests required to be delivered to the Collateral Agent pursuant to clause (i) of the preceding sentence shall not include any Equity Interests of a Foreign Subsidiary that is a controlled foreign corporation (within the meaning of Section 957(a) of the Code) and (2) no Foreign Subsidiary that is a controlled foreign corporation (within the meaning of Section 957(a) of the Code) shall be required to take the actions specified in clause (ii) of the preceding sentence, provided that the exception contained in clause (1) shall not apply to (A) Voting Stock of any Subsidiary which is a first-tier controlled foreign corporation (within the meaning of Section 957(a) of the Code) representing 66% of the total voting power of all outstanding Voting Stock of such Subsidiary and (B) 100% of the Equity Interests not constituting Voting Stock of any such Subsidiary. For purposes of this Section 5.10(b), any Equity Interests constituting “stock entitled to vote” within the meaning of Treasury Regulation Section 1.956-2(c)(2) shall be treated as Voting Stock.

 

(c)            With respect to any Person that is or becomes a Subsidiary of a Loan Party after the Closing Date, promptly (and in any event within 10 Business Days after such Person becomes a Subsidiary), unless extended by the Administrative Agent in writing in its sole discretion) execute and deliver to the Collateral Agent (i) a counterpart to the Intercompany Note and (ii) if such Subsidiary is a Loan Party, an endorsement to the Intercompany Note (undated and endorsed in blank) in the form attached thereto, endorsed by such Subsidiary.

 

  

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(d)            (i)            Within 60 days after the Mortgage Trigger Date, to the extent requested by the Administrative Agent, deliver the following with respect to each parcel of Real Property owned in fee by such Loan Party on the Mortgage Trigger Date:

 

(A)            Mortgages on each such parcel of fee-owned Real Property in favor of the Collateral Agent, for the benefit of the Secured Parties, duly executed and acknowledged by each Loan Party that is the owner of such Mortgaged Property, and otherwise in form for recording or filing in the recording or filing office of each applicable governmental subdivision where each such Mortgaged Property is situated, together with such certificates, affidavits, questionnaires or returns as shall be required in connection with the recording or filing thereof to create a lien under applicable Legal Requirements, and such financing statements and any other instruments necessary to grant a mortgage Lien under the laws of any applicable jurisdiction, all of which shall be in form and substance satisfactory to the Collateral Agent;

 

(B)            with respect to each such Mortgaged Property, such consents, approvals, amendments, supplements, estoppels, tenant subordination agreements or other instruments as shall reasonably be deemed necessary by the Collateral Agent in order for the owner or holder of the fee interest constituting such Mortgaged Property to grant the Lien contemplated by the Mortgage with respect to such Mortgaged Property;

 

(C)            with respect to each Mortgage, a policy of title insurance (or marked up title insurance commitment having the effect of a policy of title insurance) insuring the Lien of such Mortgage as a valid first mortgage Lien on the Mortgaged Property and fixtures described therein in the amount equal to not less than 120% of the Fair Market Value of such Mortgaged Property and fixtures (with the Fair Market Value to be mutually agreed upon by the Administrative Agent and Borrower), which policy (or such marked-up commitment) (each, a “Title Policy”) shall (A) be issued by the Title Company, (B) to the extent necessary, include such reinsurance arrangements (with provisions for direct access, if necessary) as shall be acceptable to the Collateral Agent, (C) contain a “tie-in” or “cluster” endorsement, if available under applicable Legal Requirements (i.e., policies which insure against losses regardless of location or allocated value of the insured property up to a stated maximum coverage amount), (D) have been supplemented by such endorsements (or where such endorsements are not available, opinions of special counsel, architects or other professionals reasonably acceptable to the Collateral Agent) as shall be reasonably requested by the Collateral Agent (including endorsements on matters relating to usury, first loss, last dollar, zoning, contiguity, revolving credit, doing business, non-imputation, public road access, survey, variable rate, environmental lien, subdivision, separate tax lot, revolving credit, and so-called comprehensive coverage over covenants and restrictions), and (E) contain no exceptions to title other than exceptions reasonably acceptable to the Collateral Agent;

 

(D)            with respect to each Mortgaged Property, such affidavits, certificates, information (including financial data) and instruments of indemnification (including a so-called “gap” indemnification) as shall be required to induce the Title Company to issue the Title Policy/ies and endorsements contemplated above;

 

(E)            evidence reasonably acceptable to the Collateral Agent of payment by Borrower of all Title Policy premiums, search and examination charges, escrow charges and related charges, mortgage recording taxes, fees, charges, costs and expenses required for the recording of the Mortgages and issuance of the Title Policies referred to above;

 

(F)            with respect to each Mortgaged Property, copies of all Leases in which any Loan Party holds the lessor’s interest or other agreements relating to possessory interests, if any.  To the extent any of the foregoing affect any Mortgaged Property, such agreement shall be subordinate to the Lien of the Mortgage to be recorded against such Mortgaged Property, either expressly by its terms or pursuant to a subordination, non-disturbance and attornment agreement, and shall otherwise be reasonably acceptable to the Collateral Agent;

 

  

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(G)            evidence, with respect to each Mortgaged Property, that each Loan Party shall have made all notifications, registrations and filings, to the extent required by, and in accordance with, all Governmental Real Property Disclosure Requirements applicable to such Real Property or Mortgaged Property;

 

(H)            Surveys with respect to each Mortgaged Property;

 

(I)             with respect to each Mortgaged Property, (1) an environmental assessment prepared by any environmental consultant and in form and substance reasonably acceptable to the Collateral Agent and (2) a completed Federal Emergency Management Agency (or any successor agency) Standard Flood Hazard Determination; and

 

(J)             with respect to each Mortgaged Property, an opinion of local counsel admitted to practice in the jurisdiction in which such Mortgaged Property is located, reasonably satisfactory in form and substance to the Collateral Agent, as to the validity and effectiveness of such Mortgage as a lien on such Real Property encumbered thereby.

 

(ii)            After the Mortgage Trigger Date, to the extent requested by the Administrative Agent, promptly (and in any event within 10 Business Days of the acquisition thereof) deliver the items described in Section 5.10(d)(i) with respect to (A) each parcel of owned Real Property that is acquired by such Loan Party after the Mortgage Trigger Date.

 

(iii)           The Mortgages delivered pursuant to clauses (i) or (ii) of this Section 5.10(d) shall be duly recorded or filed in such manner and in such places as are required by applicable Legal Requirements to establish, perfect, preserve and protect the Liens in favor of the Collateral Agent required to be granted pursuant to such Mortgages and all taxes, fees and other charges payable in connection therewith shall be paid in full.

 

Section 5.11            Security Interests; Further Assurances.  (a)  Promptly, upon the reasonable request of the Administrative Agent, the Collateral Agent or any Lender, at the Companies’ expense, execute, acknowledge and deliver, or cause the execution, acknowledgment and delivery of, and thereafter register, file or record, or cause to be registered, filed or recorded, in an appropriate governmental office, any document or instrument supplemental to or confirmatory of the Security Documents or otherwise deemed by the Administrative Agent or the Collateral Agent reasonably necessary or desirable for the continued validity, enforceability, perfection and priority of the Liens on the Collateral covered thereby subject to no other Liens except Permitted Liens, or obtain any consents or waivers as may be necessary or appropriate in connection therewith.

 

(b)            Deliver or cause to be delivered to the Administrative Agent and the Collateral Agent from time to time such other documentation, instruments, consents, authorizations, approvals and Orders in form and substance reasonably satisfactory to the Administrative Agent and the Collateral Agent as the Administrative Agent and the Collateral Agent shall reasonably deem necessary or advisable to perfect or maintain the validity, enforceability, perfection and priority of the Liens on the Collateral pursuant to the Security Documents.

 

  

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Section 5.12            Information Regarding Collateral.  (a)  Concurrently with the delivery of financial statements pursuant to Section 5.01(a), deliver to the Administrative Agent and the Collateral Agent a Perfection Certificate Supplement.

 

Section 5.13            Maintenance of Corporate Separateness.  Satisfy in all material respects, customary corporate, limited liability company or other like formalities, including the accurate maintenance of separate organizational and business records.

 

Section 5.14            Maintenance of Ratings.  Use commercially reasonable efforts to cause the Loans and Borrower’s corporate credit to continue to be rated by Standard & Poor’s Ratings Group and Moody’s Investors Service Inc. (but not to maintain a specific rating).

 

Section 5.15            Post-Closing Matters.

 

(a)            Execute and deliver Control Agreements in form and substance reasonably satisfactory to the Collateral Agent with respect to each deposit account listed on Schedule 16(a) to the Perfection Certificate (except for the Monaco Account, as defined therein) within 90 days of the Closing Date (or such later date agreed to by the Collateral Agent in its sole discretion).

 

(b)            Execute and deliver a stock certificate representing all of the Equity Interests of Steak n Shake International, Inc. and issued to Borrower, together with an undated stock power executed and delivered in blank by a duly authorized officer of Borrower, within 90 days of the Closing Date (which may be extended with the consent of the Administrative Agent in its sole discretion).

 

(c)            Deliver a stock certificate representing all of the Equity Interests of Steak n Shake Enterprises, Inc. and issued to Borrower, together with an undated stock power executed and delivered in blank by a duly authorized officer of Borrower, within 1 Business Day following the Closing Date (which may be extended with the consent of the Administrative Agent in its sole discretion).

 

(d)            With respect to each insurance policy required by Section 5.04 and the applicable provisions of the Security Documents, deliver an endorsement or other amendment including a “standard” or “New York” lender’s loss payable or mortgagee endorsement (as applicable), within 7 days of the Closing Date (which may be extended with the consent of the Administrative Agent in its sole discretion).

 

ARTICLE VI

NEGATIVE COVENANTS

 

Each Loan Party warrants, covenants and agrees with the Administrative Agent, the Collateral Agent, the Issuing Bank and each Lender that, so long as this Agreement shall remain in effect and until the Commitments have been terminated and the principal of and interest and premium (if any) on each Loan, all Fees and all other expenses or amounts payable under any Loan Document have been paid in full and all Letters of Credit have been canceled or have expired or have been Cash Collateralized and all amounts drawn thereunder have been reimbursed in full, no Loan Party will, nor will they cause or permit any Subsidiaries to:

 

Section 6.01            Indebtedness.  Incur, create, assume or permit to exist, directly or indirectly, any Indebtedness, except:

 

  

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(a)            Indebtedness incurred under this Agreement and the other Loan Documents;

 

(b)            Indebtedness outstanding on the Closing Date and listed on Schedule 6.01(b);

 

(c)            Indebtedness consisting of Hedging Obligations under Permitted Hedging Agreements, in each case entered into in the ordinary course of business and not for speculative purposes or taking a “market view”; provided that if such Hedging Obligations relate to interest rates, (i) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by the Loan Documents and (ii) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;

 

(d)            Indebtedness permitted by Section 6.04;

 

(e)            Indebtedness of Borrower and its Subsidiaries in respect of Purchase Money Obligations and Capital Lease Obligations in an aggregate amount not to exceed $15,000,000 at any time outstanding; provided, however, that, in the case of Purchase Money Obligations, (i) such Indebtedness is incurred within 90 days after such acquisition, installation, construction or improvement of such fixed or capital assets (including Equity Interests of any Person owning the applicable fixed or capital assets) by such Person and (ii) the amount of such Indebtedness does not exceed 100% of the cost of such acquisition, installation, construction or improvement, as the case may be;

 

(f)            Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances and bid, performance or surety bonds issued for the account of any Company in the ordinary course of business, including guarantees or obligations of any Company with respect to letters of credit supporting such workers’ compensation claims, self-insurance obligations, bankers’ acceptances and bid, performance or surety obligations (in each case other than for an obligation for money borrowed);

 

(g)            Contingent Obligations of any Company in respect of Indebtedness otherwise permitted under this Section 6.01 (other than Section 6.01(i));

 

(h)            Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five Business Days of incurrence;

 

(i)            Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;

 

(j)            unsecured Indebtedness of any Company in an aggregate principal amount for all Companies not to exceed $15,000,000 at any time outstanding; provided that no Default or Event of Default shall have occurred and be continuing at the time such unsecured Indebtedness is incurred or would result from the incurrence thereof;

 

(k)            Indebtedness which represents a refinancing or renewal of any of the Indebtedness described in clauses (b), (c) and (e); provided that (A) any such refinancing Indebtedness is in an aggregate principal amount (or aggregate amount, as applicable) not greater than the aggregate principal amount (or aggregate amount, as applicable) of the Indebtedness being renewed or refinanced, plus the amount of any reasonable premiums required to be paid thereon and reasonable fees and expenses associated therewith, (B) such refinancing Indebtedness has a later or equal final maturity and longer or equal weighted average life to maturity than the Indebtedness being renewed or refinanced, (C) the covenants, events of default and subordination (including lien subordination) provisions thereof shall be, in the aggregate, no less favorable to the Administrative Agent, the Collateral Agent and the Lenders than those contained in the Indebtedness being renewed or refinanced, and (D) no Event of Default has occurred and is continuing or would result therefrom;

 

  

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(l)            Indebtedness arising from agreements of Borrower or a Subsidiary providing for indemnification, adjustment or purchase price or similar obligations, in each case, incurred or assumed in connection with any acquisition of any business, assets or Subsidiary permitted pursuant to Section 6.07, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;

 

(m)            Indebtedness owed to any Person providing property, casualty, liability, or other insurance to Borrower or any of its Subsidiaries that is incurred in the ordinary course of business, so long as the amount of such Indebtedness is not in excess of the amount of the unpaid cost of, and shall be incurred only to defer the cost of, such insurance for the period in which such Indebtedness is incurred and such Indebtedness is outstanding only during the period covered by such insurance; and

 

(n)            Indebtedness secured by a Lien on Real Property purchased by Borrower after the Closing Date, in an aggregate amount not to exceed $5,000,000 at any time outstanding.

 

Section 6.02            Liens.  Create, incur, assume or permit to exist, directly or indirectly, any Lien on any property now owned or hereafter acquired by it or on any income or revenues or rights in respect of any thereof, except the following (collectively, the “Permitted Liens”):

 

(a)            inchoate Liens for taxes, assessments or governmental charges or levies not yet due and payable or delinquent and Liens for taxes, assessments or governmental charges or levies, which are being contested in good faith by appropriate proceedings promptly initiated and diligently conducted for which adequate reserves have been established in accordance with GAAP, which proceedings (or Orders entered in connection with such proceedings) have the effect of preventing the forfeiture or sale of the property subject to any such Lien, and (i) which do not in the aggregate materially detract from the value of the property of the Companies, taken as a whole, or the Loan Parties, taken as a whole, and do not materially impair the use thereof in the operation of the business of the Companies, taken as a whole, or the Loan Parties, taken as a whole, and (ii) which, if they secure obligations that are then due and unpaid, are being contested in good faith by appropriate proceedings promptly initiated and diligently conducted for which adequate reserves have been established in accordance with GAAP, which proceedings (or Orders entered in connection with such proceedings) have the effect of preventing the forfeiture or sale of the property subject to any such Lien;

 

(b)            Liens in respect of property of any Company imposed by law, which were incurred in the ordinary course of business and do not secure Indebtedness for borrowed money, such as carriers’, warehousemen’s, materialmen’s, landlords’, workmen’s, suppliers’, repairmen’s and mechanics’ Liens and other similar Liens arising in the ordinary course of business;

 

(c)            any Lien in existence on the Closing Date and set forth on Schedule 6.02(c) and any Lien granted as a replacement or substitute therefor; provided that any such replacement or substitute Lien (i) except as permitted by Section 6.01(k)(A), does not secure an aggregate amount of Indebtedness or other obligations, if any, greater than that secured on the Closing Date (minus the aggregate amount of any permanent repayments and prepayments thereof since the Closing Date but only to the extent that such repayments and prepayments by their terms cannot be reborrowed or redrawn and do not occur in connection with a refinancing of all or a portion of such Indebtedness) and (ii) does not encumber any property other than the property subject thereto on the Closing Date (any such Lien, an “Existing Lien”);

 

  

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(d)            easements, rights-of-way, restrictions (including zoning restrictions), covenants, licenses, encroachments, protrusions, servitudes and other similar charges or encumbrances, and minor title deficiencies, in each case, on or with respect to any Real Property, whether now or hereafter in existence, not (i) securing Indebtedness, (ii) in the aggregate materially impairing the value of such Real Property or (iii) in the aggregate materially interfering with the ordinary conduct of the business of the Companies at or otherwise with respect to such Real Property;

 

(e)            Liens arising out of judgments, attachments or awards not resulting in a Default and in respect of which such Company shall in good faith be diligently prosecuting an appeal or proceedings for review in respect of which there shall be secured a subsisting stay of execution pending such appeal or proceedings;

 

(f)             Liens (other than any Lien imposed by ERISA) (x) imposed by law or deposits made in connection therewith in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security legislation, (y) incurred in the ordinary course of business to secure the performance of tenders, statutory obligations (other than excise taxes), surety, stay, customs and appeal bonds, statutory bonds, bids, leases, government contracts, trade contracts, performance and return of money bonds and other similar obligations (in each case, exclusive of obligations for the payment of Indebtedness) or (z) arising by virtue of deposits made in the ordinary course of business to secure liability for premiums to insurance carriers; provided that (i) with respect to clauses (x), (y) and (z) of this Section 6.02(f), such Liens are for amounts not yet due and payable or delinquent or, to the extent such amounts are so due and payable, such amounts are being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, which proceedings (or Orders entered in connection with such proceedings) have the effect of preventing the forfeiture or sale of the property subject to any such Lien, and (ii) to the extent such Liens are not imposed by Legal Requirements, such Liens shall in no event encumber any property other than cash and Cash Equivalents;

 

(g)            Leases of the properties of any Company, in each case entered into in the ordinary course of such Company’s business so long as such Leases do not, individually or in the aggregate, (i) interfere in any material respect with the ordinary conduct of the business of any Company or (ii) materially impair the use (for its intended purposes) or the value of the property subject thereto;

 

(h)            Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by any Company in the ordinary course of business in accordance with the past practices of such Company;

 

(i)             Liens securing Indebtedness incurred pursuant to Section 6.01(e), provided that (i) any such Liens attach only to the property being financed pursuant to such Indebtedness, (ii) do not encumber any other property of any Company and (iii) the principal amount of the Indebtedness secured by any such Lien shall not exceed the lesser of 80% of the Fair Market Value or the cost of the property secured by such Lien;

 

  

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(j)             bankers’ Liens, rights of setoff and other similar Liens existing solely with respect to cash and Cash Equivalents on deposit in one or more accounts maintained by any Company, in each case granted in the ordinary course of business in favor of the bank or banks with which such accounts are maintained, securing amounts owing to such bank with respect to cash management and operating account arrangements, including those involving pooled accounts and netting arrangements; provided that, unless such Liens are non-consensual and arise by operation of applicable Legal Requirements, in no case shall any such Liens secure (either directly or indirectly) the repayment of any Indebtedness;

 

(k)            Liens on property existing at the time such property is acquired by any Company to the extent permitted hereunder and Liens on property of a Person existing at the time such Person is acquired or merged with or into or consolidated with any Company to the extent permitted hereunder; provided that such Liens (i) do not extend to property not subject to such Liens at the time of such acquisition, merger or consolidation (other than improvements thereon), and (ii) are not created in anticipation or contemplation of such acquisition, merger or consolidation and do not attach to any other assets or property of Borrower and its Subsidiaries;

 

(l)             Liens granted pursuant to the Security Documents to secure the Secured Obligations;

 

(m)            licenses of Intellectual Property granted by any Company in the ordinary course of business and not interfering in any material respect with the ordinary conduct of business of the Companies;

 

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

 

(o)            Liens of a collecting bank arising in the ordinary course of business under Section 4-208 of the UCC (or any equivalent provision of the UCC) covering only the items being collected upon;

 

(p)            Liens granted by a Company in favor of a Loan Party in respect of Indebtedness owed by such Company to such Loan Party; provided that such Indebtedness is (i) evidenced by the Intercompany Note and (ii) pledged by such Loan Party as Collateral pursuant to the Security Documents;

 

(q)            Liens incurred in the ordinary course of business of Borrower or any Subsidiary of Borrower with respect to obligations that do not exceed $2,000,000 at any one time outstanding and which apply to property and/or assets with an aggregate fair market value not to exceed $2,000,000; provided that no Default or Event of Default exists and is continuing at the time such Lien is incurred or would result from the incurrence of such Lien;

 

(r)            Liens on assets arising pursuant to merger agreements, stock or asset purchase agreements and similar agreements in respect of the Asset Sales permitted pursuant to Section 6.06; provided that such Liens only attach to the assets subject to such Asset Sale;

 

(s)            Liens in the nature of the right of setoff in favor of counterparties to contractual agreements with Borrower or any Subsidiary in the ordinary course of business; and

 

(t)            Liens securing Indebtedness incurred pursuant to Section 6.01(n), provided that such Liens attach only to the Real Property purchased by Borrower with respect to which such Indebtedness was incurred and do not encumber any other property.

 

  

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Section 6.03            Sale and Leaseback Transactions.  Enter into any arrangement, directly or indirectly, with any Person whereby it shall sell or transfer any property used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property which it intends to use for substantially the same purpose or purposes as the property being sold or transferred (a “Sale and Leaseback Transaction”), except for any Sale and Leaseback Transaction on any fixed or capital assets by Borrower or any Subsidiary that is (i) permitted by Section 6.06, (ii) made for cash consideration in an amount not less than the Fair Market Value of such fixed or capital asset and (iii) consummated within 360 days after Borrower or such Subsidiary, as applicable, acquires or completes the construction of such fixed or capital asset; provided that, if such Sale and Leaseback Transaction results in a Capital Lease Obligation, such Capital Lease Obligation is permitted by Section 6.01 and any Lien made the subject of such Capital Lease Obligation is permitted by Section 6.02.

 

Section 6.04            Investments, Loans and Advances.  Directly or indirectly, lend money or credit (by way of guarantee, assumption of debt or otherwise) or make advances to any Person, or purchase or acquire any stock, bonds, notes, debentures or other obligations or securities of, or any other interest in, or make any capital contribution to, any other Person, or purchase or own a futures contract or otherwise become liable for the purchase or sale of currency or other commodities at a future date in the nature of a futures contract (all of the foregoing, collectively, “Investments”), except that the following shall be permitted:

 

(a)            the Companies may consummate the Transactions;

 

(b)            Investments outstanding on the Closing Date and identified on Schedule 6.04(b) and replacements thereof in an aggregate amount not to exceed the amount existing on the Closing Date; provided that Borrower shall notify the Administrative Agent in writing at the time it delivers the financial statements required pursuant to Section 5.01(b) hereof of any such replacements with detail thereof reasonably sufficient to the Administrative Agent (for the purposes of this clause (b), such Investments existing on the Closing Date will be valued as being equal to the fair market value of such Investments on the Closing Date, and any replacements of such Investments shall be valued as being equal to the consideration paid therefore at the time of purchase, in each case without regard to any increases or decreases in the market value thereof or any mark-ups or mark-downs in the book value thereof);

 

(c)            the Companies may (i) acquire and hold accounts receivables owing to any of them if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary terms, (ii) invest in, acquire and hold cash and Cash Equivalents, (iii) endorse negotiable instruments held for collection in the ordinary course of business or (iv) make lease, utility and other similar deposits in the ordinary course of business;

 

(d)            Hedging Obligations permitted pursuant to Section 6.01(c);

 

(e)            loans and advances to directors, employees and officers of Borrower and the Subsidiaries for bona fide business purposes, in aggregate amount not to exceed $500,000 at any time outstanding (calculated without regard to write-downs or write-offs thereof); provided that, no loans in violation of Section 402 of the Sarbanes-Oxley Act shall be permitted hereunder;

 

  

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(f)             Investments by (i) any Subsidiary that is not a Loan Party in any other Subsidiary that is not a Loan Party, (ii) any Company in Borrower or any Subsidiary Guarantor, (iii) Borrower or any Subsidiary Guarantor in any Immaterial Subsidiary solely to fund operational expenses of Immaterial Subsidiaries in the ordinary course of business in an aggregate amount not to exceed $5,000,000 at any time outstanding and Capital Expenditures (to the extent permitted by Section 6.10(b)) thereof and (iv) Borrower or any Subsidiary Guarantor in any Foreign Subsidiary to fund (x) operational expenses of Foreign Subsidiaries in the ordinary course of business so long as the aggregate balance of cash and Cash Equivalents held by all Foreign Subsidiaries at the time of such Investment does not exceed $25,000,000 and (y) Capital Expenditures (to the extent permitted by Section 6.10(b)); provided that any Investment in the form of a loan or advance shall be evidenced by the Intercompany Note and, in the case of a loan or advance by a Loan Party, pledged by such Loan Party as Collateral pursuant to the Security Documents;

 

(g)            Investments in securities of trade creditors or customers in the ordinary course of business and consistent with such Company’s past practices that are received in settlement of bona fide disputes or pursuant to any plan of reorganization or liquidation or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers;

 

(h)            mergers and consolidations in compliance with Section 6.05;

 

(i)             Investments made by Borrower or any Subsidiary as a result of consideration received in connection with an Asset Sale made in compliance with Section 6.06;

 

(j)             acquisitions of property in compliance with Section 6.07 (other than Section 6.07(a));

 

(k)            Dividends in compliance with Section 6.08;

 

(l)             other Investments in an aggregate amount not to exceed $50,000,000 on the date such Investments are made plus an amount equal to any repayments, interest, returns, profits, distributions, dividends, income and similar amounts actually received by Borrower or any of its Subsidiaries in cash in respect of any such Investment (in each case, so long as not otherwise included in the Cumulative Credit Availability); provided, that, with respect to any such Investment made by Borrower or any Subsidiary Guarantor in any Person that is not a Loan Party, the Collateral Agent shall have been granted a security interest in form and substance reasonably acceptable to the Collateral Agent on the assets acquired pursuant to such Investment;

 

(m)           Investments in an aggregate amount outstanding not to exceed the Cumulative Credit Availability as of the time such Investments were made; provided, that (i) no Default or Event of Default has occurred or is continuing or shall exist immediately thereafter as a result of such Investment and (ii) Borrower shall have delivered, no later than 7 days after the date of such Investment, an Officer’s Certificate to the Administrative Agent certifying as to compliance with the foregoing;

 

(n)            unsecured intercompany loans, by any Company to Holdings evidenced by the Intercompany Note for purposes and in amounts that would otherwise be permitted to be made as Dividends to Holdings pursuant to Sections 6.08(c)-(e); provided that the principal amount of any such loans shall reduce Dollar-for-Dollar the amounts that would otherwise be permitted to be paid for such purpose in the form of Dividends pursuant to such Section; and

 

  

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(o)            Investments in an aggregate amount not to exceed $20,000,000 at any time outstanding in joint ventures, partnerships, and similar arrangements (including foreign joint ventures), whether in corporate, partnership or other legal form, that do not constitute Subsidiaries; provided, that (i) any such joint venture, partnership or similar arrangement shall be, or shall be engaged in, a business of the type that Borrower and its Subsidiaries are permitted to be engaged in under Section 6.14, and (ii) no Default or Event of Default shall have occurred and be continuing at the time any such Investments are made or would result from the making of any such Investments.

 

Section 6.05            Mergers and Consolidations.  Wind up, liquidate or dissolve its affairs or enter into any transaction of merger or consolidation (or agree to do any of the foregoing at any time), except that the following shall be permitted:

 

(a)            dispositions of assets in compliance with Section 6.06 (other than Section 6.06(d) and Section 6.06(e));

 

(b)            Permitted Acquisitions;

 

(c)            any solvent Company (other than Borrower) may merge or consolidate with or into Borrower or any Subsidiary Guarantor (as long as Borrower or a Subsidiary Guarantor is the surviving Person in such merger or consolidation and, in the case of any Subsidiary Guarantor, remains a Wholly Owned Subsidiary of Borrower); provided that the Lien on and security interest in such property granted or to be granted in favor of the Collateral Agent under the Security Documents shall be maintained or created in accordance with the provisions of Section 5.10 or Section 5.11, as applicable; and

 

(d)            any Subsidiary may dissolve, liquidate or wind up its affairs at any time if such dissolution, liquidation or winding up is not disadvantageous to any Agent or Lender in any material respect.

 

To the extent the requisite Lenders under Section 10.02(b) waive the provisions of this Section 6.05 with respect to the sale of any Collateral, or any Collateral is sold as permitted by this Section 6.05, such Collateral (unless sold to a Company or any Affiliate thereof), but not the proceeds thereof, shall be sold free and clear of the Liens created by the Security Documents, and, so long as Borrower shall have previously provided to the Collateral Agent and the Administrative Agent such certifications or documents as the Collateral Agent and/or the Administrative Agent shall reasonably request in order to demonstrate compliance with this Section 6.05, the Collateral Agent shall take all actions it deems appropriate in order to effect the foregoing.

 

Section 6.06            Asset Sales.  Effect any Asset Sale, or agree to effect any disposition of any property, except that the following shall be permitted:

 

(a)            dispositions of obsolete property by Borrower or any of its Subsidiaries in the ordinary course of business and the abandonment or other disposition of Intellectual Property that is, in the reasonable good faith judgment of Borrower, no longer economically practicable to maintain or useful in the conduct of the business of the Companies taken as a whole;

 

(b)            other dispositions of property; provided that (i) the aggregate consideration received in respect of all dispositions of property pursuant to this clause (b) shall not exceed $50,000,000 during the term of this Agreement, (ii) such dispositions of property are made for Fair Market Value and on an arms-length commercial basis, (iii) at least 80% of the consideration payable in respect of such disposition of property is in the form of cash or Cash Equivalents, and (iv) Borrower uses the proceeds of the disposition to prepay the Loans as and to the extent required by Section 2.10(c);

 

  

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(c)            leases of real or personal property in the ordinary course of business and in accordance with the applicable Security Documents;

 

(d)            Investments in compliance with Section 6.04;

 

(e)            mergers and consolidations in compliance with Section 6.05;

 

(f)             Dividends in compliance with Section 6.08;

 

(g)            sales of inventory in the ordinary course of business and dispositions of cash and Cash Equivalents in the ordinary course of business;

 

(h)            any disposition of property that constitutes a Casualty Event;

 

(i)             any disposition of property by any Subsidiary of Borrower to Borrower or any of its  Wholly Owned Subsidiaries; provided that if the transferor of such property is a Subsidiary Guarantor, the transferee thereof must be Borrower or a Subsidiary Guarantor;

 

(j)             dispositions of Investments or receivables in connection with the compromise, settlement or collection thereof in the ordinary course of business or in bankruptcy or similar proceedings and exclusive of factoring or similar arrangements;

 

(k)            the licensing or sublicensing of intellectual property or other general intangibles and licenses, sublicenses, leases or subleases of other property in the ordinary course of business which do not materially interfere with the business of Borrower and its Subsidiaries.

 

To the extent the requisite Lenders under Section 10.02(b) waive the provisions of this Section 6.06, with respect to the sale of any Collateral, or any Collateral is sold as permitted by this Section 6.06, such Collateral (unless sold to a Company or any Affiliate thereof), but not the proceeds thereof, shall be sold free and clear of the Liens created by the Security Documents, and, so long as Borrower shall have previously provided to the Collateral Agent and the Administrative Agent such certifications or documents as the Collateral Agent and/or the Administrative Agent shall reasonably request in order to demonstrate compliance with this Section 6.06, the Collateral Agent shall take all actions it deems appropriate in order to effect the foregoing.

 

Section 6.07            Acquisitions.  Purchase or otherwise acquire (in one or a series of related transactions) any part of the property of any Person (or agree to do any of the foregoing at any time), except that the following shall be permitted:

 

(a)            Investments in compliance with Section 6.04;

 

(b)            Capital Expenditures by Borrower and the Subsidiaries shall be permitted to the extent permitted by Section 6.10(b);

 

(c)            purchases and other acquisitions of inventory, materials, equipment and intangible property in the ordinary course of business;

 

 

  

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(d)            leases or licenses of real or personal property in the ordinary course of business and in accordance with this Agreement and the applicable Security Documents;

 

(e)            Permitted Acquisitions;

 

(f)             acquisitions of leased property or franchised restaurants so long as the Acquisition Consideration in respect of such acquisitions does not exceed $5,000,000 in the aggregate in any fiscal year;

 

(g)            mergers and consolidations in compliance with Section 6.05; and

 

(h)            Dividends in compliance with Section 6.08.

 

provided that the Lien on and security interest in such property granted or to be granted in favor of the Collateral Agent under the Security Documents shall be maintained or created in accordance with the provisions of Section 5.10 or Section 5.11, as applicable.

 

Section 6.08            Dividends.  Authorize, declare or pay, directly or indirectly, any Dividends with respect to any Company (including pursuant to any Synthetic Purchase Agreement) or incur any obligation (contingent or otherwise) to do so, except that the following shall be permitted:

 

(a)            the Closing Date Dividend;

 

(b)            Dividends by any Company that is a Wholly Owned Subsidiary of Borrower to Borrower or any Subsidiary Guarantor that is a Wholly Owned Subsidiary of Borrower;

 

(c)            payments of cash, securities and/or limited partnership interests by Borrower to Holdings in an amount equal to or less than the amount of any cash, securities and/or limited partnership interests received by Borrower (i) from the sale or other disposition of any Lion Fund Interests or from Lion Fund on account of the Lion Fund Interests and (ii) from the sale or other disposition of any Cracker Barrel Shares or from Cracker Barrel on account of the Cracker Barrel Shares;

 

(d)            payments to Holdings to permit Holdings, and the substantially concurrent use of such payments by Holdings, to repurchase or redeem Qualified Capital Stock of Holdings held by officers, directors or employees or former officers, directors or employees (or their transferees, estates or beneficiaries under their estates) of any Company, upon their death, disability, retirement, severance or termination of employment or service; provided that the aggregate amount of payments to Holdings shall not exceed, in any period of 12 consecutive months, $500,000 and, in the aggregate, $1,000,000;

 

(e)            (i) to the extent actually used substantially concurrently by Holdings to pay such taxes, costs and expenses, payments by Borrower to or on behalf of Holdings in an amount sufficient to pay franchise taxes and other fees required to maintain the legal existence of Holdings and (ii) payments by Borrower to or on behalf of Holdings in an amount sufficient to pay out-of-pocket legal, accounting and filing costs and other expenses in the nature of overhead in the ordinary course of business of Holdings, in the case of clauses (i) and (ii) in an aggregate amount not to exceed $1,000,000 in any period of 12 consecutive months;

 

(f)             Permitted Tax Distributions by Borrower to Holdings, so long as Holdings uses such distributions substantially concurrently to pay its taxes;

 

  

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(g)            Dividends in an aggregate amount outstanding not to exceed the Cumulative Credit Availability as of the time such Dividends were made; provided, that (i) no Default or Event of Default has occurred or is continuing or shall exist immediately as a result of such Dividend, (ii) the Total Leverage Ratio calculated on a pro forma basis after giving effect to such Dividend shall not exceed 3.50:1.00; provided, however, this clause (ii) shall not apply with respect to the starter basket of $10,000,000 under clause (a) of the definition of Cumulative Credit Availability utilized at any time after the Closing Date to the extent not otherwise utilized under this Section 6.08(g) or under any other Section of this Agreement and (iii) Borrower shall have delivered, no later than the date of such Dividend, an Officer’s Certificate to the Administrative Agent certifying as to compliance with the foregoing (provided, however, in the case of a Dividend made under the proviso in Section 6.08(g)(ii), such Officer’s Certificate shall be delivered no later than 7 days after the date of such Dividend);

 

(h)            cash Dividends to Holdings in an aggregate amount not to exceed $10,000,000 in any fiscal year; provided that such Dividends shall only be permitted if (i) no Default or Event of Default shall have occurred and be continuing or would result therefrom, (ii) Borrower will be in pro forma compliance with the financial covenant set forth in Section 6.10(a) as of the most recent Test Period after giving effect to such Dividend (assuming, for purposes of Section 6.10(a), that the maximum Total Leverage Ratio permitted in any Test Period pursuant to Section 6.10(a) is the lower of (A) the maximum Total Leverage Ratio set forth in Section 6.10(a) for such Test Period or (B) 3.00:1.00), and (iii) after giving effect to the payment of such Dividend on a pro forma basis, the aggregate amount of (A) all unrestricted cash and Cash Equivalents of the Loan Parties and (B) undrawn and available portion of the Revolving Commitment shall be at least $10,000,000; and

 

(i)             cash Dividends paid to Holdings with proceeds of Term Loans made to Borrower as the result of an increase in the Term Loan Commitments pursuant to Section 2.19 in an amount not to exceed $15,000,000, if after giving effect to the payment of such Dividend on a pro forma basis, the aggregate amount of (i) all unrestricted cash and Cash Equivalents of the Loan Parties and (ii) undrawn and available portion of the Revolving Commitment shall be at least $10,000,000;

 

provided that the amount of Dividends that may be made for a particular purpose pursuant to Sections 6.08(c)-(e) shall be reduced Dollar-for-Dollar by the amount of any such payments made for such purpose in the form of an intercompany loan by Borrower or one of its Subsidiaries to Holdings pursuant to Section 6.04(n).

 

Section 6.09            Transactions with Affiliates.  Enter into, directly or indirectly, any transaction or series of related transactions, whether or not in the ordinary course of business, with any Affiliate of any Company (other than between or among Borrower and one or more Subsidiary Guarantors), other than on terms and conditions at least as favorable to such Company as would reasonably be obtained by such Company at that time in a comparable arm’s-length transaction with a Person other than an Affiliate, except that the following shall be permitted:

 

(a)            Dividends permitted by Section 6.08;

 

(b)            Investments permitted by Section 6.04(e), (f), (h), (i), (j) and (n);

 

(c)            reasonable and customary director, officer and employee compensation (including bonuses) and other benefits (including retirement, health, stock option and other benefit plans) and indemnification arrangements, in each case approved by the Board of Directors of the applicable Company;

 

  

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(d)            the Transactions;

 

(e)            any issuance of Equity Interests (other than Disqualified Capital Stock) of Borrower to Affiliates of Borrower; and

 

(f)             any transaction with suppliers or franchisees in the ordinary course of business that are on substantially similar terms to those contained in similar transactions by Borrower or any of its Subsidiaries with unaffiliated suppliers and franchisees consistent with past practice.

 

Section 6.10            Financial Covenants.

 

(a)            Maximum Total Net Leverage Ratio.  Prior to the Revolving Maturity Date, permit the Total Net Leverage Ratio, as of the last day of any fiscal quarter ending nearest to any Test Period End Date set forth in the table below, to exceed the ratio set forth opposite such Test Period in the table below:

 

	
Test Period End Date

	
Total Net Leverage Ratio

	
March 31, 2014

	
5.75 to 1.0

	
June 30, 2014

	
5.75 to 1.0

	
September 30, 2014

	
5.75 to 1.0

	
December 31, 2014

	
5.75 to 1.0

	
March 31, 2015

	
5.25 to 1.0

	
June 30, 2015

	
5.25 to 1.0

	
September 30, 2015

	
5.25 to 1.0

	
December 31, 2015

	
5.25 to 1.0

	
March 31, 2016

	
4.75 to 1.0

	
June 30, 2016

	
4.75 to 1.0

	
September 30, 2016

	
4.75 to 1.0

	
December 31, 2016

	
4.75 to 1.0

	
March 31, 2017

	
4.25 to 1.0

	
June 30, 2017

	
4.25 to 1.0

	
September 30, 2017

	
4.25 to 1.0

	
December 31, 2017

	
4.25 to 1.0

	
March 31, 2018

	
3.75 to 1.0

	
June 30, 2018

	
3.75 to 1.0

	
September 30, 2018

	
3.75 to 1.0

	
December 31, 2018

	
3.75 to 1.0

 

(b)            Limitation on Capital Expenditures.  Permit the aggregate amount of Capital Expenditures made during any fiscal year to exceed the applicable amount set forth below (the “Base Amount”):

 

(i)                $30,000,000 in the case of the fiscal year ending September 24, 2014; or

 

(ii)               $17,500,000 in the case of any fiscal year thereafter;

 

provided, however, that (i) if the aggregate amount of Capital Expenditures made in any fiscal year shall be less than the Base Amount for such fiscal year (before giving effect to any carryover), then an amount of such shortfall in the immediately preceding fiscal year (without giving effect to clause (iii) below) may, so long as no Default or Event of Default has occurred and is then continuing, be added to the Base Amount for the immediately succeeding (but not any other) fiscal year, (ii) in determining whether any amount is available for carryover, the amount expended in any fiscal year shall first be deemed to be expended from the Base Amount (before giving effect to any carryover) and (iii) the Base Amount for any fiscal year shall be increased by the then applicable Cumulative Credit Availability.

 

  

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Section 6.11            Prepayments of Other Indebtedness; Modifications of Organizational Documents, Acquisition and Certain Other Documents, etc.  Directly or indirectly:

 

(a)            (including pursuant to any Synthetic Purchase Agreement) make or offer to make (or give any notice in respect thereof) any voluntary or optional payment or prepayment on or redemption, retirement, defeasance, or acquisition for value of, or any prepayment or redemption as a result of any asset sale, change of control or similar event of, any Subordinated Indebtedness, other than any payments of Subordinated Indebtedness in an amount not to exceed the Cumulative Credit Availability as of the time such payment was made; provided, that (i) no Default or Event of Default has occurred or is continuing or shall exist immediately as a result of such payment, (ii) the Total Leverage Ratio calculated on a pro forma basis after giving effect to such payment shall not exceed 3.50:1.00 and (iii) Borrower shall have delivered, no later than the date of such payment, an Officer’s Certificate to the Administrative Agent certifying as to compliance with the foregoing; or

 

(b)            terminate, amend, modify (including electing to treat any Pledged Interests (as defined in the Security Agreement) as a “security” under Section 8-103 of the UCC) or change any of its Organizational Documents (including by the filing or modification of any certificate of designation) or any agreement to which it is a party with respect to its Equity Interests (including any stockholders’ agreement), or enter into any new agreement with respect to its Equity Interests, other than any such amendments, modifications or changes or such new agreements which are not, and could not reasonably be expected to be, adverse in any material respect to the interests of any Agent or Lender.

 

Section 6.12            Limitation on Certain Restrictions on Subsidiaries.  Directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance, restriction or condition on the ability of any Subsidiary to (i) pay Dividends or make any other distributions on its Equity Interests or any other interest or participation in its profits owned by any Company, or pay any Indebtedness owed to any Company, (ii) make loans or advances to any Company or (iii) transfer any of its properties to any Company, except for such encumbrances, restrictions or conditions existing under or by reason of:

 

(a)            applicable Legal Requirements;

 

(b)            this Agreement and the other Loan Documents;

 

(c)            customary provisions restricting subletting or assignment of any lease governing a leasehold interest of a Subsidiary;

 

(d)            customary provisions restricting assignment of any agreement entered into by a Subsidiary in the ordinary course of business;

 

(e)            customary restrictions and conditions contained in any agreement relating to the sale or other disposition of any property pending the consummation of such sale; provided that (i) such restrictions and conditions apply only to the property to be sold, and (ii) such sale or other disposition is permitted hereunder; or

 

  

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(f)            agreements listed on Schedule 6.12 and any amendments, restatements, modifications, renewals, supplements, refundings, replacements or refinancings of those agreements; provided that the amendments, restatements, modifications, renewals, supplements, refundings, replacements or refinancings are not materially more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in those agreements on the Closing Date (as determined in good faith by Borrower).

 

Section 6.13            Limitation on Issuance of Capital Stock.  With respect to Borrower or any Subsidiary, issue any Equity Interest (including by way of sales of treasury stock) or any options or warrants to purchase, or securities convertible into, any Equity Interest, except (i) for stock splits, stock dividends and additional issuances of Equity Interests which do not decrease the percentage ownership of Borrower or any Subsidiaries in any class of the Equity Interests of such Subsidiary, (ii) Subsidiaries of Borrower formed or acquired after the Closing Date in accordance with Section 6.14 may issue Equity Interests to Borrower or the Wholly Owned Subsidiary of Borrower which is to own such Equity Interests, and (iii) Borrower may issue common stock that is Qualified Capital Stock to Holdings.  All Equity Interests issued in accordance with this Section 6.13(b) shall, to the extent required by Sections 5.11 and 5.12 or any Security Document, be delivered to the Collateral Agent for pledge pursuant to the applicable Security Document.

 

Section 6.14            Business.  With respect to Borrower and its Subsidiaries, engage (directly or indirectly) in any businesses other than those businesses in which Borrower and its Subsidiaries are engaged on the Closing Date as described in the Confidential Information Memorandum (or which are substantially related thereto or are reasonable extensions thereof).

 

Section 6.15            Limitation on Accounting Changes.  Make or permit, any material change in accounting policies or reporting practices, without the consent of the Required Lenders, which consent shall not be unreasonably withheld, except (a) changes that are required by GAAP or (b) to implement IFRS (subject in each case to the provisions of Section 1.04).

 

Section 6.16            Fiscal Periods.  Change its fiscal year-end (a 52- or 53- week fiscal year) to a date other than the last Wednesday in September of each calendar year or change its fiscal quarter ends to dates other than the last Wednesday of the applicable fiscal quarter (the first, third, and fourth fiscal quarters contain 12 weeks (or 13 weeks in the fourth fiscal quarter in a 53-week fiscal year) and the second fiscal quarter contains 16 weeks), except that in the event Holdings changes its fiscal year and fiscal quarter ends to calendar year and calendar quarter ends, the Companies shall be permitted to change their fiscal year and fiscal quarter ends accordingly.

 

Section 6.17            No Further Negative Pledge.  Enter into any agreement, instrument, deed or lease which prohibits or limits the ability of any Company to create, incur, assume or suffer to exist any Lien upon any of its properties or assets, whether now owned or hereafter acquired, or which requires the grant of any security for an obligation if security is granted for another obligation, except the following:  (a) this Agreement and the other Loan Documents; (b) covenants in documents creating Liens permitted by Section 6.02 prohibiting further Liens (other than Liens permitted under Section 6.02(l)) on the properties encumbered thereby; (c) any prohibition or limitation that (i) exists pursuant to applicable Legal Requirements, or (ii) consists of customary restrictions and conditions contained in any agreement relating to the sale of any property pending the consummation of such sale; provided that (1) such restrictions apply only to the property to be sold and such sale is permitted hereunder, and (2) such sale is permitted hereunder, or (iii) restricts subletting or assignment of any lease governing a leasehold interest of Borrower or one of its Subsidiaries; (d) prohibitions and limitations contained in any agreement to which a Subsidiary is a party that was in effect at the time such Subsidiary became a Subsidiary of a Borrower, so long as such agreement was not entered into in anticipation or contemplation of such Person becoming a Subsidiary and such prohibitions and limitations only relate to such Subsidiary; (e) customary non-assignment provisions in customer contracts and licenses of (or any other grants of rights to use) Intellectual Property, in each case entered into in the ordinary course of business; and (f) is imposed by any amendments that are otherwise permitted by the Loan Documents of the contracts, instruments or obligations referred to in this Section 6.17; provided that such amendments are no more restrictive with respect to the prohibitions and limitations in such contracts, instruments or obligations as in effect prior to any such amendment.

 

  

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Section 6.18            Anti-Terrorism Law; Anti-Money Laundering.

 

(a)            Directly or indirectly, (i) knowingly conduct any business or engage in making or receiving any contribution of funds, goods or services to or for the benefit of any Person described in Section 3.21, (ii) knowingly deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order or any other Anti-Terrorism Law, or (iii) knowingly engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law (and the Companies shall deliver to the Lenders any certification or other evidence requested from time to time by any Lender in its reasonable discretion, confirming the Companies’ compliance with this Section 6.18).

 

(b)            Cause or permit any of the funds of such Company that are used to repay the Credit Extensions to be derived from any unlawful activity with the result that the making of the Credit Extensions would be in violation of Legal Requirements.

 

Section 6.19            Embargoed Person.  Cause or permit (a) any of the funds or properties of the Companies that are used to repay the Loans or other Credit Extensions to constitute property of, or be beneficially owned directly or indirectly by, any Person subject to sanctions or trade restrictions under United States law (“Embargoed Person” or “Embargoed Persons”) that is identified on (1) the “List of Specially Designated Nationals and Blocked Persons” maintained by OFAC and/or on any other similar list maintained by OFAC pursuant to any authorizing statute including the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Order or regulation promulgated thereunder, with the result that the investment in the Companies (whether directly or indirectly) is prohibited by applicable Legal Requirements, or the Loans or other Credit Extensions made by the Lenders and the Issuing Bank would be in violation of Legal Requirements, or (2) the Executive Order, any related enabling legislation or any other similar executive orders (the Legal Requirements referred to in clauses (1) and (2), collectively, “Sanctions Laws”), (b) any Embargoed Person to have any direct or indirect interest, of any nature whatsoever in the Companies, with the result that the investment in the Companies (whether directly or indirectly) is prohibited by applicable Legal Requirements or the Credit Extensions are in violation of applicable Legal Requirements or (c) any Company to conduct any business or engage in any action that is in violation of any Sanctions Law.

 

ARTICLE VII

GUARANTEE

 

Section 7.01            The Guarantee.  The Subsidiary Guarantors hereby, jointly and severally, guarantee, as primary obligors and not as sureties, to each Secured Party and their respective successors and assigns, the prompt payment and performance in full when due (whether at stated maturity, by required prepayment, declaration, demand, by acceleration or otherwise) of the principal of, and premium and interest (including any interest, fees, costs or charges that would accrue but for the provisions of the Bankruptcy Code after any bankruptcy or insolvency petition under Title 11 of the Bankruptcy Code) on the Loans made by the Lenders to, and the Notes held by each Lender of, Borrower, and all other Secured Obligations (provided, however that, with respect to each Subsidiary Guarantor, subject to Section 7.11, Hedging Obligations guaranteed by such Subsidiary Guarantor shall exclude all Excluded Swap Obligations) from time to time owing to the Secured Parties by any Loan Party in each case strictly in accordance with the terms thereof (such obligations being herein collectively called the “Guaranteed Obligations”).  The Subsidiary Guarantors hereby jointly and severally agree that if Borrower or other Subsidiary Guarantor(s) shall fail to pay in full when due (whether at stated maturity, by acceleration or otherwise) any of the Guaranteed Obligations, the Subsidiary Guarantors will promptly pay the same in cash, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Guaranteed Obligations, the same will be promptly paid in full when due (whether at extended maturity, by acceleration or otherwise) in accordance with the terms of such extension or renewal.

 

  

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Section 7.02            Obligations Unconditional.  The obligations of the Subsidiary Guarantors under Section 7.01 shall constitute a guaranty of payment and performance and not of collection and to the fullest extent permitted by applicable Legal Requirements, are primary, absolute, irrevocable and unconditional, joint and several, irrespective of the value, genuineness, validity, regularity or enforceability of the Guaranteed Obligations under this Agreement, the Notes, if any, or any other agreement or instrument referred to herein or therein, or any substitution, release or exchange of any other guarantee of or security for any of the Guaranteed Obligations, and, irrespective of any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a surety or Subsidiary Guarantor (except for payment in full of the Guaranteed Obligations).  Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not alter or impair the liability of the Subsidiary Guarantors hereunder which shall remain absolute, irrevocable and unconditional under any and all circumstances as described above:

 

(a)            at any time or from time to time, without notice to the Subsidiary Guarantors, the time for any performance of or compliance with any of the Guaranteed Obligations shall be extended, or such performance or compliance shall be waived;

 

(b)            any of the acts mentioned in any of the provisions of this Agreement, the other Loan Documents or the Notes, if any, or any other agreement or instrument referred to herein or therein shall be done or omitted;

 

(c)            the maturity of any of the Guaranteed Obligations shall be accelerated, or any of the Guaranteed Obligations shall be amended in any respect, or any right under the Loan Documents or any other agreement or instrument referred to herein or therein shall be amended or waived in any respect or any other guarantee of any of the Guaranteed Obligations or any security therefor shall be released or exchanged in whole or in part or otherwise dealt with;

 

(d)            any Lien or security interest granted to, or in favor of, any Secured Party as security for any of the Guaranteed Obligations shall fail to be valid, perfected or to have the priority required under the Loan Documents; or

 

(e)            the release of any other Subsidiary Guarantor pursuant to Section 7.09.

 

The Subsidiary Guarantors hereby expressly waive diligence, presentment, demand of payment, protest and all notices whatsoever, and any requirement that any Secured Party exhaust any right, power or remedy or proceed against Borrower or any Subsidiary Guarantor under this Agreement or the Notes, if any, or any other agreement or instrument referred to herein or therein, or against any other Person under any other guarantee of, or security for, any of the Guaranteed Obligations.  The Subsidiary Guarantors waive any and all notice of the creation, renewal, extension, waiver, termination or accrual of any of the Guaranteed Obligations and notice of or proof of reliance by any Secured Party upon this Guarantee or acceptance of this Guarantee, and the Guaranteed Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred in reliance upon this Guarantee, and all dealings between Borrower and the Secured Parties shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guarantee.  This Guarantee shall be construed as a continuing, absolute, irrevocable and unconditional guarantee of payment and performance without regard to any right of offset with respect to the Guaranteed Obligations at any time or from time to time held by the Secured Parties, and the obligations and liabilities of the Subsidiary Guarantors hereunder shall be primary and shall not be conditioned or contingent upon the pursuit by the Secured Parties or any other Person at any time of any right or remedy against Borrower or against any other Person which may be or become liable in respect of all or any part of the Guaranteed Obligations or against any collateral security or guarantee therefor or right of offset with respect thereto.  This Guarantee shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon the Subsidiary Guarantors and their respective successors and assigns, and shall inure to the benefit of the Secured Parties, and their respective successors and assigns, notwithstanding that from time to time during the term of this Agreement there may be no Guaranteed Obligations outstanding.

 

  

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Section 7.03            Reinstatement.  The obligations of the Subsidiary Guarantors under this Article VII shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of Borrower or other Loan Party in respect of the Guaranteed Obligations is rescinded or must be otherwise restored by any holder of any of the Guaranteed Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise.

 

Section 7.04            Subrogation; Subordination.  Each Subsidiary Guarantor hereby agrees that until the indefeasible payment and satisfaction in full in cash of all Guaranteed Obligations and the expiration and termination of the Commitments of the Lenders under this Agreement it shall waive any claim and shall not exercise any right or remedy, direct or indirect, arising by reason of any performance by it of its guarantee in Section 7.01, whether by subrogation or otherwise, against Borrower or any other Subsidiary Guarantor of any of the Guaranteed Obligations or any security for any of the Guaranteed Obligations.  Any Indebtedness of any Loan Party permitted pursuant to Section 6.04(f) shall be subordinated to such Loan Party’s Secured Obligations in the manner set forth in the Intercompany Note evidencing such Indebtedness.

 

Section 7.05            Remedies.  The Subsidiary Guarantors jointly and severally agree that, as between the Subsidiary Guarantors and the Lenders, the obligations of Borrower under this Agreement and other Loan Documents may be declared to be forthwith due and payable as provided in Article VIII (and shall be deemed to have become automatically due and payable in the circumstances provided in Article VIII) for purposes of Section 7.01, notwithstanding any stay, injunction or other prohibition preventing such declaration (or such obligations from becoming automatically due and payable) as against Borrower and that, in the event of such declaration (or such obligations being deemed to have become automatically due and payable), such obligations (whether or not due and payable by Borrower) shall forthwith become due and payable by the Subsidiary Guarantors for purposes of Section 7.01.

 

Section 7.06            Instrument for the Payment of Money.  Each Subsidiary Guarantor hereby acknowledges that the guarantee in this Article VII constitutes an instrument for the payment of money, and consents and agrees that any Lender or Agent, at its sole option, in the event of a dispute by such Subsidiary Guarantor in the payment of any moneys due hereunder, shall have the right to bring a motion-action under New York CPLR Section 3213.

 

  

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Section 7.07            Continuing Guarantee.  The guarantee in this Article VII is a continuing guarantee of payment and performance, and shall apply to all Guaranteed Obligations whenever arising.

 

Section 7.08            General Limitation on Guarantee Obligations.  In any action or proceeding involving any state corporate limited partnership or limited liability company law, or any applicable state, federal or foreign bankruptcy, insolvency or reorganization law or other Legal Requirement affecting the rights of creditors generally, if the obligations of any Subsidiary Guarantor under Section 7.01 would otherwise be held or determined to be void, voidable, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of the amount of its liability under Section 7.01, then, notwithstanding any other provision to the contrary, the amount of such liability shall, without any further action by such Subsidiary Guarantor, any Loan Party or any other Person, be automatically limited and reduced to the highest amount (after giving effect to the rights of subrogation and contribution established in Sections 7.04 and 7.10, respectively) that is valid and enforceable, not void or voidable and not subordinated to the claims of other creditors as determined in such action or proceeding.

 

Section 7.09            Release of Guarantors.  If, in compliance with the terms and provisions of the Loan Documents, (i) all of the Equity Interests or (ii) all or substantially all of the property of any Subsidiary Guarantor are sold or otherwise transferred (a “Transferred Guarantor”) to a Person or Persons (other than any Company or any Affiliate thereof), such Transferred Guarantor shall, upon the consummation of such sale or transfer, be automatically released from its obligations under this Agreement (including under Section 10.03) and its obligations to pledge and grant any Collateral owned by it pursuant to any Security Document and, in the case of the sale of all of the Equity Interests of the Transferred Guarantor, the pledge of such Equity Interests to the Collateral Agent pursuant to the Security Documents shall be released, and, so long as Borrower shall have previously provided the Collateral Agent and the Administrative Agent such certifications or documents the Collateral Agent and/or the Administrative Agent as shall reasonably request, the Collateral Agent shall take, and the Lenders hereby irrevocably authorize the Collateral Agent to take, such actions as are necessary to effect each release described in this Section 7.09 in accordance with the relevant provisions of the Security Documents.

 

Section 7.10            Right of Contribution.  Each Subsidiary Guarantor hereby agrees that to the extent that a Subsidiary Guarantor shall have paid more than its proportionate share of any payment made hereunder, such Subsidiary Guarantor shall be entitled to seek and receive contribution from and against any other Subsidiary Guarantor hereunder which has not paid its proportionate share of such payment.  Each Subsidiary Guarantor’s right of contribution shall be subject to the terms and conditions of Section 7.04.  The provisions of this Section 7.10 shall in no respect limit the obligations and liabilities of any Subsidiary Guarantor to the Administrative Agent, the Issuing Bank, the Swingline Lender and the Lenders, and each Subsidiary Guarantor shall remain liable to the Administrative Agent, the Issuing Bank, the Swingline Lender and the Lenders for the full amount guaranteed by such Subsidiary Guarantor hereunder.

 

Section 7.11            Qualified ECP Guarantors.  Each Qualified ECP Guarantor hereby jointly and severally absolutely, unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from time to time by each other Loan Party to honor all of its obligations under this Article VII in respect of Hedging Obligations that constitute Secured Obligations (provided, however, that each Qualified ECP Guarantor shall only be liable under this Section 7.11 for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 7.11, or otherwise under this Article VII, voidable under applicable Legal Requirements relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount).  The obligations of each Qualified ECP Guarantor under this Section 7.11 shall remain in full force and effect until the termination of the Guaranteed Obligations.  Each Qualified ECP Guarantor intends that this Section 7.11 constitute, and this Section 7.11 shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of each other Loan Party for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

 

  

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ARTICLE VIII

EVENTS OF DEFAULT

 

Section 8.01            Events of Default.  Upon the occurrence and during the continuance of any of the following events (each, an “Event of Default”):

 

(a)            default shall be made in the payment of any principal of any Loan or any Reimbursement Obligation when and as the same shall become due and payable, whether at the due date thereof (including a Term Loan Repayment Date) or at a date fixed for prepayment (whether voluntary or mandatory) thereof or by acceleration thereof or otherwise;

 

(b)            default shall be made in the payment of any interest on any Credit Extension or any Fee or any other amount (other than an amount referred to in paragraph (a) above) due under any Loan Document, when and as the same shall become due and payable, whether at the due date thereof (including an Interest Payment Date) or at a date fixed for prepayment (whether voluntary or mandatory) or by acceleration or demand thereof or otherwise, and such default shall continue unremedied for a period of three Business Days;

 

(c)            any representation or warranty made or deemed made in or in connection with any Loan Document or the borrowings of Loans or issuances of Letters of Credit hereunder, or any representation, warranty, statement or information contained in any report, certificate, financial statement or other instrument furnished in connection with or pursuant to any Loan Document, shall prove to have been false or misleading in any material respect when so made, deemed made or furnished;

 

(d)            default shall be made in the due observance or performance by any Company of any covenant, condition or agreement contained in Sections 5.01, 5.02, 5.03(a), 5.04(a), 5.08, 5.11 or 5.15 or in Article VI; provided, that, any Financial Covenant Default shall not constitute an Event of Default with respect to the Term Loans until the date on which any Revolving Loans have been declared by the Administrative Agent to be due and payable pursuant to this Article 8 on account of a Financial Covenant Default;

 

(e)            default shall be made in the due observance or performance by any Company of any covenant, condition or agreement contained in any Loan Document (other than those specified in paragraphs (a), (b) or (d) immediately above) and such default shall continue unremedied or shall not be waived for a period of 30 days (or 10 Business Days in the case of the Fee Letter) after the occurrence thereof;

 

(f)            any Company shall (i) fail to pay any principal or interest, regardless of amount, due in respect of any Indebtedness (other than the Obligations), when and as the same shall become due and payable beyond any applicable grace period, or (ii) fail to observe or perform any other term, covenant, condition or agreement contained in any agreement or instrument evidencing or governing any such Indebtedness beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness was created if the effect of any failure referred to in this clause (ii) is to cause, or to permit the holder or holders of such Indebtedness or a trustee or other representative on its or their behalf (with or without the giving of notice, the lapse of time or both) to cause, such Indebtedness to become due prior to its stated maturity or become subject to a mandatory offer to purchase by the obligor; provided that it shall not constitute an Event of Default pursuant to this paragraph (f) unless the aggregate amount of all such Indebtedness referred to in clauses (i) and (ii) exceeds $7,500,000 at any one time; and provided, further, that any Financial Covenant Default shall not constitute an Event of Default with respect to the Term Loans until the date on which any Revolving Loans have been declared by the Administrative Agent to be due and payable pursuant to this Article 8 on account of a Financial Covenant Default;

 

  

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(g)            an Insolvency Proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of any Company or of a substantial part of the property of any Company, under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal, state or foreign bankruptcy, insolvency, receivership or similar Legal Requirement, (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator, liquidator, rehabilitator or similar official for any Company or for a substantial part of the property of any Company, or (iii) the winding-up or liquidation of any Company; and such proceeding or petition shall continue undismissed for 60 days or an Order approving or ordering any of the foregoing shall be entered;

 

(h)            any Company shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal, state or foreign bankruptcy, insolvency, receivership or similar Legal Requirement, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any Insolvency Proceeding or the filing of any petition described in clause (g) above, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator, liquidator, rehabilitator or similar official for any Company or for a substantial part of the property of any Company, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors, (vi) become unable, admit in writing its inability or fail generally to pay its debts as they become due, (vii)  wind up or liquidate, or (viii) take any action for the purpose of effecting any of the foregoing;

 

(i)            one or more Orders for the payment of money in an aggregate amount in excess of $7,500,000 (that are not covered by insurance from an unaffiliated insurance company with an A.M. Best financial strength rating of at least A-, it being understood that even if such amounts are covered by insurance from such an insurance company, such amounts shall count against such basket if responsibility for such amounts has been denied by such insurance company or such insurance company has not been promptly notified of such amounts or such insurance company is not participating in the defense thereof with customary diligence (as reasonably determined by the Administrative Agent)) shall be rendered against any Company or any combination thereof and the same shall remain unpaid, undischarged, unvacated or unbonded for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to levy upon properties of any Company to enforce any such Order;

 

(j)            one or more ERISA Events, or any events with respect to any Foreign Plan, shall have occurred that, when taken together with all other such ERISA Events, or any other events with respect to any Foreign Plan, that have occurred, could reasonably be expected to result in liability of any Company or any of its ERISA Affiliates in an aggregate amount exceeding $3,500,000 or the imposition of a Lien on any properties of a Company;

 

(k)            any security interest and Lien purported to be created by any Security Document shall cease to be in full force and effect, or shall cease to give the Collateral Agent, for the benefit of the Secured Parties, the Liens, rights, powers and privileges purported to be created and granted under such Security Documents (including a valid, enforceable, perfected first priority security interest in and Lien on, all of the Collateral thereunder (except as otherwise expressly provided in this Agreement or such Security Document and except for any failure to perfect a security interest caused by the Collateral Agent’s gross negligence or willful misconduct)) in favor of the Collateral Agent, or shall be asserted by or on behalf of any Company not to be, a valid, enforceable, perfected, first priority (except as otherwise expressly provided in this Agreement or such Security Document) security interest in or Lien on the Collateral covered thereby; provided that it shall not be an Event of Default under this paragraph (k) if the Collateral Agent shall not have, or shall cease to have, a valid, enforceable and perfected first priority security interest in or Lien on any Collateral purported to be covered by the Security Documents that (i) has a Fair Market Value, individually or in the aggregate, of less than $1,000,000 and (ii) is not material to the operations or the businesses of the Companies, taken as a whole, in each case as determined by the Collateral Agent in its reasonable discretion;

 

  

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(l)            any Loan Document or any material provisions thereof shall at any time and for any reason be declared by a court of competent jurisdiction to be null and void, or a proceeding shall be commenced by or on behalf of any Loan Party or any other Person, or by any Governmental Authority, seeking to establish the invalidity or unenforceability thereof (exclusive of questions of interpretation of any provision thereof), or any Company (directly or indirectly) shall repudiate, revoke, terminate or rescind (or purport to do any of the foregoing) or deny any portion of its liability or obligation for the Obligations; or

 

(m)            there shall have occurred a Change in Control; or

 

(n)            any Company shall be prohibited or otherwise restrained from conducting the business theretofore conducted by it in any manner that has, or could reasonably be expected to result in, a Material Adverse Effect by virtue of any determination, ruling, decision or Order of any court or Governmental Authority of competent jurisdiction;

 

then, and in every such event (other than an event with respect to Borrower described in paragraph (g) or (h) above), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to Borrower, take either or both of the following actions, at the same or different times:  (i) terminate forthwith the Commitments; (ii) declare the Loans and Reimbursement Obligations then outstanding to be forthwith due and payable in whole or in part, whereupon the principal of the Loans and Reimbursement Obligations so declared to be due and payable, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Loan Parties accrued hereunder and under any other Loan Document, shall become forthwith due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Loan Parties, anything contained herein or in any other Loan Document or otherwise to the contrary notwithstanding; and (iii) exercise any and all of its other rights and remedies under applicable Legal Requirements, hereunder and under the other Loan Documents; and in any event with respect to Borrower described in paragraph (g) or (h) above, the Commitments shall automatically terminate and the principal of the Loans and Reimbursement Obligations then outstanding, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Loan Parties accrued hereunder and under any other Loan Document, shall automatically become due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Loan Parties, anything contained herein or in any other Loan Document or otherwise to the contrary notwithstanding.

 

In addition, without limiting the foregoing, in the event of a foreclosure (or other similar exercise of remedies) by Collateral Agent on any of the Collateral pursuant to a public or private sale or other disposition, the Collateral Agent, the Administrative Agent or any Secured Party may be the purchaser of any or all of such Collateral at any such sale or other disposition and, in addition, the Collateral Agent or the Administrative Agent, as agent for and representative of all of Secured Parties (but not any Lender or Lenders in its or their respective individual capacities unless Required Lenders shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such sale or other disposition, to use and apply any of the Obligations as a credit on account of the purchase price for any Collateral payable by Collateral Agent at such sale.

 

  

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Section 8.02            Rescission

 

.  If at any time after termination of the Commitments or acceleration of the maturity of the Loans, the Loan Parties shall pay all arrears of interest and all payments on account of principal of the Loans and Reimbursement Obligations owing by them that shall have become due otherwise than by acceleration (with interest on principal and, to the extent permitted by law, on overdue interest, at the rates specified herein) and all Defaults (other than non-payment of principal of and accrued interest on the Loans due and payable solely by virtue of acceleration) shall be remedied or waived pursuant to Section 10.02, then upon the written consent of the Required Lenders (which may be given or withheld in their sole discretion) and written notice to Borrower, the termination of the Commitments or the acceleration and their consequences may be rescinded and annulled; but such action shall not affect any subsequent Default or Event of Default or impair any right or remedy consequent thereon.  The provisions of the preceding sentence are intended merely to bind the Lenders, the Issuing Bank and the other Secured Parties to a decision that may be made at the election of the Required Lenders, and such provisions are not intended to benefit Borrower or any of the other Loan Parties and do not give Borrower and/or any of the Loan Parties the right to require the Lenders to rescind or annul any acceleration hereunder, even if the conditions set forth herein are met.

 

Section 8.03            [Reserved]

 

Section 8.04            Application of Proceeds.  The proceeds received by the Collateral Agent in respect of any sale of, collection from or other realization upon all or any part of the Collateral pursuant to the exercise by the Collateral Agent of its remedies shall be applied, in full or in part, together with any other sums then held by the Collateral Agent pursuant to this Agreement or any other Loan Document, promptly by the Collateral Agent as follows:

 

(a)            First, to the indefeasible payment in full in cash of all costs and expenses, fees, commissions and taxes of such sale, collection or other realization (including compensation to the Collateral Agent, the Administrative Agent and their respective agents and counsel, and all expenses, liabilities and advances made or incurred by the Collateral Agent and the Administrative Agent in connection therewith and all amounts for which the Collateral Agent and the Administrative Agent is entitled to indemnification pursuant to the provisions of any Loan Document), together with interest on each such amount at the highest rate then in effect under this Agreement from and after the date such amount is due, owing or unpaid until paid in full;

 

(b)            Second, to the indefeasible payment in full in cash of all other reasonable costs and expenses of such sale, collection or other realization (including compensation to the other Secured Parties and their agents and counsel and all costs, liabilities and advances made or incurred by the other Secured Parties in connection therewith), together with interest on each such amount at the highest rate then in effect under this Agreement from and after the date such amount is due, owing or unpaid until paid in full;

 

(c)            Third, without duplication of amounts applied pursuant to clauses (a) and (b) above, to the indefeasible payment in full in cash, pro rata, of interest and other amounts constituting Obligations in respect of the Credit Facilities (other than principal, Reimbursement Obligations and obligations to Cash Collateralize Letters of Credit) in each case equally and ratably in accordance with the respective amounts thereof then due and owing (it being agreed that, for purposes of applying this clause (c), all interest and all other amounts described herein will be deemed payable in accordance with this Agreement regardless of whether such claims are allowed in any proceeding described in Section 8.01(g) or (h));

 

  

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(d)            Fourth, to the indefeasible payment in full in cash of Secured Obligations of the type specified in clause (b) or (c) of the definition of Secured Obligations then due and owing and the principal amount of the Obligations in respect of the Credit Facilities (including Reimbursement Obligations and obligations to Cash Collateralize Letters of Credit), pro rata;

 

(e)            Fifth, to the indefeasible payment in full in cash of the remaining Secured Obligations then due and owing, pro rata; and

 

(f)            Sixth, the balance, if any, to the Person lawfully entitled thereto (including the applicable Loan Party or its successors or assigns) or as a court of competent jurisdiction may direct.

 

In the event that any such proceeds are insufficient to pay in full the items described in clauses (a) through (f) above, the Loan Parties shall remain liable, jointly and severally, for any deficiency.

 

ARTICLE IX

THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT

 

Section 9.01            Appointment.  (a)  Each Lender and the Issuing Bank hereby irrevocably designates and appoints each of the Administrative Agent and the Collateral Agent as an agent of such Lender under this Agreement and the other Loan Documents and the Administrative Agent and the Collateral Agent hereby accept such designations and appointments.  Each Lender and each Issuing Bank irrevocably authorizes each Agent, in such capacity, through its agents or employees, to take such actions on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are delegated to such Agent by the terms of this Agreement and the other Loan Documents, together with such actions and powers as are reasonably incidental thereto.  The provisions of this Article IX are solely for the benefit of the Agents, the Lenders and the Issuing Bank, and no Loan Party shall have rights as a third party beneficiary of any such provisions.  Without limiting the generality of the foregoing, the Agents are hereby expressly authorized to execute any and all documents (including releases) with respect to the Collateral and any rights of the Secured Parties with respect thereto as contemplated by and in accordance with the provisions of this Agreement and the other Loan Documents.  In performing its functions and duties hereunder, each Agent shall act solely as an agent of the Lenders and does not assume and shall not be deemed to have assumed any obligation towards or relationship of agency or trust with or for Borrower or any of its Subsidiaries.  Without limiting the generality of the foregoing, the use of the term “agent” in this Agreement with reference to the Administrative Agent or the Collateral Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law.  Instead, such term is used merely as a matter of market custom and is intended to create or reflect only an administrative relationship between independent contracting parties.

 

(b)            Each Lender and the Issuing Bank hereby irrevocably authorizes the Administrative Agent, based upon the instruction of the Required Lenders, to credit bid and purchase (either directly or through one or more acquisition vehicles) all or any portion of the Collateral at any sale thereof conducted by Collateral Agent under the provisions of the UCC, including pursuant to Sections 9-610 or 9-620 of the UCC (or any equivalent provision of the UCC), at any sale thereof conducted under the provisions of the Bankruptcy Code, including Section 363 of the Bankruptcy Code, or at any other sale or foreclosure conducted by Collateral Agent (whether by judicial action or otherwise) in accordance with applicable Legal Requirements.

 

  

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(c)            Each Lender irrevocably appoints each other Lender as its agent and bailee for the purpose of perfecting Liens (whether pursuant to Section 8-301(a)(2) of the UCC or otherwise), for the benefit of the Secured Parties, in assets in which, in accordance with the UCC or any other applicable Legal Requirement a security interest can be perfected by possession or control.  Should any Lender (other than the Collateral Agent) obtain possession or control of any such Collateral, such Lender shall notify the Collateral Agent thereof, and, promptly following the Collateral Agent’s request therefor, shall deliver such Collateral to the Collateral Agent or otherwise deal with such Collateral in accordance with the Collateral Agent’s instructions.

 

Section 9.02            Agent in Its Individual Capacity.  Each Person serving as an 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 an Agent, and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as an Agent hereunder in its individual capacity.  Such Person and its Affiliates may accept deposits from, lend money to, act as financial advisor or in any other advisory capacity for, and generally engage in any kind of business with, any Company or Affiliate thereof as if it were not an Agent hereunder and without duty to account therefor to the Lenders or the Issuing Bank.

 

Section 9.03            Exculpatory Provisions.  No Agent shall have any duties or obligations except those expressly set forth in the Loan Documents.  Without limiting the generality of the foregoing, (a) no Agent shall be subject to any fiduciary or other implied duties, regardless of whether a Default or Event of Default has occurred and is continuing, (b) no Agent shall have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Loan Documents that such Agent is required to exercise in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 10.02); provided that no Agent shall be required to take any action that, in its opinion or the opinion of its counsel, may expose such Agent to liability, if the Agent is not indemnified to its satisfaction, or that is contrary to any Loan Document or applicable Legal Requirements including, for the avoidance of doubt any action that may be in violation of the automatic stay under any Insolvency Law or that may effect a foreclosure, modification or termination of Property of a Defaulting Lender under any Debtor Relief Law, and (c) except as expressly set forth in the Loan Documents, no Agent shall have any duty to disclose or shall be liable for the failure to disclose, any information relating to any Company or any of its Affiliates that is communicated to or obtained by the Person serving as such Agent or any of its Affiliates in any capacity.  No Agent shall 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 any Agent shall believe in good faith shall be necessary, under the circumstances as provided in Section 10.02) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by a final and nonappealable judgment.  No Agent shall be deemed to have knowledge of any Default or Event of Default unless and until written notice thereof describing such Default or Event of Default is given to such Agent by Borrower, a Lender, or the Issuing Bank, and no Agent shall be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document or the occurrence of any Default or Event of Default, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document.  Each party to this Agreement acknowledges and agrees that the Administrative Agent may from time to time use one or more outside service providers for the tracking of all UCC financing statements (and/or other collateral related filings and registrations from time to time) required to be filed or recorded pursuant to the Loan Documents and the notification to the Administrative Agent, of, among other things, the upcoming lapse or expiration thereof, and that each of such service providers will be deemed to be acting at the request and on behalf of Borrower and the other Loan Parties.  No Agent shall be liable for any action taken or not taken by any such service provider.  Neither any Agent nor any of its officers, partners, directors, employees or agents shall be liable to the Lenders for any action taken or omitted by any Agent under or in connection with any of the Loan Documents.

 

  

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Section 9.04            Reliance by Agent.  Each 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 a proper Person.  Each Agent also may rely upon any statement made to it orally and believed by it to be made by a 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 of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the Issuing Bank, each Agent may presume that such condition is satisfactory to such Lender or the Issuing Bank unless each Agent shall have received written notice to the contrary from such Lender or the Issuing Bank prior to the making of such Loan or the issuance of such Letter of Credit.  Each Agent may consult with legal counsel (who may be counsel for Borrower), independent accountants and other advisors 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 advisors.

 

Section 9.05            Delegation of Duties.  Each Agent may perform any and all of its duties and exercise its rights and powers by or through, or delegate any and all such rights and powers to, any one or more sub-agents appointed by such Agent.  Each Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Affiliates.  The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Affiliates of each Agent and any such sub-agent, and shall apply, without limiting the foregoing, to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Agent.  The Agents shall not be responsible for the negligence or misconduct of any sub-agent except to the extent that a court of competent jurisdiction determines in a final and nonappealable judgment that such Agent acted with gross negligence or willful misconduct in the selection of such sub-agent.

 

Section 9.06            Successor Agent.  Each Agent may resign as such at any time upon at least 10 days’ prior notice to the Lenders, the Issuing Bank and Borrower.  Upon any such resignation, the Required Lenders shall have the right, in consultation with Borrower, to appoint a successor Agent from among the Lenders.  If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 10 days after the retiring Agent gives notice of its resignation, then the retiring Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor Agent, which successor shall be a commercial banking institution organized under the laws of the United States (or any State thereof) or a United States branch or agency of a commercial banking institution, in each case, having combined capital and surplus of at least $500,000,000; provided that if such retiring Agent is unable to find a commercial banking institution that is willing to accept such appointment and which meets the qualifications set forth above, the retiring Agent’s resignation shall nevertheless thereupon become effective and the retiring (or retired) Agent shall be discharged from its duties and obligations under the Loan Documents, and the Required Lenders shall assume and perform all of the duties of the Agent under the Loan Documents until such time, if any, as the Required Lenders appoint a successor Agent.  Any such resignation by an Agent hereunder shall also constitute, to the extent applicable, its resignation as an Issuing Bank and as Swingline Lender, in which case such resigning Agent (a) shall not be required to issue any further Letters of Credit or make any additional Swingline Loans hereunder and (b) shall maintain all of its rights as Issuing Bank or Swingline Lender, as the case may be, with respect to any Letters of Credit issued by it, or Swingline Loans made by it, prior to the date of such resignation.

 

  

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Upon the acceptance of its appointment as an Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring (or retired) Agent shall be discharged from its duties and obligations under the Loan Documents.  The fees payable by Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between Borrower and such successor.  After an Agent’s resignation hereunder, the provisions of this Article IX, Section 10.03 and Sections 10.08 to 10.10 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Affiliates in respect of any actions taken or omitted to be taken by any of them while it was acting as Agent.

 

Section 9.07            Non-Reliance on Agent and Other Lenders.  Each Lender and the Issuing Bank acknowledges that it has, independently and without reliance upon any Agent or any other Lender or any of their respective Affiliates and based on such documents and information as it has deemed appropriate, conducted its own independent investigation of the financial condition and affairs of the Loan Parties and their Subsidiaries and made its own credit analysis and decision to enter into this Agreement.  Each Lender further represents and warrants that it has reviewed the Confidential Information Memorandum and each other document made available to it on the Platform in connection with this Agreement and has acknowledged and accepted the terms and conditions applicable to the recipients thereof (including any such terms and conditions set forth, or otherwise maintained, on the Platform with respect thereto).  Each Lender and the Issuing Bank also acknowledges that it will, independently and without reliance upon any Agent or any other Lender or any of their respective Affiliates and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or related agreement or any document furnished hereunder or thereunder.

 

Section 9.08            Name Agents.  The parties hereto acknowledge that the Documentation Agent and the Syndication Agent hold such titles in name only, and that such titles confer no additional rights or obligations relative to those conferred on any Lender or the Issuing Bank hereunder.

 

Section 9.09            Indemnification.  The Lenders severally agree to indemnify each Agent in its capacity as such and each of its Related Persons (to the extent not reimbursed by Borrower or the Subsidiary Guarantors and without limiting the obligation of Borrower or the Subsidiary Guarantors to do so), ratably according to their respective outstanding Loans and Commitments in effect on the date on which indemnification is sought under this Section 9.09 (or, if indemnification is sought after the date upon which all Commitments shall have terminated and the Loans and Reimbursement Obligations shall have been paid in full, ratably in accordance with such outstanding Loans and Commitments as in effect immediately prior to such date), from and against any and all liabilities, obligations, losses, damages, fines, penalties, actions, claims, suits, judgments, litigations, investigations, inquiries or proceedings, costs, expenses or disbursements of any kind whatsoever that may at any time (whether before or after the payment of the Loans and Reimbursement Obligations) be imposed on, incurred by or asserted against such Agent or Related Person in any way relating to or arising out of, the Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein, the Transactions or any of the other transactions contemplated hereby or thereby or any action taken or omitted by such Agent or Related Person under or in connection with any of the foregoing (IN ALL CASES, WHETHER OR NOT CAUSED OR ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE OF ANY AGENT OR RELATED PERSON); provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, claims, suits, judgments, litigations, investigations, inquiries or proceedings, costs, expenses or disbursements that are found by a final and nonappealable judgment of a court of competent jurisdiction to have directly resulted solely and directly from such Agent’s or Related Person’s, as the case may be, gross negligence or willful misconduct.  The agreements in this Section 9.09 shall survive the payment of the Loans and all other amounts payable hereunder.

 

  

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Section 9.10            [Reserved]

 

Section 9.11            Lender Action.  Each Lender agrees that it shall not take or institute any actions or proceedings, judicial or otherwise, for any right or remedy against any Loan Party or any other obligor under any of the Loan Documents (including the exercise of any right of setoff, rights on account of any banker’s lien or similar claim or other rights of self-help), or institute any actions or proceedings, or otherwise commence any remedial procedures or cause any of the foregoing (through Affiliates or otherwise), with respect to any Collateral or any other Property of any such Loan Party, without the prior written consent of the Administrative Agent.  Without limiting the foregoing, each Lender agrees that, except as otherwise provided in any Loan Documents or with the written consent of the Administrative Agent, it will not take any enforcement action, accelerate Obligations under any Loan Documents, or exercise any right that it might otherwise have under applicable Legal Requirements to credit bid or purchase any portion of the Collateral at any sale or foreclosure thereof referred to in Section 9.01(b); provided that nothing contained in this Section shall affect any Lender’s right to credit bid its pro rata share of the Obligations pursuant to Section 363(k) of the Bankruptcy Code.

 

Section 9.12            Withholding Taxes.  To the extent required by any applicable law, the Administrative Agent may withhold from any payment to any Lender an amount equivalent to any applicable withholding Tax.  If the Internal Revenue Service or any other Governmental Authority asserts a claim that the Administrative Agent did not properly withhold Tax from amounts paid to or for the account of any Lender because the appropriate form was not delivered or was not properly executed or because such Lender failed to notify the Administrative Agent of a change in circumstance which rendered the exemption from, or reduction of, withholding Tax ineffective or for any other reason, or if Administrative Agent reasonably determines that a payment was made to a Lender pursuant to this Agreement without deduction of applicable withholding tax from such payment, such Lender shall indemnify the Administrative Agent fully for all amounts paid, directly or indirectly, by the Administrative Agent as Tax or otherwise, including any penalties or interest and together with all expenses (including legal expenses, allocated internal costs and out-of-pocket expenses) incurred.

 

Section 9.13            Lender’s Representations, Warranties and Acknowledgements.  (a) Each Lender represents and warrants that it has made its own independent investigation of the financial condition and affairs of Borrower and its Subsidiaries in connection with Credit Extensions hereunder and that it has made and shall continue to make its own appraisal of the creditworthiness of Borrower and its Subsidiaries.  No Agent shall have any duty or responsibility, either initially or on a continuing basis, to make any such investigation or any such appraisal on behalf of Lenders or to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before the making of the Loans or at any time or times thereafter, and no Agent shall have any responsibility with respect to the accuracy of or the completeness of any information provided to the Lenders.  Each Lender and Issuing Bank acknowledges that no Agent or Related Person of any Agent has made any representation or warranty to it.  Except for documents expressly required by any Loan Document to be transmitted by an Agent to the Lenders or Issuing Bank, no Agent shall have any duty or responsibility (either express or implied) to provide any Lender or Issuing Bank with any credit or other information concerning any Loan Party, including the business, prospects, operations, Property, financial and other condition or creditworthiness  of any Loan Party or any Affiliate of a Loan Party, that may come in to the possession of an Agent or any of its Related Persons.

 

  

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(b)            Each Lender, by delivering its signature page to this Agreement or an Assignment and Assumption and funding its Loan, shall be deemed to have acknowledged receipt of, and consented to and approved, each Loan Document and each other document required to be approved by any Agent, the Required Lenders or the Lenders, as applicable, on the Closing Date.

 

Section 9.14            Security Documents and Guarantee.

 

(a)            Agents under Security Documents and Guarantee.  Each Secured Party hereby further authorizes the Administrative Agent or the Collateral Agent, as applicable, on behalf of and for the benefit of the Secured Parties, to be the agent for and representative of the Secured Parties with respect to the Guarantee, the Collateral and the Loan Documents; provided that neither the Administrative Agent nor the Collateral Agent shall owe any fiduciary duty, duty of loyalty, duty of care, duty of disclosure or any other obligation whatsoever to any holder of Secured Obligations with respect to any Permitted Hedging Agreement.  Subject to Section 10.02, without further written consent or authorization from any Secured Party, the Administrative Agent or the Collateral Agent, as applicable, may execute any documents or instruments necessary to (i) in connection with a sale or disposition of assets permitted by this Agreement, release any Lien encumbering any item of Collateral that is the subject of such sale or disposition of assets, release any Lien encumbering any item of Collateral owned by any Subsidiary no longer required to become a Subsidiary Guarantor pursuant to Section 5.10(b) or to which the Required Lenders (or such other Lenders as may be required to give such consent under Section 10.02) have otherwise consented or (ii) release any Subsidiary Guarantor from the Guarantee pursuant to Section 7.09, or to the extent such Subsidiary is no longer required to be a Subsidiary Guarantor pursuant to Section 5.10(b), or with respect to which the Required Lenders (or such other Lenders as may be required to give such consent under Section 10.02) have otherwise consented.

 

(b)            Right to Realize on Collateral and Enforce Guarantee.  Anything contained in any of the Loan Documents to the contrary notwithstanding, Borrower, the Administrative Agent, the Collateral Agent and each Secured Party hereby agree that (i) no Secured Party shall have any right individually to realize upon any of the Collateral or to enforce the Guarantee, it being understood and agreed that all powers, rights and remedies hereunder and under any of the Loan Documents may be exercised solely by the Administrative Agent or the Collateral Agent, as applicable, for the benefit of the Secured Parties in accordance with the terms hereof and thereof and all powers, rights and remedies under the Security Documents may be exercised solely by the Collateral Agent for the benefit of the Secured Parties in accordance with the terms thereof, and (ii) in the event of a foreclosure or similar enforcement action by the Collateral Agent on any of the Collateral pursuant to a public or private sale or other disposition (including, without limitation, pursuant to Section 363(k), Section 1129(b)(2)(a)(ii) or otherwise of the Bankruptcy Code), the Collateral Agent (or any Lender, except with respect to a “credit bid” pursuant to Section 363(k), Section 1129(b)(2)(a)(ii) or otherwise of the Bankruptcy Code) may be the purchaser or licensor of any or all of such Collateral at any such sale or other disposition and the Collateral Agent, as agent for and representative of the Secured Parties (but not any Lender or Lenders in its or their respective individual capacities) shall be entitled, upon instructions from the Required Lenders, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such sale or disposition, to use and apply any of the Obligations as a credit on account of the purchase price for any collateral payable by the Collateral Agent at such sale or other disposition.

 

  

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(c)            Release of Collateral and Guarantees, Termination of Loan Documents.

 

(i)            Notwithstanding anything to the contrary contained herein or in any other Loan Document, the Administrative Agent shall (without notice to, or vote or consent of, any Lender, or any Affiliate of any Lender that is a party to any Hedging Agreement) take such actions as shall be required to release its security interest in any Collateral subject to any disposition permitted by the Loan Documents, and to release any guarantee obligations under any Loan Document of any Person subject to such disposition, to the extent necessary to permit consummation of such disposition in accordance with the Loan Documents, to release any guarantee obligations under any Loan Document of any Subsidiary that is no longer required to be a Subsidiary Guarantor pursuant to Section 5.10(b) and to release its security interest in any Collateral owned by any Subsidiary that is no longer required to be a Subsidiary Guarantor pursuant to Section 5.10(b).

 

(ii)            Notwithstanding anything to the contrary contained herein or any other Loan Document, when all Secured Obligations under clauses (a) and (b) of the definition thereof (other than contingent expense reimbursement and indemnity obligations that are not then due and payable) have been paid in full and all Commitments have terminated or expired, upon request of Borrower, the Administrative Agent and the Collateral Agent shall (without notice to, or vote or consent of, any Lender, or any other Secured Party) take such actions as shall be required to release its security interest in all Collateral, and to release all guarantee obligations provided for in any Loan Document, whether or not on the date of such release there may be outstanding Secured Obligations under clause (c) of the definition thereof.  Any such release of guarantee obligations shall be deemed subject to the provision that such guarantee obligations shall be reinstated if after such release any portion of any payment in respect of the Obligations guaranteed thereby shall be rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of Borrower or any Subsidiary Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, Borrower or any Subsidiary Guarantor or any substantial part of its Property, or otherwise, all as though such payment had not been made.

 

(iii)            The Collateral Agent shall not be responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the existence, value or collectability of the Collateral, the existence, priority or perfection of the Collateral Agent’s Lien thereon, or any certificate prepared by any Loan Party in connection therewith, nor shall the Collateral Agent be responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral.

 

Section 9.15            Administrative Agent May File Bankruptcy Disclosure and Proofs of Claim.  In case of the pendency of any proceeding under any Debtor Relief Laws relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan or LC Exposure shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on Borrower) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:

 

(a)            to file a verified statement pursuant to rule 2019 of the Federal Rules of Bankruptcy Procedure that, in its sole opinion, complies with such rule’s disclosure requirements for entities representing more than one creditor;

 

(b)            to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the Issuing Bank, the Collateral Agent and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the Issuing Bank, the Collateral Agent and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders, the Issuing Bank, the Collateral Agent and the Administrative Agent Administrative Agent under Sections 2.05 and 10.03) allowed in such judicial proceeding; and

 

  

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(c)            to collect and receive any monies or other Property payable or deliverable on any such claims and to distribute the same;

 

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender, the Issuing Bank and the Collateral Agent to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, the Issuing Bank and the Collateral Agent, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under this Agreement.  To the extent that the payment of any such compensation, expenses, disbursements and advances of the Administrative Agent, its agents and counsel, and any other amounts due the Administrative Agent under this Agreement out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Lenders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise.

 

Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.

 

ARTICLE X

MISCELLANEOUS

 

Section 10.01            Notices.  (a)  Generally.  Notices and other communications provided for herein shall, except as provided in Section 10.01(b), be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy or e-mail, as follows:

 

(i)            if to any Loan Party, to Borrower at 107 S. Pennsylvania Street, Indianapolis, Indiana 46204, Attention:  Duane E. Geiger, Telecopy No.: (317) 633-4105, Email: duane.geiger@steaknshake.com with a copy to: Olshan Grundman Frome Rosenzweig and Wolosky LLP, Park Avenue Tower, 65 East 55th street, New York, New York 10022, Attention:  Steven Wolosky, Telecopy No.: (212) 451-2222, email: swolosky@olshanlaw.com;

 

(ii)            if to the Administrative Agent or the Collateral Agent, to it at: Jefferies Finance LLC, 520 Madison Avenue, New York, New York  10022, Attention:  Account Officer Steak n Shake Operations, Inc., Telecopy No.:  (212) 284-3444, Email: jfin.admin@jefferies.com;

 

(iii)           if to a Lender, to it at its address (or telecopy number) set forth on Annex I or in the Assignment and Assumption pursuant to which such Lender shall have become a party hereto; and

 

(iv)          if to the Swingline Lender or Issuing Bank, to it at 251 North Illinois Street, Suite 1200, MD 8490A2, Indianapolis, Indiana 46204, Attention:  William J. Krummen, Telecopy No.: 317-383-2509.

 

  

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Notices and other communications to the Lenders and the Issuing Bank hereunder may (subject to Section 10.01(b)) be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent.  Any party hereto may change its address, telecopier number or e-mail address for notices and other communications hereunder by notice to the other parties hereto.  The Administrative Agent or Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.  Unless the Administrative Agent otherwise prescribes, (A) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgment), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient, and (B) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (A) of notification that such notice or communication is available and identifying the website address therefor.

 

(b)            Posting.   Each Loan Party hereby agrees that it will provide to the Administrative Agent all information, documents and other materials that it is obligated to furnish to the Administrative Agent pursuant to this Agreement and any other Loan Document, including all notices, requests, financial statements, financial and other reports, certificates and other information materials, but excluding any such communication that (i) relates to a request for a new, or a conversion of an existing, Borrowing or other extension of credit (including any election of an interest rate or interest period relating thereto), (ii) relates to the payment of any principal or other amount due under this Agreement prior to the scheduled date therefor, (iii) provides notice of any Default under this Agreement or (iv) is required to be delivered to satisfy any condition precedent to the effectiveness of this Agreement and/or any borrowing or other extension of credit hereunder (all such non-excluded communications, collectively, the “Communications”), by transmitting the Communications in an electronic/soft medium in a format reasonably acceptable to the Administrative Agent at such e-mail address(es) provided to Borrower by the Administrative Agent from time to time or in such other form, including hard copy delivery thereof, as the Administrative Agent shall require.  In addition, each Loan Party agrees to continue to provide the Communications to the Administrative Agent in the manner specified in this Agreement or any other Loan Document or in such other form, including hard copy delivery thereof, as the Administrative Agent shall reasonably require.  Nothing in this Section 10.01 shall prejudice the right of the Agents, any Lender, the Issuing Bank or any Loan Party to give any notice or other communication pursuant to this Agreement or any other Loan Document in any other manner specified in this Agreement or any other Loan Document or as any such Agent shall reasonably require.

 

(c)            To the extent consented to by the Administrative Agent in writing from time to time, the Administrative Agent agrees that receipt of the Communications by the Administrative Agent at its e-mail address(es) set forth above shall constitute effective delivery of the Communications to the Administrative Agent for purposes of the Loan Documents.

 

(d)            Each Loan Party further agrees that the Administrative Agent may make the Communications available to the other Agents, the Lenders or the Issuing Bank by posting the Communications on IntraLinks, SyndTrak or a substantially similar electronic transmission system (the “Platform”).  The Platform is provided “as is” and “as available.”  The Agents do not warrant the accuracy or completeness of the Communications, or the adequacy of the Platform and expressly disclaim liability for errors or omissions in the communications.  No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of third party rights or freedom from viruses or other code defects, is made by any Agent in connection with the Communications or the Platform.  In no event shall any Agent have any liability to any Loan Party, any Lender or any other Person for damages of any kind, whether or not based on strict liability and including direct or indirect, special, incidental or consequential damages, losses or expenses (whether in contract, tort or otherwise) arising out of or related to any Loan Party’s or any Agent’s transmissions of Communications through Internet (including the Platform), except to the extent caused by the willful misconduct or gross negligence of such Agent, as determined by a final, non-appealable judgment of a court of competent jurisdiction.  Notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address of notification that such notice or communication is available and identifying the website address therefor.  Each Loan Party understands that the distribution of material through an electronic medium is not necessarily secure and that there are confidentiality and other risks associated with such distribution and agrees and assumes the risks associated with such electronic distribution, except to the extent caused by the willful misconduct or gross negligence of the Administrative Agent, as determined by a final, non-appealable judgment of a court of competent jurisdiction.

 

  

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(e)            The Administrative Agent agrees that the receipt of the Communications by the Administrative Agent at its e-mail address shall constitute effective delivery of the Communications to the Administrative Agent for purposes of the Loan Documents.  Each Lender agrees that receipt of notice to it (as provided in the next sentence) specifying that the Communications have been posted to the Platform shall constitute effective delivery of the Communications to such Lender for purposes of the Loan Documents.  Each Lender agrees to notify the Administrative Agent in writing (including by electronic communication) from time to time of such Lender’s e-mail address to which the foregoing notice may be sent by electronic transmission and that the foregoing notice may be sent to such e-mail address.  Nothing herein shall prejudice the right of the Administrative Agent or any Lender to give any notice or other communication pursuant to any Loan Document in any other manner specified in such Loan Document.

 

(f)            Each Loan Party, each Lender and each Agent agrees that the Administrative Agent may, but shall not be obligated to, store any Approved Electronic Communications on the Platform in accordance with the Administrative Agent’s customary document retention procedures and policies.

 

(g)            Each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable law, including United States federal and state securities laws, to make reference to information that is not made available through the “Public Side Information” portion of the Platform and that may contain Non-Public Information with respect to Borrower, its Subsidiaries or their securities for purposes of United States federal or state securities laws.  In the event that any Public Lender has determined for itself to not access any information disclosed through the Platform or otherwise, such Public Lender acknowledges that (i) other Lenders may have availed themselves of such information and (ii) neither Borrower nor the Administrative Agent has any responsibility for such Public Lender’s decision to limit the scope of the information it has obtained in connection with this Agreement and the other Loan Documents.

 

Section 10.02            Waivers; Amendment.  (a)  No failure or delay by any Agent, the Issuing Bank or any Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.  The rights and remedies of each Agent, the Issuing Bank and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have.  No waiver of any provision of any Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by Section 10.02(b), and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether any Agent, any Lender or the Issuing Bank may have had notice or knowledge of such Default at the time.  No notice or demand on Borrower or any other Loan Party in any case shall entitle Borrower or any other Loan Party to any other or further notice or demand in similar or other circumstances.

 

  

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(b)            Subject to Section 2.16(c) and Section 10.02(c), this Agreement nor any other Loan Document nor any provision hereof or thereof may be waived, amended, supplemented or modified except, in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by Borrower and the Required Lenders or, in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by the Administrative Agent, the Collateral Agent (in the case of any Security Document) and the Loan Party or Loan Parties that are parties thereto, in each case with the written consent of the Required Lenders; provided that no such agreement shall:

 

(i)            Increase or extend the expiry date of the Commitment of any Lender without the written consent of such Lender (it being understood that no amendment, modification, termination, waiver or consent with respect to any condition precedent, covenant or Default (or any definition used, respectively, therein) shall constitute an increase in or an extension of the expiry date of the Commitment of any Lender for purposes of this clause (i));

 

(ii)            reduce the principal amount or premium, if any, of any Loan or LC Disbursement or reduce the rate of interest thereon (other than interest pursuant to Section 2.06(c)) , or reduce any Fees payable hereunder, or change the form or currency of payment of any Obligation, without the written consent of each Lender directly affected thereby (it being understood that any amendment or modification to the financial definitions in this Agreement shall not constitute a reduction in the rate of interest for purposes of this clause (ii));

 

(iii)           postpone or extend the maturity of any Loan, or any scheduled date of payment of or the installment otherwise due on the principal amount of any Term Loan under Section 2.09, or the required date of payment of any Reimbursement Obligation, or any date for the payment of any interest or fees payable hereunder, or reduce the amount of, waive or excuse any such payment (other than a waiver of any increase in the interest rate pursuant to Section 2.06(c)), or postpone the scheduled date of expiration of any Commitment or postpone the scheduled date of expiration of any Letter of Credit beyond the Letter of Credit Expiration Date, without the written consent of each Lender directly affected thereby;

 

(iv)          change Section 2.14(b) or (c) in a manner that would alter the order of or the pro rata sharing of payments or setoffs required thereby, without the written consent of each Lender;

 

(v)           change the percentage set forth in the definition of “Required Lenders” or “Required Revolving Lenders” or any other provision of any Loan Document (including this Section 10.02) specifying the number or percentage of Lenders (or Lenders of any Class) required to waive, amend or modify any rights thereunder or make any determination or grant any consent thereunder, without the written consent of each Lender (or each Lender of such Class, as the case may be);

 

  

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(vi)          release all or substantially all of the Subsidiary Guarantors from their respective Guarantees (except as expressly provided in Article VII), or limit their liability in respect of such Guarantees, without the written consent of each Lender;

 

(vii)         except as expressly permitted in this Agreement or any Security Document, release all or substantially all of the Collateral from the Liens of the Security Documents or alter the relative priorities of the Secured Obligations entitled to the Liens of the Security Documents (except in connection with securing additional Secured Obligations equally and ratably with the other Secured Obligations), in each case without the written consent of each Lender;

 

(viii)        change any provisions of any Loan Document in a manner that by its terms adversely and directly affects the rights in respect of payments due to Lenders holding Loans of any Class materially differently than those holding Loans of any other Class, without the written consent of Lenders holding a majority in interest of the outstanding Loans and unused Commitments of each directly affected Class;

 

(ix)           change Section 10.04(h) without the consent of each Granting Lender all or any part of whose Loans are being funded by any SPC at the time of any such amendment, waiver or modification;

 

(x)            change the order of application of prepayments among Term Loans and Revolving Commitments under Section 2.10(g) or change the application of prepayments of Term Loans set forth in Section 2.10(g) in each case without the written consent of each Lender in the directly affected Class;

 

(xi)           change Section 10.04(b) in a manner which further restricts assignments thereunder without the written consent of each Lender;

 

(xii)          permit assignments by any Loan Party of its rights or obligations under the Credit Facilities without the written consent of each Lender, the Administrative Agent, the Collateral Agent, the Swingline Lender and the Issuing Bank; or

 

(xiii)         subordinate the Obligations under the Loan Documents to any other Indebtedness;

 

provided, further, that (1) no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, the Collateral Agent, the Issuing Bank or the Swingline Lender without the prior written consent of the Administrative Agent, the Issuing Bank or the Swingline Lender, as the case may be, (2) any waiver, amendment or modification of this Agreement that by its terms directly affects the rights or duties under this Agreement of the Revolving Lenders (but not the Term Loan Lenders), or the Term Loan Lenders (but not the Revolving Lenders) may be effected by an agreement or agreements in writing entered into by Borrower and the requisite percentage in interest of the affected Class of Lenders that would be required to consent thereto under this Section 10.02 if such Class of Lenders were the only Class of Lenders hereunder at the time, (3) any waiver, amendment or modification of this Agreement that by its terms results in (at the time of such waiver, amendment or modification or any time thereafter) Borrower satisfying any condition to a Revolving Borrowing contained in Section 4.02 hereof (which, but for such waiver, amendment or modification would not otherwise be satisfied), without the consent of the Required Revolving Lenders and (4) any waiver, amendment or modification prior to the achievement of a successful syndication of the credit facilities provided herein (as determined by the Arrangers in their sole discretion) may not be effected without the written consent of the Arrangers.  Notwithstanding the foregoing, any provision of this Agreement may be amended by an agreement in writing entered into by Borrower, the Required Lenders, and the Administrative Agent (and, if their rights or obligations are affected thereby, the Issuing Bank and the Swingline Lender) if (x) by the terms of such agreement the Commitment of each Lender not consenting to the amendment provided for therein shall terminate upon the effectiveness of such amendment, (y) at the time such amendment becomes effective, each Lender not consenting thereto receives payment in full of the principal of, premium, if any, and interest accrued on each Loan made by it and all other amounts owing to it or accrued for its account under this Agreement, and (z) Section 2.16(b) is complied with.

 

  

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(c)            Without the consent of any other Person, the applicable Loan Party or Loan Parties and the Administrative Agent and/or Collateral Agent may (in its or their respective sole discretion, or shall, to the extent required by any Loan Document) enter into any amendment or waiver of any Loan Document, or enter into any new agreement or instrument, to effect the granting, perfection, protection, expansion or enhancement of any security interest in any Collateral or additional property to become Collateral for the benefit of the Secured Parties, or as required by applicable Legal Requirements to give effect to, or protect any security interest for the benefit of the Secured Parties, in any property or assets so that the security interests therein comply with applicable Legal Requirements.

 

(d)            Notwithstanding the foregoing, (x) this Agreement may be amended (or amended and restated) with the written consent of the Required Lenders, the Administrative Agent and Borrower (a) to add one or more additional credit facilities to this Agreement and to permit the extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Loan Documents with the Term Loans and Revolving Loans and the accrued interest and fees in respect thereof and (b) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders and (y) Borrower and the Administrative Agent may enter into amendments to this Agreement and the other Loan Documents in accordance with the provisions of Section 2.19 and Section 2.20.

 

(e)            Notwithstanding anything to the contrary set forth herein or in any other Loan Document but subject to the proviso in clause (c) of Article 8, (i) no Term Loan Lender shall have any right to exercise, or direct the Administrative Agent to exercise or refrain from exercising, any right or remedy arising or available hereunder or under any other Loan Document upon the occurrence or during the continuance of a Default or an Event of Default if the only such Default or Event of Default that shall have occurred and be continuing is a Financial Covenant Default, (ii) no Term Loan Lender shall have any right to approve or disapprove (X) any amendment or modification to Section 6.10(a), (Y) any waiver of a Financial Covenant Default or (Z) any amendment, waiver, consent or approval referred to in the proviso to the definition of “Required Lenders” and (iii) it is understood and agreed that any Term Loans held by any Term Loan Lender shall be excluded from any vote of the Lenders (and shall be deemed to not be outstanding) for the purposes described in clause (i) above and clause (ii) above, including in determining whether the “Required Lenders” have directed the Administrative Agent to exercise or refrain from exercising any such rights or remedies or to approve or disapprove any such amendment, modification or waiver.  For the avoidance of doubt, nothing in this paragraph shall in any way limit or restrict the rights or remedies of the Term Loan Lenders in connection with any Default or Event of Default other than a Financial Covenant Default (whether arising before or after the occurrence of the Financial Covenant Default) or the right of any Term Loan Lenders to approve or disapprove any amendment or modification to any other provision hereof or of any other Loan Document or to waive any Default or Event of Default other than a Financial Covenant Default.

 

  

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Section 10.03            Expenses; Indemnity; Damage Waiver.  (a)  The Loan Parties agree, jointly and severally, to pay, promptly upon demand:

 

(i)            all reasonable and documented out-of-pocket costs and expenses incurred by the Arrangers, the Administrative Agent, the Collateral Agent, the Swingline Lender and the Issuing Bank, including the reasonable fees, charges and disbursements of Advisors for the Arrangers, the Administrative Agent, the Collateral Agent, the Swingline Lender and the Issuing Bank, in connection with the syndication of the Loans and Commitments, the preparation, negotiation, execution and delivery of the Loan Documents, the administration of the Credit Extensions and Commitments, the perfection and maintenance of the Liens securing the Collateral (including, without limitation, conducting Collateral audits from time to time) and any actual or proposed amendment, supplement or waiver of any of the Loan Documents (whether or not the transactions contemplated hereby or thereby shall be consummated); provided that the fees, charges and disbursements of counsel for the Administrative Agent and the Collateral Agent shall (except, in all events, in the case of any conflict of interest (as reasonably determined by either the Administrative Agent or Collateral Agent)) be limited to the fees, charges and disbursements of one lead counsel to such Persons, taken as a whole, together with one regulatory counsel and one local counsel in any relevant jurisdiction;

 

(ii)            all reasonable and documented out-of-pocket costs and expenses incurred by the Administrative Agent or the Collateral Agent, including the fees, charges and disbursements of Advisors for the Administrative Agent and the Collateral Agent, in connection with any action, claim, suit, litigation, investigation, inquiry or proceeding affecting the Collateral or any part thereof, in which action, claim, suit, litigation, investigation, inquiry or proceeding the Administrative Agent or the Collateral Agent is made a party or participates or in which the right to use the Collateral or any part thereof is threatened, or in which it becomes necessary in the judgment of the Administrative Agent or the Collateral Agent to defend or uphold the Liens granted by the Security Documents (including any action, claim, suit, litigation, investigation, inquiry or proceeding to establish or uphold the compliance of the Collateral with any Legal Requirements); provided that the fees, charges and disbursements of counsel for the Administrative Agent and the Collateral Agent shall (except, in all events, in the case of any conflict of interest (as reasonably determined by either the Administrative Agent or Collateral Agent)) be limited to the fees, charges and disbursements of one lead counsel to such Persons, taken as a whole, together with one regulatory counsel and one local counsel in any relevant jurisdiction;

 

(iii)           all reasonable and documented out-of-pocket costs and expenses incurred by the Arrangers, the Administrative Agent, the Collateral Agent, any other Agent, the Swingline Lender, the Issuing Bank or any Lender, including the fees, charges and disbursements of Advisors for any of the foregoing, incurred in connection with the enforcement or protection of its rights under the Loan Documents, including its rights under this Section 10.03(a), or in connection with the Loans made or Letters of Credit issued hereunder and the collection of the Secured Obligations, including all such costs and expenses incurred during any workout, restructuring or negotiations in respect of the Secured Obligations; and

 

(iv)          all Other Taxes in respect of the Loan Documents.

 

(b)            The Loan Parties agree, jointly and severally, to indemnify the Agents, each Lender, the Issuing Bank and the Swingline Lender and each of their respective Related Persons (each such Person being called an “Indemnitee”) against, and to hold each Indemnitee harmless from, all reasonable out-of-pocket costs and any and all losses, claims, damages, liabilities, fees, fines, penalties, actions, judgments, suits and related expenses, including reasonable Advisors fees, charges and disbursements (collectively, “Claims”), incurred by, imposed on or asserted against any Indemnitee, directly or indirectly, arising out of, in any way connected with, or as a result of (i) the execution, delivery, performance, administration or enforcement of the Loan Documents or any agreement or instrument contemplated thereby or the performance by the parties thereto of their respective obligations thereunder, (ii) any actual or proposed use of the proceeds of the Loans or issuance of Letters of Credit, (iii) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto, (iv) any actual or alleged presence or Release or threatened Release of Hazardous Materials, on, at, under or from any property owned, leased or operated by any Company at any time, or any Environmental Claim or threatened Environmental Claim related in any way to any Company, (v) any past, present or future non-compliance with, or violation of, Environmental Laws  or Environmental Permits applicable to any Company, or any Company’s business, or any property presently or formerly owned, leased, or operated by any Company or their predecessors in interest, (vi) the environmental condition of any property owned, leased, or operated by any Company at any time, or the applicability of any Legal Requirements relating to such property, whether or not occasioned wholly or in part by any condition, accident or event caused by any act or omission of any Company, (vii) the imposition of any environmental Lien encumbering any Real Property, (viii) the consummation of the Transactions and the other transactions contemplated hereby (including the syndication of the Credit Facilities) or (ix) any actual or prospective action, claim, suit, litigation, investigation, inquiry or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by any Loan Party or otherwise, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have directly resulted solely from the gross negligence or willful misconduct of such Indemnitee.

 

  

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(c)            The Loan Parties agree, jointly and severally, that, without the prior written consent of the Administrative Agent and any affected Lender, which consent(s) will not be unreasonably withheld, the Loan Parties will not enter into any settlement of a Claim in respect of the subject matter of clauses (i) through (ix) of Section 10.03(b) unless such settlement includes an explicit and unconditional release from the party bringing such Claim of all Indemnitees.

 

(d)            The provisions of this Section 10.03 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the Transactions and the other transactions contemplated hereby, the repayment of the Loans, Reimbursement Obligations and any other Secured Obligations, the release of any Subsidiary Guarantor or of all or any portion of the Collateral, the expiration of the Commitments, the expiration of any Letter of Credit, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Agents, the Issuing Bank or any Lender.  All amounts due under this Section 10.03 shall be accompanied by reasonable documentation with respect to any reimbursement, indemnification or other amount requested.

 

(e)            To the extent that the Loan Parties fail to pay any amount required to be paid by them to the Agents, the Issuing Bank or the Swingline Lender under Sections 10.03(a) or (b) in accordance with Section 10.03(g), each Lender severally agrees to pay to the Agents, the Issuing Bank or the Swingline Lender, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount (such indemnity shall be effective whether or not the related losses, claims, damages, liabilities and related expenses are incurred or asserted by any party hereto or any third party); provided that the unreimbursed Claim was incurred by or asserted against any of the Agents, the Issuing Bank or the Swingline Lender in its capacity as such.  For purposes of this Section 10.03(e), a Lender’s “pro rata share” shall be determined based upon its share of the sum of the total Revolving Exposure, outstanding Term Loans and unused Commitments at the time.

 

  

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(f)            To the fullest extent permitted by applicable Legal Requirements, no Loan Party shall assert, and each Loan Party hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, exemplary, consequential, or punitive damages (including any loss of profits, business or anticipated savings) arising out of, in connection with, or as a result of, any Loan Document or any agreement or instrument contemplated hereby or thereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.  No Indemnitee shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with the Loan Documents or the transactions contemplated hereby or thereby.

 

(g)            All amounts due under this Section 10.03 shall be payable not later than 10 days after demand therefor.

 

(h)            This Section 10.03 shall not apply to any Taxes other than Other Taxes.

 

Section 10.04            Successors and Assigns.  (a)  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 (including any Affiliate of the Issuing Bank that issues any Letter of Credit), except that the Loan Parties may not assign or otherwise transfer any of their respective rights or obligations hereunder without the prior written consent of the Administrative Agent, the Collateral Agent, the Issuing Bank, the Swingline Lender, and each Lender, which consent may be withheld in their respective sole discretion (and any attempted assignment or transfer by any Loan Party without such consent shall be null and void).  Nothing in this Agreement or any other Loan Document, express or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), Participants to the extent expressly provided in Section 10.04(e) and, to the extent expressly contemplated hereby, the other Indemnitees) any legal or equitable right, remedy or claim under or by reason of this Agreement or any other Loan Document.

 

(b)            Any Lender shall have the right at any time to assign to one or more assignees (other than any Company or any Affiliate thereof, a natural Person or a Borrower Competitor) 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:

 

(i)            except in the case of (A) an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, (B) contemporaneous assignments to related Approved Funds that equal at least the amount specified in this Section 10.04(b)(i) in the aggregate, (C) any assignment made in connection with the syndication of the Commitments and Loans by the Arrangers or (D) an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans, the amount of the Term Loan Commitment or Term 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) shall not be less than $1,000,000 and the amount of the Revolving Commitment or Revolving 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) shall not be less than $2,500,000; provided that the foregoing may be reduced with the consent of the Administrative Agent and, so long as no Default or Event of Default has occurred and is continuing, Borrower;

 

  

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(ii)           each partial assignment shall be made as an assignment of a proportionate part of all of the assigning Lender’s rights and obligations under this Agreement, except that this clause (ii) shall not be construed to prohibit the assignment of a proportionate part of all the assigning Lender’s rights and obligations in respect of one Class of Commitments or Loans;

 

(iii)          the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with any Tax forms required to be delivered by Section 2.15(f) and a processing and recordation fee of $3,500; provided that such fee shall not be payable in the case of (A) an assignment by any Lender to an Approved Fund of such Lender, (B) any assignment made in connection with the primary syndication of the Commitments and Loans by the Arrangers or (C) an assignment settled through the Administrative Agent;

 

(iv)          the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire;

 

(v)           in the case of an assignment of all or a portion of a Revolving Commitment or any Revolving Lender’s obligations in respect of its LC Exposure or Swingline Exposure, the Issuing Bank and the Swingline Lender must give its prior written consent to such assignment (which consent shall not be unreasonably withheld, delayed or conditioned);

 

(vi)          except in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, the Administrative Agent must give its prior written consent to such assignment (which consent shall not be unreasonably withheld, delayed or conditioned); and

 

(vii)         in the case of an assignment of all or a portion of a Revolving Commitment, a Revolving Loan or any Revolving Lender’s obligations in respect of its LC Exposure or Swingline Exposure (except in the case of (A) an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, or (B) any assignment made in connection with the syndication of the Commitments and Loans by the Arrangers), Borrower must give its prior written consent to such assignment (which consent shall not be unreasonably withheld, delayed or conditioned); provided that Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within 5 Business Days after having received notice thereof.

 

Notwithstanding the foregoing, if a Default has occurred and is continuing any consent of Borrower otherwise required under this paragraph shall not be required.  Subject to acceptance and recording thereof pursuant to Section 10.04(d), from and after the effective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement (provided that any liability of Borrower to such assignee under Section 2.12, 2.13 or 2.15 shall be limited to the amount, if any, that would have been payable thereunder by Borrower in the absence of such assignment, except to the extent any such amounts are attributable to a Change in Law occurring after the date of such assignment), 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 2.12, 2.13, 2.15 and 10.03).

 

  

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(c)            The Administrative Agent, acting for this purpose as an agent of Borrower, shall maintain at one of its offices 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 and stated interest on the Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive and binding in the absence of manifest error, and Borrower, the Administrative Agent, the Issuing Bank and the Lenders shall 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 Borrower, the Issuing Bank, the Collateral Agent, the Swingline Lender and any Lender (with respect to its own interest only), at any reasonable time and from time to time upon reasonable prior notice.

 

(d)            Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in Section 10.04 and any written consent to such assignment required by Section 10.04(b), the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register.  No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this Section 10.04(b).  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with the requirements of this Section 10.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 10.04(e).

 

(e)            Any Lender shall have the right at any time, without the consent of, or notice to Borrower, the Administrative Agent, the Issuing Bank, or the Swingline Lender or any other Person to sell participations to any Person (other than any Company or any Affiliate thereof or a natural Person) (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment and 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) Borrower, the Administrative Agent, the Collateral Agent, the Issuing Bank and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.  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 the Loan Documents and to approve any amendment, modification or waiver of any provision of the Loan Documents; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver that (1) is described in clauses (i), (ii) or (iii) of the proviso to Section 10.02(b) and (2) directly affects such Participant.  Subject to Section 10.04(f), each Participant shall be entitled to the benefits of Sections 2.12, 2.13 and 2.15 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 10.04(b) (it being understood that the documentation required under Section 2.15(f) shall be delivered to the participating Lender).  To the extent permitted by Legal Requirements, each Participant also shall be entitled to the benefits of Section 10.08 as though it were a Lender; provided that such Participant agrees in writing to be subject to Section 2.14(c) as though it were a Lender.  Each Lender that sells a participation shall, acting for this purpose as an agent of Borrower, maintain at one of its offices a register for the recordation of the names and addresses of its Participants, the principal amounts of and stated interest on, and terms of, its participations (the “Participant Register”).  The entries in the Participant Register shall be conclusive and binding absent manifest error, and such Lender (and Borrower, to the extent that the Participant requests payment from Borrower) 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.  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 Loan Document) except to the extent that such disclosure is necessary to establish that such commitment, loan, or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations.  For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

 

 

  

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(f)            A Participant shall not be entitled to receive any greater payment under Sections 2.12, 2.13 or 2.15 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 prior written consent of Borrower (which consent shall not be unreasonably withheld, delayed or conditioned) or the greater payment results from a Change in Law after the date the participation was sold to such Participant.

 

(g)            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 or any other central bank, and this Section 10.04(g) shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.  Without limiting the foregoing, in the case of any Lender that is a fund that invests in bank loans or similar extensions of credit, such Lender may, without the consent of Borrower, the Issuing Bank, the Swingline Lender, the Administrative Agent or any other Person, collaterally assign or pledge all or any portion of its rights under this Agreement, including the Loans and Notes or any other instrument evidencing its rights as a Lender under this Agreement, to any holder of, trustee for, or any other representative of holders of, obligations owed or securities issued, by such fund, as security for such obligations or securities.

 

(h)            Notwithstanding anything to the contrary contained herein, any Lender (a “Granting Lender”) may grant to a special purpose funding vehicle (an “SPC”), identified as such in writing from time to time by the Granting Lender to the Administrative Agent and Borrower, the option to provide to Borrower all or any part of any Loan that such Granting Lender would otherwise be obligated to make to such Borrower pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to make any Loan and (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof; provided further that nothing herein shall make the SPC a “Lender” for the purposes of this Agreement, obligate Borrower or any other Loan Party or the Administrative Agent to deal with such SPC directly, obligate Borrower or any other Loan Party in any manner to any greater extent than they were obligated to the Granting Lender, or increase costs or expenses of Borrower.  The Loan Parties and the Administrative Agent shall be entitled to deal solely with, and obtain good discharge from, the Granting Lender and shall not be required to investigate or otherwise seek the consent or approval of any SPC, including for the approval of any amendment, waiver or other modification of any provision of any Loan Document.  The making of a Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by such Granting Lender.  Each party hereto hereby agrees that no SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Lender).  In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPC, it will not institute against, or join any other Person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States of America or any state thereof.  In addition, notwithstanding anything to the contrary contained in this Section 10.04(h), any SPC may (i) with notice to, but without the prior written consent of, Borrower and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Loans to the Granting Lender or to any financial institutions (consented to by Borrower and the Administrative Agent) providing liquidity and/or credit support to or for the account of such SPC to support the funding or maintenance of Loans and (ii) disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC.

 

  

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(i)            The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable Legal Requirement, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

 

Section 10.05            Survival of Agreement.  All covenants, agreements, representations and warranties made by the Loan Parties in the Loan Documents and in the reports, certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Agents, the Issuing Bank or any Lender may have had notice or knowledge of any Default or Event of Default, failure of any condition set forth in Article IV to be satisfied or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as any Obligation (other than contingent indemnification obligations not then payable) or any Letter of Credit is outstanding (or Cash Collateralized) and so long as the Commitments have not expired or terminated.  The provisions of Article IX and Sections 2.12 to 2.15, 10.03 and 10.08 to 10.10 shall survive and remain in full force and effect regardless of the consummation of the Transactions and the other transactions contemplated hereby, the repayment of the Loans, the payment of the Reimbursement Obligations, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof.

 

Section 10.06            Counterparts; Integration; Effectiveness.  This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Agreement and the other Loan Documents, and any separate letter agreements with respect to fees payable to the Administrative Agent and/or the Arrangers, constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.  Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.  Delivery of an executed counterpart of a signature page of this Agreement by telecopy or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Agreement.

 

  

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Section 10.07            Severability.  Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

 

Section 10.08            Right of Setoff; Marshalling; Payments Set Aside.  If an Event of Default shall have occurred and be continuing, each Lender, the Issuing Bank and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable Legal Requirements, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender, the Issuing Bank or any such Affiliate to or for the credit or the account of any Loan Party against any and all of the obligations of any Loan Party now or hereafter existing under this Agreement or any other Loan Documents held by such Lender or the Issuing Bank, irrespective of whether or not such Lender shall have made any demand under this Agreement or any other Loan Document and although such obligations may be contingent or unmatured or are owed to a branch or office of such Lender or the Issuing Bank different from the branch or office holding such deposit or obligated on such indebtedness.  The rights of each Lender under this Section 10.08 are in addition to other rights and remedies (including other rights of setoff) which such Lender may have.  Each Lender and the Issuing Bank agrees to notify Borrower and the Administrative Agent promptly after any such setoff and application; provided, however, that in no event shall the failure to give such notice effect the validity or enforceability of any such setoffs.  None of any Agent, any Lender or any Issuing Bank shall be under any obligation to marshal any assets in favor of any Loan Party or any other Person or against or in payment of any or all of the Obligations.  To the extent that any Loan Party makes a payment or payments to Administrative Agent, Issuing Bank or Lenders (or to Administrative Agent, on behalf of Lenders or Issuing Bank), or any Agent, Issuing Bank or Lender enforces any security interests or exercises any right of setoff, and such payment or payments or the proceeds of such enforcement or setoff or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any Debtor Relief Law or any equitable cause, then, to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, shall be revived and continued in full force and effect as if such payment or payments had not been made or such enforcement or setoff had not occurred.

 

Section 10.09            Governing Law; Jurisdiction; Consent to Service of Process.  (a)  This Agreement and the other Loan Documents and any claims, controversy, dispute or cause of action (whether sounding n contract law or tort law or otherwise) based upon, arising out of or relating to this Agreement or any other Loan Document (except, as to any other Loan Document, as expressly set forth therein) and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with, the law of the State of New York without giving effect to any choice of law principles that would apply the laws of another jurisdiction.

 

(b)            Each Loan Party hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to any Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding shall be heard and determined in such New York State court or, to the extent permitted by applicable Legal Requirements, in such federal court.  Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Legal Requirements.  Nothing in this Agreement or any other Loan Document or otherwise shall affect any right that the Administrative Agent, any other Agent, the Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against any Loan Party or its properties in the courts of any jurisdiction.

 

  

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(c)            Each Loan Party hereby irrevocably and unconditionally waives, to the fullest extent permitted by applicable Legal Requirements, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in Section 10.09(b).  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable Legal Requirements, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

(d)            Each party to this Agreement irrevocably consents to service of process in any action or proceeding arising out of or relating to any Loan Document, in the manner provided for notices (other than telecopy or email) in Section 10.01.  Nothing in this Agreement or any other Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by applicable Legal Requirements.

 

Section 10.10            Waiver of Jury Trial.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENTS, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT, THE TRANSACTIONS OR THE OTHER TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.10.

 

Section 10.11            Headings.  Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

 

Section 10.12            Confidentiality.  Each of the Administrative Agent, the Issuing Bank and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ and Approved Funds’ directors, officers, employees, agents, advisors and other representatives, including accountants, legal counsel and other advisors (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 pursuant to the terms hereof), (b) to the extent requested by any regulatory authority or any quasi-regulatory authority (such as the National Association of Insurance Commissioners), (c) to the extent required by applicable Legal Requirements or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies under the Loan Documents or any suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section 10.12, 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, (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to Borrower and its obligations, (iii) any actual or prospective investor in an SPC or (iv) any rating agency for the purpose of obtaining a credit rating applicable to any Loan or Loan Party, (g) with the consent of Borrower, (h) to any assignee or pledgee under Section 10.04(g), or (i) to the extent such Information (i) is publicly available at the time of disclosure or becomes publicly available other than as a result of a breach of this Section 10.12 or (ii) becomes available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis from a source other than Borrower or any Subsidiary.  In addition, the Agents, the Issuing Bank and the Lenders may disclose the existence of the Loan Documents and information about the Loan Documents to market data collectors, similar service providers to the financing community, and service providers to the Agents, the Issuing Bank and the Lenders.  For the purposes of this Section 10.12, “Information” shall mean all information received from Borrower relating to Borrower or any of its Subsidiaries or its business that is clearly identified at the time of delivery as confidential, other than any such information that is available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by Borrower.  Any Person required to maintain the confidentiality of Information as provided in this Section 10.12 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.

 

  

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Section 10.13            Interest Rate Limitation.  Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively, the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable Legal Requirements, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section 10.13 shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.

 

Section 10.14            Assignment and Assumption.  Each Lender to become a party to this Agreement (other than the Administrative Agent and any other Lender that is a signatory hereto) shall do so by delivering to the Administrative Agent an Assignment and Assumption duly executed by such Lender, Borrower (if Borrower consent to such assignment is required hereunder) and the Administrative Agent.

 

Section 10.15            Obligations Absolute.  To the fullest extent permitted by applicable law, all obligations of the Loan Parties hereunder shall be absolute and unconditional irrespective of:

 

(a)            any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or the like of any Loan Party;

 

(b)            any lack of validity or enforceability of any Loan Document or any other agreement or instrument relating thereto against any Loan Party;

 

(c)            any change in the time, manner or place of payment of, or in any other term of, all or any of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from any Loan Document or any other agreement or instrument relating thereto;

 

  

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(d)            any exchange, release or non-perfection or loss of priority of any Liens on any or all of the Collateral, or any release or amendment or waiver of or consent to any departure from any guarantee, for all or any of the Secured Obligations;

 

(e)            any exercise or non-exercise, or any waiver of any right, remedy, power or privilege under or in respect hereof or any Loan Document; or

 

(f)             any other circumstances which might otherwise constitute a defense available to, or a discharge of, the Loan Parties.

 

Section 10.16            Waiver of Defenses; Absence of Fiduciary Duties.  (a)  Each of the Loan Parties hereby waives any and all suretyship defenses available to it as a Subsidiary Guarantor arising out of the joint and several nature of its respective duties and obligations hereunder (including any defense contained in Article VII).

 

(b)            Each Agent, each Lender and their Affiliates (collectively, solely for purposes of this paragraph, the “Lenders”), may have economic interests that conflict with those of the Loan Parties, their stockholders and/or their affiliates.  Each Loan Party agrees that nothing in the Loan Documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between any Lender, on the one hand, and such Loan Party, its stockholders or its affiliates, on the other.  The Loan Parties acknowledge and agree that (i) the transactions contemplated by the Loan Documents (including the exercise of rights and remedies hereunder and thereunder) are arm’s-length commercial transactions between the Lenders, on the one hand, and the Loan Parties, on the other, and (ii) in connection therewith and with the process leading thereto, (x) no Lender has assumed an advisory or fiduciary responsibility in favor of any Loan Party, its stockholders or its affiliates with respect to the transactions contemplated hereby or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether any Lender has advised, is currently advising or will advise any Loan Party, its stockholders or its Affiliates on other matters) or any other obligation to any Loan Party except the obligations expressly set forth in the Loan Documents and (y) each Lender is acting solely as principal and not as the agent or fiduciary of any Loan Party, its management, stockholders, creditors or any other Person.  Each Loan Party acknowledges and agrees that it has consulted its own legal and financial advisors to the extent it deemed appropriate and that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto.  Each Loan Party agrees that it will not claim that any Lender has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to such Loan Party, in connection with such transaction or the process leading thereto.

 

Section 10.17            Reinstatement

 

.  To the extent that any payments on the Indebtedness or proceeds of any Collateral are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, debtor in possession, receiver, receiver and manager, interim receiver or other Person under any bankruptcy law or other Insolvency Law, common law or equitable cause, then to such extent, the Indebtedness so satisfied shall be revived and continue as if such payment or proceeds had not been received and the Secured Parties’ Liens, security interests, rights, powers and remedies under this Agreement and each Loan Document shall continue in full force and effect.  In such event, each Loan Document shall be automatically reinstated and each Loan Party shall take (and shall cause each other Loan Party to take) such action as may be requested by the Administrative Agent, the Collateral Agent or the Required Lenders to effect such reinstatement.

 

Section 10.18            USA Patriot Act.  Each Lender hereby notifies each Loan Party that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies the Loan Parties, which information includes the name, address  and taxpayer identification number of each Loan Party and other information that will allow such Lender to identify such Loan Party in accordance with the Patriot Act.

 

(Signature Pages Follow)

 

  

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IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to be duly executed by their respective authorized officers or other authorized signatories as of the day and year first above written.

 

	  	
STEAK N SHAKE OPERATIONS, INC., as Borrower

	  	  
	  	  
	  	
By:

	/s/  Duane E. Geiger
	  	
Name:

	Duane E. Geiger
	  	
Title:

	Chief Financial Officer, Vice President, Controller and Treasurer

	  	
STEAK N SHAKE, LLC, as a Subsidiary Guarantor

	  	  
	  	  
	  	
By:

	/s/  Duane E. Geiger
	  	
Name:

	Duane E. Geiger
	  	
Title:

	Chief Financial Officer, Vice President, Controller and Treasurer  

	  	
STEAK N SHAKE ENTERPRISES, INC., as a Subsidiary Guarantor

	  	  
	  	  
	  	
By:

	/s/  Duane E. Geiger
	  	
Name:

	Duane E. Geiger
	  	
Title:

	Chief Financial Officer, Vice President, Controller and Treasurer  

	  	
JEFFERIES FINANCE LLC, as Administrative Agent, Collateral Agent, Arranger, Book Manager, Syndication Agent and as a Term Loan Lender and a Revolving Lender

	  	  
	  	  
	  	
By:

	/s/ Briane Buoye
	  	
Name:

	Briane Buoye  
	  	
Title:

	Managing Director  

 

 

  

 

  

	  	
FIFTH THIRD BANK, as Arranger, Issuing Bank, Swingline Lender and as a Revolving Lender

	  	  
	  	  
	  	
By:

	/s/ William Krummen
	  	
Name:

	William Krumen
	  	
Title:

	Vice President

  

 

  

 

Annex I

 

Initial Lenders and Commitments

 

	
Lender

	
Address for Notices

	
Amount of 

Revolving 

Commitment

	
Amount of 

Term Loan 

Commitment

	
 Jefferies Finance LLC

	
 520 Madison Avenue

 New York, New York  10022; 

 Attention:  Account Officer - Steak n Shake Operations, Inc.

 Telecopy No.:  (212) 284-3444

 Email: jfin.admin@jefferies.com

	
$10,000,000

	
$220,000,000

	
 Fifth Third Bank

	
 251 North Illinois Street, Suite 1200

 MD 8490A2

 Indianapolis, Indiana 46204

 Attention:  William J. Krummen 

 Telecopy No.: 317-383-2509

	
$20,000,000

	
$0

	  	
Total:

	
$30,000,000

	
$220,000,000

 

  

Annex I-1

  

Annex II

 

Applicable Margin

 

	
Total Net

Leverage Ratio

	
Applicable Margin for Eurodollar Revolving Loans

	
Applicable Margin for ABR Revolving Loans

	
Commitment Fee Rate

	
Level I

Greater than or equal to 4.75:1.00

	
4.25%

	
3.25%

	
0.50%

	
Level II

Greater than or equal to 3.50:1.00 and less than 4.75:1.00

	
3.75%

	
2.75%

	
0.50%

	
Level III

Greater than or equal to 2.25:1.00 and less than 3.50:1.00

	
3.25%

	
2.25%

	
0.45%

	
Level IV

Less than 2.25:1.00

	
2.75%

	
1.75%

	
0.40%

 

Each change in the Applicable Margin resulting from a change in the Total Net Leverage Ratio shall be effective with respect to all Commitment Fees owed, and all Term Loans, Revolving Loans, Swingline Loans and Letters of Credit outstanding on and after the date of delivery to the Administrative Agent of the financial statements and certificates required by Section 5.01(a) or (b) and Section 5.01(c), respectively, indicating such change until the date immediately preceding the next date of delivery of such financial statements and certificates indicating another such change.

 

Notwithstanding anything to the contrary in the Loan Documents, the Total Net Leverage Ratio shall be deemed to be in (i) Level II from the Closing Date to the date of delivery to the Administrative Agent of the financial statements and certificates required by Section 5.01(a) or (b) and Section 5.01(c) for the fiscal period ended at least two fiscal quarters of Borrower after the Closing Date, and (ii) Level I at any time during which Borrower has failed to deliver the financial statements and certificates required by Section 5.01(a) or (b) and Section 5.01(c), respectively, and (iii) Level I at any time during the existence of an Event of Default.

 

If (i) the Total Net Leverage Ratio used to determine the Applicable Margin for any period is incorrect as a result of any error, misstatement or misrepresentation contained in any financial statement or certificate delivered pursuant to Section 5.01(a) or (b) or Section 5.01(c), and (ii) as a result thereof, the Applicable Margin paid to the Lenders and/or the Issuing Bank, as the case may be, at any time pursuant to the Agreement is lower than the Applicable Margin that would have been payable to the Lenders and/or the Issuing Bank, as the case may be, had the Applicable Margin been calculated on the basis of the correct Total Net Leverage Ratio, the Applicable Margin in respect of such period will be adjusted upwards automatically and retroactively, and Borrower shall pay to each Lender and/or the Issuing Bank, as the case may be, such additional amounts (“Additional Amounts”) as are necessary so that after receipt of such amounts such Lender and/or the Issuing Bank, as the case may be, receives an amount equal to the amount it would have received had the Applicable Margin been calculated during such period on the basis of the correct Total Net Leverage Ratio.  Additional Amounts shall be payable 10 days following delivery by the Administrative Agent to Borrower of a notice (which shall be conclusive and binding absent manifest error) setting forth in reasonable detail the Administrative Agent’s calculation of the amount of any Additional Amounts owed to the Lenders and/or the Issuing Bank.  The payment of Additional Amounts pursuant to this Annex II shall be in addition to, and not in limitation of, any other amounts payable by Borrower pursuant to Section 2.06(c).  Additional Amounts shall constitute “Obligations”.  The agreements in this Annex II shall survive the payment of the Loans and all other Obligations payable under the Agreement and the termination of the Commitments.

 

  

Annex II-1

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