Document:

ex_199702.htm

 

Exhibit 10.2

SCHEDULE A

 

REVOLVING COMMITMENTS AND TERM A LOANS

AFTER GIVING EFFECT TO THE REALLOCATION

 

 

 

	
			Lender

				 	
			Revolving

			Commitment

				 	 	
			Term A Loan

				 
	
			Bank of America, N.A.

				 	$	83,636,363.62	 	 	$	19,133,387.63	 
	
			Deutsche Bank AG New York Branch

				 	$	115,000,000.00	 	 	 	--	 
	
			Wells Fargo Bank, National Association

				 	$	83,636,363.64	 	 	$	19,133,387.28	 
	
			Fifth Third Bank, National Association

				 	$	83,636,363.64	 	 	$	19,133,387.28	 
	
			JPMorgan Chase Bank, N.A.

				 	$	100,000,000.00	 	 	 	--	 
	
			Truist Bank (as successor by merger to SunTrust Bank)

				 	$	88,682,824.46	 	 	$	21,317,175.54	 
	
			Barclays Bank PLC

				 	$	100,000,000.00	 	 	 	--	 
	
			BNP Paribas

				 	$	85,000,000.00	 	 	 	--	 
	
			Capital One, National Association

				 	$	85,000,000.00  65,875,000.00	 	 	$	13,201,476.63	 
	
			U.S. Bank National Association

				 	$	65,875,000.00  61,818,181.82	 	 	$	14,142,068.81	 
	
			Crédit Agricole Corporate and Investment Bank

				 	$	65,875,000.00	 	 	$	5,884,801.87	 
	
			Citizens Bank, N.A.

				 	$	61,818,181.82	 	 	$	5,000,000.00	 
	
			KeyBank National Association

				 	$	38,750,000.00	 	 	$	7,765,574.50	 
	
			First Hawaiian Bank

				 	 	--	 	 	$	6,100,500.29	 
	
			Franklin Investors Securities Trust – Franklin Floating Rate Daily Access Fund

				 	 	--	 	 	$	4,096,633.00	 
	
			Franklin Floating Rate Mater Trust – Franklin Floating Rate Master Series

				 	 	--	 	 	$	1,969,964.30	 
	
			Franklin Templeton Series II Funds Franklin Floating Rate II Fund

				 	 	--	 	 	$	550,697.30	 
	
			Octagon Joint Credit Trust Series I

				 	 	--	 	 	$	1,617,560.87	 
	
			Total:

				 	$	1,033,728,279.00	 	 	$	139,046,615.30ktc_exhibit10x1to8-kaugu

                                                          Exhibit 10.1                                                  EXECUTION VERSION                                                                                                                                                                                                                                                                                                                     LOAN, GUARANTY AND SECURITY AGREEMENT                     Dated as of August 14, 2020                                                 KEY TRONIC CORPORATION,                  CDR MANUFACTURING, LLC,          AYRSHIRE ELECTRONICS OF ARKANSAS LLC,         AYRSHIRE ELECTRONICS OF MISSISSIPPI, LLC,                             and  CERTAIN SUBSIDIARIES FROM TIME TO TIME JOINED HERETO,                         as Borrowers,    CERTAIN SUBSIDIARIES FROM TIME TO TIME JOINED HERETO,                         as Guarantors,                                                           and                                                 BANK OF AMERICA, N.A.,            as Agent, Sole Lead Arranger and Sole Bookrunner                                                                                                           

 

                              TABLE OF CONTENTS                                                                                                                       Page    SECTION 1.  DEFINITIONS; RULES OF CONSTRUCTION ........................................................... 1        1.1   Definitions .................................................................................................................... 1        1.2   Accounting Terms ....................................................................................................... 25        1.3   Uniform Commercial Code.......................................................................................... 25        1.4   Certain Matters of Construction ................................................................................... 25        1.5   LIBOR Amendment .................................................................................................... 26  SECTION 2.  CREDIT FACILITIES ................................................................................................ 26        2.1   Loan Commitments ..................................................................................................... 26        2.2   Letter of Credit Facility ............................................................................................... 28  SECTION 3.  INTEREST, FEES AND CHARGES ........................................................................... 30        3.1   Interest ........................................................................................................................ 30        3.2   Fees............................................................................................................................. 31        3.3   Computation of Interest, Fees, Yield Protection ........................................................... 31        3.4   Reimbursement Obligations ......................................................................................... 31        3.5   Illegality ...................................................................................................................... 32        3.6   Inability to Determine Rates ........................................................................................ 32        3.7   Increased Costs; Capital Adequacy .............................................................................. 32        3.8   Mitigation ................................................................................................................... 33        3.9   Funding Losses ........................................................................................................... 33        3.10  Maximum Interest ....................................................................................................... 34  SECTION 4.  LOAN ADMINISTRATION ....................................................................................... 34        4.1   Manner of Borrowing and Funding Loans .................................................................... 34        4.2   Defaulting Lender ....................................................................................................... 35        4.3   Reserved ..................................................................................................................... 36        4.4   Borrower Agent ........................................................................................................... 36        4.5   One Obligation ............................................................................................................ 36        4.6   Effect of Termination .................................................................................................. 36  SECTION 5.  PAYMENTS ............................................................................................................... 36        5.1   General Payment Provisions ........................................................................................ 36        5.2   Repayment of Loans .................................................................................................... 37        5.3   Payment of Other Obligations ...................................................................................... 37        5.4   Marshaling; Payments Set Aside .................................................................................. 37        5.5   Application and Allocation of Payments ...................................................................... 37        5.6   Dominion Account ...................................................................................................... 38        5.7   Account Stated ............................................................................................................ 38        5.8   Taxes .......................................................................................................................... 38         5.9   Lender Tax Information ............................................................................................... 40         5.10  Nature and Extent of Each Borrower’s Liability ........................................................... 41   SECTION 6.  CONDITIONS PRECEDENT ..................................................................................... 44         6.1   Conditions Precedent to Initial Loans .......................................................................... 44         6.2   Conditions Precedent to All Credit Extensions ............................................................. 45   SECTION 7.  COLLATERAL........................................................................................................... 45                                          -i-    

 

                              TABLE OF CONTENTS                                       (continued)                                                                            Page          7.1   Grant of Security Interest ............................................................................................. 45        7.2   Lien on Deposit Accounts; Cash Collateral .................................................................. 46        7.3   Reserved ..................................................................................................................... 46        7.4   Other Collateral ........................................................................................................... 47        7.5   Limitations .................................................................................................................. 47        7.6   Further Assurances ...................................................................................................... 47        7.7   Foreign Subsidiary Stock ............................................................................................. 47  SECTION 8.  COLLATERAL ADMINISTRATION ........................................................................ 47         8.1   Borrowing Base Reports .............................................................................................. 47         8.2   Accounts ..................................................................................................................... 47         8.3   Inventory ..................................................................................................................... 48         8.4   Equipment ................................................................................................................... 49         8.5   Deposit Accounts ........................................................................................................ 49         8.6   General Provisions ...................................................................................................... 49         8.7   Power of Attorney ....................................................................................................... 50         8.8   Release of Collateral.................................................................................................... 51  SECTION 9.  REPRESENTATIONS AND WARRANTIES ............................................................. 51         9.1   General Representations and Warranties ...................................................................... 51         9.2   Complete Disclosure ................................................................................................... 56  SECTION 10.  COVENANTS AND CONTINUING AGREEMENTS ................................................ 56        10.1  Affirmative Covenants ................................................................................................ 56        10.2  Negative Covenants ..................................................................................................... 59        10.3  Financial Covenants .................................................................................................... 62  SECTION 11.  EVENTS OF DEFAULT; REMEDIES ON DEFAULT ............................................... 63        11.1  Events of Default ......................................................................................................... 63        11.2  Remedies upon Default ............................................................................................... 64        11.3  License ........................................................................................................................ 65        11.4  Setoff .......................................................................................................................... 65        11.5  Remedies Cumulative; No Waiver ............................................................................... 65  SECTION 12.  AGENT ....................................................................................................................... 66        12.1  Appointment, Authority and Duties of Agent ............................................................... 66        12.2  Agreements Regarding Collateral and Borrower Materials ........................................... 67         12.3  Reliance By Agent ...................................................................................................... 67         12.4  Action Upon Default ................................................................................................... 67         12.5  Ratable Sharing ........................................................................................................... 68         12.6  Indemnification ........................................................................................................... 68         12.7  Limitation on Responsibilities of Agent ....................................................................... 68         12.8  Successor Agent and Co-Agents .................................................................................. 68         12.9  Due Diligence and Non-Reliance ................................................................................. 69         12.10  Remittance of Payments and Collections ..................................................................... 69         12.11  Individual Capacities ................................................................................................... 70         12.12  Titles ........................................................................................................................... 70         12.13  Certain ERISA Matters ................................................................................................ 70         12.14  Bank Product Providers ............................................................................................... 71                                        -ii-      

 

                              TABLE OF CONTENTS                                       (continued)                                                                            Page          12.15  No Third Party Beneficiaries ....................................................................................... 71  SECTION 13.  BENEFIT OF AGREEMENT; ASSIGNMENTS ......................................................... 71         13.1  Successors and Assigns ............................................................................................... 71         13.2  Participations............................................................................................................... 71         13.3  Assignments ................................................................................................................ 72         13.4  Replacement of Certain Lenders .................................................................................. 73   SECTION 14.  MISCELLANEOUS .................................................................................................... 73         14.1  Consents, Amendments and Waivers ........................................................................... 73         14.2  Indemnity .................................................................................................................... 74         14.3  Notices and Communications ...................................................................................... 74         14.4  Performance of Borrowers’ Obligations ....................................................................... 75         14.5  Credit Inquiries ........................................................................................................... 75         14.6  Severability ................................................................................................................. 75         14.7  Cumulative Effect; Conflict of Terms .......................................................................... 76         14.8  Counterparts; Execution .............................................................................................. 76         14.9  Entire Agreement ........................................................................................................ 76         14.10  Relationship with Lenders ........................................................................................... 76         14.11  No Advisory or Fiduciary Responsibility ..................................................................... 76         14.12  Confidentiality ............................................................................................................ 77         14.13  Reserved ..................................................................................................................... 77         14.14  GOVERNING LAW ................................................................................................... 77         14.15  Consent to Forum; Bail-In of EEA Financial Institutions ............................................. 78         14.16  Waivers by Borrowers ................................................................................................. 78         14.17  Patriot Act Notice ........................................................................................................ 79         14.18  NO ORAL AGREEMENT .......................................................................................... 79         14.19  Acknowledgement Regarding Any Supported QFCs .................................................... 79   SECTION 15.  CONTINUING GUARANTY ..................................................................................... 80         15.1  Guaranty ..................................................................................................................... 80         15.2  Rights of Lenders ........................................................................................................ 80         15.3  Certain Waivers ........................................................................................................... 81         15.4  Obligations Independent .............................................................................................. 81         15.5  Subrogation ................................................................................................................. 81         15.6  Termination; Reinstatement ......................................................................................... 81         15.7  Subordination .............................................................................................................. 81         15.8  Stay of Acceleration .................................................................................................... 82         15.9  Condition of Borrowers ............................................................................................... 82         15.10  Keepwell ..................................................................................................................... 82         15.11  Limitation of Guaranty ................................................................................................ 82                                                -iii-      

 

                         LIST OF EXHIBITS AND SCHEDULES      Exhibit A         Assignment  Exhibit B         Assignment Notice   Schedule 1.1      Commitments of Lenders  Schedule 6.3                   Post-Closing Matters   Schedule 8.5      Deposit Accounts  Schedule 8.6.1    Business Locations  Schedule 9.1.4    Names and Capital Structure  Schedule 9.1.5    Real Estate in Special Flood Hazard Zone  Schedule 9.1.11   Patents, Trademarks, Copyrights and Licenses  Schedule 9.1.14   Environmental Matters  Schedule 9.1.15   Restrictive Agreements  Schedule 9.1.16   Litigation  Schedule 9.1.18   Pension Plans  Schedule 9.1.20   Labor Contracts  Schedule 10.2.2   Existing Liens  Schedule 10.2.17  Existing Affiliate Transactions                                            -iv-    

 

                     LOAN, GUARANTY AND SECURITY AGREEMENT         THIS LOAN, GUARANTY AND SECURITY AGREEMENT        is dated as of August 14, 2020,  among  KEY  TRONIC  CORPORATION,     a  Washington  corporation  (“Key  Tronic”), CDR  MANUFACTURING,  LLC    ,  a  Kentucky  limited  liability  company  (“CDR”), AYRSHIRE  ELECTRONICS OF ARKANSAS LLC     , a Kentucky limited liability company  (“Ayrshire Arkansas”),  AYRSHIRE ELECTRONICS OF MISSISSIPPI, LLC   , a Kentucky limited liability company (“Ayrshire  Mississippi”; and together with Key Tronic, CDR, Ayrshire Arkansas, and any other party joined hereto as  a Borrower, each, a “Borrower” and collectively, the “Borrowers”), K T SERVICES, INC., a Washington  corporation  (“KT”), KEY  TRONIC  CHINA  LTD. ,  a  Washington  corporation  (“KTC”)  and  any  Subsidiary of Key Tronic party hereto (or joined hereto in the future) as a guarantor (together with KT and  KTC, each, a “Guarantor” and collectively, the “Guarantors”; and together with the Borrowers, each, an  “Obligor” and collectively, the “Obligors”), the financial institutions party to this Agreement from time to  time as Lenders, and BANK OF AMERICA, N.A. , a national banking association (“Bank of America”),  as agent for the Lenders (in such capacity, “Agent”).                                    R E C I T A L S :         WHEREAS,   Borrowers  have  requested  that  Lenders  provide  a  credit  facility  to  Borrowers  to  finance their mutual and collective business enterprise.           WHEREAS,   Lenders are willing to provide the credit facility on the terms and conditions set forth  in this Agreement.         NOW,  THEREFORE   ,  for  valuable  consideration  hereby  acknowledged,  the  parties  agree  as  follows:   SECTION 1.  DEFINITIONS; RULES OF CONSTRUCTION         1.1   Definitions .  As used herein, the following terms have the meanings set forth below:         Acquisition:  a transaction or series of transactions resulting in (a) acquisition of a business, division  or substantially all assets of a Person; (b) record or beneficial ownership of 50% or more of the Equity  Interests of a Person; or (c) merger, consolidation or combination of a Borrower or Subsidiary with another  Person that is not an Obligor.         Affiliate:  with respect to a specified Person, any other Person that directly, or indirectly through  intermediaries, Controls, is Controlled by or is under common Control with the specified Person.         Agent  Indemnitees:   Agent  and  its  officers,  directors,  employees,  Affiliates  and  Agent  Professionals.         Agent  Professionals:   attorneys,  accountants,  appraisers,  auditors,  advisors,  agents,  business  valuation experts, environmental engineers or consultants, turnaround consultants, and other professionals,  experts and representatives retained or used by Agent.         Allocable Amount:  as defined in Section 5.10.3 .         Anti-Terrorism Law:  any law relating to terrorism or money laundering, including the Patriot Act.                                          -1-    

 

         Applicable Law:  all laws, rules, regulations and governmental guidelines applicable to the Person  or matter in question, including statutory law, common law and equitable principles, as well as provisions  of constitutions, treaties, statutes, rules, regulations, orders and decrees of Governmental Authorities.         Applicable Margin:  the margin set forth below, as determined by the average daily Availability for  the last Fiscal Quarter:            Level     Average Daily Availability   Base Rate Loans  LIBOR Loans             I            < $15,000,000               1.75%           2.75%            II       > $15,000,000 < $30,000,000      1.50%           2.50%            III           > $30,000,000               1.25%           2.25%    Through December 31, 2020, margins shall be  determined  as  if  Level  II  were  applicable.   Thereafter,  margins shall be subject to increase or decrease by Agent on the first day of the calendar month following   each Fiscal Quarter end.  If Agent is unable to calculate average daily Availability for a Fiscal Quarter due   to Borrowers’ failure to deliver any Borrowing Base Report when required hereunder, then, at the option  of Agent or Required Lenders, margins shall be determined as if Level I were applicable until the first day  of the calendar month following its receipt.  Notwithstanding the above, all margins with respect to Loans  which are FILO Loans shall be determined based on the margins set forth in the appropriate level above   plus  1.00%.   In  the  event  the  Commitments  are  increased  pursuant  to Section  2.1.7   or  otherwise,  the  amounts in the column titled “Average Daily Availability” shall be increased to maintain the amounts as a  percentage of the total Commitments.         Approved Fund:  any entity owned or Controlled by a Lender or Affiliate of a Lender, if such entity  is engaged in making or investing in commercial loans in its ordinary course of activities.         Asset Disposition:  a sale, lease, license, consignment, transfer or other disposition of Property of  an Obligor, including any disposition in connection with a sale-leaseback transaction, synthetic lease or  statutory division of a limited liability company.         Assignment:  an assignment agreement between a Lender and Eligible Assignee, in the form of  Exhibit A or otherwise satisfactory to Agent.         Availability:  the Borrowing Base minus Revolver Usage.         Availability Block:  $5,000,000.         Availability Reserve:  the sum (without duplication) of (a) the Rent and Charges Reserve; (b) the  Availability Block; (c) the Dilution Reserve; (d) accounts payable which remain unpaid more than 60 days   after the due date thereof; and (e) additional reserves, in such amounts and with respect to such matters, as   Agent in its Permitted Discretion may elect to impose from time to time, including, but not limited to, (i)   the Inventory Reserve, (ii) the Bank Product Reserve, and (iii) liabilities secured by Liens upon Collateral   that are or may be senior to Agent’s Liens (but imposition of any such reserve shall not waive an Event of   Default arising therefrom); provided, that Agent may only initially establish reserves under clause (f) during  the existence of an Event of Default (it being understood that once established, the reserves under clause   (f) may be continued and maintained if the applicable Event of Default is no longer in existence).         Bail-In Action:  the exercise of any Write-Down and Conversion Powers by the applicable EEA  Resolution Authority in respect of any liability of an EEA Financial Institution.                                         -2-    

 

         Bail-In  Legislation:   with  respect  to  any  EEA  Member  Country  implementing  Article  55  of  Directive  2014/59/EU  of  the  European  Parliament  and  of  the  Council  of  the  European  Union,  the  implementing law for such EEA Member Country from time to time which is described in the EU Bail-In  Legislation Schedule.         BALC Facility: that certain term loan facility provided by Bank of America Leasing & Capital in  the aggregate amount of $5,000,000.         Bank of America Indemnitees:  Bank of America and its officers, directors, employees, Affiliates,  agents, advisors and attorneys.         Bank Product:  any of the following products or services extended to a Borrower or Affiliate of a  Borrower by a Lender or any of its Affiliates:  (a) Cash Management Services; (b) Swaps; (c) commercial  credit card and merchant card services; and (d) supply chain finance, credit insurance, leases and other  banking products or services, other than Letters of Credit.         Bank Product Reserve:  the aggregate amount of reserves established by Agent from time to time  in its Permitted Discretion with respect to Secured Bank Product Obligations.         Bankruptcy Code:  Title 11 of the United States Code.         Base Rate:  for any day, a per annum rate equal to the greater of (a) the Prime Rate for such day;  (b) the Federal Funds Rate for such day, plus 0.50%; or (c) LIBOR for a 30 day interest period as of such  day, plus 1.00%; provided, that in no event shall the Base Rate be less than zero.         Base Rate Loan:  any Loan that bears interest based on the Base Rate.         Beneficial Ownership Certification:  a certification regarding beneficial ownership as required by  the Beneficial Ownership Regulation, in form and substance satisfactory to Agent.         Beneficial Ownership Regulation:  31 C.F.R. §1010.230.         Benefit Plan:  any (a) employee benefit plan (as defined in ERISA) subject to Title I of ERISA,  (b) plan (as defined in and subject to Section 4975 of the Code), or (c) Person whose assets include (for  purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the  Code) the assets of any such employee benefit plan or plan.         Borrowed Money:  with respect to any Obligor, without duplication, its (a) Debt that (i) arises from  the lending of money by any Person to such Obligor, (ii) is evidenced by notes, drafts, bonds, debentures,  credit documents or similar instruments, (iii) accrues interest or is a type upon which interest charges are  customarily paid (excluding trade payables owing in the Ordinary Course of Business), or (iv) was issued  or assumed as full or partial payment for Property; (b) Capital Leases; (c) letter of credit reimbursement  obligations; and (d) guaranties of any of the foregoing owing by another Person.         Borrower Agent:  as defined in Section 4.4 .          Borrower  Materials:   Borrowing  Base  Reports, Compliance  Certificates  and  other  information,  reports, financial statements and other materials delivered by Borrowers hereunder, as well as other Reports  and information provided by Agent to Lenders.         Borrowing:  Loans made or converted together on the same day.                                         -3-    

 

         Borrowing Base:  on any date of determination, an amount equal to the lesser of:         (a) the aggregate Commitments; or          (b) the sum of:                (i) the Investment Grade Accounts Formula Amount, plus                (ii) the Non-Investment Grade Accounts Formula Amount, plus               (iii) during the FILO Period, the FILO Amount, plus               (iv) the Inventory Formula Amount, minus               (v) the Availability Reserve.         Borrowing Base Report:  a report of the Borrowing Base, in form and substance satisfactory to  Agent.         Business Day:  any day that is not a Saturday, Sunday or other day on which commercial banks are  authorized to close under the laws of, or are in fact closed in, North Carolina and California; and if such   day relates to a LIBOR Loan, is a day on which dealings in Dollar deposits are conducted in the London   interbank market.          Capital Expenditures:  all liabilities incurred or expenditures made by a Borrower or Subsidiary for  the acquisition of fixed assets, or any improvements, replacements, substitutions or additions thereto with  a useful life of more than one year.         Capital Lease:  any lease required to be capitalized for financial reporting purposes in accordance  with GAAP.         Cash Collateral:  cash delivered to Agent to Cash Collateralize any Obligations, and all interest,  dividends, earnings and other proceeds relating thereto.         Cash Collateralize:  the delivery of cash to Agent, as security for the payment of Obligations, in an  amount equal to (a) with respect to LC Obligations, 105% of the aggregate LC Obligations, and (b) with  respect to any inchoate, contingent or other Obligations (including Secured Bank Product Obligations),  Agent’s  good  faith  estimate  of  the  amount  due  or  to  become  due,  including  fees,  expenses  and  indemnification hereunder.  “Cash Collateralization” has a correlative meaning.         Cash Equivalents:  (a) marketable obligations issued or unconditionally guaranteed by, and backed  by the full faith and credit of, the U.S. government, maturing within 12 months of the date of acquisition;  (b) certificates of deposit, time deposits and bankers’ acceptances maturing within 12 months of the date of  acquisition, and overnight bank deposits, in each case which are issued by Bank of America or a commercial  bank organized under the laws of the United States or any state or district thereof, rated A-1 (or better) by  S&P or P-1 (or better) by Moody’s at the time of acquisition, and (unless issued by a Lender) not subject  to offset rights; (c) repurchase obligations with a term of not more than 30 days for underlying investments  of  the  types  described  in  clauses  (a)  and  (b)  entered  into  with  any  bank  described  in  clause  (b);  (d)  commercial paper issued by Bank of America or rated A-1 (or better) by S&P or P-1 (or better) by Moody’s,  and maturing within nine months of the date of acquisition; and (e) shares of any money market fund that                                          -4-    

 

   has substantially all of its assets invested continuously in the types of investments referred to above, has  net assets of at least $500,000,000 and has the highest rating obtainable from either Moody’s or S&P.         Cash Flow Leverage Ratio: measured for any applicable period of measurement, the ratio of (a)  Borrowed Money to (b) EBITDA.         Cash  Management  Services:   services  relating  to  operating,  collections,  payroll,  trust,  or  other  depository  or  disbursement  accounts,  including  automated  clearinghouse,  e-payable,  electronic  funds  transfer, wire transfer, controlled disbursement, overdraft, depository, information reporting, lockbox and  stop payment services.         CERCLA:   the  Comprehensive  Environmental  Response  Compensation  and  Liability  Act  (42  U.S.C. § 9601 et seq.).         Change in Law:  the occurrence, after the date hereof, of (a) the adoption, taking effect or phasing  in of any  law, rule, regulation  or treaty; (b) any change in any law, rule, regulation or treaty or in the  administration,  interpretation  or  application  thereof;  or  (c)  the  making,  issuance  or  application  of  any  request, guideline, requirement or directive (whether or not having the force of law) by any Governmental  Authority; provided, that “Change in Law” shall include, regardless of the date enacted, adopted or issued,  all requests, rules, guidelines, requirements or directives (i) under or relating to the Dodd-Frank Wall Street   Reform  and  Consumer  Protection  Act,  or  (ii)  promulgated  pursuant  to  Basel  III  by  the  Bank  for   International Settlements, the Basel Committee on Banking Supervision (or any similar authority) or any  other Governmental Authority.          Change of Control:  means at any time, (a) any “person” or “group” (as such terms are used in  Sections  13(d)  and  14(d)  of  the  Exchange  Act),  shall  become,  or  obtain  rights  (whether  by  means  of  warrants, options or otherwise) to become, the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)- 5 under the Exchange Act), directly or indirectly, of thirty-five percent (35%) or more of the ordinary voting   power for the election of directors of Key Tronic represented by the issued and outstanding Equity Interests   of Key Tronic (determined on a fully diluted basis) or (b) Key Tronic fails to own and control 100% of the   Equity Interests of each of its Subsidiaries, with the exception of a de minimis amount of the Equity Interests   of any Foreign Subsidiary in order to comply with Applicable Law.          Claims:   all  claims,  liabilities,  obligations,  losses,  damages,  penalties,  judgments,  proceedings,  interest, costs and expenses of any kind (including remedial response costs, reasonable attorneys’ fees and  Extraordinary Expenses) at any time (including after Full Payment of the Obligations or replacement of  Agent or any Lender) incurred by any Indemnitee or asserted against any Indemnitee by any Obligor or  other Person, in any way relating to (a) any Loans, Letters of Credit, Loan Documents, Borrower Materials,  or the use thereof or transactions relating thereto, (b) any action taken or omitted in connection with any  Loan  Documents,  (c)  the  existence  or  perfection  of any  Liens,  or  realization  upon  any  Collateral,  (d) exercise of any rights or remedies under any Loan Documents or Applicable Law, or (e) failure by any  Obligor  to  perform  or  observe  any  terms  of  any  Loan  Document,  in  each  case  including  all  costs  and  expenses relating to any investigation, litigation, arbitration or other proceeding (including an Insolvency  Proceeding or appellate proceedings), whether or not the applicable Indemnitee is a party thereto.         Closing Date:  as defined in Section 6.1 .         Code:  the Internal Revenue Code of 1986.                                          -5-    

 

         Collateral:  all Property described in Section 7.1 , all Property described in any Security Documents  as security for any Obligations, and all other Property that now or hereafter secures (or is intended to secure)  any Obligations.         Commitment:  for any Lender, its obligation to make Loans and to participate in LC Obligations  up to the maximum principal amount shown on Schedule 1.1 , as hereafter modified pursuant to Section  2.1.7  or an Assignment to which it is a party.  “Commitments” means the aggregate amount of all Lenders’  Commitments.         Commodity Exchange Act:  the Commodity Exchange Act (7 U.S.C. § 1 et  seq. ).         Compliance  Certificate:   a  certificate,  in  form  and  substance  satisfactory  to  Agent,  by  which  Borrowers certify compliance with Section 10.3 .         Connection  Income  Taxes:   Other  Connection  Taxes  that  are  imposed  on  or  measured  by  net  income (however denominated), or are franchise or branch profits Taxes.         Contingent Obligation:  any obligation of a Person arising from a guaranty, indemnity or other  assurance  of  payment  or  performance  of  any  Debt,  lease,  dividend  or  other  obligation  (“primary  obligation”) of another obligor (“primary obligor”) in any manner, whether directly or indirectly, including  any obligation of such Person under any (a) guaranty, endorsement, co-making or sale with recourse of an  obligation  of  a  primary  obligor;  (b)  obligation  to make  take-or-pay  or  similar  payments  regardless  of  nonperformance  by  any  other  party  to  an  agreement; or  (c)  arrangement  (i)  to  purchase  any  primary  obligation or security therefor, (ii) to supply funds for the purchase or payment of any primary obligation,  (iii) to maintain or assure working capital, equity capital, net worth or solvency of the primary obligor,  (iv) to purchase Property or services for the purpose of assuring the ability of the primary obligor to perform  a primary obligation, or (v) otherwise to assure or hold harmless the holder of any primary obligation against  loss  in  respect  thereof.  The  amount  of  any  Contingent  Obligation  shall  be  deemed  to  be  the  stated  or  determinable amount of the primary obligation (or, if less, the maximum amount for which such Person  may be liable under the instrument evidencing the Contingent Obligation) or, if not stated or determinable,  the maximum reasonably anticipated liability with respect thereto.         Control:  possession, directly or indirectly, of the power to direct or cause direction of a Person’s  management or policies, whether through the ability to exercise voting power, by contract or otherwise.         Debt:   as  applied  to  any  Person,  without  duplication,  (a)  all  items  that  would  be  included  as  liabilities on a balance sheet in accordance with GAAP, excluding trade payables incurred and being paid  in the Ordinary Course of Business, but including Capital Leases; (b) all Contingent Obligations; (c) all  reimbursement obligations in connection with letters of credit issued for the account of such Person; and  (d) in the case of a Borrower, the Obligations.  The Debt of a Person shall include any recourse Debt of any  partnership in which such Person is a general partner or joint venturer.         Default:  an event or condition that, with the lapse of time or giving of notice, would constitute an  Event of Default.         Default Rate:  for any Obligation (including, to the extent permitted by law, interest not paid when  due), 2.00% plus the interest rate otherwise applicable thereto.         Defaulting Lender:  any Lender that (a) has failed to comply with its funding obligations hereunder,  and such failure is not cured within two Business Days; (b) has notified Agent or any Borrower that such  Lender does not intend to comply with its funding obligations hereunder or under any other credit facility,                                         -6-    

 

   or has made a public statement to that effect; (c) has failed, within three Business Days following request  by Agent or any Borrower, to confirm in a manner satisfactory to Agent and Borrowers that such Lender  will comply with its funding obligations hereunder; or (d) has, or has a direct or indirect parent company  that  has,  become  the  subject  of  an  Insolvency  Proceeding  (including  reorganization,  liquidation,  or  appointment  of  a receiver,  custodian,  administrator  or  similar  Person  by  the  Federal  Deposit  Insurance  Corporation or any other regulatory authority) or Bail-In Action; provided, that a Lender shall not be a  Defaulting Lender solely by virtue of a Governmental Authority’s ownership of an equity interest in such  Lender or parent company unless the ownership provides immunity for such Lender from jurisdiction of  courts within the United States or from enforcement of judgments or writs of attachment on its assets, or  permits  such  Lender  or  Governmental  Authority  to  repudiate  or  otherwise  to  reject  such  Lender’s  agreements.         Deposit  Account  Control  Agreement:   control  agreement  satisfactory  to  Agent  executed  by  an  institution maintaining a Deposit Account for an Obligor, to perfect Agent’s Lien on such account.         Designated Jurisdiction:  a country or territory that is the target of a Sanction.         Dilution Percent:  the percent, determined for Borrowers’ most recent Fiscal Quarter, equal to (a)  bad debt write-downs or write-offs, discounts, returns, promotions, credits, credit memos and other dilutive  items with respect to Accounts, divided by (b) gross sales.         Dilution Reserve: a reserve equal to 1.00% of the Value of Eligible Accounts for each percentage  point (or portion thereof) that the Dilution Percent exceeds 5.00%.          Distribution:   any  declaration  or  payment  of  a  distribution, interest or dividend  on any Equity  Interest (other than payment-in-kind, including the issuance of any Equity Interests); distribution, advance  or  repayment  of  Debt  to  a  holder  of  Equity  Interests;  or  purchase,  redemption,  or  other  acquisition  or   retirement for value of any Equity Interest.          Dollars:  lawful money of the United States.         Dominion Account:  a special account established by Borrowers at Bank of America or another  bank acceptable to Agent, over which Agent has exclusive control for withdrawal purposes.         EBITDA:   determined  on  a  consolidated  basis  for  Borrowers  and  Subsidiaries,  net  income  calculated before (i) interest expense, (ii) provision for income taxes, (iii) depreciation and amortization  expense, (iv) gains or losses arising from the sale of capital assets, (v) gains arising from the write-up of  assets, (vi) non-cash gains or losses arising from the write-down of assets, (vii) any extraordinary gains,  (viii) losses not to exceed the aggregate amount of $277,000 incurred in the Fiscal Quarter ending December  28, 2019 resulting from the sale of a manufacturing facility in Kentucky,  (ix) non-recurring cash expenses  related to COVID-19 and incurred prior to the Closing Date, not to exceed $2,688,554 in the aggregate, and  (x) any other items approved by Agent (in each case, to the extent included in determining net income).          EEA  Financial  Institution:   (a) any  credit  institution  or  investment  firm  established  in  an  EEA  Member  Country  that  is  subject  to  the  supervision  of  an  EEA  Resolution  Authority;  (b)  any  entity  established in an EEA Member Country that is a parent of an institution described in clause (a) above; or  (c) any financial institution established in an EEA Member Country that is a subsidiary of an institution  described in the foregoing clauses and is subject to consolidated supervision with its parent.         EEA Member Country:  any of the member states of the European Union, Iceland, Liechtenstein  and Norway.                                         -7-    

 

         EEA Resolution Authority:  any public administrative authority or any Person entrusted with public  administrative authority of an EEA Member Country (including any delegee) having responsibility for the  resolution of any EEA Financial Institution.         Eligible Account:  an Account owing to a Borrower that arises in the Ordinary Course of Business  from the sale of goods or rendition of services and is payable in Dollars’ provided, that, no Account shall  be an Eligible Account if:         (a) (i) with respect to Eligible Long-Dated Accounts, it is unpaid  for no more than 60 days after  the original due date, or more than 120 days after the original invoice date, (ii) with respect to Accounts   owed by Siemens Aktiengesellschaft with 180 day terms, it is unpaid for no more than 30 days after the   original due date, or more than 180 days after the original invoice date, and (iii) with respect to all other   Accounts, it is unpaid for more than 60 days after the original due date, or more than 90 days after the   original invoice date;           (b) 50% or more of the Accounts owing by the Account Debtor are not Eligible Accounts under   the foregoing clause;           (c) when aggregated with other Accounts owing by the Account Debtor and its Affiliates, it exceeds   15% of the aggregate Eligible Accounts (or such higher percentage as Agent may establish for the Account   Debtor from time to time); provided, that, with respect to Accounts owed by (x) Helen  of Troy and its  Affiliates,  such  percentage  shall  be  30%  (or  such  higher  percentage  as  Agent  may  establish  for  such  Account Debtor from time to time) or (y) Lululemon Athletica and its Affiliates, such percentage shall be  25% (or such higher percentage as Agent may establish for such Account Debtor from time to time);          (d) it does not conform with a covenant or representation herein;          (e) it is owing by a creditor or supplier, or is otherwise subject to an offset, counterclaim, dispute,  deduction, discount (other than discounts or allowances reflected on the face of the applicable invoice and  granted  in  the  Ordinary  Course  of  Business  for  prompt  payment),  recoupment,  reserve,  defense,  chargeback, credit or allowance (but ineligibility shall be limited to the amount thereof);          (f)  an  Insolvency  Proceeding  has  been  commenced  by or  against  the  Account  Debtor;  or  the  Account Debtor has failed, has suspended or ceased doing business, is liquidating, dissolving or winding  up its affairs, is not Solvent, or is the target of any Sanction or on any specially designated nationals list  maintained by OFAC; or the Borrower is not able to bring suit or enforce remedies against the Account  Debtor through judicial process;          (g) the Account Debtor is organized or has its principal offices or assets outside the United States  or Canada, other than (i) an Account which is supported by a letter of credit (delivered to and directly  drawable by Agent) or credit insurance satisfactory in all respects to Agent in its Permitted Discretion;  provided that the aggregate Value of Accounts supported by a letter of credit and deemed eligible under  this sub-clause shall at no time exceed $3,000,000;          (h) it is owing by a Governmental Authority, unless the Account Debtor is the United States or any  department, agency or instrumentality thereof and the Account has been assigned to Agent in compliance  with the federal Assignment of Claims Act;          (i) it is not subject to a duly perfected, first priority Lien in favor of Agent, or is subject to any other  Lien that is not subordinated to the Lien  in favor of  Agent pursuant to a Lien Waiver or other manner  reasonably satisfactory to Agent;                                          -8-    

 

         (j) the goods giving rise to it have not been delivered to the Account Debtor, the services giving  rise to it have not been accepted by the Account Debtor, or it otherwise does not represent a final sale;          (k) it is evidenced by Chattel Paper or an Instrument of any kind, or has been reduced to judgment;          (l) its payment has been extended or the Account Debtor has made a partial payment;          (m) it arises from a sale to an Affiliate, from a sale on a cash-on-delivery, bill-and-hold (unless the  held Account is subject to an agreement between Agent and the applicable Account Debtor in form and  substance satisfactory to Agent in its Permitted Discretion), sale or return, sale on approval, consignment,  or other repurchase or return basis, or from a sale for personal, family or household purposes;          (n) it represents a progress billing or retainage, or relates to services for which a performance, surety  or completion bond or similar assurance has been issued;          (o) it includes a billing for interest, fees  or late charges, but ineligibility shall be limited to the  extent thereof;         (p)  it is deemed to be ineligible by Agent in its Permitted Discretion.         In calculating delinquent portions of Accounts under clauses (a) and (b), credit balances more than  90 days old will be excluded.         Eligible  Assignee:   (a)  a  Lender,  Affiliate  of  a  Lender  or  Approved  Fund  that  satisfies  Section 12.13 ; (b) an assignee approved by Borrower Agent (which approval shall not be unreasonably  withheld or delayed, and shall be deemed given if no objection is made within five Business Days after  notice of the proposed assignment) and Agent; or (c) during an Event of Default, any Person acceptable to  Agent in its discretion.         Eligible Finished Goods Inventory: Eligible Inventory consisting of finished goods located within  the United States that satisfy each of the following criteria: (i)(A) it is manufactured pursuant to a purchase  order from, or other contractual requirement  with, a customer of a Borrower, or (B) it is manufactured   pursuant to a manufacturing services agreement which provides cost recovery in favor of the applicable   Borrower on terms acceptable to  Agent in its Permitted Discretion, and (ii) it is aged  no  more than 90   calendar days following its conversion from work-in-process to finished goods.          Eligible Inventory:  Inventory owned by a Borrower that Agent, in its Permitted Discretion, deems  to be Eligible Inventory.  Without limiting the foregoing, no Inventory shall be Eligible Inventory unless it  (a)  is  finished  goods,  raw  materials,  work-in-process  and  not  packaging  or  shipping  materials,  labels,  samples, display items, bags, replacement parts or manufacturing supplies; (b) is not held on consignment,  nor subject to any  deposit  or down payment; (c) is in new and saleable condition and is not damaged,  defective,  shopworn  or  otherwise  unfit  for  sale;  (d)  is  not  slow-moving,  perishable,  obsolete  or  unmerchantable, and does not constitute returned or repossessed goods; (e) meets all standards imposed by   any Governmental Authority, has not been acquired from a Person that is the target of any Sanction or on   any specially designated nationals list maintained by OFAC, and does not constitute hazardous materials  under any Environmental Law; (f) conforms with the covenants and representations herein; (g) is subject  to Agent’s duly perfected, first priority Lien, and no other Lien; (h) is within the continental United States  or Canada, is not in transit except between locations of Borrowers, and is not consigned to any Person; (i) is  not subject to any warehouse receipt or negotiable Document (unless such Document names Agent as the  “consignee”, only one original of such Document exists and such original is in the possession of Agent);  (j) is not subject to any License or other arrangement that restricts such Borrower’s or Agent’s right to                                         -9-    

 

   dispose of such Inventory, unless Agent has received an appropriate Lien Waiver; (k) is not located on  leased premises or in the possession of a warehouseman, processor, repairman, mechanic, shipper, freight  forwarder or other Person, unless the lessor or such Person has delivered a Lien Waiver or an appropriate  Rent and Charges Reserve has been established; and (l) is reflected in the details of a current perpetual  inventory report.         Eligible Long-Dated Accounts:  Accounts with payments terms in excess of 90 but not greater than  120 which are owed by Long-Dated Account Debtors and other Account Debtors which are approved by  Agent in writing in its Permitted Discretion.         Eligible Raw Materials Inventory: on any date, that portion of Eligible Inventory made up of raw  materials.         Eligible  Work  In  Process  Inventory:  Eligible  Inventory  consisting  of  work-in-process  located  within the United States that satisfy each of the following criteria: (i)(A) it is manufactured pursuant to a  purchase  order  from,  or  other  contractual  requirement  with,  a  customer  of  a  Borrower,  (B)  it  is  manufactured pursuant to a manufacturing services agreement which provides cost recovery in favor of the   applicable Borrower on terms acceptable to Agent in its Permitted Discretion, and (ii) it is aged no more  than 90 calendar days following its conversion from raw materials to work-in-process.         Enforcement  Action:  any action to  enforce any Obligations (other than Secured Bank Product  Obligations) or Loan Documents or to exercise any rights or remedies relating to any Collateral, whether  by judicial action, self-help, notification of Account Debtors, setoff or recoupment, credit bid, deed in lieu  of foreclosure, action in an Insolvency Proceeding or otherwise.         Environmental Laws:  Applicable Laws (including programs, permits and guidance promulgated  by regulators) relating to public health (other than occupational safety and health regulated by OSHA) or  the protection or pollution of the environment, including the Resource Conservation and Recovery Act (42  U.S.C. §§6991-6991i), Clean Water Act (33 U.S.C. §1251 et seq.) and CERCLA.         Environmental Notice:  a notice (whether written or oral) from any Governmental Authority or  other Person of any possible noncompliance with, investigation of a possible violation of, litigation relating  to, or potential fine or liability under any Environmental Law, or with respect to any Environmental Release,  environmental pollution or hazardous materials, including any complaint, summons, citation, order, claim,  demand or request for correction, remediation or otherwise.         Environmental Release:  a release as defined in CERCLA or under any other Environmental Law.         Equity Interest:  the interest of any (a) shareholder in a corporation; (b) partner in a partnership  (whether general, limited, limited liability or joint venture); (c) member in a limited liability company; or  (d) other Person having any other form of equity security or ownership interest.         ERISA:  the Employee Retirement Income Security Act of 1974.         ERISA Affiliate:  any trade or business (whether or not incorporated) under common control with  an Obligor within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the  Code solely for purposes of provisions relating to Section 412 of the Code).         ERISA Event:  (a) a Reportable Event with respect to a Pension Plan; (b) withdrawal of an Obligor  or ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it   was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is                                         -10-    

 

   treated as such a withdrawal under Section 4062(e) of ERISA; (c) complete or partial withdrawal of an  Obligor  or  ERISA  Affiliate  from  a  Multiemployer  Plan;  (d)  filing  of  a  notice  of  intent  to  terminate,  treatment  of  a  Pension  Plan  amendment  as  a  termination  under  Section  4041  or  4041A  of  ERISA,  or  institution of proceedings by the PBGC to terminate a Pension Plan; (e) determination that a Pension Plan  is considered an at-risk plan or that a Multiemployer Plan is in critical or endangered status under the Code  or ERISA; (f) an event or condition that constitutes grounds under Section 4042 of ERISA for termination  of, or appointment of a trustee to administer, any Pension Plan; (g) imposition of any liability on an Obligor   or ERISA Affiliate under Title IV of ERISA, other than for PBGC premiums due but not delinquent under   Section 4007 of ERISA; or (h) failure by an Obligor or ERISA Affiliate to meet all applicable requirements   under the Pension Funding Rules in respect of a Pension Plan, whether or not waived, or to make a required   contribution to a Multiemployer Plan.          EU  Bail-In  Legislation  Schedule:   the  EU  Bail-In  Legislation  Schedule  published  by  the  Loan  Market Association, as in effect from time to time.         Event of Default:  as defined in Section 11 .         Excess Finished Goods Limit: $1,000,000, which amount shall be reduced to $0 on the last day of  the first Loan Year.         Excess Raw Material Limit: $500,000, which amount shall be reduced to $0 on the last day of the  first Loan Year.         Excluded Swap Obligation:  with respect to an Obligor, each Swap Obligation as to which, and  only to the extent that, such Obligor’s guaranty of or grant of a Lien as security for such Swap Obligation  is  or  becomes  illegal  under  the  Commodity  Exchange Act  because  the  Obligor  does  not  constitute  an  “eligible contract participant” as defined in the act (determined after giving effect to any keepwell, support  or other agreement for the benefit of such Obligor and all guarantees of Swap Obligations by other Obligors)  when such guaranty or grant of Lien becomes effective with respect to the Swap Obligation.  If a hedging  agreement  governs  more  than  one  Swap  Obligation,  only  the  Swap  Obligation(s)  or  portions  thereof  described in the foregoing sentence shall be Excluded Swap Obligation(s) for the applicable Obligor.         Excluded  Taxes:   (a)  Taxes  imposed  on  or  measured  by  a  Recipient’s  net  income  (however  denominated), franchise Taxes and branch profits Taxes (i) as a result of such Recipient being organized  under the laws of, or having its principal office or applicable Lending Office located in, the jurisdiction  imposing  such  Tax,  or  (ii)  constituting  Other  Connection  Taxes;  (b)  U.S.  federal  withholding  Taxes  imposed on amounts payable to or for the account of a Lender with respect to its interest in a Loan or  Commitment pursuant to a law in effect  when the Lender acquires such interest (except pursuant to an  assignment request by Borrower Agent under Section 13.4 ) or changes its Lending Office, unless the Taxes  were payable to its assignor immediately prior to such assignment or to the Lender immediately prior to its  change in Lending Office; (c) Taxes attributable to a Recipient’s failure to comply with Section 5.9 ; and  (d) U.S.  federal  withholding  Taxes  imposed  pursuant to  FATCA.   In  no  event  shall  “Excluded  Taxes”  include any withholding Tax imposed on amounts paid by or on behalf of a foreign Obligor to a Recipient  that has complied with Section 5.9.2 .         Extraordinary Expenses:  all costs, expenses or advances incurred by Agent during a Default or  Event  of  Default  or  an  Obligor’s  Insolvency  Proceeding,  including  those  relating  to  (a)  any  audit,  inspection, repossession, storage, repair, appraisal, insurance, manufacture, preparation or advertising for   sale, sale, collection, or other preservation of or realization upon any Collateral; (b) any action, arbitration   or other proceeding (whether instituted by or against Agent, any Lender, any Obligor, any creditor(s) of an   Obligor or any other Person) in any way relating to any Collateral, Agent’s Liens, Loan Documents, Letters                                         -11-    

 

   of Credit or Obligations, including any lender liability or other Claims; (c) exercise of any rights or remedies  of Agent in, or the monitoring of, any Insolvency Proceeding; (d) settlement or satisfaction of taxes, charges  or Liens with respect to any Collateral; (e) any Enforcement Action; and (f) negotiation and documentation  of any modification, waiver, workout, restructuring or forbearance with respect to any Loan Documents or  Obligations.  Such costs, expenses and advances include transfer fees, Other Taxes, storage fees, insurance  costs, permit fees, utility reservation and standby fees, legal fees, appraisal fees, brokers’ and auctioneers’  fees and commissions, accountants’ fees, environmental study fees, wages and salaries paid to employees  of any Obligor or independent contractors in liquidating any Collateral, and travel expenses.         FATCA:  Sections 1471 through 1474 of the Code (including any amended or successor version if  substantively comparable and not materially more onerous to comply with), and any agreements entered  into pursuant to Section 1471(b)(1) of the Code.         Federal Funds Rate:  (a) the weighted average per annum interest rate on overnight federal funds  transactions with members of the Federal Reserve System on the applicable day (or the preceding Business  Day, if the applicable day is not a Business Day), as published by the Federal Reserve Bank of New York  on the next Business Day; or (b) if the rate is not so published, the average per annum rate (rounded up to  the nearest 1/8 of 1%) charged to Bank of America on the applicable day on such transactions, as determined  by Agent; provided, that in no event shall the Federal Funds Rate be less than zero.         FILO Amount: the lesser of (a) FILO Sublimit, and (b) the sum of the FILO Accounts Formula  Amount, plus FILO Inventory Formula Amount.         FILO Account Formula Amount: an amount equal to 5% of the Value of Non-Investment Grade  Eligible Accounts (excluding Eligible Accounts owed by Account Debtors located outside of the United  States and Canada); provided, that commencing on December 31, 2020 and continuing on the last day of  each calendar quarter thereafter, such percentage shall be reduced by 0.4167% per quarter until reduced to  0% on September 30, 2023.         FILO Inventory Formula Amount: an amount equal to the sum of (i) 10% of the NOLV Percent of  the Value of Eligible Finished Goods Inventory (excluding Eligible Finished Goods Inventory which is in  excess  of  90  day’s  supply)  and  (ii)  10%  of  the  NOLV  Percent  of  the  Value  of  Eligible  Raw  Material  Inventory (excluding Eligible Raw Material Inventory which is in excess of 90 day’s supply); provided,  that commencing on December 31, 2020 and continuing on the last day of each calendar quarter thereafter,   such percentages shall be reduced by 0.8333% per quarter each until reduced to 0% on September 30, 2023.         FILO Loan: as defined in Section 2.1.1 .         FILO  Period:  the  period  commencing  on  the  Closing  Date  and  ending  on  the  earlier  of  (x)  September 30, 2023 and (y) the date on which Borrower Agent elects to terminate the FILO Period by  giving at least 30 days prior written notice of such election to Agent.         FILO Sublimit: $5,000,000; provided, that commencing on December 31, 2020 and continuing on  the last day of each calendar quarter thereafter, such amount shall be reduced by $416,666.67 per quarter  until reduced to $0 on September 30, 2023.         Fiscal Month: any fiscal month of any Fiscal Year, which month shall generally end on the Saturday  of the 4-4-5  week period  (or occasionally 4-5-5  week period)  in accordance  with the  fiscal accounting  calendar of Key Tronic and its Subsidiaries                                          -12-    

 

         Fiscal  Quarter:   each  period  of  thirteen  (13)  weeks  (or  occasionally  fourteen  (14)  weeks)  in  accordance with the fiscal accounting calendar of Key Tronic and its Subsidiaries as in effect on the Closing  Date, commencing on the first day of a Fiscal Year.         Fiscal Year:  the fiscal year of Key Tronic its and Subsidiaries for accounting and tax purposes,  ending on the Saturday nearest to June 30 of each year.         Fixed Charge Coverage Ratio:  the ratio, determined on a consolidated basis for Borrowers and  Subsidiaries  for  the  most  recent  12  months,  of  (a) EBITDA  minus  Capital  Expenditures  (except  those  financed with Borrowed Money other than Loans) and cash taxes paid, to (b) Fixed Charges.         Fixed Charges:  the sum of interest expense (other than payment-in-kind), and principal payments  made on Borrowed Money (other than Loans).         FLSA:  the Fair Labor Standards Act of 1938.         Flood Laws:  the National Flood Insurance Act of 1968, Flood Disaster Protection Act of 1973 and  related laws.         Foreign Lender:  any Lender that is not a U.S. Person.         Foreign Plan:  any employee benefit plan or arrangement (a) maintained or contributed to by any  Obligor or Subsidiary that is not subject to the laws of the United States; or (b) mandated by a government   other than the United States for employees of any Obligor or Subsidiary.         Foreign Subsidiary:  a Subsidiary that is a “controlled foreign corporation” under Section 957 of  the  Code,  such  that  a  guaranty  by  such  Subsidiary  of  the  Obligations  or  a  Lien  on  the  assets  of  such  Subsidiary to secure the Obligations would result in material adverse tax effects on one or more Borrowers.         Fronting  Exposure:   a  Defaulting  Lender’s  interest in  LC  Obligations,  Swingline  Loans  and  Protective Advances, except to the extent Cash Collateralized by the Defaulting Lender or allocated to other  Lenders hereunder.         Full Payment:  with respect to any Obligations, (a) the full and indefeasible cash payment thereof,  including any interest, fees and other charges accruing during an Insolvency Proceeding (whether or not  allowed in the proceeding); and (b) if such Obligations are LC Obligations or inchoate or contingent in  nature, Cash Collateralization thereof (or delivery of a standby letter of credit acceptable to Agent in its  discretion, in the amount of required Cash Collateral); provided that inchoate indemnification obligations  for which no claim has been asserted shall not be required to be Cash Collateralized.  No Loans shall be  deemed to have been paid in full unless all Commitments related to such Loans are terminated.         GAAP:  generally accepted accounting principles in effect in the United States from time to time.         Governmental  Approvals:   all  authorizations,  consents,  approvals,  licenses  and  exemptions  of,  registrations and filings with, and required reports to, all Governmental Authorities.         Governmental  Authority:   any  federal,  state,  local,  foreign  or  other  agency,  authority,  body,  commission, court, instrumentality, political subdivision, central bank, or other entity or officer exercising  executive,  legislative,  judicial,  taxing,  regulatory  or  administrative  powers  or  functions  for  any  governmental,  judicial,  investigative,  regulatory  or  self-regulatory  authority  (including  the  Financial                                          -13-    

 

   Conduct Authority, the Prudential Regulation Authority and any supra-national bodies such as the European  Union or European Central Bank).         Guarantor Payment:  as defined in Section 5.10.3 .         Guarantors:  Each Person now or hereafter party hereto as a “Guarantor” and each other Person that  guarantees payment or performance of Obligations.         Guaranty:  the guaranty provided under Section 15 and each guaranty agreement executed by a  guarantor in favor of Agent, in form and substance satisfactory to Agent.         Indemnified Taxes:  (a) Taxes, other than Excluded Taxes, imposed on or relating to any payment  of an Obligation; and (b) to the extent not otherwise described in clause (a), Other Taxes.         Indemnitees:   Agent  Indemnitees,  Lender  Indemnitees,  Issuing  Bank  Indemnitees  and  Bank  of  America Indemnitees.         Insolvency Proceeding:  any case or proceeding commenced by or against a Person under any state,  federal or foreign law for, or any agreement of such Person to, (a) the entry of an order for relief under the  Bankruptcy Code, or any other insolvency, debtor relief or debt adjustment law; (b) the appointment of a  receiver, trustee, liquidator, administrator, conservator or other custodian for such Person or any part of its  Property; or (c) an assignment or trust mortgage for the benefit of creditors.         Intellectual  Property:   all  intellectual  and  similar  Property  of  a  Person,  including  inventions,  designs,  patents,  copyrights,  trademarks,  service  marks,  trade  names,  trade  secrets,  confidential  or  proprietary information, customer lists, know-how, software and databases; all embodiments or fixations  thereof and all related documentation, applications, registrations and franchises; all licenses or other rights  to use any of the foregoing; and all books and records relating to the foregoing.         Intellectual Property Claim:  any claim or assertion (whether in writing, by suit or otherwise) that  a Borrower’s or Subsidiary’s ownership, use, marketing, sale or distribution of any Inventory, Equipment,  Intellectual Property or other Property violates another Person’s Intellectual Property.         Inventory:  as  defined  in  the  UCC,  including  all  goods  intended  for  sale,  lease,  display  or  demonstration; all work in process; and all raw materials, and other materials and supplies of any kind that  are or could be used in connection with the manufacture, printing, packing, shipping, advertising, sale, lease  or  furnishing  of  such  goods,  or  otherwise  used  or  consumed  in  a  Borrower’s  business  (but  excluding  Equipment).         Inventory Formula Amount: the sum of:          (a) the lesser of (i) 80% of the Value of Finished Goods Eligible Inventory (excluding Finished  Goods Eligible Inventory which is in excess of 90 day’s supply); or (ii) 85% of the NOLV Percentage of  the Value of Finished Goods Eligible Inventory (excluding Finished Goods Eligible Inventory which is in  excess of 90 day’s supply); plus,         (b) the lesser of (i) 35% of the Value of Finished Goods Eligible Inventory which is in excess of  90 day’s supply; (ii) 85% of the NOLV Percentage of the Value of Finished Goods Eligible Inventory which  is in excess of 90 day’s supply; or (iii) the Excess Finished Goods Limit; plus,                                          -14-    

 

         (c)  the lesser of (i) 40% of the Value of Eligible Raw Material Inventory (excluding Eligible Raw  Materials Inventory which is in excess of one year’s supply); or (ii) 85% of the NOLV Percentage of the  Value of Eligible Raw Material Inventory (excluding Eligible Raw Materials Inventory which is in excess  of one year’s supply); plus,         (d) the lesser of (i) 25% of the Value of Eligible Raw Material Inventory which is in excess of one  year’s supply but not greater than 2 year’s supply); (ii) 85%  of the NOLV Percentage  of the  Value of  Eligible  Raw  Material  Inventory  which  is  in  excess of  one  year’s  supply  but  not  greater  than  2  year’s  supply); or (iii) Excess Raw Materials Limit; plus,         (e) the lesser of (i) 65% of the Value of Eligible Work In Process Inventory; (ii) 85% of the NOLV  Percentage of the Value of Eligible Work In Process Inventory; or (iii) $3,000,000.            Inventory Reserve:  reserves established by Agent in its Permitted Discretion to reflect factors that  may negatively impact the Value of Inventory, including change in salability, obsolescence, seasonality,  theft, shrinkage, imbalance, change in composition or mix, markdowns and vendor chargebacks.         Investment:  an Acquisition, an acquisition of record or beneficial ownership of any Equity Interests  of a Person, or an advance or capital contribution to or other investment in a Person.         Investment  Grade  Accounts  Formula  Amount:  90%  of  the  Value  of  Investment  Grade  Eligible  Accounts;  provided,  that  the  portion  of  the  Investment  Grade  Accounts  Formula  Amount  representing  Accounts owed by Siemens Aktiengesellschaft with 180 day terms shall at no time exceed $500,000 in the   aggregate.          Investment Grade Eligible Accounts: Eligible Accounts owing from any Account Debtor so long  as such Account Debtor maintains a credit rating of at least BBB- or higher by S&P or Baa3 or higher by  Moody’s.          IRS:  the United States Internal Revenue Service.         Issuing  Bank:   Bank  of  America  (including  any  Lending  Office  of  Bank  of  America),  or  any  replacement issuer appointed pursuant to Section 2.2.4 .         Issuing Bank Indemnitees:  Issuing Bank and its officers, directors, employees, Affiliates, agents,  advisors and attorneys.         KT Mexico:  Key Tronic Juarez, SA de CV, a Mexican corporation.         LC Application:  an application by Borrower Agent to Issuing Bank for issuance of a Letter of  Credit, in form and substance satisfactory to Issuing Bank and Agent.         LC Conditions:  upon giving effect to issuance of a Letter of Credit, (a) the conditions in Section 6  are satisfied; (b) total LC Obligations do not exceed the Letter of Credit Subline and Revolver Usage does  not exceed the Borrowing Base; (c) the Letter of Credit and payments thereunder are denominated in Dollars  or other currency satisfactory to Agent and Issuing Bank; and (d) the purpose and form of the Letter of  Credit are satisfactory to Agent and Issuing Bank in their discretion.         LC Documents:  all documents, instruments and agreements (including requests and applications)  delivered by any Borrower or other Person to Issuing Bank or Agent in connection with a Letter of Credit.                                          -15-    

 

         LC Obligations:  the sum of (a) all amounts owing by Borrower for draws under Letters of Credit;  and (b) the Stated Amount of all outstanding Letters of Credit.         LC Request:  a request by Borrower Agent for issuance of a Letter of Credit, in form satisfactory  to Agent and Issuing Bank.         Lender Indemnitees:  Lenders and Secured Bank Product Providers, and their officers, directors,  employees, Affiliates, agents, advisors and attorneys.         Lenders:  lenders party to this Agreement (including Agent in its capacity as provider of Swingline  Loans  or  Protective  Advances)  and  any  Person  who  hereafter  becomes  a  “Lender”  pursuant  to  an  Assignment, including any Lending Office of the foregoing.         Lending Office:  the office (including any domestic or foreign Affiliate or branch) designated as  such by Agent, a Lender or Issuing Bank by notice to Borrower Agent and, if applicable, Agent.         Letter  of  Credit:   any  standby  or  documentary  letter  of  credit,  foreign  guaranty,  documentary  bankers acceptance, indemnity, reimbursement agreement or similar instrument issued by Issuing Bank for  the account or benefit of a Borrower or Affiliate of a Borrower.         Letter of Credit Subline:  $5,000,000.         LIBOR:   for  any  day,  the  per  annum  rate  of  interest  (rounded  up  to  the  nearest  1/8th  of  1%)  determined by Agent at or about 11:00 a.m. (London time) two Business Days prior to such day, for a term  equal to the London interbank offered rate for a 30 day interest period, or comparable or successor rate  approved by Agent in its reasonable discretion, as published on the applicable Reuters screen page (or other  commercially available source designated by Agent from time to time); provided, that any comparable or  successor rate shall be applied by Agent, if administratively feasible, in a manner consistent with market  practice; and provided further, that in no event shall LIBOR or such comparable or successor rate be less  than 0.50%.          LIBOR Loan:  a Loan that bears interest based on LIBOR.         LIBOR Screen Rate:  as defined in Section 1.5 .         LIBOR Successor Rate:  as defined in Section 1.5 .         LIBOR Successor Rate Conforming Changes:  with respect to any proposed LIBOR Successor  Rate, any conforming changes to this Agreement, including changes to Base Rate, timing and frequency of  determining  rates  and  payments  of  interest  and  other administrative  matters  as  may  be  appropriate,  in  Agent’s  reasonable  discretion,  to reflect  the  adoption  of  such  LIBOR  Successor  Rate  and  to  permit  its  administration by Agent in a manner substantially consistent with market practice (or, if Agent determines   that adoption of any portion of such  market practice  is  not  administratively  feasible  or  that  no  market   practice for the administration of such LIBOR Successor Rate exists, in such other manner of administration   as  Agent  determines  in  consultation  with  Borrowers).   Such  changes  shall  provide  that  the  LIBOR   Successor Rate cannot be less than zero for purposes of this Agreement.          License:  any license or agreement under which an Obligor is authorized to use Intellectual Property  in connection with any manufacture, marketing, distribution or disposition of Collateral, any use of Property  or any other conduct of its business.                                          -16-    

 

         Licensor:  any Person from whom an Obligor obtains the right to use any Intellectual Property.         Lien:  an interest in Property securing an obligation or claim, including any lien, security interest,  pledge, hypothecation, assignment, trust, reservation, assessment right, encroachment, easement, right-of- way, covenant, condition, restriction, lease, or other title exception or encumbrance.         Lien Waiver:  an agreement, in form and substance reasonably satisfactory to Agent, by which (a)  for any material Collateral located on leased premises, the lessor waives or subordinates any Lien it may  have on the Collateral, and allows Agent to enter the premises and remove, store and dispose of Collateral;  (b) for any Collateral held by a warehouseman, processor, shipper, customs broker or freight forwarder,  such Person waives or subordinates any Lien it may have on the Collateral, agrees to hold any Documents  in its possession relating to the Collateral as agent for Agent, and agrees to deliver Collateral to Agent upon  request; (c) for any Collateral held by a repairman, mechanic or bailee, such Person acknowledges Agent’s  Lien, waives or subordinates any Lien it may have on the Collateral, and agrees to deliver Collateral to  Agent  upon  request;  and  (d)  for  any  Collateral  subject  to  a  Licensor’s  Intellectual  Property  rights,  the  Licensor grants to Agent the right, vis-à-vis such Licensor, to enforce Agent’s Liens with respect to the  Collateral, including the right to dispose of it with the benefit of the Intellectual Property, whether or not a  default exists under any applicable License.         Loan:  a loan made by a Lender under the credit facility established by this Agreement.         Loan Documents:  this Agreement, Other Agreements and Security Documents.         Loan Year:  each 12 month period commencing on the Closing Date or an anniversary thereof.         Long-Dated Account Debtors: each of the following Account Debtors, so long as such Account  Debtor maintains a credit rating of at least BBB- or higher by S&P or Baa3 or higher by Moody’s: (i)  Honeywell International Inc. and its wholly owned subsidiaries, (ii) Amphenol Corporation, (iii) Baker   Hughes Company, (iv) Trane Technologies PLC, (v) Nidec Corporation, (vi) Siemens Aktiengesellschaft,   and (vii) other Persons approved by Agent in its Permitted Discretion.          Margin Stock:  as defined in Regulation U of the Federal Reserve Board of Governors.         Material Adverse Effect:  the effect of any event or circumstance that, taken alone or in conjunction  with  other events or circumstances, (a) has or could be reasonably  expected to have a material adverse   effect on the business, operations, Properties, prospects or condition (financial or otherwise) of Obligors   taken as a whole, the value of any material Collateral, the enforceability of any Loan Document, or the   validity or priority of Agent’s Lien on any Collateral; (b) impairs the ability of Obligors taken as a whole   to perform their obligations under the Loan Documents, including repayment of any Obligations; or (c)   otherwise impairs the ability of Agent or any Lender to enforce or collect any Obligations or to realize upon   any  Collateral;  provided  that  with  respect  to  clause  (a),  the  impacts  of  COVID-19  on  the  business,  operations, Properties, prospects or condition (financial  or  otherwise)  of  the  Borrowers  or  any  of  their  Subsidiaries that occurred, or were reasonably expected to occur, and were disclosed to Agent in writing  prior to the date of this Agreement shall not be deemed to constitute a Material Adverse Effect.         Material Contract:  any agreement or arrangement to which a Borrower or Subsidiary is party (other  than the Loan Documents) (a) that is deemed to be a material contract under any securities law applicable  to such Person, including the Securities Act of 1933; (b) for which breach, termination, nonperformance or  failure to renew could reasonably be  expected to  have a Material  Adverse Effect; or (c) that relates to  Subordinated Debt, or to Debt in an aggregate amount of $2,500,000 or more.                                          -17-    

 

         Moody’s:  Moody’s Investors Service, Inc. or any successor acceptable to Agent.         Multiemployer Plan:  any employee benefit plan of the type described in Section 4001(a)(3) of  ERISA, to which an Obligor or ERISA Affiliate makes or is obligated to make contributions, or during the  preceding five plan years, has made or been obligated to make contributions.         Multiple Employer Plan:  a Plan with two or more contributing sponsors, including an Obligor or  ERISA Affiliate, at least two of whom are not under common control, as described in Section 4064 of  ERISA.         Net  Proceeds:   with  respect  to  an  Asset  Disposition,  proceeds  (including,  when  received,  any  deferred or escrowed payments) received by a Borrower or Subsidiary in cash from such disposition, net of  (a) reasonable and customary costs and expenses actually incurred in connection therewith, including legal  fees and sales commissions; (b) amounts applied to repayment of Debt secured by a Permitted Lien senior   to Agent’s Liens on Collateral sold; (c) any Taxes paid or estimated in good faith to be payable as a result   of such Asset Disposition; and (d) reserves for indemnities, until such reserves are no longer needed.         NOLV  Percentage:   the  net  orderly  liquidation  value  of  Inventory,  expressed  as  a  percentage,  expected to be realized at an orderly, negotiated sale held within a reasonable period of time, net of all  liquidation expenses, as determined from the most recent appraisal of Borrowers’ Inventory performed by  an appraiser and on terms satisfactory to Agent.         Non-Investment Grade Accounts Formula Amount: 85% of the Value of Non-Investment Grade  Eligible Accounts.         Non-Investment Grade Eligible Accounts: Eligible Accounts other than Investment Grade Eligible  Accounts.          Notice of Borrowing:  a request by Borrower Agent for a Borrowing, in form satisfactory to Agent.         Notice of Conversion/Continuation:  a request by Borrower Agent for conversion or continuation  of a Loan as a LIBOR Loan, in form satisfactory to Agent.         Obligations:  all (a) principal of and premium, if any, on the Loans, (b) LC Obligations and other  obligations  of  Obligors  with  respect  to  Letters  of Credit,  (c)  interest,  expenses,  fees,  indemnification  obligations,  Claims  and  other  amounts  payable  by  Obligors  under  Loan  Documents,  (d)  Secured  Bank  Product Obligations, and (e) other Debts, obligations and liabilities of any kind owing by Obligors pursuant  to the Loan Documents, in each case whether now existing or hereafter arising, whether evidenced by a  note or other writing, whether allowed in any Insolvency Proceeding, whether arising from an extension of  credit, issuance of a letter of credit, acceptance, loan, guaranty, indemnification or otherwise, and whether  direct or indirect, absolute or contingent, due or to become due, primary or secondary, or joint or several;  provided, that Obligations of an Obligor shall not include its Excluded Swap Obligations.         Obligor:  each Borrower and each Guarantor.         OFAC:  Office of Foreign Assets Control of the U.S. Treasury Department.         Orbian: Orbian Financial Services VI Limited and its Affiliates.         Ordinary  Course  of  Business:   the  ordinary  course  of  business  of  any  Borrower  or  Subsidiary,  undertaken in good faith and consistent with Applicable Law and past practices.                                         -18-    

 

         Organic Documents:  with respect to any Person, its charter, certificate or articles of incorporation,  bylaws,  articles  of  organization,  limited  liability  agreement,  operating  agreement,  members  agreement,  shareholders agreement, partnership agreement, certificate of partnership, certificate of formation, voting  trust agreement, or similar agreement or instrument governing the formation or operation of such Person.         OSHA:  the Occupational Safety and Hazard Act of 1970.         Other  Agreement:   each  LC  Document,  fee  letter,  Lien  Waiver,  intercreditor  agreement,  subordination agreement, Borrowing Base Report, Compliance Certificate, Borrower Materials, or other  note,  document,  instrument  or  agreement  (other  than  this  Agreement  or  a  Security  Document)  now  or  hereafter delivered by an Obligor or other Person to Agent or a Lender in connection with any transactions  relating hereto.         Other Connection Taxes:  Taxes imposed on a Recipient due to a present or former connection  between it and the taxing jurisdiction (other than connections arising from the Recipient having executed,  delivered, become party to, performed obligations or received payments under, received or perfected a Lien  or engaged in any other transaction pursuant to, enforced, or sold or assigned an interest in, any Loan or  Loan Document).         Other Taxes:  all present or future stamp, court, documentary, intangible, recording, filing or similar  Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or  registration  of,  from  the  receipt  or  perfection  of a  Lien  under,  or  otherwise  with  respect  to,  any  Loan  Document,  except  Other  Connection  Taxes  imposed  with  respect  to  an  assignment  (other  than  an  assignment made pursuant to Section 13.4(c) ).         Overadvance:  the amount by which Revolver Usage exceeds the Borrowing Base at any time.         Participant:  as defined in Section 13.2 .         Patriot Act:  the Uniting and Strengthening America by Providing Appropriate Tools Required to  Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272 (2001).         Payment Item:  each check, draft or other item of payment payable to a Borrower, including those  constituting proceeds of any Collateral.         PBGC:  the Pension Benefit Guaranty Corporation.         Pension  Funding  Rules:   Code  and  ERISA  rules  regarding  minimum  required  contributions  (including installment payments) to Pension Plans set forth in Sections 412, 430 and 436 of the Code and  Sections 302 and 303 of ERISA.         Pension Plan:  any employee pension benefit plan (as defined in Section 3(2) of ERISA), other than  a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by any Obligor  or ERISA Affiliate or to which the Obligor or ERISA Affiliate contributes or has an obligation to contribute,  or in the case of a Multiple Employer Plan, has made contributions at any time during the preceding five  plan years.         Permitted Acquisitions: any Acquisition as long as (a) no Default or Event of Default exists or is  caused thereby; (b) the Acquisition is consensual; (c) the assets, business or Person being acquired is useful   or  engaged  in  the  business  of  Borrowers  and  Subsidiaries  or  is  reasonably  related,  complementary,   corollary, synergistic or ancillary thereto, is located or organized within the United States, and had positive                                         -19-    

 

   EBITDA for the 12 month period most recently ended; (d) no Debt or Liens are assumed or incurred, except  as  permitted  by Sections  10.2.1(f) , 10.2.1(i)   and 10.2.2(j) ;  (e)  upon  giving  pro  forma  effect  thereto,  Availability is at least the greater of (x) 15% of the Borrowing Base or (y) $12,500,000, in each case, for  the  30  days  preceding  and  as  of  the  Acquisition;  (f)  Borrowers  are  in  compliance  with  the  financial  covenants set forth in Section 10.3 , measured as of the most recent measurement date and determined on a   pro forma basis giving effect to the Acquisition; and (h) Borrowers deliver to Agent, at least 10 Business   Days prior to the Acquisition, copies of all material agreements relating thereto and a certificate, in form   and  substance  satisfactory  to  Agent,  stating  that  the  Acquisition  is  a  “Permitted  Acquisition”  and   demonstrating compliance with the foregoing requirements.           Permitted Asset Disposition:  as long as no Default or Event of Default exists and all Net Proceeds  are remitted to Agent, an Asset Disposition constituting (a) sale of Inventory in the Ordinary Course of  Business; (b) disposition of Equipment up to a fair market or book value (whichever is more) of $5,000,000  in  the  aggregate  during  any  12  month  period;  (c)  disposition  of  assets  (other  than  Inventory)  that  are  obsolete  or  no  longer  used  or  useful  in  the  Ordinary  Course  of  Business  and  Inventory  that  is  unmerchantable or otherwise unsalable in the Ordinary Course of Business; (d) termination of a lease of  real or personal Property not necessary for the Ordinary Course of Business, which could not reasonably  be  expected to have a Material Adverse Effect and does not result from an Obligor’s default; (e) sales,  transfers or other dispositions of assets among Obligors; provided that if the disposition includes Accounts  or Inventory such transfer or disposition may only be made to another Borrower; (f) sales, transfers or other   dispositions of assets by non-Obligor Subsidiaries of Key Tronic to an Obligor; (g) sales, transfers or other   dispositions of assets of non-Obligor  Subsidiaries of Key Tronic in an amount not to exceed $4,000,000 in   any Fiscal Year; (h) sales, transfers or other dispositions in a transaction permitted under Section 10.2.9 ;  or (i) a Permitted Orbian Sale; (j)  a disposition approved in writing by Agent and Required Lenders.         Permitted  Contingent  Obligations:   Contingent  Obligations  (a)  arising  from  endorsements  of  Payment Items for collection or deposit in the Ordinary Course of Business; (b) relating to Swaps permitted  hereunder; (c) existing on the Closing Date, and any extension or renewal thereof that does not increase the  amount of such Contingent Obligation when extended or renewed; (d) incurred in the Ordinary Course of  Business with respect to surety, appeal or performance bonds, or other similar obligations; (e) arising from  customary indemnification obligations in favor of purchasers or sellers in connection with the purchase or  disposition of assets permitted by this Agreement; (g) guaranties by Borrowers and their Subsidiaries of  any  Debtor  other  obligations  (including,  without  limitation,  trade  credit)  of  other  Borrowers  and  their  Subsidiaries  that  are  permitted  under  this  Agreement;  (h)  indemnification  of  officers,  directors  and  employees in the Ordinary Course of Business; (i) indemnification and surety obligations under bonds or  contracts in the Ordinary Course of Business; or (j) in an aggregate amount of $2,500,000 or less at any  time.         Permitted Discretion:  means a determination made in the exercise, in good faith, of reasonable  business judgment (from the perspective of a secured, asset-based lender providing for a secured facility of  the  type  set  forth  herein  and  based  on  the  applicable  circumstances  as  of  the  applicable  date  of  determination) in accordance with the customary business practices of the Agent.         Permitted Lien:  as defined in Section 10.2.2 .         Permitted Orbian Sale:  Sale of Accounts to Orbian in the Ordinary Course of Business so long as  (1) the Accounts sold by a Borrower to Orbian were at no time (either before or after such sale) included in  the calculation of the Borrowing Base, and the proceeds of each Permitted Orbian Sale are paid directly to  a Dominion Account by Orbian.                                          -20-    

 

         Permitted Purchase Money Debt:  Purchase Money  Debt  of Borrowers and Subsidiaries that is  unsecured or secured only by a Purchase Money Lien, as long as the aggregate amount does not exceed  $12,500,000 at any time.         Person:   any  individual,  corporation,  limited  liability  company,  partnership,  joint  venture,  association, trust, unincorporated organization, Governmental Authority or other entity.         Plan:  any employee benefit plan (as defined in Section 3(3) of ERISA) maintained for employees  of an Obligor, or to which an Obligor is required to contribute on behalf of its employees.          Platform:  as defined in Section 14.3.3 .         Prime Rate:  the rate of interest announced by Bank of America from time to time as its prime rate.   Such rate is set by Bank of America on the basis of various factors, including its costs and desired return,  general economic conditions and other factors, and is used as a reference point for pricing some  loans,  which may be priced at, above or below such rate.  Any change in such rate publicly announced by Bank  of America shall take effect at the opening of business on the day specified in the announcement.         Pro Rata:  with respect to any Lender, a percentage (rounded to the ninth decimal place) determined  (a) by dividing the amount of such Lender’s Commitment by the aggregate outstanding Commitments; or  (b) following termination of the Commitments, by dividing the amount of such Lender’s Loans and LC  Obligations by the aggregate outstanding Loans and LC Obligations or, if all Loans and LC Obligations  have been paid in full and/or Cash Collateralized, by dividing such Lender’s and its Affiliates’ remaining   Obligations by the aggregate remaining Obligations.          Properly Contested:  with respect to any obligation of an Obligor, (a) the obligation is subject to a  bona fide dispute regarding amount or the Obligor’s liability to pay; (b) the obligation is being properly  contested  in  good  faith  by  appropriate  proceedings promptly  instituted  and  diligently  pursued;  (c) appropriate reserves have been established in accordance with GAAP; (d) non-payment could not have  a Material Adverse Effect, nor reasonably be expected to result in forfeiture or sale of any assets of the  Obligor; (e) no Lien is imposed on assets of the Obligor, unless bonded and stayed to the satisfaction of  Agent; and (f) if the obligation results from entry of a judgment or other order, such judgment or order is  stayed pending appeal or other judicial review.         Property:  any interest in any kind of property or asset, whether real, personal or mixed, or tangible  or intangible.         Protective Advances:  as defined in Section 2.1.6 .         PTE:  a prohibited transaction class exemption issued by the U.S. Department of Labor, as amended  from time to time.         Purchase Money Debt:  (a) Debt (other than the Obligations) for payment of any of the purchase  price of fixed assets; (b) Debt (other than the Obligations) incurred within 60 days before or after acquisition  of any fixed assets, for the purpose of financing any of the purchase price thereof; and (c) any renewals,   extensions or refinancings (but not increases) thereof.          Purchase Money Lien:  a Lien that secures Purchase Money Debt, encumbering only the  fixed  assets acquired with such Debt and the proceeds thereof and constituting a Capital Lease or a purchase  money security interest under the UCC.                                          -21-    

 

         Qualified ECP:  an Obligor with total assets exceeding $10,000,000, or that constitutes an “eligible  contract participant” under the Commodity Exchange Act and can cause another Person to qualify as an  “eligible contract participant” under Section 1a(18)(A)(v)(II) of such act.         Real Estate:  all right, title and interest (whether as owner, lessor or lessee) in any real Property or  any buildings, structures, parking areas or other improvements thereon.         Recipient:  Agent, Issuing Bank, any Lender or any other recipient of a payment to be made by an  Obligor under a Loan Document or on account of an Obligation.         Refinancing  Conditions:   no  Default  or  Event  of  Default  exists  upon  giving  effect  to  the  Refinancing Debt and such Debt, when  compared to the  Debt  being  extended,  renewed  or  refinanced,  (a) does  not  have  a  greater  principal  amount  or  interest  rate,  earlier  final  maturity  or  shorter  weighted  average  life,  (b)  is  subordinated  to  the  Obligations  to  at  least  the  same  extent,  (c)  has  representations,   covenants, defaults and other terms not materially less favorable to Borrowers and Lender, and (d) has no   additional obligor, guarantor, Lien, or other recourse to any Person or Property.          Refinancing Debt:  Borrowed Money that is the result of an extension, renewal or refinancing of  Debt permitted under Section 10.2.1(b) , (d)  or (f) .         Reimbursement Date:  as defined in Section 2.2.2 .         Rent and Charges Reserve:  the aggregate of (a) all past due rent and other amounts owing by an  Obligor to any landlord, warehouseman, processor, repairman, mechanic, shipper, freight forwarder, broker  or other Person who possesses any Collateral or could assert a Lien on any Collateral; and (b) a reserve at  least equal to three months rent and other charges that could be payable to any such Person, unless it has  executed a Lien Waiver.         Report:  as defined in Section 12.2.3 .         Reportable Event:  any event set forth in Section 4043(c) of ERISA, other than an event for which  the 30 day notice period has been waived.         Reporting Trigger Period: the period (a) commencing on any day that (i) an Event of Default occurs  (ii) Availability is less than the greater of (x) $12.5% of the Borrowing Base and (y) $10,000,000.          Required  Lenders:   Secured  Parties  holding  more  than  50%  of  (a)  the  aggregate  outstanding  Commitments;  or  (b)  after  termination  of  the  Commitments,  the  aggregate  outstanding  Loans  and  LC  Obligations or, upon Full Payment of all Loans and LC Obligations, the aggregate remaining Obligations;  provided, that Commitments, Loans and other Obligations held by a Defaulting Lender and its Affiliates  shall be disregarded in making such calculation, but any related Fronting Exposure shall be deemed held as  a Loan or LC Obligation by the Lender (including in its capacity as Issuing Bank) that funded the applicable  Loan or issued the applicable Letter of Credit.         Restricted Investment:  any Investment by a Borrower or Subsidiary, other than (a) Investments in  Subsidiaries to the extent existing on the Closing Date; (b) Investments in Obligors provided that if the  Investment includes the transfer of Accounts or Inventory by a Borrower such transfer may only be made  to another Borrower; (c) Investments in non-Obligors Subsidiaries so long as (i) no Event of Default exists   immediately before or after giving effect thereto, (ii) upon giving pro forma effect thereto, Availability is   at least the greater of (x) 15% of the Borrowing Base or (y) $12,500,000, in each case, for the 30 days  preceding and as of the Acquisition; and (iii) Borrowers are in compliance with the financial covenants set                                         -22-    

 

   forth in Section 10.3 , measured as of the most recent measurement date and determined on a pro forma  basis giving effect thereto; (d) Cash Equivalents that are subject to Agent’s Lien and control, pursuant to  documentation in form and substance satisfactory to Agent; (e) loans and advances permitted under Section  10.2.7  and (f) Permitted Acquisitions .         Restrictive Agreement:  an agreement (other than a Loan Document) that conditions or restricts the  right of any Borrower, Subsidiary or other Obligor to incur or repay Borrowed Money, to grant Liens on  any  assets,  to  declare  or  make  Distributions,  to  modify,  extend  or  renew  any  agreement  evidencing  Borrowed Money, or to repay any intercompany Debt.         Revolver Usage:  (a) the aggregate amount of outstanding Loans; plus (b) the aggregate Stated  Amount of outstanding Letters of Credit, except to the extent Cash Collateralized by Borrowers.         S&P:  Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill Companies,  Inc., or any successor acceptable to Agent.         Sanction:   any  sanction  administered  or  enforced  by  the  U.S.  government  (including  OFAC),  United Nations Security Council, European Union, U.K. government or other sanctions authority.          Scheduled Unavailability Date:  as defined in Section 1.5 .         Secured Bank Product Obligations:  Debt, obligations and other liabilities with respect to Bank  Products owing by a Borrower or Affiliate of a Borrower to a Secured Bank Product Provider; provided,  that Secured Bank Product Obligations of an Obligor shall not include its Excluded Swap Obligations.         Secured Bank Product Provider:  (a) Bank of America or any of its Affiliates; and (b) any other  Lender or Affiliate of a Lender that is providing a Bank Product, provided such provider delivers written  notice to  Agent, in form and substance satisfactory to Agent, within 10 days following the later of the  Closing  Date  or  creation  of  the  Bank  Product,  (i)  describing  the  Bank  Product  and  setting  forth  the  maximum  amount  to  be  secured  by  the  Collateral  and the  methodology  to  be  used  in  calculating  such  amount, and (ii) agreeing to be bound by Section 12.14 .         Secured Parties:  Agent, Issuing Bank, Lenders and Secured Bank Product Providers.         Security Documents:  the Guaranties, Security Agreements,  Deposit Account Control Agreements,  and all other documents, instruments and agreements now or hereafter securing (or given with the intent to  secure) any Obligations.         Senior Officer:  the chief executive officer or chief financial officer of the applicable Obligor.         Settlement Report:  a report summarizing Loans and participations in LC Obligations outstanding  as  of  a  given  settlement  date,  allocated  to  Lenders  on  a  Pro  Rata  basis  in  accordance  with  their  Commitments.         Solvent:  as to any Person, such Person (a) owns Property whose fair salable value is greater than  the amount required to pay all of its debts (including contingent, subordinated, unmatured and unliquidated  liabilities);  (b)  owns  Property  whose  present  fair salable  value  (as  defined  below)  is  greater  than  the  probable total liabilities (including contingent, subordinated, unmatured and unliquidated liabilities) of such  Person as they become absolute and matured; (c) is able to pay all of its debts as they mature; (d) has capital  that is not unreasonably small for its business and is sufficient to carry on its business and transactions and  all business and transactions in which it is about to engage; (e) is not “insolvent” within the meaning of                                         -23-    

 

   Section 101(32) of the Bankruptcy Code; and (f) has not incurred (by way of assumption or otherwise) any  obligations or liabilities (contingent or otherwise) under any Loan Documents, or made any conveyance in  connection therewith, with actual intent to hinder, delay or defraud either present or future creditors of such  Person or any of its Affiliates.  “Fair salable value” means the amount that could be obtained for assets  within a reasonable time, either through collection or through sale under ordinary selling conditions by a  capable and diligent seller to an interested buyer who is willing (but under no compulsion) to purchase.         Specified  Obligor:   an  Obligor  that  is  not  then  an “eligible  contract  participant”  under  the  Commodity Exchange Act (determined prior to giving effect to Section 5.10 ).         Stated Amount:  the amount available to be drawn on a Letter of Credit, including any automatic  increase  or  tolerance  (whether  or  not  then  in  effect)  provided  by  the  Letter  of  Credit  or  related  LC  Documents.         Subordinated Debt:  Debt incurred by a Borrower that is expressly subordinate and junior in right  of payment to Full Payment of all Obligations, and is on terms (including maturity, interest, fees, repayment,  covenants and subordination) satisfactory to Agent.         Subsidiary:  with respect to any Person, any entity at least 50% of whose voting securities or Equity  Interests is owned, directly or indirectly, by such Person (including indirect ownership through other entities  in which such Person directly or indirectly owns 50% of the voting securities or Equity Interests).         Subsidiary Real Estate Debt: Debt for Borrowed Money incurred by KT Mexico in an aggregate  amount not to exceed $10,000,000 and secured by Real Estate located in Mexico and owned by KT Mexico.         Swap:  as defined in Section 1a(47) of the Commodity Exchange Act.         Swap Obligations:  obligations under an agreement relating to a Swap.          Swingline  Loan:   any  Borrowing  of  Base  Rate  Loans  funded  with  Agent’s  funds,  until  such  Borrowing is settled among Lenders or repaid by Borrowers.         Taxes:  all present  or future taxes, levies, imposts,  duties,  deductions,  withholdings  (including  backup  withholding),  assessments,  fees  or  other  charges  imposed  by  any  Governmental  Authority,  including any interest, additions to tax or penalties applicable thereto.         Termination Date:  August 14, 2025, or such earlier date on which the Commitments terminate  hereunder.         Transferee:  any  actual  or  potential  Eligible  Assignee,  Participant  or  other  Person  acquiring  an  interest in any Obligations.         UCC:  the Uniform Commercial Code as in effect in the State of New York or, when the laws of  any other jurisdiction govern the perfection or enforcement of any Lien, the Uniform Commercial Code of  such jurisdiction.         Unused Line Fee Rate:  as of any date of determination, a per annum rate equal to 0.25%.         Upstream Payment:  a Distribution by a Subsidiary of a Borrower to such Borrower.         U.S. Person:  “United States Person” as defined in Section 7701(a)(30) of the Code.                                         -24-    

 

         U.S. Tax Compliance Certificate:  as defined in Section 5.9.2(b)(iii) .         Value:  (a) for Inventory, its value determined on the basis of the lower of cost or market, calculated  on a first-in, first out basis, and excluding any portion of cost attributable to intercompany profit among  Borrowers and their Affiliates; and (b) for an Account, its face amount, net of any returns, rebates, discounts  (calculated on the shortest terms), credits, allowances or Taxes (including sales, excise or other taxes) that  have been or could be claimed by the Account Debtor or any other Person.         Write-Down and Conversion Powers:  the  write-down and conversion powers of the applicable  EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member  Country, which powers are described in the EU Bail-In Legislation Schedule.         1.2   Accounting Terms .  Under the Loan Documents (except as otherwise specified therein),  all accounting terms shall be interpreted, all accounting determinations shall be  made, and all financial  statements shall be prepared, in accordance with GAAP applied on a basis consistent with the most recent  audited financial statements of Borrowers delivered to Agent before the Closing Date and using the same  inventory valuation method and lease accounting treatment as used in such financial statements; provided,  (a) that Borrowers may adopt a change required or permitted by GAAP after the Closing Date as long as  Borrowers’  certified  public  accountants  concur  in  such  change,  it  is  disclosed  to  Agent  and  the  Loan  Documents are amended in a manner satisfactory to Required Lenders to address the change and (b) for all  purposes under this Agreement (including, without limitation, the negative covenants set forth in Section  10.2 and the calculation of the financial covenants set forth in Section 10.3) leases that would have been  classified as operating leases prior to giving effect to the Financial Accounting Standards Board Accounting  Standards Codification  842  (or any  other  Accounting  Standards Codification  having  a  similar  result  or  effect) will continue to be classified as operating leases notwithstanding Financial Accounting Standards  Board Accounting Standards Codification 842 (or any other Accounting Standards Codification having a  similar result or effect).         1.3   Uniform  Commercial  Code .   As  used  herein,  the  following  terms  are  defined in  accordance  with the  UCC in  effect in the State of New  York:  “Account,” “Account Debtor,” “Chattel  Paper,” “Commercial Tort Claim,” “Deposit Account,” “Document,” “Equipment,” “General Intangibles,”  “Goods,” “Instrument,” “Investment Property,” “Letter-of-Credit Right” and “Supporting Obligation.”         1.4   Certain Matters of Construction .  The terms “herein,” “hereof,” “hereunder” and other  words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or  subdivision.  Any pronoun used shall be deemed to cover all genders.  In the computation of periods of time  from a specified date to a later specified date, “from” means “from and including,” and “to” and “until”   each  mean  “to  but  excluding.”   The  terms  “including”  and  “include”  shall  mean  “including,  without   limitation” and, for purposes of each Loan Document, the parties agree that the rule of ejusdem generis   shall not be applicable to limit any provision.  Section titles appear as a matter of convenience only and   shall not affect the interpretation of any Loan Document.  All references in the Loan Documents to any   (a) laws include all related regulations, interpretations, supplements, amendments and successor provisions;   (b)  document,  instrument  or  agreement  include  any  amendments,  waivers  and  other  modifications,   extensions  or  renewals  (to  the  extent  permitted  by the  Loan  Documents);  (c)  section  mean,  unless  the   context otherwise requires, a section of this Agreement; (d) exhibits or schedules mean, unless the context   otherwise requires, exhibits and schedules attached hereto, which are hereby incorporated by reference;   (e) Person include successors and assigns; (f) time of day means time of day at Agent’s notice address under   Section 14.3.1 ; or (g) discretion of Agent, Issuing Bank or any Lender mean the sole and absolute discretion  of  such  Person  exercised  at  any  time  unless  expressly  provided  otherwise.   All  references  to  Value,  Borrowing  Base  components,  Loans,  Letters  of  Credit,  Obligations  and  other  amounts  herein  shall  be  denominated in Dollars, unless expressly provided otherwise, and all determinations (including calculations                                         -25-    

 

   of Borrowing Base and financial covenants) made from time to time under the Loan Documents shall be  made in light of the circumstances existing at such time, unless expressly provided otherwise.  Borrowing  Base calculations shall be consistent with historical methods of valuation and calculation, and otherwise  satisfactory to Agent (and not necessarily calculated in accordance with GAAP).  Borrowers shall have the  burden of establishing any alleged negligence, misconduct or lack of good faith by any Indemnitee under  any Loan Documents.  No provision of any Loan Documents shall be construed against any party by reason  of  such  party  having,  or  being  deemed  to  have,  drafted  the  provision.   Reference  to  an  Obligor’s  “knowledge” or similar concept means actual knowledge of a Senior Officer, or knowledge that a Senior  Officer would have obtained if he or she had engaged in good faith and diligent performance of his or her  duties, including reasonably specific inquiries of employees or agents and a good faith attempt to ascertain  the matter.         1.5   LIBOR Amendment .  Notwithstanding anything to the contrary in this Agreement or any  other  Loan  Documents,  if  Agent  determines  (which  determination  shall  be  conclusive  absent  manifest  error), or Borrower Agent or Required Lenders notify Agent (with, in the case of the Required Lenders, a  copy to Borrower Agent) that Borrowers or Required Lenders (as applicable) have determined, that:         (a)   adequate and reasonable  means do  not exist for ascertaining LIBOR for any applicable  interest period, because the LIBOR quote on the applicable screen page (or other source) used by Agent to  determine  LIBOR  (“LIBOR  Screen  Rate”)  is  not  available  or  published  on  a  current  basis  and  such  circumstances are unlikely to be temporary; or          (b)   the  administrator  of  the  LIBOR  Screen  Rate  or  a  Governmental  Authority  having  jurisdiction over Agent has made a public statement identifying a specific date (“Scheduled Unavailability  Date”) after which LIBOR or the LIBOR Screen Rate will no longer be available or used for determining  the interest rate of loans; or         (c)   syndicated  loans  currently  being  executed,  or  that include  language  similar  to  that  contained in this Section, are being  executed  or amended (as applicable) to incorporate or adopt a new  benchmark interest rate to replace LIBOR;   then, reasonably promptly after such determination or receipt of  notice by Agent,  Agent and  Borrower  Agent  may  amend  this  Agreement  to  replace  LIBOR  with  an  alternate  benchmark  rate  (including  any  mathematical  or other adjustments to the benchmark (if any)  incorporated therein) (“LIBOR Successor  Rate”), together with any proposed LIBOR Successor Rate Conforming Changes and the amendment shall  be effective at 5:00 p.m. on the fifth Business Day after Agent posts the amendment to all Lenders and  Borrowers unless, prior to such time, Required Lenders notify Agent that they do not accept the amendment.   If no LIBOR Successor Rate has been determined and the circumstances under clause (a) above exist or the  Scheduled  Unavailability  Date  has  occurred,  Agent  will  promptly  notify  Borrowers  and  Lenders.   Thereafter, (i) the obligation of Lenders to make or maintain LIBOR Loans shall be suspended (to the extent  of the affected LIBOR Loans or interest periods), and (ii) the LIBOR component shall no longer be used in  determining Base Rate.  Upon receipt of such notice, Borrower Agent may revoke any pending request for  funding, conversion or continuation of a LIBOR Loan (to the extent of the affected LIBOR Loans or interest  periods) or, failing that, will be deemed to have requested a Base Rate Loan.                                            -26-    

 

   SECTION 2.  CREDIT FACILITIES         2.1   Loan Commitments               2.1.1.  Commitments.   Each  Lender  agrees,  severally  on  a  Pro  Rata  basis  up  to  its  Commitment, on the terms set forth herein, to make Loans to Borrowers from time to time through the  Termination Date.  The Loans may be repaid and reborrowed as provided herein.  In no event shall Lenders  have any obligation to honor a request for a Loan if Revolver Usage at such time plus the requested Loan  would exceed the Borrowing Base.  Notwithstanding anything to the contrary in this Agreement, all Loans  outstanding from time to time up to the FILO Amount during the FILO Period shall be deemed to be “FILO  Loans”.               2.1.2.  Notes.  Loans and interest accruing thereon shall be evidenced by the records of  Agent and the applicable Lender.  At the request of a Lender, Borrowers shall deliver promissory note(s)   to such Lender, evidencing its Loans.                2.1.3.  Use of Proceeds.  The proceeds of Loans shall be used by Borrowers solely (a)  to satisfy existing Debt; (b) to pay fees and transaction expenses associated with the closing of this credit  facility; (c) to pay Obligations in accordance with this Agreement; and (d) for lawful business purposes of  Borrowers, including working capital.  Borrowers shall not, directly or indirectly, use any Letter of Credit  or  Loan  proceeds,  nor  use,  lend,  contribute  or  otherwise  make  available  any  Letter  of  Credit  or  Loan  proceeds to any Subsidiary, joint venture partner or knowingly to any other Person, (i) to fund any activities   of or business with any Person, or in any Designated Jurisdiction, that, at the time of issuance of the Letter   of Credit or funding of the Loan, is the target of any Sanction; or  (ii) in any manner that would result in a   violation of a Sanction by any Person (including any Secured Party or other individual or entity participating   in any transaction).                2.1.4.  Voluntary  Reduction  or  Termination.   Upon  at  least 15  Business  Days  prior  written notice to Agent at any time, Borrowers may terminate or reduce the Commitments.  Each reduction  shall be in an increment of $1,000,000, but not less than $5,000,000, and shall be specified in the notice.   Any  notice  of  termination  or  reduction  by  Borrowers  shall  be  irrevocable.   Any  such  notice  may  be  conditioned upon the effectiveness of other credit facilities, the receipt of the proceeds from the issuance  of other Debt or receipt of proceeds from the sale of the Equity Interests or assets of an Obligor.               2.1.5.  Overadvances.   Any  Overadvance  shall  be  repaid  by  Borrowers  within  one  Business Day of demand by Agent, and shall constitute an Obligation secured by the Collateral, entitled to  all benefits of the Loan Documents.  Agent may require Lenders to fund Base Rate Loans that cause or  constitute an Overadvance and to forbear from requiring Borrowers to cure an Overadvance, as long as the  total Overadvance does not exceed 10% of the Borrowing Base and does not continue for more than 30  consecutive days without the consent of Required Lenders.  In no event shall Loans be required that would  cause Revolver Usage to exceed the aggregate Commitments.  No funding or sufferance of an Overadvance  shall constitute a waiver by Agent or Lenders of the Event of Default caused thereby.  No Obligor shall be  a beneficiary of this Section nor authorized to enforce any of its terms.               2.1.6.  Protective Advances.  Agent shall be authorized, in its discretion, at any time  that any condition in Section 6  is not satisfied, to make Base Rate Loans (“Protective Advances”) (a) up to  an aggregate amount of $10,000,000 outstanding at any time,  if Agent  deems such Loans  necessary or  desirable to preserve or protect Collateral, or to enhance the collectability or repayment of Obligations, as  long as such Loans do not cause Revolver Usage to exceed the aggregate Commitments; or (b) to pay any  other  amounts  chargeable  to  Obligors  under  any  Loan  Documents,  including  interest,  costs,  fees  and  expenses.  Lenders shall participate on a Pro Rata basis in Protective Advances outstanding from time to                                         -27-    

 

   time.  Required Lenders may at any time revoke Agent’s authority to make further Protective Advances  under clause (a) by written notice to Agent.  Absent such revocation, Agent’s determination that funding  of  a Protective  Advance  is  appropriate  shall  be  conclusive.   No  funding  of  a Protective  Advance  shall  constitute a waiver by Agent or Lenders of any Event of Default relating thereto.  No Obligor shall be a  beneficiary of this Section nor authorized to enforce any of its terms.               2.1.7.  Increase in Commitments.  Borrowers may request an increase in Commitments  from time to time upon not less than 30 days’  notice to Agent, as long as (a) the requested increase is in a  minimum amount of $5,000,000 and is offered on the same terms as existing Commitments, except for a  closing fee specified by Borrowers and (b) total increases under this Section do not exceed $25,000,000  and no more than 3 increases are made. Agent shall promptly notify Lenders of the requested increase and,  within  10  Business  Days  thereafter,  each  Lender  shall  notify  Agent  if  and  to  what  extent  such  Lender  commits to increase its Commitment.  Any Lender not responding within such period shall be deemed to  have declined an increase.  If Lenders fail to commit to the full requested increase, Eligible Assignees may  issue additional Commitments and become Lenders hereunder.  Agent may allocate, in its discretion, the  increased  Commitments  among  committing  Lenders  and,  if  necessary,  Eligible  Assignees.   Total  Commitments shall be increased by the requested amount (or such lesser amount committed by Lenders  and Eligible Assignees) on a date agreed upon by Agent and Borrower Agent, provided (i) the conditions   set forth in Section 6.2  are satisfied at such time; and (ii) to the extent Collateral includes any Real Estate,   flood  insurance  diligence  and  documentation  have  been  completed  as  required  by  all  Flood  Laws  or   otherwise in a manner satisfactory to all Lenders.  Agent, Borrowers, and the new and existing Lenders   shall  execute  and  deliver  such  documents  and  agreements  as  Agent  deems  appropriate  to  evidence  the   increase in and allocations of Commitments.  On the effective date of an increase, the Revolver Usage and   other  exposures  under  the  Commitments  shall  be  reallocated  among  Lenders,  and  settled  by  Agent  as   necessary, in accordance with Lenders’ adjusted shares of Commitments.          2.2   Letter of Credit Facility               2.2.1.  Issuance of Letters of Credit.  Issuing Bank shall issue Letters of Credit from  time to time until the Termination Date, on the terms set forth herein, including the following:               (a)   Each Borrower acknowledges that Issuing Bank’s issuance of any Letter of Credit  is conditioned upon Issuing Bank’s receipt  of a LC Application  with respect to the requested Letter of  Credit, as  well  as  such  other  instruments  and  agreements  as  Issuing  Bank  may  customarily  require  for  issuance of a letter of credit of similar type and amount.  Issuing Bank shall have no obligation to issue any  Letter of Credit unless (i) Issuing Bank receives a LC Request and LC Application at least three Business  Days prior to the requested date of issuance; (ii) each LC Condition is satisfied; and (iii) if a Defaulting  Lender exists, such Lender or Borrowers have entered into arrangements satisfactory to Agent and Issuing  Bank to eliminate any Fronting Exposure associated with such Lender.  If, in sufficient time to act, Issuing  Bank receives written notice from Agent or Required Lenders that a LC Condition has not been satisfied,  Issuing Bank shall not issue the requested Letter of Credit.  Prior to receipt of any such notice, Issuing Bank  shall not be deemed to have knowledge of any failure of LC Conditions.               (b)   Letters of Credit may be requested by a Borrower to support obligations incurred  in  the  Ordinary  Course  of  Business,  or  as  otherwise  approved  by  Agent,  which  approval  shall  not  be  unreasonably withheld.  Increase, renewal or extension of a Letter of Credit shall be treated as issuance of  a new Letter of Credit, except that Issuing Bank may require a new LC Application in its discretion.               (c)   Borrowers assume all risks of any beneficiary’s acts, omissions or misuses of a  Letter  of  Credit.   None  of  Agent,  Issuing  Bank  or  any  Lender  shall  be  responsible  for  the  existence,  character, quality, quantity, condition, packing, value or delivery of any goods purported to be represented                                         -28-    

 

   by any Documents; any differences or variation in the character, quality, quantity, condition, packing, value  or delivery of any goods from that expressed in any Documents; the form, validity, sufficiency, accuracy,  genuineness or legal effect of any Documents or of any endorsements thereon; the time, place, manner or  order in which shipment of goods is made; partial, incomplete or failed shipment of any goods referred to   in a Letter of Credit or Documents; any deviation from instructions, delay, default or fraud by any shipper   or other Person in connection with any goods, shipment  or delivery; any breach  of  contract between a   shipper or vendor and a Borrower; errors, omissions, interruptions or delays in transmission or delivery of   any  messages,  by  mail,  cable,  telegraph,  telex,  telecopy,  e-mail,  telephone  or  otherwise;  errors  in   interpretation  of  technical  terms;  the  misapplication  by  a  beneficiary  of  a  Letter  of  Credit  or  proceeds   thereof; or any consequences arising from causes beyond the control of Issuing Bank, Agent or any Lender,   including any act or omission of a Governmental Authority.  Borrowers shall take all action (including   enforcement of available rights against a beneficiary) to avoid and mitigate damages relating to any Letter   of Credit or claimed against Issuing Bank, Agent or any Lender.  Issuing Bank shall be fully subrogated to   all rights and remedies of a beneficiary whose claims are discharged through a Letter of Credit.                (d)  In  connection  with  its  administration  of  and  enforcement  of  rights  or  remedies  under any Letters of Credit  or LC Documents, Issuing Bank shall be  entitled to act, and shall be fully   protected in acting, upon any certification, documentation or communication in whatever form believed by   Issuing Bank, in good faith, to be genuine and correct and to have been signed, sent or made by a proper   Person.  Issuing  Bank  may use legal counsel, accountants and  other  experts to advise  it concerning  its   obligations, rights and remedies, and shall be entitled to act (and shall be fully protected in any action taken   in  good  faith  reliance)  upon  any  advice  given  by  such  experts.   Issuing  Bank  may  employ  agents  and   attorneys-in-fact in connection with any matter relating to Letters of Credit or LC Documents, and shall not   be liable for the negligence or misconduct of agents and attorneys-in-fact selected with reasonable care.                2.2.2.  Reimbursement; Participations.               (a)   If Issuing Bank honors any request for payment under a Letter of Credit, Borrowers  shall pay to Issuing Bank, within one Business Day thereof (“Reimbursement Date”), the amount paid by  Issuing Bank under such Letter of Credit, together with interest at the interest rate for Base Rate Loans from  the Reimbursement Date until payment by Borrowers.  The obligation of Borrowers to reimburse Issuing  Bank for any payment made under a Letter of Credit shall be absolute, unconditional, irrevocable, and joint  and several, and shall be paid without regard to any lack of validity or enforceability of any Letter of Credit  or the existence of any claim, setoff, defense or other right that Borrowers may have at any time against the  beneficiary.  Whether or not Borrower Agent submits a Notice of Borrowing, Borrowers shall be deemed  to have requested a Borrowing of Base Rate Loans in an amount necessary to pay all amounts due Issuing  Bank on any Reimbursement Date and each Lender shall fund its Pro Rata share of such Borrowing whether   or not the Commitments have terminated, an Overadvance exists or is created thereby, or the conditions in   Section 6  are satisfied.                (b)   Each Lender hereby irrevocably and unconditionally purchases from Issuing Bank,   without recourse or warranty, an undivided Pro Rata participation in all LC Obligations outstanding from   time to time.  Issuing Bank is issuing Letters of Credit in reliance upon this participation.  If Borrowers do   not make a payment to Issuing Bank when due hereunder, Agent shall promptly notify Lenders and each   Lender shall within one Business Day after such notice pay to Agent, for the benefit of Issuing Bank, the   Lender’s Pro Rata share of such payment.  Upon request by a Lender, Issuing Bank shall provide copies of   Letters of Credit and LC Documents in its possession at such time.                (c)   The  obligation  of  each  Lender  to  make  payments  to  Agent  for  the  account  of   Issuing  Bank  in  connection  with  Issuing  Bank’s  payment  under  a  Letter  of  Credit  shall  be  absolute,   unconditional  and  irrevocable,  not  subject  to  any  counterclaim,  setoff,  qualification  or  exception                                         -29-    

 

   whatsoever, and shall be made in accordance with this Agreement under all circumstances, irrespective of  any lack of validity or unenforceability of any Loan Documents; any draft, certificate or other document  presented under a Letter of Credit having been determined to be forged, fraudulent, noncompliant, invalid  or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; any waiver  by Issuing Bank of a requirement that exists for its protection (and not a Borrower’s protection) or that does  not  materially prejudice a Borrower; any honor of an electronic  demand for payment even  if a draft is  required; any payment of an item presented after a Letter of Credit’s expiration date if authorized by the  UCC or applicable customs or practices; or any setoff or defense that an Obligor may have with respect to  any Obligations.  Issuing Bank does not assume any responsibility for any failure or delay in performance  or any breach by any Borrower or other Person of any obligations under any LC Documents.  Issuing Bank  does not make to Lenders any express or implied warranty, representation or guaranty with respect to any  Letter of Credit, Collateral, LC Document or Obligor.  Issuing Bank shall not be responsible to any Lender  for any recitals, statements, information, representations or warranties contained in, or for the execution,  validity,  genuineness,  effectiveness  or  enforceability  of  any  LC  Documents;  the  validity,  genuineness,  enforceability, collectability, value or sufficiency of any Collateral or the perfection of any Lien therein; or  the assets, liabilities, financial condition, results of operations, business, creditworthiness or legal status of  any Obligor.               (d)   No Indemnitee shall be liable to any Obligor, Lender or other Person for any action  taken or omitted to be taken in connection with any Letter of Credit or LC Document except as a result of  such Indemnitee’s gross negligence or willful misconduct.  Issuing Bank may refrain from taking any action  with respect to a Letter of Credit until it receives written instructions (and in its discretion, appropriate  assurances) from the Lenders.               2.2.3.  Cash Collateral.  At Agent’s or Issuing Bank’s request, Borrowers shall Cash  Collateralize (a) the Fronting Exposure of any Defaulting Lender; and (b) all outstanding Letters of Credit   if an Event of Default exists, the Termination Date is scheduled to occur within 10 Business Days or the   Termination Date occurs.  If Borrowers fail to provide any Cash Collateral as required hereunder, Lenders   may (and shall upon direction of Agent) advance, as Loans, the amount of Cash Collateral required (whether   or not the Commitments have terminated, an Overadvance exists or the conditions in Section 6 are satisfied).                2.2.4.  Resignation of Issuing Bank.  Issuing Bank may resign at any time upon notice  to  Agent  and  Borrowers,  and  any  resignation  of  Agent  hereunder  shall  automatically  constitute  its  concurrent resignation as Issuing Bank.  From the effective date of its resignation, Issuing Bank shall have  no obligation to issue, amend, renew, extend or otherwise modify any Letter of Credit, but shall otherwise  have all rights and obligations of an Issuing Bank hereunder relating to any Letter of Credit issued by it   prior to such date.  A replacement Issuing Bank may be appointed by written agreement among Agent,   Borrower Agent and the new Issuing Bank.    SECTION 3.  INTEREST, FEES AND CHARGES          3.1   Interest               3.1.1.  Rates and Payment of Interest.               (a)   The  Obligations  shall  bear  interest  at  LIBOR  plus  the  Applicable  Margin;  provided, that at any time LIBOR is not available, the Obligations shall, at the option of Agent, bear interest  based on an alternative rate as set forth in the definition of LIBOR or the Base Rate plus the Applicable  Margin.                                             -30-    

 

               (b)   During an Insolvency Proceeding with respect to any Obligor, or during any other  Event of Default if Agent or Required Lenders in their discretion so elect, Obligations shall bear interest at  the Default Rate (whether before or after any judgment), payable on demand .               (c)   Interest shall accrue from the date a Loan is advanced or Obligation is incurred or  payable, until paid in full by Borrowers, and shall in no event be less than zero at any time.  Interest accrued  on the Loans shall be due and payable in arrears, (i) on the first day of each month; (ii) on any date of  prepayment, with respect to the principal amount being prepaid; and (iii) on the Termination Date.  Interest  accrued on any other Obligations shall be due and payable as provided in the applicable agreements or, if  no payment date is specified, on demand .               3.1.2.  Reserved.               3.1.3.  Reserved.                 3.1.4.  Interest  Rate  Not  Ascertainable.   If,  due  to  any  circumstance  affecting  the  London interbank market, Agent determines that, on a temporary basis, adequate and fair means do not  exist for ascertaining LIBOR on any applicable date or that any interest period is not available on the basis  provided  herein,  then  Agent  shall  immediately  notify  Borrowers  of  such  determination.   Until  Agent  notifies  Borrowers that such circumstance  no  longer exists, the obligation  of Lenders to  make affected  LIBOR Loans shall be suspended.         3.2   Fees               3.2.1.  Unused Line Fee.  Borrowers shall pay to  Agent, for the Pro Rata benefit of  Lenders, a fee equal to the Unused Line Fee Rate times the amount by which the Commitments exceed the  average daily Revolver Usage during any month.  Such fee shall be payable in arrears, on the first day of  each month and on the Termination Date.               3.2.2.  LC Facility Fees.  Borrowers shall pay (a) to Agent, for the Pro Rata benefit of  Lenders, a fee equal to the Applicable Margin in effect for LIBOR Loans times the average daily Stated   Amount of Letters of Credit, which fee shall be payable monthly in arrears, on the first day of each month;   (b) to Agent, for its own account, a fronting fee equal to 0.125% per annum on the Stated Amount of each  Letter of Credit, which fee shall be payable monthly in arrears, on the first day of each month; and (c) to  Issuing  Bank,  for  its  own  account,  all  customary  charges  associated  with  the  issuance,  amending,  negotiating, payment, processing, transfer and administration of Letters of Credit, which charges shall be  paid as and when incurred.  During an Event of Default, the fee payable under clause (a) shall be increased  by 2% per annum.               3.2.3.  Fee Letters.  Borrowers shall pay all fees set forth in any fee letter executed in  connection with this Agreement.         3.3   Computation of Interest, Fees, Yield Protection .  All interest, as well as fees and other  charges calculated on a per annum basis, shall be computed for the actual days elapsed, based on a year of  360  days.   Each  determination  by  Agent  of  any  interest,  fees  or  interest  rate  hereunder  shall  be  final,  conclusive and binding for all purposes, absent manifest error.  All fees shall be fully earned when due and  shall not be subject to rebate, refund or proration.  All fees payable under Section 3.2  are compensation for  services and are not, and shall not be deemed to be, interest or any other charge for the use, forbearance or  detention of money.  A certificate as to amounts payable by Borrowers under Section 3.4 , 3.6 , 3.7 , 3.9  or  5.8 , submitted to Borrower Agent by Agent or the affected Lender shall be final, conclusive and binding                                          -31-    

 

   for  all  purposes,  absent  manifest  error, and  Borrowers  shall  pay  such  amounts  to  the  appropriate  party  within 10 days following receipt of the certificate.         3.4   Reimbursement  Obligations .   Borrowers  shall  pay  all  Claims  promptly  upon  request.   Borrowers shall also reimburse Agent for all reasonable legal, accounting, appraisal, consulting, and other  fees and expenses incurred by it in connection with (a) negotiation and preparation of any Loan Documents,  including  any  modification  thereof;  (b)  administration  of  and  actions  relating  to  any  Collateral,  Loan  Documents  and  transactions  contemplated  thereby,  including  any  actions  taken  to  perfect  or  maintain  priority  of  Agent’s  Liens  on  any  Collateral,  to  maintain  any  insurance  required  hereunder  or  to  verify   Collateral; and (c) subject to the limits of Section 10.1.1(b) , any examination or appraisal with respect to   any Obligor or Collateral by Agent’s personnel or a third party.  All legal, accounting and consulting fees   shall  be  charged  to  Borrowers  by  Agent’s  professionals  at  rates  actually  billed  to  Agent  by  Agent’s   professionals.   All amounts payable by Borrowers under this Section shall be due within 1 Business Day  of demand .         3.5   Illegality .  If any Lender determines that any Applicable Law has made it unlawful, or that  any Governmental Authority has asserted that it is unlawful, for any Lender to perform any of its obligations  hereunder, to make, maintain, issue, fund, participate in, or charge applicable interest or fees with respect  to, any Loan or Letter of Credit, or to determine or charge interest based on LIBOR, or any Governmental  Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take  deposits of, Dollars in the London interbank market, then, on notice thereof by such Lender to Agent, any  obligation of such Lender to perform such obligations, to make, maintain, fund or participate in the Loan  or Letter of Credit (or to charge interest or fees otherwise applicable thereto), or to continue or convert   Loans as LIBOR Loans, shall be suspended until such Lender notifies Agent that the circumstances giving  rise  to  such  determination  no  longer  exist.   Upon  delivery  of  such  notice,  Borrowers  shall  prepay  the  applicable Loan, Cash Collateralize the applicable LC Obligations or, if applicable, convert LIBOR Loan(s)  of such Lender to Base Rate Loan(s) immediately, if such Lender cannot continue to maintain the LIBOR  Loan.  Upon any such prepayment or conversion, Borrowers shall also pay accrued interest on the amount   so prepaid or converted.          3.6   Inability to Determine Rates .  Agent will promptly notify Borrower Agent and Lenders  if, in connection with any Loan or request with respect to a Loan, (a) Agent determines that (i) Dollar  deposits are not being offered to banks in the London interbank Eurodollar market for the applicable Loan  amount or interest period, or (ii) adequate and reasonable means do not exist for determining LIBOR for  the Loan or interest period (including with respect to calculation of the Base Rate); or (b) Agent or Required   Lenders determine for any reason that LIBOR for the interest period does not adequately and fairly reflect   the  cost  to  Lenders  of  funding  or  maintaining  the  Loan.   Thereafter,  Lenders’  obligations  to  make  or   maintain affected LIBOR Loans and utilization of the LIBOR component (if affected) in determining Base   Rate shall be suspended until Agent determines (or is instructed by Required Lenders) to withdraw the   notice.   Upon  receipt  of  such  notice,  Borrower  Agent  may  revoke  any  pending  request  for  funding,   conversion or continuation of a LIBOR Loan or, failing that, will be deemed to have requested a Base Rate   Loan,  and  Agent  may  (or  shall  upon  request  by  Required  Lenders)  immediately  convert  any  affected   LIBOR Loan to a Base Rate Loan.          3.7   Increased Costs; Capital Adequacy               3.7.1.  Increased Costs Generally.  If any Change in Law shall:               (a)   impose,  modify  or  deem  applicable  any  reserve,  liquidity,  special  deposit,  compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account                                          -32-    

 

   of,  or  credit  extended  or  participated  in  by,  any  Lender  (except  any  reserve  requirement  reflected  in  calculating LIBOR) or Issuing Bank;               (b)   subject  any  Recipient  to  Taxes  (other  than  (i)  Indemnified  Taxes,  (ii)  Taxes  described in clauses (b) through (d) of the definition of Excluded Taxes, and (iii) Connection Income Taxes)  with respect to any Loan, Letter of Credit, Commitment or other obligations, or its deposits, reserves, other  liabilities or capital attributable thereto; or               (c)   impose on any Lender, Issuing Bank or interbank market any other condition, cost  or expense affecting any Loan, Letter of Credit, participation in LC Obligations, Commitment or Loan  Document;   and the result thereof shall be to increase the cost to a Lender of making or maintaining any Loan or its  Commitment, or converting to or continuing any interest option for a Loan, or to increase the cost to a  Lender or Issuing Bank 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 a Lender or Issuing Bank hereunder (whether of principal, interest or any other amount)  then, upon request of such Lender or Issuing Bank, Borrowers will pay to it such additional amount(s) as  will compensate it for the additional costs incurred or reduction suffered.               3.7.2.  Capital Requirements.  If a Lender or Issuing Bank determines that a Change in  Law affecting it or its holding company, if any, regarding capital or liquidity requirements has or would  have the effect of reducing the rate of return on such Lender’s, Issuing Bank’s or holding company’s capital  as a consequence of this Agreement, or such Lender’s or Issuing Bank’s Commitment, Loans, Letters of  Credit or participations in LC Obligations or Loans, to a level below that which such Lender, Issuing Bank  or holding company could have achieved but for such Change in Law (taking into consideration its policies  with respect to capital adequacy), then from time to time Borrowers will pay to such Lender or Issuing  Bank, as the case may be, such additional amounts as will compensate it or its holding company for the  reduction suffered.               3.7.3.  LIBOR  Loan  Reserves.   If  any  Lender  is  required  to maintain  reserves  with  respect to liabilities or assets consisting of or including Eurocurrency funds or deposits, Borrowers shall  pay additional interest to such Lender on each LIBOR Loan equal to the costs of such reserves allocated to  the Loan by the Lender (as determined by it in good faith, which determination shall be conclusive).  The  additional interest shall be due and payable on each interest payment date for the Loan; provided, that if the  Lender notifies Borrowers (with a copy to Agent) of the additional interest less than 10 days prior to the  interest payment date, then such interest shall be payable 10 days after Borrowers’ receipt of the notice.               3.7.4.  Compensation.  Failure or delay on the part of any Lender or Issuing Bank to  demand compensation pursuant to this Section shall not constitute a waiver of its right to demand such  compensation,  but  Borrowers  shall  not  be  required  to  compensate  a  Lender  or  Issuing  Bank  for  any  increased costs or reductions suffered more than nine months (plus any period of retroactivity of the Change  in Law giving rise to the demand) prior to the date that the Lender or Issuing Bank notifies Borrower Agent  of the applicable Change in Law and of such Lender’s or Issuing Bank’s intention to claim compensation  therefor.         3.8   Mitigation .  If any Lender gives a notice under Section 3.5  or requests compensation under  Section 3.7 , or if Borrowers are required to pay any Indemnified Taxes or additional amounts with respect  to a Lender under Section 5.8 , then at the request of Borrower Agent, such Lender shall use reasonable  efforts to designate or assign its obligations hereunder to a different Lending Office, if, in the judgment of  such Lender, such designation or assignment would eliminate the need for such notice or reduce amounts                                         -33-    

 

   payable or to be withheld in the future, would not subject the Lender to any unreimbursed cost or expense,  and would not otherwise be disadvantageous or unlawful.  Borrowers shall pay all reasonable costs and  expenses incurred by any Lender in connection with any such designation or assignment.         3.9   Funding Losses .  If for any reason (a) any Borrowing of a LIBOR Loan does not occur on  the  date  specified  in  a  Notice  of  Borrowing  (whether  or  not  withdrawn),  (b)  Borrowers  fail  to repay  a  LIBOR Loan when required, or (c) a Lender (other than a Defaulting Lender) is required to assign a LIBOR  Loan pursuant to Section 13.4 , then Borrowers shall pay to Agent its customary administrative charge and  to each Lender all losses, expenses and fees arising from redeployment of funds or termination of match  funding.  For purposes of calculating such amounts, a Lender shall be deemed to have funded a LIBOR  Loan by a matching deposit or other borrowing in the London interbank market for a comparable amount  and period, whether or not the Loan was in fact so funded.         3.10  Maximum  Interest .   Notwithstanding  anything  to  the  contrary  contained  in  any  Loan  Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum  rate of non-usurious interest permitted by Applicable Law (“maximum rate”).  If Agent or any Lender shall  receive interest in an amount that exceeds the maximum rate, the excess interest shall be applied to the  principal of the Obligations or, if it exceeds such unpaid principal, refunded to Borrowers.  In determining  whether the interest contracted for, charged or received by Agent or a Lender exceeds the maximum rate,  such  Person  may,  to  the  extent  permitted  by  Applicable  Law,  (a)  characterize  any  payment  that  is  not  principal as an expense, fee or premium rather than interest; (b) exclude voluntary prepayments and the  effects thereof; and (c) amortize, prorate, allocate and spread (in equal or unequal parts) the total amount  of interest throughout the contemplated term of the Obligations hereunder.   SECTION 4.  LOAN ADMINISTRATION         4.1   Manner of Borrowing and Funding Loans               4.1.1.  Notice of Borrowing.               (a)   To request Loans, Borrower  Agent shall  give  Agent  a Notice  of  Borrowing by  11:00 a.m. on the requested funding date.  Notices received by  Agent after such time shall be deemed  received on the next Business Day.  Each Notice of Borrowing shall be irrevocable and shall specify (A)  the Borrowing amount and (B) the requested funding date (which must be a Business Day).               (b)   Unless  payment  is  otherwise  made  by  Borrowers,  the becoming  due  of  any   Obligation  (whether  principal,  interest,  fees  or  other  charges,  including  Extraordinary  Expenses,  LC   Obligations, Cash Collateral and Secured Bank Product Obligations) shall be deemed to be a request for a   Base Rate Loan  on the  due  date  in the amount  due and the Loan proceeds shall be disbursed as direct   payment  of  such  Obligation.   In  addition,  Agent  may,  at  its  option,  charge  such  amount  against  any   operating, investment or other account of a Borrower maintained with Agent or any of its Affiliates.                (c)   If a Borrower maintains a disbursement account with Agent or any of its Affiliates,  then presentation for payment in the account of a Payment Item when there are insufficient funds to cover  it shall be deemed to be a request for a Base Rate Loan on the presentation date, in the amount of the  Payment Item.  Proceeds of the Loan may be disbursed directly to the account.               4.1.2.  Fundings by Lenders.  Except for Swingline Loans, Agent  shall  endeavor  to  notify Lenders  of  each Notice  of  Borrowing (or deemed request for a Borrowing) by 1:00 p.m. on the  proposed funding date for a Base Rate Loan or by 3:00 p.m. two Business Days before a proposed funding  of a LIBOR Loan.  Each Lender shall fund its Pro Rata share of a Borrowing in immediately available funds                                         -34-    

 

   not later than 3:00 p.m. on the requested funding date, unless Agent’s notice is received after the times  provided above, in which case Lender shall fund by 11:00 a.m. on the next Business Day.  Subject to its  receipt of such amounts from Lenders, Agent shall disburse the Borrowing proceeds in a manner directed  by Borrower Agent and acceptable to Agent.  Unless Agent receives (in sufficient time to act) written notice  from  a  Lender  that  it  will  not  fund  its  share  of  a Borrowing,  Agent  may  assume  that  such  Lender  has  deposited or promptly will deposit its share with Agent, and Agent may disburse a corresponding amount   to Borrowers.  If a Lender’s share of a Borrowing or of a settlement under Section 4.1.3(b)  is not received   by Agent, then Borrowers agree to repay to Agent within one Business Day of  demand  the amount of such  share,  together  with  interest  thereon  from  the  date  disbursed  until  repaid,  at  the  rate  applicable  to the  Borrowing.  Agent, a Lender or Issuing Bank may fulfill its obligations under Loan Documents through  one or more Lending Offices, and this shall not affect any obligation of Obligors under the Loan Documents  or with respect to any Obligations.               4.1.3.  Swingline Loans; Settlement.               (a)   To fulfill any request for a Base Rate Loan hereunder, Agent may in its discretion  advance  Swingline  Loans  to  Borrowers,  up  to  an  aggregate  outstanding  amount  equal  to  10%  of  the  Commitments.  Swingline Loans shall constitute Loans for all purposes, except that payments thereon shall  be made to Agent for its own account until settled with or funded by Lenders hereunder.               (b)   Settlement of Loans, including Swingline Loans, among Lenders and Agent shall   take place on a date determined from time to time by Agent (but at least weekly, unless the settlement   amount is de minimis), on a Pro Rata basis in accordance with the Settlement Report delivered by Agent to   Lenders.  Between settlement dates, Agent may in its discretion apply payments on Loans to Swingline   Loans, regardless of any designation by Borrowers or anything herein to the contrary.  Each Lender hereby   purchases,  without  recourse  or  warranty,  an  undivided  Pro  Rata  participation  in  all  Swingline  Loans   outstanding from time to time until settled.  If a Swingline Loan cannot be settled among Lenders, whether   due to an Obligor’s Insolvency Proceeding or for any other reason, each Lender shall pay the amount of its   participation in the Loan to Agent, in immediately available funds, within one Business Day after Agent’s   request  therefor.   Lenders’  obligations  to  make  settlements  and  to  fund  participations  are  absolute,   irrevocable  and  unconditional,  without  offset,  counterclaim  or  other  defense,  and  whether  or  not  the   Commitments have terminated, an Overadvance exists or the conditions in Section 6  are satisfied.                4.1.4.  Notices.  If Borrowers request Loans, select interest rates or transfer funds based  on telephonic or electronic instructions to Agent, Borrowers shall confirm the request by prompt delivery  to Agent of a Notice of Borrowing.  Agent and Lenders are not liable for any loss suffered by a Borrower  as a result of Agent or a Lender acting on its understanding of telephonic or electronic instructions from a  person believed in good faith to be authorized to give instructions on a Borrower’s behalf.         4.2   Defaulting Lender .  Notwithstanding anything herein to the contrary:               4.2.1.  Reallocation  of  Pro  Rata  Share;  Amendments.   For  purposes  of  determining  Lenders’ obligations or rights to fund, participate in or receive collections with respect to Loans and Letters  of Credit (including existing Swingline Loans, Protective Advances and LC Obligations), Agent may in its  discretion reallocate Pro Rata shares by excluding a Defaulting Lender’s Commitments and Loans from the  calculation of shares.  A Defaulting Lender shall have no right to vote on any amendment, waiver or other  modification of a Loan Document, except as provided in Section 14.1.1(c) .               4.2.2.  Payments; Fees.  Agent may, in its discretion, receive and retain any amounts  payable to a Defaulting Lender under the Loan Documents, and a Defaulting Lender shall be deemed to  have assigned to Agent such amounts until all Obligations owing to Agent, non-Defaulting Lenders and                                         -35-    

 

   other Secured Parties have been paid in full.  Agent may use such amounts to cover the Defaulting Lender’s  defaulted obligations, to Cash Collateralize such Lender’s Fronting Exposure, to readvance the amounts to   Borrowers or to repay Obligations.  A Lender shall not be entitled to receive any fees accruing hereunder  while  it  is  a  Defaulting  Lender  and  its  unfunded  Commitment  shall  be  disregarded  for  purposes  of  calculating the unused line fee under Section 3.2.1 .  If any LC Obligations owing to a Defaulted Lender  are reallocated to other Lenders, fees attributable to such LC Obligations under Section 3.2.2  shall be paid   to such Lenders.  Agent shall be paid all fees attributable to LC Obligations that are not reallocated.                4.2.3.  Status; Cure.  Agent may determine in its discretion that a Lender constitutes a  Defaulting Lender and the effective date of such status shall be conclusive and binding on all parties, absent  manifest error.  Borrowers, Agent and Issuing Bank may agree in writing that a Lender has ceased to be a   Defaulting  Lender,  whereupon  Pro  Rata  shares  shall be  reallocated  without  exclusion  of  the  reinstated   Lender’s Commitments and Loans, and the Revolver Usage and other exposures under the Commitments   shall  be  reallocated  among  Lenders  and  settled  by  Agent  (with  appropriate  payments  by  the  reinstated   Lender,  including  its  payment  of  breakage  costs  for  reallocated  LIBOR  Loans)  in  accordance  with  the   readjusted Pro Rata shares.  Unless expressly agreed by Borrowers, Agent and Issuing Bank, or as expressly   provided herein with respect to Bail-In Actions and related matters, no reallocation of Commitments and  Loans to non-Defaulting Lenders or reinstatement of a Defaulting Lender shall constitute a waiver or release  of claims against such Lender.  The failure of any Lender to fund a Loan, to make a payment in respect of  LC Obligations  or otherwise to perform  obligations hereunder shall  not relieve any other Lender of its   obligations under any Loan Document.  No Lender shall be responsible for default by another Lender.          4.3   Reserved .           4.4   Borrower  Agent .   Each  Borrower  hereby  designates  Key  Tronic  Corporation,  a  Washington corporation (“Borrower Agent”) as its representative and agent for all purposes under the Loan  Documents, including requests for and receipt of Loans and Letters of Credit, designation of interest rates,   delivery or receipt of communications, delivery of Borrower Materials, payment of Obligations, requests  for  waivers,  amendments  or  other  accommodations,  actions  under  the  Loan  Documents  (including  in  respect of compliance with covenants), and all other dealings with Agent, Issuing Bank or any Lender.   Borrower Agent hereby accepts such appointment.  Agent and Lenders shall be entitled to rely upon any  notice or communication (including any notice of borrowing) delivered by or to Borrower Agent on behalf  of any Borrower.  Each of Agent, Issuing Bank and Lenders shall have the right, in its discretion, to deal  exclusively with Borrower Agent for all purposes under the Loan Documents.  Each Borrower agrees that  any notice, election, communication, delivery, representation, agreement, action, omission or undertaking  by Borrower Agent shall be binding upon and enforceable against such Borrower.         4.5   One Obligation .  The Loans, LC Obligations and other Obligations constitute one general  obligation of Borrowers and are secured by Agent’s Lien on all Collateral; provided, that Agent and each  Lender shall be deemed to be a creditor of, and the holder of a separate claim against, each Borrower to the  extent of any Obligations jointly or severally owed by such Borrower.         4.6   Effect of Termination .  On the effective date of the termination of all Commitments, the  Obligations shall be immediately due and payable, and each Secured Bank Product Provider may terminate   its Bank Products.  Until Full Payment of the Obligations, all undertakings of Borrowers contained in the   Loan Documents shall continue, and Agent shall retain its Liens in the Collateral and all of its rights and   remedies under the Loan Documents.  Agent shall not be required to terminate its Liens unless it receives   Cash Collateral or a written agreement, in each case satisfactory to it, protecting Agent and Lenders from   dishonor or return of any Payment Item previously applied to the Obligations.  Sections 2.2 , 3.4 , 3.6 , 3.7 ,  3.9 , 5.4 , 5.8 , 5.9 , 12 , 14.2 , this Section, and each indemnity or waiver given by an Obligor or Lender in any  Loan Document, shall survive any assignment by Agent, Issuing Bank or any Lender of rights or obligations                                         -36-    

 

   hereunder, termination of any Commitment, and any repayment, satisfaction, discharge or Full Payment of  any Obligations.   SECTION 5.  PAYMENTS         5.1   General  Payment  Provisions .   All  payments  of  Obligations  shall  be  made  in  Dollars,  without offset, counterclaim or defense of any kind, free and clear of (and without deduction for) any Taxes,  and in immediately available funds, not later than 12:00 noon on the due date.  Any payment after such  time shall be deemed made on the next Business Day.  Agent shall have the continuing, exclusive right to  apply and reapply payments and proceeds of Collateral against the Obligations, at Agent’s discretion.         5.2   Repayment  of  Loans .   Loans  may  be  prepaid  from  time  to  time,  without penalty  or  premium.   Loans  shall  be  due  and  payable  in  full  on  the  Termination  Date,  unless  payment  is  sooner  required hereunder, and any Overadvance or Protective Advance shall be due and payable as provided in  Sections 2.1.5  and 2.1.6 .  If an Asset Disposition includes Accounts or Inventory, Borrowers shall apply  Net Proceeds to repay Loans equal to the greater of (a) the net book value (or fair market value, if higher)  of such Accounts and Inventory, or (b) the reduction in Borrowing Base resulting from the disposition.    Notwithstanding anything to the contrary in this Agreement, any payment  in respect of Loans shall be   applied first to the Loans that are not FILO Loans until repaid in full, and then applied to FILO Loans.          5.3   Payment of Other Obligations .  Obligations other than Loans, including LC Obligations  and  Claims,  shall  be  paid  by  Borrowers  as  provided in  the  Loan  Documents  or,  if  no  payment  date  is  specified, within one Business Day of demand.         5.4   Marshaling;  Payments  Set  Aside .   None  of  Agent  or  Lenders  shall  be  under  any  obligation to marshal any assets in favor of any Obligor or against any Obligations.  If any payment by or  on behalf of Borrowers is made to Agent, Issuing Bank or any Lender, or if Agent, Issuing Bank or any  Lender exercises a right of setoff, and any of such payment or setoff is subsequently invalidated, declared  to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by  Agent, Issuing Bank or a Lender in its discretion) to be repaid to a trustee, receiver or any other Person,  then the Obligation originally intended to be satisfied, and all Liens, rights and remedies relating thereto,  shall be revived and continued in full force and effect as if such payment or setoff had not occurred.         5.5   Application and Allocation of Payments               5.5.1.  Application.  Payments made by Borrowers hereunder shall be applied (a) first,  as  specifically  required  hereby;  (b)  second,  to  Obligations  then  due  and  owing;  (b)  third,  to  other  Obligations specified by Borrowers; and (c) fourth, as determined by Agent in its discretion.               5.5.2.  Post-Default Allocation.  Notwithstanding anything in any Loan Document to  the contrary, during an Event of Default under Section 11.1(j) , or during any other Event of Default at the  discretion of Agent or Required Lenders, monies to be applied to the Obligations, whether arising from  payments by Obligors, realization on Collateral, setoff or otherwise, shall be allocated as follows:               (a)   first,  to  all  fees,  indemnification,  costs  and  expenses,  including  Extraordinary  Expenses, owing to Agent;               (b)   second,  to  all  other  amounts  owing  to  Agent,  including  Swingline  Loans,  Protective Advances, and Loans and participations that a Defaulting Lender has failed to settle or fund;               (c)   third, to all amounts owing to Issuing Bank;                                         -37-    

 

               (d)   fourth,  to  all  Obligations  (other  than  Secured  Bank  Product  Obligations)  constituting fees, indemnification, costs or expenses owing to Lenders;               (e)   fifth, to all Obligations (other than Secured Bank Product Obligations) constituting  interest;               (f)   sixth, to Cash Collateralize all LC Obligations;               (g)   seventh, to all Loans other than FILO Loans               (h)   eighth, to all FILO Loans and to Secured Bank Product Obligations constituting  Swap Obligations (including Cash Collateralization thereof) up to the amount of Reserves existing therefor;               (i)   ninth, to all other Secured Bank Product Obligations; and               (j)   last, to all remaining Obligations.   Amounts shall be applied to payment of each category of Obligations only after Full Payment of amounts  payable from time to time under all preceding categories.  If amounts are insufficient to satisfy a category,  they shall be paid ratably among outstanding Obligations in the category.  Monies and proceeds obtained  from an Obligor shall not be applied to its Excluded Swap Obligations, but appropriate adjustments shall  be made with respect to amounts obtained from other Obligors to preserve the allocations in each category.   Agent shall have no obligation to calculate the amount of any Secured Bank Product Obligation and may  request a reasonably detailed calculation thereof from a Secured Bank Product Provider.  If the provider  fails to deliver the calculation within five days following request, Agent may assume the amount is zero.   The allocations in this Section are solely to determine the priorities among Secured Parties and may be  changed by agreement of affected Secured Parties without the consent of any Obligor.  This Section is not  for the benefit of or enforceable by any Obligor, and no Borrower has any right to direct the application of  payments or Collateral proceeds subject to this Section.               5.5.3.  Erroneous Application.  Agent shall not be liable for any application of amounts  made by it in good faith and, if any such application is subsequently determined to have been made in error,   the sole recourse of any Lender or other Person to which such amount should have been paid shall be to   recover the amount from the Person that actually received it (and, if such amount was received by a Secured   Party, the Secured Party agrees to return it).          5.6   Dominion Account .  Commencing 45 days after the Closing Date (or such longer period  as determined by Agent in its discretion) and continuing at all times thereafter, the ledger balance in the  main Dominion Account as of the end of a Business Day shall be applied to the Obligations at the beginning  of the next Business Day.  Any resulting credit balance shall not accrue interest in favor of Borrowers and  shall be made available to Borrowers as long as no Default or Event of Default exists.         5.7   Account Stated .  Agent shall maintain, in accordance with its customary practices, loan  account(s) evidencing the Debt of Borrowers hereunder.  Any failure of Agent to record anything in a loan  account, or any error in doing so, shall not limit or otherwise affect the obligation of Borrowers to pay any  amount  owing  hereunder.   Entries  in  a  loan  account shall  be  presumptive  evidence  of  the  information  contained therein.  If information in a loan account is provided to or inspected by or on behalf of a Borrower,  the information shall be conclusive and binding on Borrowers for all purposes absent manifest error, except  to the extent Borrower Agent notifies Agent in writing within 30 days that specific information is subject  to dispute.                                          -38-    

 

         5.8   Taxes               5.8.1.  Payments Free of Taxes; Obligation to Withhold; Tax Payment.               (a)   All  payments  of  Obligations  by  Obligors  shall  be  made  without  deduction  or  withholding for any Taxes, except as required by Applicable Law.  If Applicable Law (as determined by  Agent in its discretion) requires the deduction or withholding of any Tax from any such payment by Agent  or an Obligor, then Agent or such Obligor shall be entitled to make such deduction or withholding based  on information and documentation provided pursuant to Section 5.9 .               (b)   If  Agent  or  any  Obligor  is  required  by  the  Code  to withhold  or  deduct  Taxes,  including backup withholding and withholding taxes, from any payment, then (i) Agent shall pay the full  amount that it determines is to be withheld or deducted to the relevant Governmental Authority pursuant to  the Code, and (ii) to the extent the withholding or deduction is made on account of Indemnified Taxes, the  sum payable by the applicable Obligor shall be increased as necessary so that the Recipient receives an  amount equal to the sum it would have received had no such withholding or deduction been made.               (c)   If Agent or any Obligor is required by any Applicable Law other than the Code to  withhold or deduct Taxes from any payment, then (i) Agent  or such Obligor, to the extent required by  Applicable Law, shall timely pay the full amount to be withheld or deducted to the relevant Governmental  Authority, and (ii) to the extent the withholding or deduction is made on account of Indemnified Taxes, the  sum payable by the applicable Obligor shall be increased as necessary so that the Recipient receives an  amount equal to the sum it would have received had no such withholding or deduction been made.               5.8.2.  Payment of Other Taxes.  Without limiting the foregoing, Borrowers shall timely  pay  to  the  relevant  Governmental  Authority  in  accordance  with  Applicable  Law,  or at  Agent’s  option,  timely reimburse Agent for payment of, any Other Taxes.                 5.8.3.  Tax Indemnification.               (a)   Each Borrower shall indemnify and hold harmless, on a joint and several basis,  each Recipient against any Indemnified Taxes (including those imposed or asserted on or attributable to  amounts payable under this Section) payable or paid by a Recipient or required to be withheld or deducted  from a payment to a Recipient, and any penalties, interest and reasonable expenses arising therefrom or  with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted  by the relevant Governmental Authority.  Each Borrower shall indemnify and hold harmless Agent against  any amount that a Lender or Issuing Bank fails for any reason to pay indefeasibly to Agent as required  pursuant to this Section.  Each Borrower shall make payment within 10 days after demand for any amount  or liability payable under this Section.  A certificate as to the amount of such payment or liability delivered  to Borrowers by a Lender or Issuing Bank (with a copy to Agent), or by Agent on its own behalf or on  behalf of any Recipient, shall be conclusive absent manifest error.                  (b)   Each Lender and Issuing Bank shall indemnify and hold harmless, on a several   basis, (i) Agent against any Indemnified Taxes attributable to such Lender or Issuing Bank (but only to the   extent  Borrowers  have  not  already  paid  or reimbursed  Agent  therefor  and  without  limiting  Borrowers’   obligation to do so), (ii) Agent and Obligors, as applicable, against any Taxes attributable to such Lender’s   failure to maintain a Participant register as required hereunder, and (iii) Agent and Obligors, as applicable,   against any Excluded Taxes attributable to such Lender or Issuing Bank, in each case, that are payable or   paid  by  Agent  or  an  Obligor  in  connection  with  any Obligations,  and  any  reasonable  expenses  arising   therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed   or asserted by the relevant Governmental Authority.  Each Lender and Issuing Bank shall make payment                                         -39-    

 

   within 10 days after demand for any amount or liability payable under this Section.  A certificate as to the  amount of such payment or liability delivered to any Lender or Issuing Bank by Agent shall be conclusive  absent manifest error.               5.8.4.  Evidence of Payments.  As soon as practicable after payment by an Obligor of  any Taxes pursuant to this Section, Borrower Agent shall deliver to Agent the original or a certified copy  of a receipt issued by the appropriate Governmental Authority evidencing the payment, a copy of any return  required by Applicable Law to report the payment or other evidence of payment reasonably satisfactory to  Agent.               5.8.5.  Treatment of Certain Refunds.  Unless required by Applicable Law, at no time  shall Agent have any obligation to file for or otherwise pursue on behalf of a Lender or Issuing Bank, nor  have any obligation to pay to any Lender or Issuing Bank, any refund of Taxes withheld or deducted from  funds paid for the account of a Lender or Issuing Bank.  If a Recipient determines in its discretion that it  has received a refund of Taxes that were indemnified by Borrowers or with respect to which a Borrower  paid additional amounts pursuant to this Section, it shall pay the amount of such refund to Borrowers (but  only to the extent of indemnity payments or additional amounts actually paid by Borrowers with respect to  the Taxes giving rise to the refund), net of all out-of-pocket expenses (including Taxes) incurred by such  Recipient and without interest (other than interest paid by the relevant Governmental Authority with respect  to such refund).  Borrowers shall, upon request by the Recipient, repay to the Recipient such amount paid  over to Borrowers (plus any penalties, interest or other charges  imposed by the relevant Governmental  Authority)  if  the  Recipient  is  required  to  repay  such  refund  to  the  Governmental  Authority.   Notwithstanding  anything  herein  to  the  contrary,  no  Recipient  shall  be  required  to  pay  any  amount  to  Borrowers if such payment would place it in a less favorable net after-Tax position than it would have been  in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or  otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had  never been paid.  In no event shall Agent or any Recipient be required to make its tax returns (or any other  information relating to its taxes that it deems confidential) available to any Obligor or other Person.         5.9   Lender Tax Information               5.9.1.  Status of Lenders.  Any Lender that is entitled to an exemption from or reduction  of withholding Tax with respect to payments of Obligations shall deliver to Borrowers and Agent properly  completed and executed documentation reasonably requested by Borrowers or Agent as will permit such  payments to be made without or at a reduced rate of withholding.  In addition, any Lender, if reasonably  requested by Borrowers or Agent, shall deliver such other documentation prescribed by Applicable Law or  reasonably requested by Borrowers or Agent to enable them to determine whether such Lender is subject  to  backup  withholding  or  information  reporting  requirements.   Notwithstanding  the  foregoing,  such  documentation (other than documentation described in Sections 5.9.2(a) , (b)  and (d) ) shall not be required  if a Lender reasonably believes delivery of the documentation would subject it to any material unreimbursed  cost or expense or would materially prejudice its legal or commercial position.               5.9.2.  Documentation.   Without  limiting  the  foregoing,  if any  Borrower  is  a  U.S.  Person,               (a)   Any Lender that is a U.S. Person shall deliver to Borrowers and Agent on or prior  to the  date on  which such Lender becomes a Lender hereunder (and from time to time thereafter upon  reasonable request of Borrowers or Agent), executed copies of IRS Form W-9, certifying that such Lender  is exempt from U.S. federal backup withholding Tax;                                          -40-    

 

               (b)   Any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to  Borrowers and Agent (in such number of copies as shall be requested by the recipient) on or prior to the  date on which such Foreign Lender becomes a Lender hereunder (and from time to time thereafter upon  reasonable request of Borrowers or Agent), whichever of the following is applicable:                     (i)   in the case of a Foreign Lender claiming the benefits of an income tax        treaty to which the United States is a party, (x) with respect to payments of interest under any Loan        Document, executed copies of IRS Form W-8BEN-E establishing an exemption from or reduction        of U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty, and (y) with        respect  to  other  payments  under  the  Loan  Documents,  IRS  Form  W-8BEN-E  establishing  an        exemption from or reduction of U.S. federal withholding Tax pursuant to the “business profits” or        “other income” article of such tax treaty;                     (ii)  executed copies of IRS Form W-8ECI;                     (iii)  in the case of a Foreign Lender claiming the benefits of the exemption for        portfolio interest under Section 881(c) of the Code, (x) a certificate in form satisfactory to Agent        to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A)        of the Code, a “10 percent shareholder” of a Borrower within the meaning of Section 881(c)(3)(B)        of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code        (“U.S. Tax Compliance Certificate”), and (y) executed copies of IRS Form W-8BEN-E; or                     (iv)  to the extent a Foreign Lender is not the beneficial owner, executed copies        of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN-E, a U.S. Tax        Compliance Certificate in form satisfactory to Agent, IRS Form W-9, and/or other certification        documents from  each beneficial owner, as applicable; provided, that if the Foreign Lender is a        partnership  and  one  or  more  of  its  direct  or  indirect  partners  is  claiming  the  portfolio  interest        exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate on behalf of each        such partner;               (c)   any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to  Borrowers and Agent (in such number of copies as shall be requested by the recipient) on or prior to the  date on which such Foreign Lender becomes a Lender hereunder (and from time to time thereafter upon  reasonable request), executed copies of any other form prescribed by Applicable Law as a basis for claiming  exemption  from  or  a  reduction  in  U.S.  federal  withholding  Tax,  duly  completed,  together  with  such  supplementary documentation as may be prescribed by Applicable Law to permit Borrowers or Agent to  determine the withholding or deduction required to be made; and               (d)   if  payment  of  an  Obligation  to  a  Lender  would  be  subject  to  U.S.  federal  withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting  requirements  of  FATCA  (including  those  contained  in  Section  1471(b)  or  1472(b)  of  the  Code),  such  Lender  shall  deliver  to  Borrowers  and  Agent,  at  the  time(s)  prescribed  by  law  and  otherwise  upon  reasonable request, such documentation prescribed by Applicable Law (including Section 1471(b)(3)(C)(i)  of the Code) and such additional documentation as may be appropriate for Borrowers or Agent to comply  with their obligations under FATCA and to determine that such Lender has complied with its obligations  under FATCA or to determine the amount to deduct and withhold from such payment.  Solely for purposes  of this clause (d), “FATCA” shall include any amendments made to FATCA after the date hereof.               5.9.3.  Redelivery of Documentation..  If any form or certification previously delivered  by a Lender pursuant to this Section expires or becomes obsolete or inaccurate in any respect, such Lender                                          -41-    

 

   shall promptly update the form or certification or notify Borrowers and Agent in writing of its inability to  do so.         5.10  Nature and Extent of Each Borrower’s Liability               5.10.1.  Joint and Several Liability.  Each Borrower agrees that it is jointly and severally  liable for, and absolutely and unconditionally guarantees to Agent and Lenders the prompt payment and  performance  of,  all  Obligations,  except  its  Excluded  Swap  Obligations.   Each  Borrower  agrees  that  its  guaranty obligations hereunder constitute a continuing guaranty of payment and not of collection, that such  obligations shall  not be discharged until Full Payment of the Obligations, and that such obligations are  absolute  and  unconditional,  irrespective  of  (a)  the  genuineness,  validity,  regularity,  enforceability,  subordination or any future modification of, or change in, any Obligations or Loan Document, or any other  document, instrument or agreement to which any Obligor is or may become a party or be bound; (b) the  absence of any action to enforce this Agreement (including this Section) or any other Loan Document, or  any  waiver,  consent  or  indulgence  of  any  kind  by  Agent  or  any  Lender  with  respect  thereto;  (c)  the  existence, value or condition of, or failure to perfect a Lien or to preserve rights against, any security or  guaranty for any Obligations or any action, or the absence of any action, by Agent or any Lender in respect  thereof  (including  the  release  of  any  security  or  guaranty);  (d)  the  insolvency  of  any  Obligor;  (e)  any  election by Agent or any Lender in an Insolvency Proceeding for the application of Section 1111(b)(2) of  the Bankruptcy Code; (f) any borrowing or grant of a Lien by any other Borrower, as debtor-in-possession  under Section 364 of the Bankruptcy Code or otherwise; (g) the disallowance of any claims of Agent or  any Lender against any Obligor for the repayment of any Obligations under Section 502 of the Bankruptcy  Code  or  otherwise;  or  (h)  any  other  action  or  circumstances  that  might  otherwise  constitute  a  legal  or  equitable discharge or defense of a surety or guarantor, except Full Payment of the Obligations.               5.10.2.  Waivers.               (a)   Each Borrower expressly waives all rights that it may have now or in the future  under any statute, at common law, in equity or otherwise, to compel Agent or Lenders to marshal assets or  to proceed against any Obligor, other Person or security for the payment or performance of any Obligations  before,  or  as  a  condition  to,  proceeding  against  such  Borrower.   Each  Borrower  waives  all  defenses  available to a surety, guarantor or accommodation co-obligor other than Full Payment of Obligations and  waives, to the maximum extent permitted by law, any right to revoke any guaranty of Obligations as long  as it is a Borrower.  It is agreed among each Borrower, Agent and Lenders that the provisions of this Section  are of the essence of the transaction contemplated by the Loan Documents and that, but for such provisions,  Agent and Lenders would decline to make Loans and issue Letters of Credit.  Each Borrower acknowledges  that its guaranty pursuant to this Section is necessary to the conduct and promotion of its business, and can  be expected to benefit such business.               (b)   Agent and Lenders may, in their discretion, pursue such rights and remedies as  they  deem  appropriate  which  do  not  violate  Applicable  Law,  including  realization  upon  Collateral  by  judicial foreclosure or nonjudicial sale or enforcement, without affecting any rights and remedies under this  Section.  If, in taking any action in connection with the exercise of any rights or remedies, Agent or any  Lender shall forfeit any other rights or remedies, including the right to enter a deficiency judgment against  any Borrower or other Person, whether because of any Applicable Laws pertaining to “election of remedies”  or otherwise, each Borrower consents to such action and waives any claim based upon it, even if the action  may result in loss of any rights of subrogation that any Borrower might otherwise have had.  Any election  of remedies that results in denial or impairment of the right of Agent or any Lender to seek a deficiency  judgment against any Borrower shall not impair any other Borrower’s obligation to pay the full amount of  the Obligations.  Each Borrower waives all rights and defenses arising out of an election of remedies, such  as nonjudicial foreclosure with respect to any security for Obligations, even though that election of remedies                                         -42-    

 

   destroys such Borrower’s rights of subrogation against any other Person.  Agent may bid Obligations, in  whole or part, at any foreclosure, trustee or other sale, including any private sale, and the amount of such   bid need not be paid by Agent but shall be credited against the Obligations.  The amount of the successful  bid at any such sale, whether Agent or any other Person is the successful bidder, shall be conclusively  deemed to be the fair market value of the Collateral, and the difference between such bid amount and the  remaining balance of the Obligations shall be conclusively deemed to be the amount of the Obligations  guaranteed under this Section, notwithstanding that any present or future law or court decision may have  the effect of reducing the amount of any deficiency claim to which Agent or any Lender might otherwise  be entitled but for such bidding at any such sale.               5.10.3.  Extent of Liability; Contribution.               (a)   Notwithstanding anything herein to the contrary, each Borrower’s liability under  this Section shall not exceed the greater of (i) all amounts for which such Borrower is primarily liable, as  described in clause (c) below, and (ii) such Borrower’s Allocable Amount.               (b)   If any Borrower makes a payment under this Section of any Obligations (other than  amounts for which such Borrower is primarily liable) (a “Guarantor Payment”) that, taking into account all  other Guarantor Payments previously or concurrently made by any other Borrower, exceeds the amount  that such Borrower would otherwise have paid if each Borrower had paid the aggregate Obligations satisfied  by such Guarantor Payments in the same proportion that such Borrower’s Allocable Amount bore to the  total Allocable Amounts of all Borrowers, then such Borrower shall be entitled to receive contribution and  indemnification payments from, and to be reimbursed by, each  other Borrower for the amount of such  excess, ratably based on their respective Allocable Amounts in effect immediately prior to such Guarantor   Payment.  The “Allocable Amount” for any Borrower shall be the maximum amount that could then be  recovered from such Borrower under this Section without rendering such payment voidable under Section  548 of the Bankruptcy Code or under any applicable state fraudulent transfer or conveyance act, or similar  statute or common law.               (c)   This Section shall not limit the liability of any Borrower to pay or guarantee Loans  made  directly or indirectly to it (including Loans advanced hereunder to any other Person and then re- loaned or otherwise transferred to, or for the benefit of, such Borrower), LC Obligations relating to Letters  of Credit issued to support its business, Secured Bank Product Obligations incurred to support its business,  and all accrued interest, fees, expenses and other related Obligations with respect thereto, for which such  Borrower shall be primarily liable for all purposes hereunder.  Agent and Lenders shall have the right, at  any  time  in  their  discretion,  to  condition  Loans  and  Letters  of  Credit  upon  a  separate  calculation  of  borrowing availability for each Borrower and to restrict the disbursement and use of Loans and Letters of  Credit to a Borrower based on that calculation.               (d)   Each  Obligor  that  is  a  Qualified  ECP  when  its  guaranty  of  or  grant  of  Lien  as  security for a Swap Obligation becomes effective hereby jointly and severally, absolutely, unconditionally  and irrevocably undertakes to provide funds or other support to each Specified Obligor with respect to such  Swap  Obligation  as  may  be  needed  by  such  Specified Obligor  from  time  to  time  to  honor  all  of  its  obligations under the Loan Documents in respect of such Swap Obligation (but, in each case, only up to the  maximum amount of such liability that can be hereby incurred without rendering such Qualified ECP’s  obligations  and  undertakings  under  this  Section  voidable  under  any  applicable  fraudulent  transfer  or  conveyance act).  The obligations and undertakings of each Qualified ECP under this Section shall remain  in full force and effect until Full Payment of all Obligations.  Each Obligor intends this Section to constitute,  and this Section shall be deemed to constitute, a guarantee of the obligations of, and a “keepwell, support  or other agreement” for the benefit of, each Obligor for all purposes of the Commodity Exchange Act.                                          -43-    

 

               5.10.4.  Joint Enterprise.  Each Borrower has requested that Agent and Lenders make  this credit facility available to Borrowers on a combined basis, in order to finance Borrowers’ business most   efficiently and economically.  Borrowers’ business is a mutual and collective enterprise, and the successful   operation  of  each  Borrower  is  dependent  upon  the  successful  performance  of  the  integrated  group.    Borrowers  believe  that  consolidation  of  their  credit  facility  will  enhance  the  borrowing  power  of  each   Borrower and ease administration of the facility, all to their mutual advantage.  Borrowers acknowledge   that Agent’s and Lenders’ willingness to extend credit and to administer the Collateral on a combined basis   hereunder is done solely as an accommodation to Borrowers and at Borrowers’ request.                5.10.5.  Subordination.  Each Borrower hereby subordinates any claims, including any  rights  at  law  or  in  equity  to  payment,  subrogation,  reimbursement,  exoneration,  contribution,  indemnification or set off, that it may have at any time against any other Obligor, howsoever arising, to the  Full Payment of its Obligations.   SECTION 6.  CONDITIONS PRECEDENT         6.1   Conditions  Precedent  to  Initial  Loans .   In  addition  to  the  conditions  set  forth  in  Section 6.2 ,  Lenders  shall  not  be  required  to  fund  any  requested  Loan,  issue  any  Letter  of  Credit,  or  otherwise extend credit to Borrowers hereunder, until the date (“Closing Date”) that each of the following  conditions has been satisfied:         (a)   Each Loan Document shall have been duly executed and delivered to Agent by each of the  signatories thereto, and each Obligor shall be in compliance with all terms thereof.         (b)   Agent  shall  have  received  acknowledgments  of  all  filings  or  recordations  necessary  to  perfect its Liens in the Collateral, as well as UCC and Lien searches and other evidence satisfactory to  Agent that such Liens are the only Liens upon the Collateral, except Permitted Liens.          (c)   Agent  shall  have  received  evidence  that  Borrowers  have  received  the  proceeds  of  the   BALC Facility.          (d)   Agent shall have received duly executed agreements establishing each Dominion Account   and related lockbox, in form and substance, and with financial institutions, satisfactory to Agent.          (e)   Agent  shall  have  received  certificates,  in  form  and  substance  satisfactory  to  it,  from  a   knowledgeable Senior Officer of each Borrower certifying that, after giving effect to the initial Loans and   transactions hereunder, (i) such Borrower is Solvent; (ii) no Default or Event of Default exists; (iii) the   representations  and  warranties  set  forth  in Section  9   are  true  and  correct;  and  (iv)  such  Borrower  has   complied with all agreements and conditions to be satisfied by it under the Loan Documents.          (f)   Agent  shall  have  received  a  certificate  of  a  duly  authorized  officer  of  each  Obligor,   certifying (i) that attached copies of such Obligor’s Organic Documents are true and complete, and in full   force and effect, without amendment except as shown; (ii) that an attached copy of resolutions authorizing   execution and delivery of the Loan Documents is true and complete, and that such resolutions are in full   force  and  effect,  were  duly  adopted,  have  not  been amended,  modified  or  revoked,  and  constitute  all   resolutions adopted with respect to this credit facility; and (iii) to the title,  name and signature of  each   Person authorized to sign the Loan Documents.  Agent may conclusively rely on this certificate until it is   otherwise notified by the applicable Obligor in writing.          (g)   Agent shall  have received a written  opinion  of Perkins Coie LLP, as well as any  local   counsel to Borrowers or Agent, in form and substance satisfactory to Agent.                                         -44-    

 

         (h)   Agent shall have received copies of the charter documents of each Obligor, certified by the  Secretary of State or other appropriate official of such Obligor’s jurisdiction of organization.  Agent shall  have  received  good  standing  certificates  for  each  Obligor,  issued  by  the  Secretary  of  State  or  other  appropriate  official  of  such  Obligor’s  jurisdiction  of  organization  and  each  jurisdiction  where  such  Obligor’s conduct of business or ownership of Property necessitates qualification.         (i)   Agent shall have received copies of policies or certificates of insurance for the insurance  policies carried by Borrowers, all in compliance with the Loan Documents.         (j)   Each Borrower shall have provided, in form and substance satisfactory to Agent and each  Lender, all documentation and other information as Agent or any Lender deems appropriate in connection  with  applicable  “know  your  customer”  and  anti-money-laundering  rules  and  regulations,  including  the  Patriot Act and Beneficial Ownership Regulation.  If any Borrower qualifies as a “legal entity customer”  under the Beneficial Ownership Regulation, it shall have provided a Beneficial Ownership Certification to  Agent and Lenders in relation to such Borrower.         (k)   Agent  shall  have  completed  its  business,  financial and  legal  due  diligence  of  Obligors,  including a roll-forward of its previous field examination, with results satisfactory to Agent.  No material  adverse change in the financial condition of any Obligor or in the quality, quantity or value of any Collateral  shall have occurred since June 29, 2019.         (l)   Borrowers shall have paid all fees and expenses to be paid to Agent and Lenders on the  Closing Date.         (m)   Agent shall have received a Borrowing Base Report as of July 24, 2020.  Upon giving  effect to the initial funding of Loans and issuance of Letters of Credit, and the payment by Borrowers of all  fees and expenses incurred in connection herewith as well as any payables stretched beyond their customary  payment practices, Availability shall be at least $10,000,000.         6.2   Conditions Precedent to All Credit Extensions .  Agent, Issuing Bank and Lenders shall  not be required to make any credit extension hereunder (including funding any Loan, arranging any Letter  of Credit, or granting any other accommodation to or for the benefit of any Borrower), if the following  conditions are not satisfied on such date and upon giving effect thereto:         (a)   No Default or Event of Default exists;         (b)   The representations and warranties of each Obligor in the Loan Documents are true and  correct (except for representations and warranties that expressly apply only on an earlier date);         (c)   All conditions precedent in any Loan Document are satisfied;         (d)   Since the Closing Date, no  event has occurred  or circumstance  exists that has or could  reasonably be expected to have a Material Adverse Effect; and         (e)   With respect to a Letter of Credit issuance, all LC Conditions are satisfied.   Each request (or deemed request) by a Borrower for any credit extension shall constitute a representation  by Borrowers that the foregoing conditions are satisfied on the date of such request and on the date of the  credit extension.  As an additional condition to a credit extension, Agent may request any other information,  certification, document, instrument or agreement as it deems appropriate.                                          -45-    

 

         6.3   Post-Closing Date Requirements.  By no later than the time periods specified with respect  to each items referenced therein, Borrower shall deliver evidence to Agent of the satisfaction of each of the   items set forth on Schedule 6.3 .    SECTION 7.  COLLATERAL          7.1   Grant  of  Security  Interest .   To  secure  the  prompt  payment  and  performance  of its  Obligations,  each  Obligor  party  hereto  hereby  grants  to  Agent,  for  the  benefit  of  Secured  Parties,  a  continuing Lien on all Property of such Obligor, including the following, whether now owned or hereafter  acquired, and wherever located:         (a)   all Accounts;         (b)   all Chattel Paper, including electronic chattel paper;         (c)   all Commercial Tort Claims, including those shown on Schedule 9.1.16 ;         (d)   all Deposit Accounts;         (e)   all Documents;         (f)   all General Intangibles, including Intellectual Property;         (g)   all Goods, including Inventory, Equipment and fixtures;         (h)   all Instruments;         (i)   all Investment Property;         (j)   all Letter-of-Credit Rights;         (k)   all Supporting Obligations;         (l)   all monies, whether or not in the possession or under the control of Agent, a Lender, or a  bailee or Affiliate of Agent or a Lender, including any Cash Collateral;         (m)   all accessions to, substitutions for, and all replacements, products, and cash and non-cash  proceeds of the foregoing, including proceeds of and unearned premiums with respect to insurance policies,  and claims against any Person for loss, damage or destruction of any Collateral; and         (n)   all  books  and  records  (including  customer  lists,  files,  correspondence,  tapes,  computer   programs, print-outs and computer records) pertaining to the foregoing.         7.2   Lien on Deposit Accounts; Cash Collateral               7.2.1.  Deposit Accounts.  Agent’s Lien hereunder encumbers all amounts credited to  any Deposit Account of an Obligor, including sums in any blocked, lockbox, sweep or collection account.   Each Obligor hereby authorizes and directs each bank or other depository to deliver to Agent, upon request,  all balances in any Deposit Account maintained for such Obligor, without inquiry into the authority or right  of Agent to make such request.                                          -46-    

 

               7.2.2.  Cash Collateral.  Cash Collateral may be invested, at Agent’s discretion (with  the consent of Borrowers, provided no Event of Default exists), but Agent shall have no duty to do so,  regardless of any agreement or course of dealing with any Borrower, and shall have no responsibility for   any investment or loss.  As security for its Obligations, each Borrower hereby grants to Agent a security   interest in and Lien upon all Cash Collateral delivered  hereunder from time to time,  whether  held in a   segregated cash collateral account or otherwise.  Agent may apply Cash Collateral to payment of such   Obligations as they become due, in such order as Agent may elect.  All Cash Collateral and related deposit   accounts shall be under the sole dominion and control of Agent, and no Borrower or other Person shall have   any right to any Cash Collateral until Full Payment of the Obligations.         7.3   Reserved.         7.4   Other Collateral               7.4.1.  Commercial Tort Claims.  Obligors shall promptly notify Agent in writing if any  Obligor  has a Commercial  Tort Claim  (other  than,  as  long  as  no  Default  or  Event  of  Default  exists, a  Commercial Tort Claim for less than $100,000), shall promptly amend Schedule 9.1.16 to include such  claim, and shall take such actions as Agent deems appropriate to subject such claim to a duly perfected,  first priority Lien in favor of Agent.               7.4.2.  Certain After-Acquired Collateral.  Obligors shall (a) promptly notify Agent if  an Obligor obtains an interest in any Deposit Account, Chattel Paper, Document, Instrument, Intellectual  Property, Investment Property or Letter-of-Credit Right, and (b) upon request, take such actions as Agent  deems  appropriate  to  effect  its  perfected,  first  priority  Lien  on  the  Collateral,  including  obtaining any  possession, control agreement or Lien Waiver.  If Collateral is in the possession of a third party, Obligors  shall obtain an acknowledgment from such party that it holds the Collateral for the benefit of Agent.         7.5   Limitations .  The Lien on Collateral granted hereunder is given as security only and shall  not subject Agent or any Lender to, or in any way modify, any obligation or liability of Obligors relating  to any Collateral.  In no event shall any Obligor’s grant of a Lien under any Loan Document secure its  Excluded Swap Obligations.         7.6   Further Assurances .  All Liens granted to Agent under the Loan Documents are for the  benefit of Secured Parties.  Promptly upon request, Obligors shall deliver such instruments and agreements,  and shall take such actions, as Agent reasonably deems appropriate under Applicable Law to evidence or  perfect its Lien on any Collateral, or otherwise to give effect to the intent of this Agreement.  Each Obligor  authorizes Agent to file any financing statement that describes the Collateral as “all assets” or “all personal  property” of such Obligor, or words to similar effect, and ratifies any action taken by Agent before the  Closing Date to effect or perfect its Lien on any Collateral.         7.7   Foreign Subsidiary Stock .  Notwithstanding Section 7.1 , the Collateral shall include only  65% of the voting stock of any Foreign Subsidiary.   SECTION 8.  COLLATERAL ADMINISTRATION         8.1   Borrowing Base Reports .  Borrowers shall deliver to Agent (and Agent shall promptly  deliver same to Lenders) (a) at any time during a Reporting Trigger Period, by the second Business Day of  each week, a Borrowing Base Report as of the close of business of the previous week, (b) so long as no  Reporting Trigger Period is in effect, by the 15th day of each month, a Borrowing Base Report as of the  close of business of the previous month, and, in each case, and at such other times as Agent may request.   All information (including calculation of Availability) in a Borrowing Base Report shall be certified by                                         -47-    

 

   Borrowers.  Agent may from time to time adjust such report to reflect any information or calculation does  not comply with this Agreement. Together with each Borrowing Base Report, Borrowers shall  provide to  Agent a listing of Accounts sold to Orbian since the prior delivered Borrowing Base Report.         8.2   Accounts               8.2.1.  Records and Schedules of Accounts.  Each Borrower shall keep accurate and  complete records of its Accounts, including all payments and collections thereon, and shall submit to Agent  sales, collection, reconciliation and other reports in form satisfactory to Agent, on such periodic basis as   Agent may request.  Each Borrower shall also provide to Agent, together with delivery of each Borrowing   Base Report as required pursuant to Section 8.1  hereof, a detailed aged trial balance of all Accounts as of  the end of the preceding month, specifying each Account’s Account Debtor name and address, amount,  invoice  date  and  due  date,  showing  any  discount,  allowance,  credit,  authorized  return  or  dispute,  and  including such proof of  delivery, copies of invoices and invoice registers, copies  of related documents,  repayment histories, status reports and other information as Agent may reasonably request.  If Accounts in  an aggregate face amount of $5,000,000 or more cease to be Eligible  Accounts, Borrowers shall notify  Agent of such occurrence promptly (and in any event within one Business Day) after any Borrower has  knowledge thereof.               8.2.2.  Taxes.  If an Account of any Borrower includes a charge for any Taxes, Agent  is authorized, in its discretion, to pay the amount thereof to the proper taxing authority for the account of  such Borrower and to charge Borrowers therefor; provided, that neither Agent nor Lenders shall be liable   for any Taxes that may be due from Borrowers or relate to any Collateral.                8.2.3.  Account Verification.  Whether or not a Default or Event of Default exists, Agent  shall have the right at any time, in the name of Agent, any designee of Agent or any Borrower, to verify the  validity, amount or any other matter relating to any Accounts of Borrowers by mail, telephone or otherwise.   Borrowers  shall  cooperate  fully  with  Agent  in  an  effort  to  facilitate  and  promptly  conclude  any  such  verification process.  Notwithstanding the foregoing, unless there exists an Event of Default, Agent shall  not contact any Account Debtor to verify Accounts without providing not less than three Business Day’s  prior  written  notice  to  Borrowers  and  including  Borrowers  in  any  communications  with  such  Account  Debtor.               8.2.4.  Maintenance  of  Dominion  Account.   Borrowers  shall  maintain  Dominion  Accounts  pursuant  to  lockbox  or  other  arrangements acceptable  to  Agent.   Borrowers  shall  obtain  an  agreement (in form and substance satisfactory to Agent) from each lockbox servicer and Dominion Account  bank, establishing Agent’s control over and Lien in the lockbox or Dominion Account  requiring immediate   deposit of all remittances received in the lockbox to a Dominion Account, and waiving offset rights of such  servicer or bank, except for customary administrative charges.  If a Dominion Account is not maintained  with Bank of America, Agent may require immediate transfer of all funds in such account to a Dominion  Account maintained with Bank of America.  Agent and Lenders assume no responsibility to Borrowers for  any lockbox arrangement or Dominion Account, including any claim of accord and satisfaction or release  with respect to any Payment Items accepted by any bank.               8.2.5.  Proceeds of Collateral.  Borrowers shall request in writing and otherwise take all  necessary steps to ensure that all payments on Accounts or otherwise relating to Collateral are made directly  to a Dominion Account (or a lockbox relating to a Dominion Account).  If any Borrower or Subsidiary  receives cash or Payment Items with respect to any Collateral, it shall hold same in trust for Agent and  promptly (not later than the next Business Day) deposit same into a Dominion Account.                                          -48-    

 

         8.3   Inventory               8.3.1.  Records  and  Reports  of  Inventory.   Each  Borrower  shall  keep  accurate  and  complete records of its Inventory, including costs and daily withdrawals and additions, and shall submit to  Agent inventory and reconciliation reports in form satisfactory to Agent, on such periodic basis as Agent  may request.  Each Borrower shall conduct a physical inventory at least once per calendar year (and on a  more  frequent  basis  if requested  by  Agent  when  an  Event  of  Default  exists)  and  periodic  cycle  counts  consistent with historical practices, and shall provide to Agent a report based on each such inventory and  count promptly upon completion thereof, together with such supporting information as Agent may request.   Agent may participate in and observe each physical count.               8.3.2.  Returns of  Inventory.  No  Borrower  shall return  any  Inventory to  a  supplier,  vendor or other Person, whether for cash, credit or otherwise, unless (a) such return is in the Ordinary   Course of Business; (b) no Default, Event of Default or Overadvance exists or would result therefrom; (c)   Agent  is  promptly  notified  if  the  aggregate  Value  of  all  Inventory  returned  in  any  month  exceeds   $5,000,000; and (d) any payment received by a Borrower for a return is promptly remitted to Agent for   application to the Obligations.                8.3.3.  Acquisition, Sale and Maintenance.  No Borrower shall acquire or accept any  Inventory on consignment or approval, and shall take all steps to assure that all Inventory is produced in  accordance  with  Applicable  Law,  including  the  FLSA.   No  Borrower  shall  sell  any  Inventory  on  consignment or approval or any other basis under which the customer may return or require a Borrower to  repurchase such Inventory.  Borrowers shall use, store and maintain all Inventory with reasonable care and  caution, in accordance with applicable standards of any insurance and in conformity with all Applicable  Law, and shall make current rent payments (within applicable grace periods provided for in leases) at all  locations where any Collateral is located.         8.4   Equipment               8.4.1.  Reserved.                 8.4.2.  Dispositions of Equipment.  No Borrower shall sell, lease or otherwise dispose  of any Equipment, without the prior written consent of Agent, other than (a) a Permitted Asset Disposition;  and (b) replacement of Equipment that is worn, damaged or obsolete with Equipment of like function and   value, if the replacement Equipment is acquired substantially contemporaneously with such disposition and   is free of Liens.                8.4.3.  Condition  of Equipment.  The Equipment  is in  good  operating condition and  repair, and all necessary replacements and repairs have been made so that its value and operating efficiency  are  preserved  at  all  times,  reasonable  wear  and  tear  excepted.   Each  Borrower  shall  ensure  that  the  Equipment is mechanically and structurally sound, and capable of performing the functions for which it  was designed, in accordance with manufacturer specifications.           8.5   Deposit  Accounts .  Schedule  8.5   lists all  Deposit  Accounts  maintained  by  Borrowers,  including Dominion Accounts.  Each Borrower shall take all actions necessary to establish Agent’s first  priority  Lien  on  each  Deposit  Account  (except  accounts  exclusively  used  for  payroll,  payroll  taxes  or  employee benefits, other disbursement accounts acceptable to Agent, or an account containing not more  than $10,000 at any time).  Borrowers shall be the sole account holders of each Deposit Account and shall  not  allow  any  Person  (other  than  Agent  and  the  depository  bank)  to  have  control  over  their  Deposit  Accounts or any Property deposited therein.  Borrowers shall promptly notify Agent of any opening or  closing of a Deposit Account and, with the consent of Agent, will amend Schedule 8.5  to reflect same.                                         -49-    

 

         8.6   General Provisions               8.6.1.  Location of Collateral.  All tangible items of Collateral, other than Inventory in  transit, shall at all times be kept by Borrowers at the business locations set forth in Schedule 8.6.1 , except  that Borrowers may (a) make sales or other dispositions of Collateral in accordance with Section 10.2.6 ;  and (b) move Collateral to another location in the United States, upon 30 Business Days prior written notice  to Agent.               8.6.2.  Insurance of Collateral; Condemnation Proceeds.               (a)   Each Borrower shall maintain insurance with respect to the Collateral, covering  casualty, hazard, theft, malicious mischief, flood and other risks, in amounts, with endorsements and with  insurers (with a Best rating of at least A, unless otherwise approved by Agent in its discretion) reasonably   satisfactory  to  Agent;  provided,  that  if  Real  Estate  secures  any  Obligations,  flood  hazard  diligence,  documentation and insurance for such Real Estate shall comply with all Flood Laws or shall otherwise be  satisfactory to all Lenders.  All proceeds under each policy for which Agent is to be named an lender loss  payee hereunder shall be payable to Agent.  From time to time upon request, Borrowers shall deliver to  Agent the originals or certified copies of its insurance policies and if Real Estate secures any Obligations,  updated flood plain searches.  Unless Agent shall agree otherwise, each policy shall include satisfactory  endorsements (i) showing Agent as lender loss payee; (ii) requiring (A) 10 days prior written  notice to  Agent in the event of cancellation of the policy for non-payment and (B) 30 days prior written notice to  Agent in the event of cancellation of the policy for any reason; and (iii) specifying that the interest of Agent  shall not be impaired or invalidated by any act or neglect of any Borrower or the owner of the Property, nor  by the occupation of the premises for purposes more hazardous than are permitted by the policy.  If any  Borrower fails to provide and pay for any insurance, Agent may, in its discretion, procure the insurance and  charge Borrowers therefor.  Each Borrower agrees to deliver to Agent, promptly as rendered, copies of all  reports made to insurance companies.  While no Event of Default exists, Borrowers may settle, adjust or  compromise any insurance claim, as long as the proceeds are delivered to Agent.  If an Event of Default  exists, only Agent may settle, adjust and compromise such claims.               (b)   Any proceeds of insurance for which Agent is to be named as lender loss payee  hereunder  (other  than  workers’  compensation  or  D&O insurance)  and  any  awards  arising  from  condemnation of Collateral shall be paid directly to Agent for application to the Obligations.               (c)   If requested by Borrowers in writing within 15 days after Agent’s receipt of any  insurance proceeds or condemnation awards relating to any loss or destruction of Equipment or Real Estate,  Borrowers may use such proceeds or awards to repair or replace such Equipment or Real Estate (and until  so used, the proceeds shall be held by Agent as Cash Collateral) as long as (i) no Default or Event of Default  exists; (ii) such repair or replacement  is promptly undertaken and concluded, in accordance  with plans  satisfactory to Agent; (iii) replacement buildings are constructed on the sites of the original casualties and  are of comparable size, quality and utility to the destroyed buildings; (iv) the repaired or replaced Property  is free of Liens, other than Permitted Liens that are not Purchase Money Liens; (v) Borrowers comply with  disbursement  procedures  for  such  repair  or replacement  as  Agent  may  reasonably  require;  and  (vi)  the  aggregate amount of such proceeds or awards from any single casualty or condemnation does not exceed  $2,500,000.               8.6.3.  Protection  of  Collateral.   All  expenses  of  protecting,  storing,  warehousing,  insuring, handling, maintaining and shipping any Collateral, all Taxes payable with respect to any Collateral  (including any sale thereof), and all other payments required to be made by Agent to any Person to realize  upon any Collateral, shall be borne and paid by Borrowers.  Agent shall not be liable or responsible in any  way for the safekeeping of any Collateral, for any loss or damage thereto (except for reasonable care in its                                         -50-    

 

   custody while Collateral is in Agent’s actual possession), for any diminution in the value thereof, or for any  act or default of any warehouseman, carrier, forwarding agency or other Person whatsoever, but the same  shall be at Borrowers’ sole risk.               8.6.4.  Defense of Title.  Each Borrower shall defend its title to Collateral and Agent’s  Liens therein against all Persons, claims and demands, except Permitted Liens.         8.7   Power of Attorney .  Each Borrower hereby irrevocably constitutes and appoints Agent  (and all Persons designated by Agent) as such Borrower’s true and lawful attorney (and agent-in-fact) for  the purposes provided in this Section.  Agent, or Agent’s designee, may (in its discretion), without notice  and in either its or a Borrower’s name, but at the cost and expense of Borrowers:         (a)   Endorse a Borrower’s name on any Payment Item or other proceeds of Collateral (including  proceeds of insurance) that come into Agent’s possession or control; and         (b)   During  an  Event  of  Default,  (i)  notify  any  Account Debtors  of  the  assignment  of  their  Accounts,  demand  and  enforce  payment  of  Accounts  by  legal  proceedings  or  otherwise,  and  generally  exercise any rights and remedies with respect to Accounts; (ii) settle, adjust, modify, compromise, discharge  or  release  any  Accounts  or  other  Collateral,  or  any  legal  proceedings  brought  to  collect  Accounts  or  Collateral; (iii) sell or assign any Accounts and other Collateral upon such terms, for such amounts and at  such times as Agent deems advisable; (iv) collect, liquidate and receive balances in Deposit Accounts or   investment accounts, and take control, in any manner, of proceeds of Collateral; (v) prepare, file and sign  a Borrower’s name to a proof of claim or other document in a bankruptcy of an Account Debtor, or to any  notice,  assignment  or  satisfaction  of  Lien  or  similar  document;  (vi)  receive,  open  and  dispose  of  mail  addressed to a Borrower, and notify postal authorities to deliver any such mail to an address designated by  Agent;  (vii)  endorse  any  Chattel  Paper,  Document,  Instrument,  bill  of  lading,  or  other  document  or  agreement relating to any Accounts, Inventory or other Collateral; (viii) use a Borrower’s stationery and  sign its name to verifications of Accounts and notices to Account Debtors; (ix) use information contained  in any data processing, electronic or information systems relating to Collateral; (x) make and adjust claims  under insurance policies; (xi) take any action as may be necessary or appropriate to obtain payment under  any  letter  of  credit,  banker’s  acceptance  or  other instrument  for  which  a  Borrower  is  a  beneficiary;  (xii) exercise any voting or other rights relating to Investment Property; and (xiii) take all other actions as  Agent deems appropriate to fulfill any Borrower’s obligations under the Loan Documents.         8.8   Release of Collateral .  Agent shall release all Liens on all Collateral (a) concurrently with  Agent’s confirmation that the Full Payment of the Obligations has occurred and (b) that is the subject of a   disposition that is a Permitted Asset Disposition concurrently with the disposition thereof and, if applicable,   receipt of the Net Proceeds of such disposition.    SECTION 9.  REPRESENTATIONS AND WARRANTIES          9.1   General Representations and Warranties .  To induce Agent and Lenders to enter into  this  Agreement  and  to  make  available  the  Commitments,  Loans  and  Letters  of  Credit,  each  Obligor  represents and warrants that:               9.1.1.  Organization and Qualification.  Each Obligor and Subsidiary is duly organized,  validly existing and in good standing under the laws of the jurisdiction of its organization.  Each Obligor  and Subsidiary is duly qualified, authorized to do business and in good standing as a foreign corporation in  each jurisdiction where failure to be so qualified could reasonably be expected to have a Material Adverse  Effect.  No Obligor is an EEA Financial Institution.  The information included in the Beneficial Ownership  Certification most recently provided to Agent and Lenders is true and complete in all respects.                                         -51-    

 

               9.1.2.  Power and Authority.  Each Obligor is duly authorized to execute, deliver and  perform its Loan Documents.  The execution, delivery and performance of the Loan Documents have been  duly authorized by all necessary action, and do not (a) require any consent or approval of any holders of  Equity Interests of any Obligor, except those already obtained; (b) contravene the Organic Documents of  any Obligor; (c) violate or cause a default under any Applicable Law or Material Contract; or (d) result in  or require imposition of a Lien (other than a Permitted Lien) on any Obligor’s Property.               9.1.3.  Enforceability.  Each Loan Document is a legal, valid and binding obligation of  each Obligor party thereto, enforceable in accordance with its terms, except as enforceability may be limited  by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally.               9.1.4.  Capital Structure.  Schedule 9.1.4  shows, for each Obligor and Subsidiary, its  name, jurisdiction of organization, authorized and issued Equity Interests, holders of its Equity Interests  (except in the case of Key Tronic), and agreements binding on such holders with respect to such Equity   Interests.  Except as disclosed on Schedule 9.1.4 , in the five years preceding the Closing Date, no Obligor  or Subsidiary has acquired any substantial assets from any other Person nor been the surviving entity in a  merger or combination.  Each Obligor has good title to its Equity Interests in its Subsidiaries, subject only   to Agent’s Lien, and all such Equity Interests are duly issued, fully paid and non-assessable.  There are no   outstanding  purchase  options,  warrants,  subscription  rights,  agreements  to  issue  or  sell,  convertible   interests, phantom rights or powers of attorney relating to Equity Interests of any Obligor or Subsidiary   (except in the case of Key Tronic).                9.1.5.  Title to Properties; Priority of Liens.  Each Obligor and Subsidiary has good and  marketable title to (or valid leasehold interests in) all of its Real Estate, and good title to all of its personal  Property, including all Property reflected in any financial statements delivered to Agent or Lenders, in each  case free of Liens except Permitted Liens.  To the extent real estate secured any Obligation, no Real Estate  is  located  in  a  special  flood  hazard  zone,  except  as  disclosed  on Schedule  9.1.5 .   Each  Obligor  and  Subsidiary has paid and discharged all lawful claims that, if unpaid, could become a Lien on its Properties,  other than Permitted Liens.  All Liens of Agent in the Collateral are duly perfected, first priority Liens,  subject only to Permitted Liens that are expressly allowed to have priority over Agent’s Liens.               9.1.6.  Accounts.   Agent  may  rely,  in  determining  which  Accounts  are  Eligible  Accounts,  on  all  statements  and  representations  made  by  Borrowers  with  respect  thereto.   Borrowers  warrant, with respect to each Account shown as an Eligible Account in a Borrowing Base Report, that:               (a)   it is genuine and in all respects what it purports to be;               (b)   it arises out of a completed, bona fide sale and delivery of goods or performance  of services in the Ordinary Course of Business, and substantially in accordance with any purchase order,   contract or other document relating thereto;                (c)   with respect to an Eligible Account, it is for a sum certain, maturing as stated in   the applicable invoice, a copy of which has been furnished or is available to Agent on request;                (d)   it is not subject to any offset, Lien (other than Agent’s Lien), deduction, defense,   dispute, counterclaim or other adverse condition except as arising in the Ordinary Course of Business and   disclosed to Agent; and with respect to an Eligible Account, it is absolutely owing by the Account Debtor,   without contingency of any kind;                                          -52-    

 

               (e)   no purchase order, agreement, document or Applicable Law restricts assignment  of the Account to Agent (regardless of whether, under the UCC, the restriction is ineffective), and, with  respect to each Account, the applicable Borrower is the sole payee or remittance party shown on the invoice;               (f)   no extension, compromise, settlement, modification, credit, deduction or return has  been authorized or is in process with respect to the Account, except, with respect to Accounts, discounts or  allowances granted in the Ordinary Course of Business for prompt payment that are reflected on the face  of the invoice related thereto and in the reports submitted to Agent hereunder; and               (g)   to the best of Borrowers’ knowledge, (i) there are no facts or circumstances that  are reasonably likely to impair the enforceability or collectability of such Account; (ii) the Account Debtor  had  the  capacity  to  contract  when  the  Account  arose,  continues  to  meet  the  applicable  Borrower’s  customary credit standards, is Solvent, is not contemplating or subject to an Insolvency Proceeding, and  has  not  failed,  or  suspended  or  ceased  doing  business;  and  (iii)  there  are  no  proceedings  or  actions  threatened or pending against any Account Debtor that could reasonably be expected to have a material  adverse effect on the Account Debtor’s financial condition.               9.1.7.  Financial Statements.  The consolidated balance sheets, and related statements  of income, cash flow and shareholders equity, of Obligors and Subsidiaries that have been and are hereafter  delivered to Agent and Lenders, are prepared in accordance with GAAP, and fairly present the financial  positions and results of operations of Obligors and Subsidiaries at the dates and for the periods indicated.   All projections delivered from time to time to Agent and Lenders have been prepared in good faith, based  on reasonable assumptions in light of the circumstances at such time.  Since June 29, 2019, there has been  no change in the condition, financial or otherwise, of any Obligor or Subsidiary that could reasonably be  expected to have a Material Adverse Effect.  No financial statement delivered to Agent or Lenders at any   time contains any untrue statement of a material fact, nor fails to disclose any material fact necessary to  make such statement not materially misleading.  Each Obligor and Subsidiary is Solvent.               9.1.8.  Surety  Obligations.   No  Obligor  or  Subsidiary  is  obligated  as  surety  or  indemnitor under any bond or other contract that assures payment or performance of any obligation of any  Person, except as permitted hereunder.               9.1.9.  Taxes.  Each Obligor and Subsidiary has filed all federal, state and  local tax  returns and other reports that it is required by law to file, and has paid, or made provision for the payment  of, all Taxes upon it, its income and its Properties that are due and payable, except to the extent being  Properly Contested.  The provision for Taxes on the books of each Obligor and Subsidiary is adequate for  all years not closed by applicable statutes and for its current Fiscal Year.               9.1.10.  Brokers.   There  are  no  brokerage  commissions,  finder’s  fees  or  investment  banking fees payable in connection with any transactions contemplated by the Loan Documents.               9.1.11.  Intellectual Property.  Each Obligor and Subsidiary owns or has the lawful right  to use all Intellectual Property necessary for the conduct of its business, without conflict with any rights of  others.  There is no pending or, to any Obligor’s knowledge, threatened Intellectual Property Claim with  respect to any Obligor, any Subsidiary or any of their Property (including any Intellectual Property) that  could reasonably be  expected to result in a Material Adverse Effect.  Except as disclosed on Schedule  9.1.11 , no Obligor or Subsidiary pays or owes any royalty or other compensation to any Person with respect  to any Intellectual Property.  All Intellectual Property owned, used or licensed (with the exception of off- the=shelf licenses for software used in the Ordinary Course of Business) by, or otherwise subject to any  interests of, any Obligor or Subsidiary is shown on Schedule 9.1.11 .                                          -53-    

 

               9.1.12.  Governmental Approvals.  Each Obligor and Subsidiary has, is in compliance  with, and is in good standing with respect to, all Governmental Approvals necessary to conduct its business  and to own, lease and operate its Properties, except where noncompliance could not reasonably be expected  to have a Material Adverse Effect.  All necessary import, export or other licenses, permits or certificates  for the import or handling of any goods or other Collateral have been procured and are in effect, and Obligor  s and  Subsidiaries  have  complied  with  all  foreign  and  domestic  laws  with  respect  to  the  shipment  and  importation of any goods or Collateral, except where noncompliance could not reasonably be expected to  have a Material Adverse Effect.               9.1.13.  Compliance with Laws.  Each Obligor and Subsidiary has duly complied, and  its Properties and business operations are in compliance, in all material respects with all Applicable Law,  except where noncompliance could not reasonably be expected to have a Material Adverse Effect.  There  have been no citations, notices or orders of material noncompliance issued to any Obligor or Subsidiary  under any Applicable Law except any such matters that could not reasonably be expected to have a Material  Adverse Effect.  No Inventory has been produced in violation of the FLSA.               9.1.14.  Compliance with Environmental Laws.  Except as disclosed on Schedule 9.1.14   and except any such matters that could not reasonably be expected to have a Material Adverse Effect, no  Obligor’s  or  Subsidiary’s  past  or  present  operations, Real Estate or other Properties are subject to any  federal,  state  or  local  investigation  to  determine whether  any  remedial  action  is  needed  to  address  any  environmental  pollution,  hazardous  material  or  environmental  clean-up.   No  Obligor  or Subsidiary  has  received any Environmental Notice, except any such notice that could not reasonably be expected to have  a  Material  Adverse  Effect.   No  Obligor  or  Subsidiary  has  any  contingent  liability  with  respect  to  any  Environmental  Release,  environmental  pollution  or  hazardous  material  on  any  Real  Estate  now  or  previously owned, leased or operated by it that could reasonably be expected to have a Material Adverse  Effect.               9.1.15.  Burdensome Contracts.  No Obligor or Subsidiary is a party or subject to any  contract, agreement or charter restriction that could reasonably be expected to have a Material Adverse  Effect.  No Obligor or Subsidiary is party or subject to any Restrictive Agreement, except as shown on   Schedule 9.1.15 and  customary  restrictions  set  forth  in  the  documents  evidencing  the  Subsidiary  Real  Estate Debt.  No such Restrictive Agreement prohibits the execution, delivery or performance of any Loan   Document by an Obligor.                9.1.16.  Litigation.  Except as shown on Schedule 9.1.16 , there are no proceedings or  investigations pending or, to any Obligor’s knowledge, threatened against any Obligor or Subsidiary, or  any  of  their  businesses,  operations,  Properties,  prospects  or  conditions,  that  (a)  relate  to  any  Loan  Documents or transactions contemplated thereby; or (b) could reasonably be expected to have a Material  Adverse Effect.  Except as shown on such Schedule, no Obligor has a Commercial Tort Claim (other than,  as long as no Default or Event of Default exists, a Commercial Tort Claim for less than $100,000).  No   Obligor or Subsidiary is in default with respect to any order, injunction or judgment of any Governmental   Authority that could reasonably be expected to have a Material Adverse Effect.                9.1.17.  No Defaults.  No event or circumstance has occurred or exists that constitutes a  Default or Event of Default.  No Obligor or Subsidiary is in default, and no event or circumstance has   occurred or exists that with the passage of time or giving of notice would constitute a default, under any   Material Contract or in the payment of any Borrowed Money.  There is no basis upon which any party   (other than a Obligor or Subsidiary) could terminate a Material Contract prior to its scheduled termination   date.                9.1.18.  ERISA.  Except as disclosed on Schedule 9.1.18 :                                         -54-    

 

               (a)   Except as could not reasonably be expected to have a Material Adverse Effect, (i)  each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code, and  other federal and state laws, (ii) each Plan that is intended to qualify under Section 401(a) of the Code has  received a favorable determination letter from the IRS or an application for such a letter is currently being  processed  by  the  IRS  with  respect  thereto  or  such  Plan  utilizes  a  prototype  or  volume  submitter  plan  document that is the subject of a favorable opinion or advisory letter issued by the IRS to the sponsor of  such prototype or volume submitter plan, and, to the knowledge of Obligors, nothing has occurred which  would  prevent,  or  cause  the  loss  of,  such  qualification  and  (iii)  and  no  application  for  a  waiver  of  the  minimum funding standards or an extension of any amortization period has been made with respect to any  Pension Plan or Multiemployer Plan, as applicable.               (b)   There are no pending or, to the knowledge of Obligors, threatened claims, actions  or lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably be  expected  to  have  a  Material  Adverse  Effect.   There has  been  no  nonexempt  prohibited  transaction  or  violation  of  the  fiduciary  responsibility  rules  with  respect  to  any  Plan  that  has  resulted  in  or  could  reasonably be expected to have a Material Adverse Effect.  No Obligor is or will be using “plan assets”  (within the meaning of ERISA Section 3(42) or otherwise) of one or more Benefit Plans with respect to its  entrance  into,  participation  in,  administration  of and  performance  of  the  Loans,  Letter  of  Credits,  Commitments or Loan Documents.               (c)   Except as could not reasonably be expected to have a Material Adverse Effect, (i)  no ERISA Event has occurred or is reasonably expected to occur, (ii) as of the most recent valuation date  for any Pension Plan, the funding target attainment percentage (as defined in Section 430(d)(2) of the Code)  is  at  least  60%,  and  no  Obligor  or  ERISA  Affiliate knows  of  any  reason  that  such  percentage  could  reasonably be expected to drop below 60%, (iii) no Obligor or ERISA Affiliate has incurred any liability  to the PBGC except for the payment of premiums, and no premium payments are due and unpaid, (iv)  Obligor or ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or 4212(c)  of ERISA and (v) no Pension Plan has been terminated by its plan administrator or the PBGC, and no fact  or circumstance exists that could reasonably be expected by any Obligor to cause the PBGC to institute  proceedings to terminate a Pension Plan.               (d)   With respect to any Foreign Plan, except as could not reasonably be expected to  have a Material Adverse Effect,  (i) all employer and employee contributions required by law or by the  terms of the Foreign Plan have been made, or, if applicable, accrued, in accordance with normal accounting  practices in the relevant jurisdiction; (ii) the fair market value of the assets of each funded Foreign Plan,  the liability of each insurer for any Foreign Plan funded through insurance, or the book reserve established  for any Foreign Plan, together with any accrued contributions, is sufficient to procure or provide for the  accrued  benefit  obligations  with  respect  to  all  current  and  former  participants  in  such  Foreign  Plan  according to the actuarial assumptions and valuations most recently used to account for such obligations in  accordance with the normal accounting practices in the relevant jurisdiction; and (iii) it has been registered  as required and has been maintained in good standing with applicable regulatory authorities.                9.1.19.  Trade Relations.  There exists no actual or threatened termination, limitation or  modification of any business relationship between any Obligor or Subsidiary and any customer or supplier,  or any group of customers or suppliers, who individually or in the aggregate are material to the business of  such Obligor or Subsidiary.  There exists no condition or circumstance that could reasonably be expected  to  (a)  impair  the  ability  of  any  Obligor  or  Subsidiary  to  conduct  its  business  at any  time  hereafter  in  substantially the same manner as conducted on the Closing Date and (b) to have a Material Adverse Effect.               9.1.20.  Labor Relations.  Except as described on Schedule 9.1.20 (as may be updated  by Borrowers from time to time with the delivery of any Compliance Certificate as required hereunder), no                                         -55-    

 

   Obligor or Subsidiary is party to or bound by any collective bargaining agreement, management agreement  or consulting agreement.  There are no material grievances, disputes or controversies with any union or  other  organization  of  any  Obligor’s  or  Subsidiary’s  employees,  or,  to  any  Obligor’s  knowledge,  any  asserted or threatened strikes, work stoppages or demands for collective bargaining that could reasonably  be expected to have a Material Adverse Effect.               9.1.21.  Payable Practices.  No Obligor or Subsidiary has made any material change in  its historical accounts payable practices from those in effect on the Closing Date.               9.1.22.  Not a Regulated Entity.  No Obligor is (a) an “investment company” or a “person  directly or indirectly controlled by or acting on behalf of an investment company” within the meaning of  the  Investment  Company  Act  of  1940;  or  (b)  subject to  regulation  under  the  Federal  Power  Act,  the  Interstate Commerce Act, any public utilities code or any other Applicable Law regarding its authority to  incur Debt.               9.1.23.  Margin Stock.  No Obligor or Subsidiary is engaged, principally or as one of its  important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin  Stock.  No Loan proceeds or Letters of Credit will be used by Obligor s to purchase or carry, or to reduce  or refinance any Debt incurred to purchase or carry, any Margin Stock or for any related purpose governed  by Regulations T, U or X of the Federal Reserve Board of Governors.               9.1.24.  OFAC.   No  Obligor,  Subsidiary,  or  any  director,  officer,  employee,  agent,  affiliate or representative thereof, is or is owned or controlled by any individual or entity that is currently  the target of any Sanction or is located, organized or resident in a Designated Jurisdiction.               9.1.25.  Orbian.  Accounts sold by a Borrower to Orbian pursuant to an Permitted Orbian  Sale are at no time (either before or after such sale) included in the calculation of the Borrowing Base.         9.2   Complete Disclosure .  No Loan Document contains any untrue statement of a material  fact, nor fails to disclose any material fact necessary to make the statements contained therein not materially  misleading.  There is no fact or circumstance that any Obligor has failed to disclose to Agent in writing that  could reasonably be expected to have a Material Adverse Effect.   SECTION 10.  COVENANTS AND CONTINUING AGREEMENTS         10.1  Affirmative Covenants .  As long as any Commitment or Obligations are outstanding, each  Obligor shall, and shall cause each Subsidiary to:               10.1.1.  Inspections; Appraisals.               (a)   Permit  Agent  from  time  to  time,  subject  (unless  a  Default  or  Event  of  Default  exists) to reasonable notice and normal business hours, to visit and inspect the Properties of any Obligor or  Subsidiary, inspect, audit and make extracts from any Obligor’s or Subsidiary’s books and records, and  discuss  with  its  officers,  employees,  agents,  advisors  and  independent  accountants  such  Obligor’s  or  Subsidiary’s  business,  financial  condition,  assets,  prospects  and  results  of  operations.   Lenders  may  participate in any such visit or inspection, at their own expense.  Secured Parties shall have no duty to any  Obligor to make any inspection, nor to share any results of any inspection, appraisal or report with any  Obligor.  Obligor s acknowledge that all inspections, appraisals and reports are prepared by  Agent and  Lenders for their purposes, and Obligor s shall not be entitled to rely upon them.                                          -56-    

 

               (b)   Reimburse  Agent  for  all  its  charges,  costs  and  expenses  in  connection  with  (i) examinations of Obligors’ books and records or any other financial or Collateral matters as it deems  appropriate up to one (1) time per calendar year (and up to two (2) times per calendar year, if, at any time  during the prior 12 month period, Availability was less than the greater of (x) 15% of the Borrowing Base  or (y) $12,500,000; and (ii) appraisals of Inventory up to one (1) time per calendar year (and up to two (2)  times per calendar year, if, at any time during the prior 12 month period Availability was less than the  greater of (x) 15% of the Borrowing Base or (y) $12,500,000; provided, that if an examination or appraisal  is initiated during a Default or Event of Default, all charges, costs and expenses relating thereto shall be  reimbursed by Borrowers without regard to such limits.  Borrowers shall pay Agent’s then standard charges  for examination activities, including charges for its internal examination and appraisal groups, as well as  the  charges  of  any  third  party  used  for  such  purposes.   No  Borrowing  Base  calculation  shall  include  Collateral acquired in a Permitted Acquisition or otherwise outside the Ordinary Course of Business until  completion  of  applicable  field  examinations  and  appraisals  (which  shall  not  be  included  in  the  limits  provided above)  satisfactory to Agent.               10.1.2.  Financial and Other Information.  Keep adequate records and books of account  with respect to its business activities, in which proper entries are made in accordance with GAAP reflecting  all financial transactions; and furnish to Agent and Lenders:               (a)   as soon as available, and in any event within 90 days after the close of each Fiscal  Year, balance sheets as of the end of such Fiscal Year and the related statements of income, cash flow and  shareholders  equity  for  such  Fiscal  Year,  on  a  consolidated  basis  for  Obligors and  Subsidiaries,  which  consolidated  statements  shall  be  audited  and  certified  (without  qualification)  by  a  firm  of  independent  certified public accountants of recognized standing selected by Obligors and acceptable to Agent, and shall  set forth in comparative form corresponding figures for the preceding Fiscal Year and other information  acceptable to Agent;               (b)   as soon as available, and in any event within 45 days after the end of each Fiscal  Quarter, balance sheets as of the end of such quarter and the related statements of income and cash flow for  such quarter and for the portion of the Fiscal Year then elapsed, on a consolidated basis for Obligors and  Subsidiaries, which statements shall be reviewed by a firm of independent certified public accountants of  recognized  standing  selected  by  Obligors  and  acceptable  to  Agent  and  set  forth  in  comparative  form  corresponding figures for the preceding Fiscal Year and certified by the chief financial officer of Borrower  Agent as prepared  in accordance  with GAAP and fairly presenting the financial position and results of  operations for such quarter and period, subject to normal year end adjustments and the absence of footnotes;               (c)   as soon as available, and in any event within 30 days after the end of each Fiscal  Month (and 45 days for the last Fiscal Month in each Fiscal Quarter), unaudited balance sheets as of the  end of such month and the related statements of income and cash flow for such month and for the portion  of  the  Fiscal  Year  then  elapsed,  on  a  consolidated basis  for  Obligors  and  Subsidiaries,  setting  forth in  comparative form corresponding figures for the preceding Fiscal Year and certified by the chief financial  officer of Borrower Agent as prepared in accordance with GAAP and fairly presenting the financial position  and results of operations for such month and period, subject to normal year end adjustments and the absence  of footnotes;               (d)   concurrently with delivery of financial statements under clauses (a) and (b) above,  or  more  frequently  if  requested  by  Agent  while  a  Default  or  Event  of  Default  exists,  a  Compliance  Certificate executed by the chief financial officer of Borrower Agent;                                          -57-    

 

               (e)   concurrently with delivery of financial statements under clause (a) above, copies  of  all  management  letters  and  other  material  reports  submitted  to  Obligors  by  their  accountants  in  connection with such financial statements;               (f)   not later than 30 days after the end of each Fiscal Year, projections of Obligors’  consolidated balance sheets, results of operations, cash flow and Availability for the next Fiscal Year, by  Fiscal Quarter, and for the next two Fiscal Years, year by year;               (g)   at Agent’s request, a listing of each Borrower’s trade payables, specifying the trade  creditor and balance due, and a detailed trade payable aging, all in form satisfactory to Agent;                (h)   promptly  after  the  sending  or  filing  thereof,  copies  of  any  proxy  statements,   financial statements or reports that any Obligor has made generally available to its shareholders; copies of   any regular, periodic and special reports or registration statements or prospectuses that any Obligor files   with  the  Securities  and  Exchange  Commission  or  any other  Governmental  Authority,  or  any  securities   exchange; and copies of any press releases or other statements made available by a Obligor to the public   concerning material changes to or developments in the business of such Obligor;                (i)   promptly after the sending or filing thereof, copies of any annual report to be filed  in connection with each Plan or Foreign Plan; and               (a)   such  other  reports  and  information  (financial  or  otherwise)  as  Agent  may  reasonably request from time to time in connection with any Collateral or any Obligor’s, Subsidiary’s or  other Obligor’s financial condition, ownership or business.               10.1.3.  Notices.   Notify  Agent  and  Lenders  in  writing,  promptly  after  a  Obligor’s  obtaining  knowledge  thereof,  of  any  of  the  following  that  affects  an  Obligor:   (a)  the  threat  or  commencement  of any proceeding or investigation, whether or not covered by  insurance, if an adverse  determination could have a Material Adverse Effect; (b) any pending or threatened labor dispute, strike or  walkout, or the expiration of any material labor contract; (c) any default under or termination of a Material  Contract; (d) the existence of any Default or Event of Default; (e) any judgment in an amount exceeding  $2,500,000;  (f)  the  assertion  of  any  Intellectual  Property  Claim,  if  an  adverse  resolution  could  have a  Material Adverse Effect; (g) any violation or asserted violation of any Applicable Law (including ERISA,  OSHA, FLSA, or any Environmental Laws), that could reasonably be expected to have a Material Adverse  Effect; (h) any Environmental Release by an Obligor or on any Property owned, leased or occupied by an  Obligor;  or  receipt  of  any  Environmental  Notice;  (i)  the  occurrence  of  any  ERISA  Event  that  could  reasonably  be  expected  to  have  a  Material  Adverse  Effect;  (j)  the  discharge  of  or  any  withdrawal  or  resignation by Obligors’ independent accountants; or (k) any opening of a new office or place of business,   at least 10 days prior to such opening.                 10.1.4.  Landlord and Storage Agreements.  Upon request, provide Agent with copies of  all  existing  agreements,  and  promptly  after  execution  thereof  provide  Agent  with  copies  of  all  future  agreements,  between  an  Obligor  and  any  landlord,  warehouseman,  processor,  shipper,  bailee  or  other  Person that owns any premises at which any Collateral of the type included in the Borrowing Base may be  kept or that otherwise may possess or handle any Collateral.               10.1.5.  Compliance with Laws.  Comply with all Applicable Laws, including ERISA,  Environmental Laws, FLSA, OSHA, Anti-Terrorism Laws, and laws regarding collection and payment of  Taxes, and maintain all Governmental Approvals necessary to the ownership of its Properties or conduct   of its business, unless failure to comply (other than failure to comply with Anti-Terrorism Laws) or maintain   could not reasonably be expected to have a Material Adverse Effect.  Without limiting the generality of the                                         -58-    

 

   foregoing, if any Environmental Release occurs at or on any Properties of any Obligor or Subsidiary, it   shall  act  promptly  and  diligently  to  investigate  and  report  to  Agent  and  all  appropriate  Governmental   Authorities  the  extent  of,  and  to  make  appropriate remedial  action  to  eliminate  or  remediate,  such   Environmental Release, whether or not directed to do so by any Governmental Authority.                10.1.6.  Taxes.  Pay and  discharge  all  Taxes  prior to  the  date  on  which  they  become  delinquent or penalties attach, unless such Taxes are being Properly Contested.               10.1.7.  Insurance.   In  addition  to  the  insurance  required  hereunder  with  respect  to  Collateral, maintain insurance with insurers (with a Best rating of at least A, unless otherwise approved by  Agent in its discretion) satisfactory to Agent, (a) with respect to the Properties and business of Obligors  and Subsidiaries of such type (including product liability, workers’ compensation, larceny, embezzlement,  or other criminal misappropriation insurance), in such amounts, and with such coverages and deductibles  as are customary for companies similarly situated; and (b) business interruption insurance in an amount not  less than $7,500,000, with deductibles and subject to an endorsement or assignment reasonably satisfactory  to Agent.               10.1.8.  Licenses.   Keep  each  License  affecting  any  Collateral  (including  the  manufacture,  distribution  or  disposition  of  Inventory)  or  any  other  material  Property  of  Obligors  and  Subsidiaries  in  full  force  and  effect;  promptly  notify  Agent  of  any  proposed  modification  to  any  such  License which modification may adversely impact the interests of Secured Parties in any of the Collateral  related thereto, or entry into any new License (with the exception of off-the-shelf licenses for software used  in the Ordinary Course of Business), in each case at least 10 days prior to its effective date; pay all royalties  and other amounts when due under any License; and notify Agent of any material default or breach asserted  by any Person to have occurred under any License.               10.1.9.  Future  Subsidiaries.   Promptly  notify  Agent  upon  any  Person  becoming  a  Subsidiary and, if such Person is not a Foreign Subsidiary, cause it to guaranty the Obligations in a manner  satisfactory to Agent, and to execute and deliver such documents, instruments and agreements and to take  such other actions as Agent shall require to evidence and perfect a Lien in favor of Agent on all assets of  such Person, including delivery of such legal opinions, in form and substance satisfactory to Agent, as it  shall deem appropriate.               10.1.10.  Subsidiary Real Estate Debt.  In the event KT Mexico obtains the Subsidiary  Real Estate Debt, it shall promptly use the net proceeds of such Debt to repay all intercompany debt owed  to the Obligors and the Obligors shall promptly use the proceeds thereof to repay the Revolver Loans.         10.2  Negative Covenants .  As long as any Commitment or Obligations are outstanding, each  Obligor shall not, and shall cause each Subsidiary not to:               10.2.1.  Permitted Debt.  Create, incur, guarantee or suffer to exist any Debt, except:               (a)   the Obligations;               (b)   Subordinated Debt;               (c)   Permitted  Purchase  Money  Debt,  Capital  Leases  entered  into  in  the  Ordinary  Course of Business and leases that would have been classified as operating leases prior giving effect to the  Financial Accounting Standards Board Accounting Standards Codification 842 (or any other Accounting  Standards Codification having a similar result or effect);                                          -59-    

 

               (d)   existing Borrowed Money not satisfied with the initial Loan proceeds;               (e)   Debt with respect to Bank Products incurred in the Ordinary Course of Business;               (f)   Debt of any Person that becomes a direct or indirect Subsidiary of Key Tronic,  provided that such Debt was not incurred in contemplation of such Person becoming a Subsidiary of Key  Tronic and does not exceed $2,500,000 in the aggregate;               (g)   Permitted Contingent Obligations;               (h)   Refinancing Debt as long as each Refinancing Condition is satisfied;                (i)   The BALC Facility;                (j)   Subsidiary Real Estate Debt;               (k)   unsecured Debt up to $5,000,000 in the aggregate at any time; and               (l)   Intercompany  Debt  among  Obligors;  provided  that  the  proceeds  thereof  shall  continue to be subject to the perfected Lien of Agent.                10.2.2.  Permitted Liens.  Create or suffer to exist any Lien upon any of its Property,  except the following (collectively, “Permitted Liens”):               (a)   Liens in favor of Agent;               (b)   Purchase Money Liens securing Permitted Purchase Money Debt;               (c)   Liens for Taxes not yet due or being Properly Contested;               (d)   statutory Liens (other than Liens for Taxes or imposed under ERISA) arising in  the Ordinary Course of Business, but only if (i) payment of the obligations secured thereby is not yet due  or is being Properly Contested, and (ii) such Liens do not materially impair the value or use of the Property  or materially impair operation of the business of any Obligor or Subsidiary;               (e)   Liens incurred or deposits made in the Ordinary Course of Business to secure the  performance of government tenders, bids, contracts, statutory obligations and other similar obligations, as  long as such Liens are at all times junior to Agent’s Liens and are required or provided by law;               (f)   Liens arising in the Ordinary Course of Business and, to the extent that any such  Liens encumber Collateral that is included in the Borrowing Base or books and records related thereto, that  are subject to Lien Waivers or a Rent and Charges Reserve;               (g)   Liens  arising  by  virtue  of  a  judgment  or  judicial  order  against  any  Obligor  or  Subsidiary, or any Property of an Obligor or Subsidiary (or Liens securing any appeal or other surety bonds  relating to such judgments), as long as such Liens are (i) to the extent not securing any appeal or other  surety bonds relating to such judgments, in existence for less than 20 consecutive days or being Properly  Contested, and (ii) and, to the extent the property encumbered by such Liens constitutes Collateral, at all  times junior to Agent’s Liens;                                          -60-    

 

               (h)   easements, rights-of-way, restrictions, covenants or other agreements of record,  and other similar charges or encumbrances on Real Estate, that do not secure any monetary obligation and  do not interfere with the Ordinary Course of Business;               (i)   normal  and  customary  rights  of  setoff  upon  deposits  in  favor  of  depository   institutions, and Liens of a collecting bank on Payment Items in the course of collection;                (j)   pledges or deposits (i) to secure obligations under workers' compensation laws,   unemployment insurance and other social security legislation or similar legislation or to secure letters of   credit or bonds supporting such obligations or (ii) to secure public or statutory obligations;;                (k)   Liens on the asset leased securing leases that are permitted by this Agreement;                (l)   Liens  on  the  assets  of  Foreign  Subsidiaries  securing  Debt  of  such  Foreign  Subsidiaries permitted under this Agreement;               (m)   Liens on the assets of any Person (other than Accounts and Inventory included in  the Borrowing Base) that becomes a direct or indirect Subsidiary of Key Tronic securing Debt permitted  under Section 10.2.1(f)  (other than Liens incurred in contemplation of such Person becoming a Subsidiary  of Key Tronic);               (n)   the  filing  of  UCC  financing  statements  solely  as  a precautionary  measure  in  connection with operating leases or the purchase of goods;;                (o)   Liens on Equipment securing the BALC Facility;                (p)   Liens on Real Estate located in Mexico and owned by KT Mexico securing the  Subsidiary Real Estate Debt; and               (q)   existing Liens shown on Schedule 10.2.2 .               10.2.3.  Reserved.                 10.2.4.  Distributions; Upstream Payments.  Declare or make any Distributions, except  Upstream Payments; or create or suffer to exist any encumbrance or restriction on the ability of a Subsidiary  to make an Upstream Payment, except for (a) any such customary restrictions on KT Mexico provided for  in the documents evidencing the Subsidiary Real Estate Debt, (b) restrictions under the Loan Documents,   under Applicable Law or (d) in effect on the Closing Date as shown on Schedule 9.1.15 .                10.2.5.  Restricted Investments.  Make any Restricted Investment.               10.2.6.  Disposition of Assets.  Make any Asset Disposition, except a Permitted Asset  Disposition, a disposition of Equipment under Section 8.4.2 , or a transfer of Property by a Subsidiary or  Obligor to a Obligor.               10.2.7.  Loans.   Make  any  loans  or  other  advances  of  money  to  any  Person,  except  (a) advances to an officer or employee for salary, travel expenses, commissions and similar items in the  Ordinary Course of Business; (b) prepaid expenses and extensions of trade credit made in the Ordinary  Course  of  Business;  (c)  deposits  with  financial  institutions  permitted  hereunder;  and  (d)  as  long  as  no  Default or Event of Default exists, intercompany loans permitted under Section 10.2.1 .                                          -61-    

 

               10.2.8.  Restrictions  on  Payment  of  Certain  Debt.   Make  any payments  (whether  voluntary or mandatory, or a prepayment, redemption, retirement, defeasance or acquisition) with respect  to any (a) Subordinated Debt, except regularly scheduled payments of principal, interest and fees, but only  to the extent permitted under any subordination agreement relating to such Debt; or (b) Borrowed Money  (other than the Obligations) prior to its due date under the agreements evidencing such Debt as in effect on  the Closing Date (or as amended thereafter with the consent of Agent); provided, that such payments on  Borrowed Money may be made so long as (i) no Event of Default exists immediately before or after giving  effect thereto, (ii) upon giving pro forma effect thereto, Availability is at least the greater of (x) 15% of the  Borrowing Base or (y) $12,500,000, in each case, for the 30 days preceding and as of the Acquisition; and  (iii) Borrowers are in compliance with the financial covenants set forth in Section 10.3 , measured as of the  most recent measurement date and determined on a pro forma basis giving effect thereto.               10.2.9.  Fundamental Changes.  Change its name or conduct business under any fictitious  name; change its tax, charter or other organizational identification number, in each case without providing  Agent with at least 10 days prior written notice; change its form or state of organization; liquidate, wind up  its affairs or dissolve itself; provided, that non-Obligor Subsidiaries may liquidate, wind up or dissolve so  long as all assets of such Subsidiaries are transferred to an Obligor in connection with such action and any  Obligor (other than Key Tronic) may liquidate, wind up or dissolve so long as all assets of such Obligor’s  are transferred to another Obligor in connection with such action (provided, that if a Borrower is taking  such action, its assets shall be transferred to another Borrower); consummate a statutory division; or merge,   combine or consolidate with any Person, whether in a single transaction or in a series of related transactions,   except for (a) mergers or consolidations of a wholly-owned non-Obligor Subsidiary with another wholly-  owned Subsidiary or into a Borrower or a Borrower into another Borrower or (b) Permitted Acquisitions.                10.2.10.  Subsidiaries.  Form or acquire any Subsidiary (other than a Foreign Subsidiary)  after the Closing Date, except in accordance with Sections 10.1.9 , 10.2.5  and 10.2.9 .               10.2.11.  Organic Documents.  Amend, modify or otherwise change any of its Organic  Documents  in  a  manner  that  would  reasonably  be  expected  to  have  an  adverse  impact  on  the  Secured  Parties.               10.2.12.  Tax Consolidation.  File or consent to the filing of any consolidated income tax  return with any Person other than Obligors and Subsidiaries.               10.2.13.  Accounting Changes.  Make any  material  change  in  accounting  treatment  or  reporting practices, except in accordance with Section 1.2 ; or change its Fiscal Year.               10.2.14.  Restrictive Agreements.  Become a party to any Restrictive Agreement, except  a Restrictive Agreement (a) in effect on the Closing Date; (b) relating to secured Debt permitted hereunder,  as long as the restrictions apply only to collateral for such Debt; or (c) constituting customary restrictions  on assignment in leases and other contracts.               10.2.15.  Swaps.   Enter  into  any  Swap,  except  to  hedge  risks arising  in  the  Ordinary  Course of Business and not for speculative purposes.               10.2.16.  Conduct  of  Business.   Engage  in  any  business,  other  than  its  business  as  conducted on the Closing Date and any activities reasonably related, complementary, corollary, synergistic  or ancillary thereto (including related, complementary, synergistic or ancillary technologies).               10.2.17.  Affiliate  Transactions .   Enter  into  or  be  party  to  any  transaction  with  an  Affiliate, except (a) transactions expressly permitted by the Loan Documents; (b) payment of reasonable                                         -62-    

 

   compensation  to  officers  and  employees  for  services  actually  rendered,  and  payment  of  customary  directors’  fees  and  indemnities;  (c)  transactions  solely among  Obligors;  (d)  transactions  with  Affiliates  consummated prior to the Closing Date, as shown on Schedule 10.2.17 ; (e) transactions with Affiliates in  the Ordinary Course of Business, upon fair and reasonable terms fully disclosed to Agent (including those  of a nature  disclosed  in Schedule 10.2.17 , in the  financial statements or other information provided to  Agent) and no less favorable than would be obtained in a comparable arm’s-length transaction with a non- Affiliate; (f) may make intercompany loans and other Investments that are otherwise permitted hereunder;  and (g) Subsidiaries may pay dividends and distributions that are otherwise permitted hereunder.               10.2.18.  Plans.  Become party to any Multiemployer Plan or Foreign Plan, other than any  in existence on the Closing Date.               10.2.19.  Amendments to Subordinated Debt.  Amend, supplement or otherwise modify  any  document,  instrument  or  agreement  relating  to  any  Subordinated  Debt,  if  such  modification  (a)  increases the principal balance of such Debt, or increases any required payment of principal or interest; (b)   accelerates the date on which any installment of principal or any interest is due, or adds any additional   redemption, put or prepayment provisions; (c) shortens the final  maturity  date  or otherwise accelerates   amortization; (d)  increases the interest rate; (e) increases  or adds any fees  or charges; (f)  modifies any   covenant in a manner or adds any representation, covenant or default that is more onerous or restrictive in   any material respect for any Obligor or Subsidiary, or that is otherwise materially adverse to any Obligor,   any Subsidiary or Lenders; or (g) results in the Obligations not being fully benefited by the subordination   provisions thereof.                10.2.20.  Orbian.  Accounts sold by Borrower to Orbian pursuant to a Permitted Orbian  Sale shall at no time (either before or after such sale) be included in the calculation of the Borrowing Base,  and the proceeds of each Permitted Orbian Sale shall be paid directly to a Dominion Account by Orbian.   The financial arrangements between Borrower and Orbian shall be terminated within no later than 60 days  after  the  Closing  Date.   The  aggregate  outstanding amount  of  Accounts  sold  to  Orbian  pursuant  to  a  Permitted Orbian Sale shall at no time exceed $2,500,000.               10.2.21.  GE Capital.  On the Closing Date and at all times thereafter, there shall be no  outstanding amounts owing by any Obligor, or any transactions outstanding, with respect to the financial   arrangements between an Obligor and GE Capital Trade Payables Services, LLC         10.3  Financial  Covenants .   As  long  as  any  Commitment  or  Obligations  are  outstanding,  Borrowers shall:               10.3.1.   Fixed Charge Coverage Ratio.  Maintain a Fixed Charge Coverage Ratio of at  least 1.25 to 1.00, measured monthly as of the last day of each Fiscal Month on a trailing 12 Fiscal Month  basis.                10.3.2.  Cash Flow Leverage Ratio.  Maintain a Cash Flow Leverage Ratio of no greater  than 6.00 to 1.00, measured monthly as of the last day of each Fiscal Month on a trailing 12 Fiscal Month  basis.    SECTION 11.  EVENTS OF DEFAULT; REMEDIES ON DEFAULT         11.1  Events of Default .  Each of the following shall be an “Event of Default” if it occurs for  any reason whatsoever, whether voluntary or involuntary, by operation of law or otherwise:                                          -63-    

 

         (a)   (i) Any Obligor shall fail to pay any principal of any Loan when the same shall become  due and payable or (ii) any Obligor shall fail to pay any interest on any Loan, or any other Obligation within  three Business Days after the same shall become due and payable;         (b)   Any representation, warranty or other written statement of an Obligor made in connection  with any Loan Documents or transactions contemplated thereby is incorrect or misleading in any material  respect when given;         (c)   A Obligor breaches or fail to perform any covenant contained in Section 7.2 , 7.4 , 7.6 , 8.1 ,  8.2.4 , 8.2.5 , 8.6.2 , 10.1.1 , 10.1.2 , 10.2  or 10.3 ;         (d)   An  Obligor  breaches  or  fails  to  perform  any  other  covenant  contained  in  any  Loan  Documents, and such breach or failure is not cured within 30 days after a Senior Officer of such Obligor  has knowledge thereof  or receives  notice thereof from Agent, whichever is sooner; provided, that such  notice and opportunity to cure shall not apply if the breach or failure to perform is not capable of being  cured within such period or is a willful breach by an Obligor;         (e)   A Guarantor repudiates, revokes or attempts to revoke its Guaranty; an Obligor or third  party  denies  or  contests  the  validity  or  enforceability  of  any  Loan  Documents  or  Obligations,  or  the  perfection or priority of any Lien granted to Agent; or any Loan Document ceases to be in full force or  effect for any reason (other than a waiver or release by Agent and Lenders);         (f)   Any breach or default of an Obligor occurs under (i) any Swap; or (ii) any instrument or  agreement to which it is a party or by which it or any of its Properties is bound, relating to any Debt (other  than the Obligations) in excess of $2,500,000 if the maturity of or any payment with respect to such Debt  may be accelerated or demanded due to such breach;         (g)   Any  judgment  or  order  for  the  payment  of  money  is  entered  against  an  Obligor  in  an  amount  that  exceeds,  individually  or  cumulatively  with  all  unsatisfied  judgments  or  orders  against  all   Obligors, $2,500,000 (net of insurance coverage therefor that has not been denied by the insurer), unless a   stay of enforcement of such judgment or order is in effect within 30 days of the entry thereof;          (h)   [Reserved];          (i)   An Obligor is enjoined, restrained or in any way prevented by any Governmental Authority   from conducting any material part of its business; an Obligor suffers the loss, revocation or termination of   any material license, permit, lease or agreement necessary to its business; there is a cessation of any material   part of an Obligor’s business for a material period of time; any material Collateral or Property of an Obligor   is taken or impaired through condemnation and in the case of each of the foregoing, any such event could  reasonably be  expected to result in a Material Adverse Effect; an Obligor agrees to or commences any  liquidation, dissolution or winding up of its affairs except as permitted hereunder; or an Obligor is not  Solvent;         (j)   An Insolvency Proceeding is commenced by an Obligor; an Obligor makes an offer of  settlement,  extension  or composition to  its unsecured  creditors generally; a trustee is appointed to take  possession of any substantial Property of or to operate any of the business of an Obligor; or an Insolvency  Proceeding is commenced against an Obligor and:  the Obligor consents to institution of the proceeding,  the petition commencing the proceeding is not timely contested by the Obligor, the petition is not dismissed  within 60 days after filing, or an order for relief is entered in the proceeding;                                          -64-    

 

         (k)   An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan that has  resulted or could reasonably be expected to result in liability of an Obligor to a Pension Plan, Multiemployer  Plan or PBGC, or that constitutes grounds for appointment of a trustee for or termination by the PBGC of  any  Pension  Plan  or  Multiemployer  Plan;  an  Obligor or  ERISA  Affiliate  fails  to  pay  when  due  any  installment  payment  with  respect  to  its  withdrawal liability  under  Section  4201  of  ERISA  under  a  Multiemployer Plan; or any event similar to the foregoing occurs or exists with respect to a Foreign Plan,  and in the case of each of the foregoing, such event could reasonably be expected to result in a Material  Adverse Effect;           (l)   An Obligor or any of its Senior Officers is criminally indicted or convicted for (i) a felony  committed in the conduct of the Obligor’s business, or (ii) violating any state or federal law (including the  Controlled  Substances  Act,  Money  Laundering  Control  Act  of  1986  and  Illegal  Exportation  of  War  Materials Act) that could lead to forfeiture of any material Property; or         (m)   A Change of Control occurs.         11.2  Remedies upon Default .  If an Event of Default described in Section 11.1(j)  occurs with  respect to any Obligor, then to the extent permitted by Applicable Law, all Obligations (including Secured  Bank Product Obligations only to the extent provided in applicable agreements) shall become automatically  due and payable and all Commitments shall terminate, without any action by Agent or notice of any kind.   In addition, or if any other Event of Default exists, Agent may in its discretion (and shall upon written  direction of Required Lenders) do any one or more of the following from time to time:         (a)   declare any Obligations (other than Secured Bank Product Obligations) immediately due  and payable, whereupon they shall be due and payable without diligence, presentment, demand, protest or  notice of any kind, all of which are hereby waived by Obligors to the fullest extent permitted by law;         (b)   terminate, reduce or condition any Commitment or adjust the Borrowing Base;         (c)   require  Obligors  to  Cash  Collateralize  their  LC  Obligations,  Secured  Bank  Product  Obligations and other Obligations that are contingent or not yet due and payable (provided that inchoate  indemnification  obligations  for  which  no  claim  has been  asserted  shall  not  be  required  by  to  be  Cash  Collateralized), and if Obligors fail to deposit such Cash Collateral, Agent may (and shall upon the direction  of Required Lenders) advance the required Cash Collateral as Loans (whether or not an Overadvance exists  or is created thereby, or the conditions in Section 6 are satisfied); and         (d)   exercise any other rights or remedies afforded under any agreement, by law, at equity or  otherwise, including the rights and remedies of a secured party under the UCC.  Such rights and remedies  include the rights to (i) take possession of any Collateral; (ii) require Obligors to assemble Collateral, at  Obligors’ expense, and make it available to Agent at a place designated by Agent; (iii) enter any premises  where Collateral is located and store Collateral on such premises until sold (and if the premises are owned  or leased by an Obligor, Borrowers agree not to charge for such storage); and (iv) sell or otherwise dispose  of any Collateral in its then condition, or after any further manufacturing or processing thereof, at public or  private sale, with such notice as may be required by Applicable Law, in lots or in bulk, at such locations,  all as Agent, in its discretion, deems advisable.  Each Borrower agrees that 10 days notice of any proposed  sale or other disposition of Collateral by Agent shall be reasonable, and that any sale conducted on the  internet or to a licensor of Intellectual Property shall be commercially reasonable.  Agent may conduct sales  on any Obligor’s premises, without charge, and any sale may be adjourned from time to time in accordance  with Applicable Law.  Agent shall have the right to sell, lease or otherwise dispose of any Collateral for  cash, credit or any combination thereof, and Agent may purchase any Collateral at public or, if permitted                                          -65-    

 

   by law, private sale and, in lieu of actual payment of the purchase price, may credit bid and set off the  amount of such price against the Obligations.         11.3  License .  Agent is hereby granted an irrevocable, non-exclusive license or other right to  use, license or sub-license (without payment of royalty or other compensation to any Person) any or all  Intellectual Property of Borrowers, computer hardware and software, trade secrets, brochures, customer  lists, promotional and advertising materials, labels, packaging materials and other Property, in advertising  for sale, marketing, selling, collecting, completing manufacture of, or otherwise exercising any rights or  remedies with respect to, any Collateral.  Each Borrower’s rights and interests under Intellectual Property  shall inure to Agent’s benefit.         11.4  Setoff .  At any time during an Event of Default, Agent, Issuing Bank, Lenders, and any of  their Affiliates are authorized, to the fullest extent permitted by Applicable Law, to set off and apply any   and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time   held and other obligations (in whatever currency) at any time owing by Agent, Issuing Bank, such Lender   or such Affiliate to or for the credit or the account of an Obligor against its Obligations, whether or not   Agent, Issuing Bank, such Lender or such Affiliate shall have made any demand under this Agreement or   any other Loan Document and although such Obligations may be contingent or unmatured or are owed to   a branch or office of Agent, Issuing Bank, such Lender or such Affiliate different from the branch or office   holding such deposit or obligated on such indebtedness.  The rights of Agent, Issuing Bank, each Lender   and each such Affiliate under this Section are in addition to other rights and remedies (including other rights   of setoff) that such Person may have.          11.5  Remedies Cumulative; No Waiver               11.5.1.  Cumulative  Rights.   All  agreements,  warranties,  guaranties,  indemnities  and  other undertakings of Obligors under the Loan Documents are cumulative and not in derogation of each  other.   The  rights  and  remedies  of  Agent,  Issuing  Bank  and  Lenders  under  the  Loan  Documents  are  cumulative, may be exercised at any time and from time to time, concurrently or in any order, and are not  exclusive of any other rights or remedies available by agreement, by law, at equity or otherwise.  All such  rights and remedies shall continue in full force and effect until Full Payment of all Obligations.               11.5.2.  Waivers.  No waiver or course of dealing shall be established by (a) the failure  or delay of Agent, Issuing Bank or any Lender to require strict performance by any Obligor under any Loan  Document, or to exercise any rights or remedies with respect to Collateral or otherwise; (b) the making of  any Loan or issuance of any Letter of Credit during a Default, Event of Default or other failure to satisfy  any  conditions  precedent;  or  (c)  acceptance  by  Agent,  Issuing  Bank  or  any  Lender  of  any  payment  or  performance by an Obligor under any Loan Documents in a manner other than that specified therein.  Any  failure to satisfy a financial covenant on a measurement date shall not be cured or remedied by satisfaction  of such covenant on a subsequent date.   SECTION 12.  AGENT         12.1  Appointment, Authority and Duties of Agent               12.1.1.  Appointment and Authority.  Each Secured Party appoints and designates Bank  of America as Agent under all Loan Documents.  Agent may, and each Secured Party authorizes Agent to,  enter into all Loan Documents to which Agent is intended to be a party and accept all Security Documents.   Any action taken by Agent in accordance with the provisions of the Loan Documents, and the exercise by   Agent  of  any  rights  or  remedies  set  forth  therein, together  with  all  other  powers  reasonably  incidental   thereto, shall be authorized by and binding upon all Secured Parties.  Without limiting the generality of the                                         -66-    

 

   foregoing, Agent shall have the sole and exclusive authority to (a) act as the disbursing and collecting agent  for Lenders with respect to all payments and collections arising in connection with the Loan Documents;  (b)  execute  and  deliver  as  Agent  each  Loan  Document,  including  any  intercreditor  or  subordination  agreement, and accept delivery of each Loan Document; (c) act as collateral agent for Secured Parties for  purposes of perfecting and administering Liens under the Loan Documents, and for all other purposes stated  therein; (d) manage, supervise or otherwise deal with Collateral; and (e) take any Enforcement Action or  otherwise exercise any rights or remedies with respect to any Collateral or under any Loan Documents,  Applicable Law or otherwise.  Agent alone is authorized to determine eligibility and applicable advance  rates under the Borrowing Base, whether to impose or release any reserve, or whether any conditions to  funding  or  issuance  of  a  Letter  of  Credit  have  been  satisfied,  which  determinations  and  judgments,  if  exercised in good faith, shall exonerate Agent from liability to any Secured Party or other Person for any  error in judgment.               12.1.2.  Duties.  The title of “Agent” is used solely as a matter of market custom and the  duties of Agent are administrative in nature only.  Agent has no duties except those expressly set forth in   the  Loan  Documents,  and  in  no  event  does  Agent  have  any  agency,  fiduciary  or  implied  duty  to  or   relationship with any Secured Party or other Person by reason of any Loan Document or related transaction.   The conferral upon Agent of any right shall not imply a duty to exercise such right, unless instructed to do  so by Lenders in accordance with this Agreement.               12.1.3.  Agent  Professionals.   Agent  may  perform  its  duties through  employees  and  agents.  Agent may consult with and employ Agent Professionals, and shall be entitled to act upon, and   shall be fully protected  in any action taken  in good faith reliance upon, any advice  given by an  Agent   Professional.  Agent shall not be responsible for the negligence or misconduct of any agents, employees or   Agent Professionals selected by it with reasonable care.                12.1.4.  Instructions  of  Required  Lenders.   The  rights  and  remedies  conferred  upon  Agent under the Loan Documents may be exercised without the necessity of joining any other party, unless  required  by  Applicable  Law.   In  determining  compliance  with  a  condition  for  any  action  hereunder,  including satisfaction of any condition in Section 6 , Agent may presume that the condition is satisfactory  to a Secured Party unless Agent has received notice to the contrary from such Secured Party before Agent  takes the action.  Agent may request instructions from Required Lenders or other Secured Parties  with  respect to any act (including the failure to act) in connection with any Loan Documents or Collateral, and   may seek assurances to its satisfaction from Secured Parties of their indemnification obligations against   Claims  that  could  be  incurred  by  Agent.   Agent  may refrain  from  any  act  until  it  has  received  such   instructions or assurances, and shall not incur liability to any Person by reason of so refraining.  Instructions   of Required Lenders shall be binding upon all Secured Parties, and no Secured Party shall have any right   of  action  whatsoever  against  Agent  as  a  result  of  Agent  acting  or  refraining  from  acting  pursuant  to   instructions of Required Lenders.  Notwithstanding the foregoing, instructions by and consent of specific   parties shall be required to the extent provided in Section 14.1.1 .  In no event shall Agent be required to   take any action that it determines in its discretion is contrary to Applicable Law or any Loan Documents or   could subject any Agent Indemnitee to liability.          12.2  Agreements Regarding Collateral and Borrower Materials               12.2.1.  Lien Releases; Care of Collateral.  Secured Parties authorize Agent to release  any Lien on any Collateral (a) upon Full Payment of the Obligations; (b) that is the subject of a disposition  or Lien that Borrowers certify in writing is a Permitted Asset Disposition or a Permitted Lien entitled to  priority over Agent’s Liens (and Agent may rely conclusively on such certificate without further inquiry);  (c) that does not constitute a material part of the Collateral; or (d) subject to Section 14.1 , with the consent  of Required Lenders.  Secured Parties authorize Agent to subordinate its Liens to any Purchase Money Lien                                         -67-    

 

   or other Lien entitled to priority hereunder.  Agent has no obligation to assure that any Collateral exists or  is owned by an Obligor, or is cared for, protected or insured, nor to assure that Agent’s Liens have been   properly created, perfected or enforced, or are entitled to any particular priority, nor to exercise any duty of   care with respect to any Collateral.                12.2.2.  Possession of Collateral.  Agent and Secured Parties appoint each Secured Party  as  agent  (for  the  benefit  of  Secured  Parties)  for  the  purpose  of  perfecting  Liens  in  Collateral  held  or  controlled by it, to the extent such Liens are perfected by possession or control.  If a Secured Party obtains  possession or control of any Collateral, it shall notify Agent thereof and, promptly upon Agent’s request,  deliver such Collateral to Agent or otherwise deal with it in accordance with Agent’s instructions.               12.2.3.  Reports.  Agent shall promptly provide to Lenders, when complete, any field  examination,  audit  or  appraisal  report  prepared  for  Agent  with  respect  to  any  Obligor  or  Collateral  (“Report”).  Reports and other Borrower Materials may be made available to Lenders by providing access  to them on the Platform, but Agent shall not be responsible for system failures or access issues that may  occur from time to time.  Each Lender agrees (a) that Reports are not intended to be comprehensive audits  or examinations, and that Agent or any other Person performing an audit or examination will inspect only  limited information and will rely significantly upon Borrowers’ books, records and representations; (b) that   Agent makes no representation or warranty as to the accuracy or completeness of any Borrower Materials   and shall not be liable for any information contained in or omitted from any Borrower Materials, including   any Report; and (c) to keep all Borrower Materials confidential and strictly for such Lender’s internal use,   not to distribute any Report or other Borrower Materials (or the contents thereof) to any Person (except to   such  Lender’s  Participants,  attorneys  and  accountants),  and  to  use  all  Borrower  Materials  solely  for   administration of the Obligations.  Each Lender shall indemnify and hold harmless Agent and any other   Person preparing a Report from any action such Lender may take as a result of or any conclusion it may   draw from any Borrower Materials, as well as from any Claims arising as a direct or indirect result of Agent   furnishing same to such Lender, via the Platform or otherwise.          12.3  Reliance By Agent .  Agent shall be entitled to rely, and shall be fully protected in relying,  upon  any  certification,  notice  or  other  communication  (including  those  by  telephone,  telex,  telegram,  telecopy, e-mail or other electronic means) believed by it to be genuine and correct and to have been signed,  sent or made by the proper Person.  Agent shall have a reasonable and practicable amount of time to act  upon any instruction, notice or other communication under any Loan Document, and shall not be liable for  any delay in acting.         12.4  Action Upon Default .  Agent shall not be deemed to have knowledge of any Default or  Event of Default, or of any failure to satisfy any conditions in Section 6 , unless it has received written  notice from a Borrower or Required Lenders specifying the occurrence and nature thereof.  If a Lender  acquires knowledge of a Default, Event of Default or failure of such conditions, it shall promptly notify  Agent  and  the  other  Lenders  thereof  in  writing.   Each  Secured  Party  agrees  that,  except  as  otherwise  provided in any Loan Documents or with the written consent of Agent and Required Lenders, it will not  take any Enforcement Action, accelerate Obligations (other than Secured Bank Product Obligations) or  assert any rights relating to any Collateral.         12.5  Ratable  Sharing .   If any  Lender  obtains  any  payment  or  reduction  of  any  Obligation,  whether through set-off or otherwise, in excess of its ratable share of such Obligation, such Lender shall   forthwith purchase from Secured Parties participations in the affected Obligation as are necessary to share   the excess payment or reduction on a Pro Rata basis or in accordance with Section 5.5.2 , as applicable.  If  any of such payment or reduction is thereafter recovered from the purchasing Lender, the purchase shall be  rescinded  and  the  purchase  price  restored  to  the  extent  of  such  recovery,  but  without  interest.   Notwithstanding the foregoing, if a Defaulting Lender obtains a payment or reduction of any Obligation, it                                         -68-    

 

   shall immediately turn over the full amount thereof to Agent for application under Section 4.2.2  and it shall  provide a written statement to Agent describing the Obligation affected by such payment or reduction.  No  Lender shall set off against a Dominion Account without Agent’s prior consent.         12.6  Indemnification .  EACH  SECURED  PARTY  SHALL  INDEMNIFY  AND  HOLD  HARMLESS AGENT INDEMNITEES AND ISSUING BANK INDEMNITEES, TO THE EXTENT  NOT REIMBURSED BY OBLIGORS, ON A PRO RATA BASIS, AGAINST ALL CLAIMS THAT  MAY BE INCURRED BY OR ASSERTED AGAINST ANY SUCH INDEMNITEE, PROVIDED  THAT ANY CLAIM AGAINST AN AGENT INDEMNITEE RELATES TO OR ARISES FROM  ITS ACTING AS OR FOR AGENT (IN THE CAPACITY OF AGENT).     In Agent’s discretion, it may  reserve for any Claims made against an Agent Indemnitee or Issuing Bank Indemnitee, and may satisfy any  judgment, order or settlement relating thereto, from proceeds of Collateral prior to making any distribution  of Collateral proceeds to Secured Parties.  If Agent is sued by any receiver, trustee or other Person for any  alleged preference or fraudulent transfer, then any monies paid by Agent in settlement or satisfaction of  such proceeding, together with all interest, costs and expenses (including attorneys’ fees) incurred in the  defense of same, shall be promptly reimbursed to Agent by each Secured Party to the extent of its Pro Rata  share.         12.7  Limitation on Responsibilities of Agent .  Agent shall not be liable to any Secured Party  for any action taken or omitted to be taken under the Loan Documents, except for losses directly and solely  caused by Agent’s gross negligence or willful misconduct.  Agent does not assume any responsibility for  any failure or delay in performance or any breach by any Obligor, Lender or other Secured Party of any  obligations  under  the  Loan  Documents.   Agent  does  not  make  any  express  or  implied  representation,  warranty  or  guarantee  to  Secured  Parties  with  respect  to  any  Obligations,  Collateral,  Liens,  Loan  Documents  or  Obligor.   No  Agent  Indemnitee  shall  be  responsible  to  Secured  Parties  for  any  recitals,  statements,  information,  representations  or  warranties  contained  in  any  Loan  Documents  or  Borrower  Materials; the execution, validity, genuineness, effectiveness or enforceability of any Loan Documents; the  genuineness, enforceability, collectability, value, sufficiency, location or existence of any Collateral, or the  validity, extent, perfection or priority of any Lien therein; the validity, enforceability or collectability of   any  Obligations;  or  the  assets,  liabilities,  financial  condition,  results  of  operations,  business,   creditworthiness or legal status of any Obligor or Account Debtor.  No Agent Indemnitee shall have any   obligation to any Secured Party to ascertain or inquire into the existence of any Default or Event of Default,   the observance by any Obligor of any terms of the Loan Documents, or the satisfaction of any conditions   precedent contained in any Loan Documents.          12.8  Successor Agent and Co-Agents               12.8.1.  Resignation; Successor Agent.  Agent may resign at any time by giving at least  30 days written notice thereof to Lenders and Borrowers.  Required Lenders may appoint a successor that  is (a) a Lender or Affiliate of a Lender; or (b) a financial institution reasonably acceptable to Required  Lenders and (provided no Default or Event of Default exists) Borrowers.  If no successor is appointed by  the effective date of Agent’s resignation, then on such date, Agent may appoint a successor acceptable to it  in its discretion (which shall be a Lender unless no Lender accepts the role) or, in the absence  of such  appointment, Required Lenders shall automatically assume all rights and duties of Agent.  The successor  Agent shall thereupon succeed to and become vested with all the powers and duties of the retiring Agent  without further act.  The retiring Agent shall be discharged from its duties hereunder on the effective date  of its resignation, but shall continue to have all rights and protections available to Agent under the Loan  Documents with respect to actions, omissions, circumstances or Claims relating to or arising while it was  acting  or  transferring  responsibilities  as  Agent  or  holding  any  Collateral  on  behalf  of  Secured  Parties,  including  indemnification  under Sections  12.6   and 14.2 ,  and  all  rights  and  protections  under  this                                          -69-    

 

   Section 12 .  Any successor to Bank of America by merger or acquisition of stock or this loan shall continue  to be Agent hereunder without further act on the part of any Secured Party or Obligor.               12.8.2.  Co-Collateral Agent.  If appropriate under Applicable Law, Agent may appoint  a Person to serve as a co-collateral agent or separate collateral agent under any Loan Document.  Each right,  remedy and protection intended to be available to Agent under the Loan Documents shall also be vested in  such agent.  Secured Parties shall execute and deliver any instrument or agreement that Agent may request  to effect such appointment.  If any such agent shall die, dissolve, become incapable of acting, resign or be  removed, then all the rights and remedies of the agent, to the extent permitted by Applicable Law, shall vest  in and be exercised by Agent until appointment of a new agent.         12.9  Due  Diligence  and  Non-Reliance .   Each  Lender  acknowledges  and  agrees  that  it  has,  independently and without reliance upon Agent or any other Lenders, and based upon such documents,  information and analyses as it has deemed appropriate, made its own credit analysis of each Obligor and its  own decision to enter into this Agreement and to fund Loans and participate in LC Obligations hereunder.   Each  Secured  Party  has  made  such  inquiries  as  it  feels  necessary  concerning  the  Loan  Documents,  Collateral and Obligors.  Each Secured Party acknowledges and agrees that the other Secured Parties have  made  no representations  or warranties concerning any  Obligor,  any  Collateral  or  the  legality,  validity,  sufficiency  or  enforceability  of  any  Loan  Documents  or  Obligations.   Each  Secured  Party  will,  independently  and  without  reliance  upon  any  other  Secured  Party,  and  based  upon  such  financial  statements, documents and information as it deems appropriate at the time, continue to make and rely upon  its own credit decisions in making Loans and participating in LC Obligations, and in taking or refraining  from any action under any Loan Documents.  Except for notices, reports and other information expressly  requested by a Lender, Agent shall have no duty or responsibility to provide any Secured Party with any  notices,  reports  or  certificates  furnished  to  Agent  by  any  Obligor  or  any  credit  or  other  information  concerning the affairs, financial condition, business or Properties of any Obligor (or any of its Affiliates)  which may come into possession of Agent or its Affiliates.         12.10  Remittance of Payments and Collections               12.10.1.  Remittances Generally.  Payments by any Secured Party to Agent shall be made  by the time and date provided herein, in immediately available funds.  If no time for payment is specified  or if payment is due on demand and request for payment is made by Agent by 1:00 p.m. on a Business Day,  then payment shall be made by the Secured Party by 3:00 p.m. on such day, and if request is made after  1:00 p.m., then payment shall be made by 11:00 a.m. on the next Business Day.  Payment by Agent to any  Secured Party shall be made by wire transfer, in the type of funds received by Agent.  Any such payment  shall be subject to Agent’s right of offset for any amounts due from such payee under the Loan Documents.               12.10.2.  Failure  to  Pay.   If  any  Secured  Party  fails  to  deliver  when  due  any  amount  payable by it to Agent hereunder, such amount shall bear interest, from the due date until paid in full, at the  greater of the Federal Funds Rate or the rate determined by Agent as customary for interbank compensation  for two Business Days and thereafter at the Default Rate for Base Rate Loans.  No Obligor shall be entitled  to credit for any interest paid by a Secured Party to Agent nor shall a Defaulting Lender be  entitled to  interest on amounts held by Agent pursuant to Section 4.2 .               12.10.3.  Recovery  of  Payments.   If  Agent  pays  an  amount  to  a  Secured  Party  in  the  expectation that a related payment will be received by Agent from an Obligor and such related payment is  not received, then Agent may recover such amount from the Secured Party.  If Agent determines that an  amount received by it must be returned or paid to an Obligor or other Person pursuant to Applicable Law  or otherwise, then Agent shall not be required to distribute such amount to any Secured Party.  If Agent is                                          -70-    

 

   required to return any amounts applied by it to Obligations held by a Secured Party, such Secured Party  shall pay to Agent, on demand , its share of the amounts required to be returned.         12.11  Individual Capacities .  As a Lender, Bank of  America shall have the same rights and  remedies under the Loan Documents as any other Lender, and the terms “Lenders,” “Required Lenders” or  any  similar  term  shall  include  Bank  of  America  in  its  capacity  as a  Lender.   Agent,  Lenders  and  their  Affiliates may accept deposits from, lend money to, provide Bank Products to, act as financial or other  advisor to, and generally engage in any kind of business with, Obligors and their Affiliates, as if they were  not  Agent  or  Lenders  hereunder,  without  any  duty  to  account  therefor  to  any  Secured  Party.   In  their  individual capacities, Agent, Lenders and their Affiliates may receive information regarding Obligors, their  Affiliates and their Account Debtors (including information subject to confidentiality obligations), and shall  have no obligation to provide such information to any Secured Party.         12.12  Titles .  Each Lender, other than Bank of America, that is designated in connection with  this credit facility as an “Arranger,” “Bookrunner” or “Agent” of any kind shall have no right or duty under  any Loan Documents other than those applicable to all Lenders, and shall in no event have any fiduciary  duty to any Secured Party.         12.13  Certain ERISA Matters               12.13.1.  Lender Representations.  Each Lender represents and warrants, as of the date it  became a Lender party hereto, and covenants, from the date it became a Lender party hereto to the date it  ceases being a Lender party hereto, for the benefit of, Agent and not, for the avoidance of doubt, to or for  the benefit of the Obligors, that at least one of the following is and will be true: (a) Lender is not using  “plan assets” (within the meaning of ERISA Section 3(42) or otherwise) of one or more Benefit Plans with  respect to Lender’s entrance into, participation in, administration of and performance of the Loans, Letters  of Credit, Commitments or Loan Documents; (b) the transaction exemption set forth in one or more PTEs,  such  as  PTE  84-14  (a  class  exemption  for  certain  transactions  determined  by  independent  qualified  professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance  company  general  accounts),  PTE  90-1  (a  class  exemption  for  certain  transactions  involving  insurance  company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank  collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in- house asset managers), is applicable with respect to Lender’s entrance into, participation in, administration  of and performance of the Loans, Letters of Credit, Commitments and Loan Documents; (c) (i) Lender is  an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI  of PTE 84-14), (ii) such Qualified Professional Asset Manager made the investment decision on behalf of  Lender to enter into, participate in, administer and perform the Loans, Letters of Credit, Commitments and  Loan Documents, (iii) the entrance into, participation in, administration of and performance of the Loans,  Letters of Credit, Commitments and Loan Documents satisfies the requirements of sub-sections (b) through  (g) of Part I of PTE 84-14, and (iv) to the best knowledge of Lender, the requirements of subsection (a) of  Part I of PTE 84-14 are satisfied with respect to Lender’s entrance into, participation in, administration of  and performance of the Loans, Letters of Credit, Commitments and Loan Documents; or (d) such other  representation, warranty and covenant as may be agreed in writing between Agent, in its discretion, and  Lender.               12.13.2.  Further Lender Representation.  Unless Section 12.13.1(a)  or (d)  is true with  respect  to  a  Lender,  such  Lender  further  represents  and  warrants,  as  of  the  date  it  became  a  Lender  hereunder, and covenants, from the date it became a Lender to the date it ceases to be a Lender hereunder,  for the benefit of, Agent and not, for the avoidance of doubt, to or for the benefit of any Obligor, that Agent  is not a fiduciary with respect to the assets of such Lender involved in its entrance into, participation in,                                          -71-    

 

   administration of and performance  of the Loans, Letters of Credit, Commitments and Loan Documents  (including in connection with the reservation or exercise of any rights by Agent under any Loan Document).         12.14  Bank Product Providers .  Each Secured Bank Product Provider, by delivery of a notice  to Agent of a Bank Product, agrees to be bound by the Loan Documents, including Sections 5.5 , 12 , 14.3.3    and 14.16 , and agrees to indemnify and hold harmless Agent Indemnitees, to the extent not reimbursed by   Obligors, against all Claims that may be incurred by or asserted against any Agent Indemnitee in connection   with such provider’s Secured Bank Product Obligations.          12.15  No Third Party Beneficiaries .  This Section 12  is an agreement solely among Secured  Parties and Agent, and shall survive Full Payment of the Obligations.  This Section 12  does not confer any  rights or benefits upon Borrowers or any other Person.  As between Borrowers and Agent, any action that  Agent  may  take  under  any  Loan  Documents  or  with  respect  to  any  Obligations  shall  be  conclusively  presumed to have been authorized and directed by Secured Parties.   SECTION 13.  BENEFIT OF AGREEMENT; ASSIGNMENTS         13.1  Successors and Assigns .  This Agreement shall be binding upon and inure to the benefit  of Borrowers, Agent, Lenders, Secured Parties, and their respective successors and assigns, except that   (a) no Obligor may assign or delegate its rights or obligations under any Loan Documents; and (b) any   assignment by a Lender must be made in compliance with Section 13.3 .  Agent may treat the Person which  made any Loan as the owner thereof for all purposes until such Person makes an assignment in accordance  with Section  13.3 .   Any  authorization  or  consent  of  a  Lender  shall  be  conclusive and binding  on any  subsequent transferee or assignee of such Lender.         13.2  Participations               13.2.1.  Permitted Participants; Effect.  Subject to Section 13.3.3 , any Lender may sell  to a financial institution (“Participant”) a participating interest in the rights and obligations of such Lender  under any Loan Documents.  Despite any sale by a Lender of participating interests to a Participant, such  Lender’s obligations under the Loan Documents shall remain unchanged, it shall remain solely responsible   to the other parties hereto for performance of such obligations, it shall remain the holder of its Loans and  Commitments for all purposes, all amounts payable by Borrowers shall be determined as if it had not sold  such participating interests, and Borrowers and Agent shall continue to deal solely and directly with such  Lender in connection with the Loan Documents.  Each Lender shall be solely responsible for notifying its  Participants of any matters under the Loan Documents, and Agent and the other Lenders shall not have any  obligation or liability to any such Participant.  A Participant that would be a Foreign Lender if it were a  Lender shall not be entitled to the benefits of Section 5.8  unless Borrowers agree otherwise in writing.               13.2.2.  Voting Rights.  Each Lender shall retain the sole right to approve, without the  consent of any Participant, any amendment, waiver or other modification of a Loan Document other than  that which forgives principal, interest or fees, reduces the stated interest rate or fees payable with respect to  any Loan or Commitment in which such Participant has an interest, postpones the Termination Date or any  date fixed for any regularly scheduled payment of principal, interest or fees on such Loan or Commitment,  or releases any Borrower, Guarantor or substantially all Collateral.               13.2.3.  Participant Register.  Each Lender that sells a participation shall, acting as a non- fiduciary agent of Borrowers (solely for tax purposes), maintain a register in which it enters the Participant’s  name, address and interest in Commitments, Loans (and stated interest) and LC Obligations.  Entries in the   register shall be conclusive, absent manifest error, and such Lender shall treat each Person recorded in the   register as the owner of the participation for all purposes, notwithstanding any notice to the contrary.  No                                         -72-    

 

   Lender shall have an obligation to disclose any information in such register except to the extent necessary  to establish that a Participant’s interest is in registered form under the Code.                13.2.4.  Benefit of Setoff.  Each Participant shall have a right of set-off in respect of its  participating interest to the same extent as if such interest were owing directly to a Lender, and each Lender  shall also retain the right of set-off with respect to any participating interests sold by it.  By exercising any  right  of  set-off,  a  Participant  agrees  to  share  with  Lenders  all  amounts  received  through  its  set-off,  in  accordance with Section 12.5  as if such Participant were a Lender.         13.3  Assignments               13.3.1.  Permitted Assignments.  A Lender may assign to an Eligible Assignee any of its  rights and obligations under the Loan Documents, as long as (a) each assignment is of a constant, and not  a varying, percentage of the transferor Lender’s rights and obligations under the Loan Documents and, in  the case of a partial assignment, is in a minimum principal amount of $10,000,000 (unless otherwise agreed  by Agent in its discretion) and integral multiples of $5,000,000 in excess of that amount; (b) except in the  case  of  an  assignment  in  whole  of  a  Lender’s  rights  and  obligations,  the  aggregate  amount  of  the  Commitments retained by the transferor Lender is at least $10,000,000 (unless otherwise agreed by Agent  in its discretion); and (c) the parties to each such assignment shall execute and deliver an Assignment to   Agent for acceptance and recording.  Nothing herein shall limit the right of a Lender to pledge or assign   any  rights  under  the  Loan  Documents  to  secure  obligations  of  such  Lender,  including  a  pledge  or   assignment to a Federal Reserve Bank; provided, that no such pledge or assignment shall release the Lender  from its obligations hereunder nor substitute the pledgee or assignee for such Lender as a party hereto.               13.3.2.  Effect; Effective Date.  Upon delivery to Agent of an assignment notice in the  form of Exhibit B and a processing fee of $3,500 (unless otherwise agreed by Agent in its discretion), the  assignment shall become effective as specified in the notice, if it complies with this Section 13.3 .  From  such effective date, the Eligible Assignee shall for all purposes be a Lender under the Loan Documents,  and shall have all rights and obligations of a Lender thereunder.  Upon consummation of an assignment,  the  transferor  Lender,  Agent  and  Borrowers  shall  make  appropriate  arrangements  for  issuance  of  replacement and/or new notes, if applicable.  The transferee Lender shall comply with Section 5.9  and  deliver, upon request, an administrative questionnaire satisfactory to Agent.               13.3.3.  Certain Assignees.  No assignment or participation may be made to a Borrower,  Affiliate of a Borrower, Defaulting Lender or natural person. Agent shall have no obligation to determine  whether any assignment is permitted under the Loan Documents.  Any assignment by a Defaulting Lender  must be accompanied by satisfaction of its outstanding obligations under the Loan Documents in a manner  satisfactory  to  Agent,  including  payment  by  the  Defaulting  Lender  or  Eligible  Assignee  of  an  amount  sufficient  upon  distribution  (through  direct  payment,  purchases  of  participations  or  other  methods  acceptable to Agent in its discretion) to satisfy all funding and payment liabilities of the Defaulting Lender.   If any assignment by a Defaulting Lender (by operation of law or otherwise) does not comply with the  foregoing, the assignee shall be deemed a Defaulting Lender for all purposes until compliance occurs.                13.3.4.  Register.  Agent, acting as a non-fiduciary agent of Borrowers (solely for tax  purposes), shall maintain (a) a copy (or electronic equivalent) of each Assignment and Acceptance delivered  to it, and (b) a register for recordation of the names, addresses and Commitments of, and the Loans, interest  and LC Obligations owing to, each Lender.  Entries in the register shall be conclusive, absent manifest  error, and Borrowers, Agent and Lenders shall treat each Person recorded in such register as a Lender for  all purposes under the Loan Documents, notwithstanding any notice to the contrary.  Agent may choose to  show only one Borrower as the borrower in the register, without any effect on the liability of any Obligor                                          -73-    

 

   with respect to the Obligations.  The register shall be available for inspection by Borrowers or any Lender,  from time to time upon reasonable notice.         13.4  Replacement of Certain Lenders .  If a Lender (a) within the last 120 days failed to give  its consent to any amendment, waiver or action for which consent of all Lenders was required and Required  Lenders  consented,  (b)  is  a  Defaulting  Lender,  or  (c)  within  the  last  120  days  gave  a  notice  under  Section 3.5   or requested  payment  or  compensation  under Section  3.7   or 5.8   (and  has  not  designated  a  different Lending Office pursuant to Section 3.8 ), then Agent or Borrower Agent may, upon 10 days notice  to  such  Lender,  require  it  to  assign  its  rights  and  obligations  under  the  Loan  Documents  to  Eligible  Assignee(s), pursuant to appropriate Assignment(s), within 20 days after the notice.  Agent is irrevocably  appointed as attorney-in-fact to execute any such Assignment if the Lender fails to execute it.  Such Lender  shall be entitled to receive, in cash, concurrently with such assignment, all amounts owed to it under the  Loan Documents through the date of assignment.   SECTION 14.  MISCELLANEOUS         14.1  Consents, Amendments and Waivers               14.1.1.  Amendment.  No modification of any Loan Document, including any extension  or amendment of a Loan Document or any waiver of a Default or Event of Default, shall be effective without  the prior written agreement of Agent (with the consent of Required Lenders) and each Obligor party to such  Loan Document; provided, that                (a)   without  the  prior  written  consent  of  Agent,  no  modification  shall  alter  any  provision in a Loan Document that relates to any rights, duties or discretion of Agent;               (b)   without  the  prior  written  consent  of  Issuing  Bank, no  modification  shall  alter  Section 2.2  or any other provision in a Loan Document that relates to Letters of Credit or any rights, duties  or discretion of Issuing Bank;               (c)   without the prior written consent of each affected Lender, including a Defaulting  Lender, no modification shall (i) increase the Commitment of such Lender; (ii) reduce the amount of, or  waive or delay payment of, any principal, interest or fees payable to such Lender (except as provided in  Section 4.2 ); (iii) extend the Termination Date applicable to such Lender’s Obligations; or (iv) amend this  clause (c);               (d)   without the prior written consent of all Lenders (except any Defaulting Lender),  no  modification  shall  (i)  alter Section  5.5.2 , 7.1   (except  to  add  Collateral)  or 14.1.1 ;  (ii)  amend  the  definition  of  Borrowing  Base,  Availability  Block,  Investment  Grade  Accounts  Formula  Amount,  Non- Investment  Grade  Formula  Account  or  Inventory  Formula  Amount  (or  any  defined  term  used  in  such  definitions) if the effect of such amendment is to increase borrowing availability, Pro Rata or Required  Lenders; (iii) decrease the Availability Block; (iv) release all or substantially all Collateral except as set  forth in Section 12.2.1(a) ; or (v) except in connection with a merger, disposition or similar transaction  permitted hereby, release any Obligor from liability for any Obligations;                (e)   without  the  prior  written  consent  of  a  Secured  Bank  Product  Provider,  no  modification shall affect its relative payment priority under Section 5.5.2 ; and               (f)   if Real Estate secures any Obligations, no modification of a Loan Document shall  add,  increase,  renew  or  extend  any  credit  line  hereunder  until  the  completion  of  flood  diligence  and  documentation as required by all Flood Laws or as otherwise satisfactory to all Lenders.                                         -74-    

 

               14.1.2.  Limitations.   The  agreement  of  Borrowers  shall  not be  required  for  any  modification of a Loan Document that deals solely with the rights and duties of Lenders, Agent and/or  Issuing Bank as among themselves.  Only the consent of the parties to any agreement relating to fees or a   Bank Product shall be required for modification of such agreement, and no Bank Product provider (in such  capacity) shall have any right to consent to modification of any Loan Document.  Any waiver or consent  granted by Agent, Issuing Bank or Lenders hereunder shall be effective only if in writing and only for the   matter specified.                14.1.3.  Payment  for  Consents.   No  Borrower  will,  directly  or  indirectly,  pay  any  remuneration or other thing of value, whether by way of additional interest, fee or otherwise, to any Lender  (in its capacity as a Lender hereunder) as consideration for agreement by such Lender with any modification  of any Loan Documents, unless such remuneration or value is concurrently paid, on the same terms, on a   Pro Rata basis to all Lenders providing their consent.          14.2  Indemnity .  EACH BORROWER SHALL INDEMNIFY AND HOLD HARMLESS  THE INDEMNITEES AGAINST ANY CLAIMS THAT MAY BE INCURRED BY OR ASSERTED  AGAINST ANY INDEMNITEE, INCLUDING CLAIMS (AS SUCH TERM IS DEFINED IN THIS  AGREEMENT)  ASSERTED  BY  ANY  OBLIGOR  OR  OTHER  PERSON    OR  ARISING  FROM  THE NEGLIGENCE OF AN INDEMNITEE.      In no event shall any party to a Loan Document have any  obligation  thereunder  to  indemnify  or  hold  harmless  an  Indemnitee  with  respect  to  a  Claim  that  is  determined in a final, non-appealable judgment by a court of competent jurisdiction to result from the gross  negligence or willful misconduct of such Indemnitee.         14.3  Notices and Communications               14.3.1.  Notice Address.  Subject to Section 14.3.2 , all notices and other communications  by or to a party hereto shall be in writing and shall be given to any Borrower, at Borrower Agent’s address  shown on the signature pages hereof, and to any other Person at its address shown on the signature pages  hereof (or, in the case of a Person who becomes a Lender after the Closing Date, at the address shown on  its Assignment), or at such other address as a party may hereafter specify by notice in accordance with this   Section 14.3 .  Each communication shall be effective only (a) if given by facsimile transmission, when   transmitted to the applicable facsimile number, if confirmation of receipt is received; (b) if given by mail,   three  Business  Days  after  deposit  in  the  U.S.  mail,  with  first-class  postage  pre-paid,  addressed  to  the   applicable address; or (c) if given by personal delivery, when  duly delivered to the notice address with   receipt acknowledged.  Notwithstanding the foregoing, no notice to Agent pursuant to Section 2.1.4 , 2.2 ,  3.1.2  or 4.1.1  shall be effective until actually received by the individual to whose attention at Agent such   notice is required to be sent.  Any written communication that is not sent in conformity with the foregoing   provisions shall nevertheless be effective on the date actually received by the noticed party.  Any notice   received by Borrower Agent shall be deemed received by all Borrowers.                14.3.2.  Communications.  Electronic and telephonic communications (including e-mail,  messaging, voice mail and websites) may be used only in a manner acceptable to Agent.  Secured Parties  make no assurance as to the privacy or security of electronic or telephonic communications.  E-mail and  voice mail shall not be effective notices under the Loan Documents.               14.3.3.  Platform.   Borrower  Materials  shall  be  delivered  pursuant  to  procedures  approved  by  Agent,  including  electronic  delivery  (if  possible)  upon  request  by  Agent  to  an  electronic  system  maintained  by  Agent  (“Platform”).   Borrowers  shall  notify  Agent  of  each  posting  of  Borrower  Materials on the Platform and the materials shall be deemed received by Agent only upon its receipt of such  notice.  Borrower Materials and other information relating to this credit facility may be made available to  Secured Parties on the Platform.  The Platform is provided “as is” and “as available.”  Agent does not                                         -75-    

 

   warrant the accuracy or completeness of any information on the Platform nor the adequacy or functioning  of the Platform, and expressly disclaims liability for any errors or omissions in the Borrower Materials or  any  issues  involving  the  Platform.   NO  WARRANTY  OF ANY  KIND,  EXPRESS,  IMPLIED  OR  STATUTORY,  INCLUDING  ANY  WARRANTY  OF  MERCHANTABILITY,  FITNESS  FOR  A  PARTICULAR  PURPOSE,  NON-INFRINGEMENT  OF  THIRD  PARTY  RIGHTS,  OR  FREEDOM  FROM  VIRUSES  OR  OTHER  CODE  DEFECTS,  IS  MADE  BY  AGENT  WITH  RESPECT  TO  BORROWER  MATERIALS  OR THE PLATFORM.   No  Agent  Indemnitee  shall  have  any  liability  to  Borrowers, Secured Parties or any other Person for losses, claims, damages, liabilities or expenses of any  kind (whether in tort, contract or otherwise) relating to use by any Person of the Platform, including any  unintended  recipient,  nor  for  delivery  of  Borrower Materials  and  other  information  via  the  Platform,  internet, e-mail, or any other electronic platform or messaging system.               14.3.4.  Public Information.  Obligors and Secured Parties acknowledge that “public”  information may not be segregated from material non-public information on the Platform.  Secured Parties  acknowledge that Borrower Materials may include Obligors’ material non-public information, and should  not be made available to personnel who do not wish to receive such information or may be engaged in  investment or other market-related activities with respect to an Obligor’s securities.               14.3.5.  Non-Conforming  Communications.   Agent  and  Lenders  may  rely  upon  any  communications purportedly given by or on behalf of any Borrower even if they were not made in a manner  specified  herein,  were  incomplete  or  were  not  confirmed,  or  if  the  terms  thereof,  as  understood  by  the  recipient,  varied  from  a  later  confirmation.   Each Borrower  shall  indemnify  and  hold  harmless  each  Indemnitee  from  any  liabilities,  losses,  costs  and expenses  arising  from  any  electronic  or  telephonic  communication reasonably determined by an Indemnitee to given by or on behalf of a Borrower.         14.4  Performance of Borrowers’ Obligations .  Agent may, in its discretion at any time and  from time to time, at Borrowers’ expense, pay any amount or do any act required of a Borrower under any  Loan Documents or otherwise lawfully requested by Agent to (a) enforce any Loan Documents or collect  any Obligations; (b) protect, insure, maintain or realize upon any Collateral; or (c) defend or maintain the  validity or priority of Agent’s Liens in any Collateral, including any payment of a judgment, insurance  premium, warehouse charge, finishing or processing charge, or landlord claim, or any discharge of a Lien.   All payments, costs and expenses (including Extraordinary Expenses) of Agent under this Section shall be  reimbursed to Agent by Borrowers, within one Business day of demand, with interest from the date incurred  until paid in full, at the Default Rate applicable to Base Rate Loans.  Any payment made or action taken by  Agent under this Section shall be without prejudice to any right to assert an Event of Default or to exercise  any other rights or remedies under the Loan Documents.         14.5  Credit Inquiries .  Agent and Lenders may (but shall have no obligation) to respond to  usual and customary credit inquiries from third parties concerning any Obligor or Subsidiary.         14.6  Severability .   Wherever  possible,  each  provision  of  the  Loan  Documents  shall  be  interpreted in such manner as to be valid under Applicable Law.  If any provision is found to be invalid  under  Applicable  Law,  it  shall  be  ineffective  only to  the  extent  of  such  invalidity  and  the  remaining  provisions of the Loan Documents shall remain in full force and effect.         14.7  Cumulative  Effect;  Conflict  of  Terms .   The  provisions  of  the  Loan  Documents  are  cumulative.   The  parties  acknowledge  that  the  Loan Documents  may  use  several  limitations  or  measurements to regulate similar matters, and they agree that these are cumulative and that each must be  performed as provided.  Except as otherwise provided in another Loan Document (by specific reference to  the applicable provision of this Agreement), if any provision contained herein is in direct conflict with any  provision in another Loan Document, the provision herein shall govern and control.                                         -76-    

 

         14.8  Counterparts; Execution .  Agreement and any document, amendment, approval, consent,  information, notice, certificate, request, statement, disclosure or authorization related to this  Agreement  (each a “Communication”), including Communications required to be in writing, may be in the form of an  Electronic Record and may be executed using Electronic Signatures.  Each of the Obligors agrees that any  Electronic Signature on or associated with any Communication shall be valid and binding on each of the  Obligors to the same extent as a manual, original signature, and that any Communication entered into by  Electronic  Signature,  will  constitute  the  legal,  valid  and  binding  obligation  of  each  of  the  Obligors  enforceable against such in accordance with the terms thereof to the same extent as if a manually executed  original  signature  was  delivered.    Any  Communication  may  be  executed  in  as  many  counterparts  as  necessary or convenient, including both paper and electronic counterparts, but all such counterparts are one  and the same Communication.  For the avoidance  of  doubt, the authorization under this paragraph may  include, without limitation, use or acceptance by the Agent and each of the Secured Parties of a manually  signed paper Communication which has been converted into electronic form (such as scanned into PDF  format),  or  an  electronically  signed  Communication converted  into  another  format,  for  transmission,  delivery and/or retention. The Agent and each of the Secured Parties may, at its option, create one or more  copies of any Communication in the form of an imaged Electronic Record (“Electronic Copy”), which shall  be  deemed  created  in  the  ordinary  course  of  such  Person’s  business,  and  destroy  the  original  paper  document.  All Communications in the form of an Electronic Record, including an Electronic Copy, shall  be considered an original for all purposes, and shall have the same legal effect, validity and enforceability  as  a  paper  record.  Notwithstanding  anything  contained  herein  to  the  contrary,  the  Agent  is  under  no  obligation to accept an Electronic Signature in any form or in any format unless expressly agreed to by the  Agent pursuant to procedures approved by it; provided, further, without limiting the foregoing, (a) to the  extent the Agent has agreed to accept such Electronic Signature, the Agent and each of the Secured Parties  shall be entitled to rely on any such Electronic Signature purportedly given by or on behalf of any Obligor  without further verification and (b) upon the request of the Agent or any Lender, any Electronic Signature  shall  be  promptly  followed  by  such  manually  executed  counterpart.  For  purposes  hereof,  “Electronic  Record” and “Electronic Signature” shall have the meanings assigned to them, respectively, by 15 USC  §7006, as it may be amended from time to time.         14.9  Entire  Agreement .   Time  is  of  the  essence  with  respect  to  all  Loan Documents  and  Obligations.  The Loan Documents constitute the entire agreement, and supersede all prior understandings  and agreements, among the parties relating to the subject matter thereof.         14.10  Relationship with Lenders .  The obligations of each Lender hereunder are several, and  no Lender shall be responsible for the obligations or Commitments of any other Lender.  Amounts payable  hereunder to each Lender shall be a separate and independent debt.  It shall not be necessary for Agent or  any other Lender to be joined as an additional party in any proceeding for such purposes.  Nothing in this  Agreement and no action of Agent, Lenders or any other Secured Party pursuant to the Loan Documents or  otherwise shall be deemed to constitute Agent and any Secured Party to be a partnership, joint venture or  similar arrangement, nor to constitute control of any Obligor.         14.11  No  Advisory  or  Fiduciary  Responsibility .   In  connection  with  all  aspects  of  each  transaction contemplated by any Loan Document, Borrowers acknowledge and agree that (a)(i) this credit  facility and any arranging or other services by Agent, any Lender, any of their Affiliates or any arranger  are arm’s-length commercial transactions between Borrowers and their Affiliates, on one hand, and Agent,  any Lender, any of their Affiliates or any arranger, on the other hand; (ii) Borrowers have consulted their   own  legal,  accounting,  regulatory  and  tax  advisors to  the  extent  they  have  deemed  appropriate;  and   (iii) Borrowers are capable of evaluating, and understand and accept, the terms, risks and conditions of the  transactions contemplated by the Loan Documents; (b) each of Agent, Lenders, their Affiliates and any  arranger  is  and  has  been  acting  solely  as a  principal  and,  except  as  expressly  agreed  in  writing  by  the  relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for Borrowers,                                         -77-    

 

   their Affiliates or any other Person, and has no obligation with respect to the transactions contemplated by  the Loan Documents except as expressly set forth therein; and (c) Agent, Lenders, their Affiliates and any  arranger may be engaged in a broad range of transactions that involve interests that differ from those of  Borrowers and their Affiliates, and have no obligation to disclose any of such interests to Borrowers or their  Affiliates.  To the fullest extent permitted by Applicable Law, each Borrower hereby waives and releases  any claims that it may have against Agent as of the date of this Agreement, Lenders, their Affiliates and  any arranger with respect to any breach of agency or fiduciary duty in connection with any transaction  contemplated by a Loan Document.         14.12  Confidentiality .   Each  of  Agent,  Lenders  and  Issuing  Bank  shall  maintain  the  confidentiality of all Information (as defined below), except that Information may be disclosed (a) to its  Affiliates,  and  to  its  and  their  partners,  directors,  officers,  employees,  agents,  auditors,  advisors and   representatives (provided they are informed of the confidential nature of the Information and instructed to   keep it confidential); (b) to the extent requested by any governmental, regulatory or self-regulatory authority   purporting to have jurisdiction over it or its Affiliates; (c) to the extent required by Applicable Law or by   any subpoena or other legal process; (d) to any other party hereto; (e) in connection with any action or   proceeding  relating  to  any  Loan  Documents  or  Obligations;  (f)  subject  to  an  agreement  containing   provisions substantially the same as this Section, to any Transferee or any actual or prospective party (or   its advisors) to any Bank Product or to any swap, derivative or other transaction under which payments are   to  be  made  by  reference  to  an  Obligor  or  Obligor’s obligations;  (g)  to  the  extent  such  Information   (i) becomes publicly available other than as a result of a breach of this Section or (ii) is available to Agent,   any Lender, Issuing Bank or any of their Affiliates on a nonconfidential basis from a source other than   Borrowers; (h) on a confidential basis to a provider of a Platform; or (i) with the consent of Borrower Agent.    Obligors consent to the publication by Agent and Lenders of customary advertising material relating to   transactions contemplated hereby, using the names, product photographs, logos or trademarks of Obligors.    In addition, Agent and Lenders may disclose information regarding this Agreement and the credit facility   hereunder to market data collectors, similar service providers to the lending industry, and service providers   to  Agent  and  Lenders  in  connection  with  the  Loan  Documents  and  Commitments.   As  used  herein,   “Information” means information received from an Obligor or Subsidiary relating to it or its business that  is  identified  as  confidential  when  delivered.   A  Person  required  to  maintain  the  confidentiality  of  Information pursuant to this Section shall be deemed to have complied if it exercises a degree of care similar  to that accorded its own confidential information.  Each of Agent, Lenders and Issuing Bank acknowledges  that  (i)  Information  may  include  material  non-public  information;  (ii)  it  has  developed  compliance  procedures regarding the use of such information; and (iii) it will handle the material non-public information   in accordance with Applicable Law.          14.13  Reserved .           14.14  GOVERNING  LAW.   UNLESS  EXPRESSLY  PROVIDED  IN  ANY  LOAN  DOCUMENT,  THIS  AGREEMENT,  THE  OTHER  LOAN  DOCUMENTS      AND  ALL  CLAIMS  SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING  EFFECT TO ANY CONFLICT OF LAW PRINCIPLES EXCEPT FEDERAL LAWS RELATING  TO NATIONAL BANKS.         14.15  Consent to Forum; Bail-In of EEA Financial Institutions               14.15.1.  Forum.   EACH  BORROWER  HEREBY  CONSENTS  TO  THE  EXCLUSIVE JURISDICTION  OF  ANY  STATE COURT SITTING  IN  NEW  YORK  COUNTY,  NEW YORK, OR THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT  OF  NEW  YORK,  IN  ANY  DISPUTE,  ACTION,  LITIGATION  OR OTHER  PROCEEDING  RELATING IN ANY WAY TO ANY LOAN DOCUMENTS, AND AGREES THAT ANY DISPUTE,                                         -78-    

 

   ACTION, LITIGATION OR OTHER PROCEEDING SHALL BE BROUGHT BY IT SOLELY IN  ANY  SUCH  COURT.   EACH  BORROWER  IRREVOCABLY  AND  UNCONDITIONALLY  WAIVES ALL CLAIMS, OBJECTIONS AND DEFENSES THAT IT MAY HAVE REGARDING  ANY  SUCH  COURT’S  PERSONAL  OR  SUBJECT  MATTER  JURISDICTION,  VENUE  OR  INCONVENIENT      FORUM.     EACH    PARTY     HERETO     IRREVOCABLY      AND  UNCONDITIONALLY  SUBMITS  TO  THE  JURISDICTION  OF  SUCH  COURTS  AND  CONSENTS  TO  SERVICE  OF  PROCESS  IN  THE  MANNER  PROVIDED  FOR  NOTICES  IN  SECTION 14.3.1.   A final judgment in any proceeding of any such court shall be conclusive and may be  enforced in other jurisdictions by suit on the judgment or any other manner provided by Applicable Law.               14.15.2.  Other Jurisdictions.  Nothing herein shall limit the right of Agent or any Lender  to bring proceedings against any Obligor in any other court, nor limit the right of any party to serve process  in any other manner permitted by Applicable Law.  Nothing in this Agreement shall be deemed to preclude  enforcement by Agent of any judgment or order obtained in any forum or jurisdiction.               14.15.3.  Acknowledgement  and  Consent  to  Bail-In  of  EEA  Financial  Institutions.   Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement  or understanding among the parties, each party hereto (including each Secured Party) acknowledges that,  with respect to any Secured Party that is an EEA Financial Institution, any liability of such Secured Party  arising under a Loan Document, to the extent such liability is unsecured, may be subject to the write-down   and conversion powers of an EEA Resolution Authority, and each party hereto agrees and consents to, and  acknowledges and agrees to be bound by, (a) the application of any Write-Down and Conversion Powers  by an EEA Resolution Authority to any such liability which may be payable to it by such Secured Party;  and (b) the effects of any Bail-in Action on any such liability, including (i) a reduction in full or in part or  cancellation of any such liability; (ii) a conversion of all, or a portion of, such liability into shares or other  instruments of ownership in such EEA Financial Institution, its parent entity, or a bridge institution that  may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will  be accepted by it in lieu of any rights with respect to any such liability under any Loan Document; or (iii) the   variation of the terms of such liability in connection with the exercise of any Write-Down and Conversion   Powers.                14.15.4.  Judicial  Reference.  If  any  action,  litigation  or  proceeding  relating  to  any  Obligations or Loan Documents is filed in a court sitting in or applying the laws of California, the court  shall, and is hereby directed to, make a general reference pursuant to Cal. Civ. Proc. Code §638 to a referee  (who shall be an active or retired judge) to hear and determine all issues in the case (whether fact or law)  and to report a statement of decision.  Nothing in this Section shall limit any right of Agent or any other  Secured Party to exercise self-help remedies, such as setoff, foreclosure or sale of Collateral, or to obtain  provisional or ancillary remedies from a court of competent jurisdiction before, during or after any judicial  reference.  The exercise of a remedy does not waive the right of any party to require judicial reference.  At  Agent’s option, foreclosure under a mortgage or deed of trust may be accomplished either by exercise of  power of sale thereunder or by judicial foreclosure.         14.16  Waivers  by  Borrowers .  To  the  fullest  extent  permitted  by  Applicable  Law, each  Borrower waives (a) the right to trial by jury (which each Secured Party hereby also waives) in any  proceeding  or  dispute  of  any  kind  relating  in  any  way  to  any  Loan  Documents,  Obligations  or  Collateral; (b) presentment, demand, protest, notice of presentment, default, non-payment, maturity,  release,  compromise,  settlement,  extension  or  renewal  of  any  commercial  paper,  accounts,  documents, instruments, chattel paper and guaranties at any time held by Agent on which a Borrower  may in any way be liable, and hereby ratifies anything Agent may do in this regard; (c) notice prior  to taking possession or control of any Collateral; (d) any bond or security that might be required by  a court prior to allowing Agent to exercise any rights or remedies; (e) the benefit of all valuation,                                         -79-    

 

   appraisement and exemption laws; (f) any claim against an Indemnitee, on any theory of liability, for  special,  indirect,  consequential,  exemplary  or  punitive  damages  (as  opposed  to  direct  or  actual  damages)  in  any  way  relating  to  any  Enforcement  Action,  Obligations,  Loan  Documents  or  transactions relating thereto; and (g) notice of acceptance hereof.   Each Borrower acknowledges that  the foregoing  waivers are a material inducement to Agent, Issuing Bank and Lenders entering into this  Agreement and that they are relying upon the foregoing in their dealings with Borrowers.  Each Borrower  has reviewed the foregoing waivers with its legal counsel and has knowingly and voluntarily waived its  jury  trial  and  other  rights  following  consultation with  legal  counsel.   In  the  event  of  litigation,  this  Agreement may be filed as a written consent to a trial by the court.         14.17  Patriot  Act  Notice .   Agent  and  Lenders  hereby  notify  Borrowers  that  pursuant  to  the  Patriot Act, Agent and Lenders are required to obtain, verify and record information that identifies each  Borrower, including its legal name, address, tax ID number and other information that will allow Agent and   Lenders to identify it in accordance with the Patriot Act.  Agent and Lenders will also require information   regarding  any  personal  guarantor  and  may  require  information  regarding  Borrowers’  management  and   owners, such as legal name, address, social security number and date of birth.  Borrowers shall, promptly   upon request, provide all documentation and other information as Agent, Issuing Bank or any Lender may   request  from  time  to  time  for  purposes  of  complying  with  any  “know  your  customer,”  anti-money   laundering rules and regulations, or other requirements of Applicable Law, including the Patriot Act and   Beneficial Ownership Regulation.          14.18  NO  ORAL  AGREEMENT.   THIS  AGREEMENT  AND  THE  OTHER  LOAN  DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY  NOT  BE  CONTRADICTED  BY  EVIDENCE  OF  PRIOR,  CONTEMPORANEOUS  OR  SUBSEQUENT  ORAL  AGREEMENTS  BETWEEN  THE  PARTIES.   THERE  ARE  NO  UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.         14.19  Acknowledgement  Regarding  Any  Supported  QFCs. To  the  extent  that  the  Loan  Documents provide support, through a guarantee  or otherwise, for any hedging agreement or any other  agreement  or  instrument  that  is  a  QFC  (such  support,  “QFC  Credit  Support”,  and  each  such  QFC,  a  “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of  the Federal Deposit Insurance Corporation under the  Federal Deposit Insurance  Act and Title II  of the  Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated  thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit  Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported  QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States  or any other state of the United States):          (a)  In  the  event  a  Covered  Entity  that  is  party  to a  Supported  QFC  (each,  a “Covered  Party”)  becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported  QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported  QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC  Credit Support) from such Covered Party will be effective to the same  extent as the transfer would be  effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support  (and any such interest, obligation and rights in property) were governed by the laws of the United States or  a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes  subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents  that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against   such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be   exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were   governed by the laws of the United States or a state of the United States. Without limitation of the foregoing,                                         -80-    

 

   it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall  in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit  Support.           (b) As used in this Section 14.19 , the following terms have the following meanings:         “BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted        in accordance with, 12 U.S.C. 1841(k)) of such party.          “Covered Entity” means any of the following:  (i) a “covered entity” as that term is defined in, and        interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a “covered bank” as that term is defined        in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a “covered FSI” as that term is        defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).          “Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance        with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.          “QFC”  has  the  meaning  assigned  to  the  term  “qualified  financial  contract”  in,  and  shall  be        interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).   SECTION 15.   CONTINUING GUARANTY         15.1  Guaranty .   Each  Guarantor  hereby  absolutely  and  unconditionally  guarantees,  as  a  guaranty of payment and performance and not merely as a guaranty of collection, prompt payment when  due, whether at stated maturity, by required prepayment, upon acceleration, demand or otherwise, and at  all times thereafter, of any and all of the Obligations (other than Excluded Swap Obligations), whether for  principal, interest, premiums, fees, indemnities, damages, costs, expenses or otherwise, of the Borrowers to  the  Secured  Parties,  arising  hereunder  or  under  any  other  Loan  Document  (including  all  renewals,  extensions, amendments, refinancings and  other  modifications thereof and all costs, attorneys’ fees and  expenses incurred by the Secured Parties in connection with the collection or enforcement thereof) (the  “Guarantied  Obligations”).   The  Agent’s  books  and  records  showing  the  amount  of  the  Guarantied  Obligations shall be admissible in evidence in any action or proceeding, and shall be binding upon each  Guarantor, and conclusive for the purpose of establishing the amount of the Guarantied Obligations.  This  Guaranty shall not be affected by the genuineness, validity, regularity or enforceability of the Guarantied  Obligations or any instrument or agreement evidencing any Guarantied Obligations, or by the existence,  validity, enforceability, perfection, non-perfection or extent of any collateral therefor, or by any fact or  circumstance  relating  to  the  Guarantied  Obligations  which  might  otherwise  constitute  a  defense  to  the  obligations  of  any  Guarantor  under  this  Guaranty,  and  each  Guarantor  hereby  irrevocably  waives  any  defenses it may now have or hereafter acquire in any way relating to any or all of the foregoing.         15.2  Rights of Lenders .  Each Guarantor consents and agrees that the Secured Parties may, at  any  time  and  from  time  to  time,  without  notice  or  demand,  and  without  affecting  the  enforceability  or  continuing effectiveness hereof:  (a) amend, extend, renew, compromise, discharge, accelerate or otherwise  change the time for payment or the terms of the Guarantied Obligations or any part thereof; (b) take, hold,  exchange, enforce, waive, release, fail to perfect, sell, or otherwise dispose of any security for the payment   of this Guaranty or any Guarantied Obligations; (c) apply such security and direct the order or manner of   sale thereof as the Agent, the Letter of Credit Issuer and the Lenders in their sole discretion may determine;   and (d) release or substitute one or more of any endorsers or other guarantors of any of the Guarantied   Obligations.  Without limiting the generality of the foregoing, each Guarantor consents to the taking of, or   failure to take, any action which might in any manner or to any extent vary the risks of any Guarantor under   this Guaranty or which, but for this provision, might operate as a discharge of any Guarantor.                                         -81-    

 

         15.3  Certain  Waivers .   Each  Guarantor  waives  (a)  any  defense  arising  by  reason  of  any  disability  or  other  defense  of  the  Borrowers  or  any  other  guarantor,  or  the  cessation  from  any  cause  whatsoever (including any act or omission of any Secured Party) of the liability of the Borrowers; (b) any  defense based on any claim that any Guarantor’s obligations exceed or are more burdensome than those of  the Borrowers; (c) the benefit of any statute of limitations affecting any Guarantor’s liability hereunder; (d)  any right to proceed against the Borrowers, proceed against or exhaust any security for the Guarantied  Obligations, or pursue any other remedy in the power of any Secured Party whatsoever; (e) any benefit of  and any right to participate in any security now or hereafter held by any Secured Party; and (f) to the fullest  extent permitted by law, any and all other defenses or benefits that may be derived from or afforded by  applicable Law limiting the liability of or exonerating guarantors or sureties.  Each Guarantor expressly  waives all setoffs and counterclaims and all presentments, demands for payment or performance, notices  of nonpayment or nonperformance, protests, notices of protest, notices of dishonor and all other notices or  demands of any kind or nature whatsoever with respect to the Guarantied Obligations, and all notices of  acceptance of this Guaranty or of the existence, creation or incurrence of new or additional Guarantied  Obligations.         15.4  Obligations  Independent .   The  obligations  of  each  Guarantor  hereunder  are those  of  primary obligor, and not  merely as surety, and are independent  of  the  Guarantied  Obligations  and  the  obligations of any other guarantor, and a separate action may be brought against each Guarantor to enforce   this Guaranty whether or not any Borrower or any other person or entity is joined as a party.         15.5  Subrogation .   No  Guarantor  shall  exercise  any  right  of  subrogation,  contribution,  indemnity, reimbursement or similar rights with respect to any payments it makes under this Guaranty until  the Facility Termination Date.  If any amounts are paid to any Guarantor in violation  of the foregoing   limitation, then such amounts shall be held in trust for the benefit of the Secured Parties and shall forthwith  be paid to the Secured Parties to reduce the amount of the Obligations, whether matured or unmatured.         15.6  Termination; Reinstatement .  This Guaranty is a continuing and irrevocable guaranty of  all  Guarantied  Obligations  now  or  hereafter  existing  and  shall  remain  in  full  force  and  effect  until  the  Commitment Termination Date.  Notwithstanding the foregoing, this Guaranty shall continue in full force  and  effect  or  be  revived,  as  the  case  may  be,  if  any  payment  by  or  on  behalf  of  the  Borrower  or  any  Guarantor is made, or any of the Secured Parties exercises its right of setoff, in respect of the Guarantied   Obligations and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated,   declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered   into by any of the Secured Parties in their discretion) to be repaid to a trustee, receiver or any other party,   in connection with any proceeding under any Debtor Relief Laws or otherwise, all as if such payment had  not been made or such setoff had not occurred and whether or not the Secured Parties are in possession of  or have released this Guaranty and regardless of any prior revocation, rescission, termination or reduction.   The obligations of each Guarantor under this paragraph shall survive termination of this Guaranty.         15.7  Subordination .  Each Guarantor hereby subordinates the payment of all obligations and  indebtedness  of  the  Borrowers  owing  to  each  Guarantor,  whether  now  existing  or  hereafter  arising,  including but not limited to any obligation of the Borrowers to any Guarantor as subrogee of the Secured  Parties or resulting from any Guarantor’s performance under this Guaranty, to the Payment in Full.  If the  Secured Parties so request, any such obligation or indebtedness of the Borrowers to any Guarantor shall be   enforced and performance received by any Guarantor as trustee for the Secured Parties and the proceeds   thereof shall be paid over to the Secured Parties on account of the Guarantied Obligations, but without  reducing or affecting in any manner the liability of any Guarantor under this Guaranty.         15.8  Stay of Acceleration .  If acceleration of the time for payment of any of the Guarantied  Obligations is stayed, in connection with any case commenced by or against any Guarantor or the Borrowers                                         -82-    

 

   under  any  Debtor  Relief  Laws,  or  otherwise,  all  such  amounts  shall  nonetheless  be  payable  by  each  Guarantor immediately upon demand by the Secured Parties.         15.9  Condition of Borrowers .  Each Guarantor acknowledges and agrees that it has the sole  responsibility for, and has adequate means of, obtaining from the Borrowers and any other guarantor such  information concerning the financial condition, business and operations of the Borrowers and any such  other  guarantor as  each  Guarantor requires,  and  that none  of  the  Secured  Parties  has any  duty,  and  no  Guarantor  is  relying  on  the  Secured  Parties  at  any time,  to  disclose  to  any  Guarantor  any  information  relating to the business, operations or financial condition of the Borrowers or any other guarantor waiving   any duty on the part of the Secured Parties to disclose such information and any defense relating to the  failure to provide the same).         15.10  Keepwell .  Each Guarantor that is a Qualified ECP 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 Obligor to honor all of its obligations under this Guaranty in respect of Swap   Obligations (provided, however, that each Qualified ECP shall only be liable under this Section 15.10  for   the maximum amount of such liability that can be hereby incurred without rendering its obligations under   this Section 15.10 , or otherwise under this Guaranty, voidable under applicable law relating to fraudulent   conveyance or fraudulent transfer, and not for any greater amount). The obligations of each Guarantor that   is a Qualified ECP under this Section shall remain in full force and effect until the Guarantied Obligations   have been paid in full in cash. Each Guarantor that is a Qualified ECP intends that this Section 15.10    constitute, and this Section 15.10  shall be deemed to constitute, a “keepwell, support, or other agreement”   for  the  benefit  of  each  other  Obligor  for  all  purposes  of  Section  1a(18)(A)(v)(II)  of  the  Commodity   Exchange Act.          15.11  Limitation of Guaranty .  Notwithstanding anything to the contrary herein or otherwise,  the Borrowers, the Agent and the Lenders hereby irrevocably agree that the Guarantied Obligations of each  Guarantor in respect of the guarantee set forth in this Section 15 at any time shall be limited to the maximum  amount as will result in the Guarantied Obligations of such Guarantor not constituting a fraudulent transfer  or conveyance after giving full effect to the liability under such guarantee set forth in this Section 1 5 and  its related contribution rights but before taking into account any liabilities under any other guarantee by  such Guarantor.                               [Remainder of page intentionally left blank; signatures begin on following page ]                                          -83-    

 

         IN WITNESS WHEREOF    , this Agreement has been executed and delivered as of the date set  forth above.                                       BORROWERS    :                                       KEY TRONIC CORPORATION     ,                                       a Washington corporation                                                                            By:/s/ Brett R. Larsen                                       Name: Brett R. Larsen                                       Title: Executive VP of Administration, CFO and                                      Treasurer                                                                             Address:                                      4424 N Sullivan Road                                      Spokane Valley, WA 99216                                      Attention:   Brett R. Larsen                                      Telecopy:   509-927-5555                                                                                   CDR MANUFACTURING, LLC    ,                                       a Kentucky limited liability company                                                                            By:/s/ Brett R. Larsen                                       Name: Brett R. Larsen                                       Title: VP and Treasurer                                                                             Address:                                      4424 N Sullivan Road                                      Spokane Valley, WA 99216                                      Attention:   Brett R. Larsen                                      Telecopy:   509-927-5555                                                                                   AYRSHIRE ELECTRONICS OF ARKANSAS,                                      LLC , a Kentucky limited liability company                                                                            By:/s/ Brett R. Larsen                                       Name: Brett R. Larsen                                       Title: VP and Treasurer                                                                             Address:                                      4424 N Sullivan Road                                      Spokane Valley, WA 99216                                      Attention:   Brett R. Larsen                                      Telecopy:   509-927-5555                                                                                           LOAN, GUARANTY AND SECURITY AGREEMENT                                                           (KEY TRONIC CORPORATION)                                                                    SIGNATURE PAGE                                                                         149229586.1   

 

               AYRSHIRE ELECTRONICS OF MISSISSIPPI,  LLC , a Kentucky limited liability company    By:/s/ Brett R. Larsen   Name: Brett R. Larsen   Title: VP and Treasurer     Address:  4424 N Sullivan Road  Spokane Valley, WA 99216  Attention:   Brett R. Larsen  Telecopy:   509-927-5555           GUARANTORS:    K T SERVICES, INC. ,   a Washington corporation    By:/s/ Brett R. Larsen   Name: Brett R. Larsen   Title: VP and Treasurer     Address:  4424 N Sullivan Road  Spokane Valley, WA 99216  Attention:   Brett R. Larsen  Telecopy:   509-927-5555           KEY TRONIC CHINA LTD.   ,   a Washington corporation    By:/s/ Brett. R. Larsen   Name: Brett R. Larsen   Title: VP, Secretary and Treasurer     Address:  4424 N Sullivan Road  Spokane Valley, WA 99216  Attention:   Brett R. Larsen  Telecopy:   509-927-5555                    LOAN, GUARANTY AND SECURITY AGREEMENT                       (KEY TRONIC CORPORATION)                                SIGNATURE PAGE                                     149229586.1   

 

                               AGENT AND LENDERS    :   BANK OF AMERICA, N.A.  ,  as Agent and Lender   By:/s/ Brett German   Name: Brett German   Title: Senior VP     Address:  Bank of America, N.A.  121 SW Morrison Street, Floor 17  Portland, OR 97204  Attention:   Asset Based Portfolio Specialist - Key Tronic  Email:   brett.german@bofa.com                       LOAN, GUARANTY AND SECURITY AGREEMENT                       (KEY TRONIC CORPORATION)                                SIGNATURE PAGE                                     149229586.1   

 

                                      Exhibit A                                         to                           Loan, Guaranty and Security Agreement                                                                   ASSIGNMENT AND ACCEPTANCE         Reference is made to the Loan, Guaranty and Security Agreement dated as of August 14, 2020 (as  amended,  restated,  amended  and  restated,  supplemented,  or  otherwise  modified  from  time  to  time,  the  “Loan Agreement”), by and among KEY TRONIC CORPORATION, a Washington corporation (“Key  Tronic”), CDR MANUFACTURING, LLC , a Kentucky limited liability company (“CDR”), AYRSHIRE  ELECTRONICS OF ARKANSAS LLC     , a Kentucky limited liability company  (“Ayrshire Arkansas”),  AYRSHIRE ELECTRONICS OF MISSISSIPPI, LLC   , a Kentucky limited liability company (“Ayrshire  Mississippi”; and together with Key Tronic, CDR, Ayrshire Arkansas, and any other party joined thereto  as  a  Borrower,  each,  a  “Borrower”  and  collectively,  the  “Borrowers”), K  T  SERVICES,  INC., a  Washington corporation (“KT”), KEY TRONIC CHINA LTD. , a Washington corporation (“KTC”) and  any Subsidiary of Key Tronic party hereto (or joined thereto in the future) as a guarantor (together with KT  and KTC, each, a “Guarantor” and collectively, the “Guarantors”; and together with the Borrowers, each,  an “Obligor” and collectively, the “Obligors”), the financial institutions party thereto from time to time as  Lenders, and BANK OF AMERICA, N.A. , a national banking association (“Bank of America”), as agent  for the Lenders (in such capacity, “Agent”).  Terms are used herein as defined in the Loan Agreement.         ______________________________________ (“Assignor”) and _________________________  _____________ (“Assignee”) agree as follows:         1.    Assignor hereby assigns to Assignee and Assignee hereby purchases and assumes from  Assignor  (a)  a  principal  amount  of  $________  of  Assignor’s  outstanding  Loans  and  $___________  of  Assignor’s  participations  in  LC  Obligations,  and  (b)  the  amount  of  $__________  of  Assignor’s  Commitment, which represents ____% of the total Commitments (the foregoing items being, collectively,  “Assigned  Interest”),  together  with  an  interest  in the  Loan  Documents  corresponding  to  the  Assigned  Interest.  This Agreement shall be effective as of the date (“Effective Date”) indicated in the corresponding  Assignment  Notice  delivered  to  Agent,  provided  such  Assignment  Notice  is  executed  by  Assignor,  Assignee, Agent and Borrower Agent, if applicable.  From and after the Effective Date, Assignee hereby  expressly assumes, and undertakes to perform, all of  Assignor’s obligations  in respect of the  Assigned  Interest, and all principal, interest, fees and  other amounts which would  otherwise be payable to  or for  Assignor’s account in respect of the Assigned Interest shall be payable to or for Assignee’s account, to the  extent such amounts accrue on or after the Effective Date.         2.    Assignor (a) represents that as of the date hereof, prior to giving effect to this assignment,  its  Commitment  is  $__________  and  the  outstanding  balance  of  its  Loans  and  participations  in  LC  Obligations is $__________; (b) makes no representation or warranty and assumes no responsibility with  respect to any statements, warranties or representations made in or in connection with the Loan Agreement  or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Agreement  or any other instrument or document furnished pursuant thereto, other than that Assignor is the legal and  beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any  adverse claim; and (c) makes no representation or warranty and assumes no responsibility with respect to  the financial condition of Borrowers or the performance by Borrowers of their obligations under the Loan  Documents.  [Assignor is attaching  the promissory note[s] held by it and requests that Agent exchange  such note[s] for new promissory notes payable to Assignee [and Assignor].]          3.    Assignee  (a)  represents  and  warrants  that  it  is legally  authorized  to  enter  into  this  Assignment;  (b)  confirms  that  it  has  received  copies  of  the  Loan  Agreement  and  such  other  Loan  Documents and information as it has deemed appropriate to make its own credit analysis and decision to  enter into this Assignment; (c) agrees that it shall, independently and without reliance upon Assignor and     

 

  based on such documents and information as it shall deem appropriate at the time, continue to make its own  credit decisions in taking or not taking action under the Loan Documents; (d) confirms that it is an Eligible  Assignee and satisfies Section 13.13  of the Loan Agreement; (e) appoints and authorizes Agent to take  such action as agent on its behalf and to exercise such powers under the Loan Agreement as are delegated  to Agent by the terms thereof, together with such powers as are incidental thereto; (f) agrees that it will  observe and perform all obligations that are required to be performed by it as a “Lender” under the Loan  Documents; and (g) represents and warrants that the assignment evidenced hereby will not result in a non- exempt “prohibited transaction” under Section 406 of ERISA.   4.    This Agreement shall be governed by the laws of the State of New York.  If any provision is found  to be invalid under Applicable Law, it shall be ineffective only to the  extent of such invalidity and the  remaining provisions of this Agreement shall remain in full force and effect.    5.    Each notice or other communication hereunder shall be in writing, shall be sent by messenger, by  telecopy or facsimile transmission, or by first-class mail, shall be deemed given when sent and shall be sent   as follows:          (a)   If to Assignee, to the following address (or to such other address as Assignee may designate              from time to time):                                  __________________________                                 __________________________                                 __________________________          (b)   If to Assignor, to the following address (or to such other address as Assignor may designate              from time to time):                                 __________________________                                 __________________________                                 __________________________                                 __________________________    Payments hereunder shall be made by wire transfer of immediately available Dollars as follows:    If to Assignee, to the following account (or to such other account as Assignee may designate from time to   time):                ______________________________               ______________________________               ABA No._______________________               ______________________________               Account No.____________________               Reference:  _____________________    If to Assignor, to the following account (or to such other account as Assignor may designate from time to  time):               ______________________________              ______________________________              ABA No._______________________              ______________________________              Account No.____________________              Reference:  _____________________                                                 

 

  IN WITNESS WHEREOF   , this Assignment and Acceptance is executed as of _____________.                                             _____________________________________                                            (“Assignee”)                                                                                        By___________________________________                                            Name:                                             Title:                                                                                                                        _____________________________________                                            (“Assignor”)                                                                                        By___________________________________                                            Name:                                             Title:                                                   

 

                                      Exhibit B                                         to                           Loan, Guaranty and Security Agreement                                                                        ASSIGNMENT NOTICE      Reference is made to (1) the Loan, Guaranty and Security Agreement dated as of August 14, 2020, (as  amended,  restated,  amended  and  restated,  supplemented,  or  otherwise  modified  from  time  to  time,  the  “Loan Agreement”), by and among KEY TRONIC CORPORATION, a Washington corporation (“Key  Tronic”), CDR MANUFACTURING, LLC , a Kentucky limited liability company (“CDR”), AYRSHIRE  ELECTRONICS OF ARKANSAS LLC     , a Kentucky limited liability company  (“Ayrshire Arkansas”),  AYRSHIRE ELECTRONICS OF MISSISSIPPI, LLC   , a Kentucky limited liability company (“Ayrshire  Mississippi”; and together with Key Tronic, CDR, Ayrshire Arkansas, and any other party joined thereto  as  a  Borrower,  each,  a  “Borrower”  and  collectively,  the  “Borrowers”), K  T  SERVICES,  INC., a  Washington corporation (“KT”), KEY TRONIC CHINA LTD. , a Washington corporation (“KTC”) and  any Subsidiary of Key Tronic party hereto (or joined thereto in the future) as a guarantor (together with KT  and KTC, each, a “Guarantor” and collectively, the “Guarantors”; and together with the Borrowers, each,  an “Obligor” and collectively, the “Obligors”), the financial institutions party thereto from time to time as  Lenders, and BANK OF AMERICA, N.A. , a national banking association (“Bank of America”), as agent  for  the  Lenders  (in  such  capacity,  “Agent”);  and  (2)  the  Assignment  and  Acceptance  dated  as  of  ____________,  20__  (“Assignment”),  between  __________________  (“Assignor”)  and  ____________________ (“Assignee”).  Terms are used herein as defined in the Loan Agreement.   Assignor hereby notifies Borrowers and Agent of Assignor’s intent to assign to Assignee pursuant to the  Assignment (a) a principal amount of $________ of Assignor’s outstanding Loans and $___________ of  Assignor’s  participations  in  LC  Obligations,  and  (b)  the  amount  of  $__________  of  Assignor’s  Commitment, which represents ____% of the total Commitments (the foregoing items being, collectively,  the “Assigned Interest”), together with an interest in the Loan Documents corresponding to the Assigned  Interest.  This Agreement shall be effective as of the date (“Effective Date”) indicated below, provided this  Assignment Notice is executed by Assignor, Assignee, Agent and Borrower Agent, if applicable.  Pursuant  to the Assignment, Assignee has expressly assumed all of Assignor’s obligations under the Loan Agreement  to the extent of the Assigned Interest, as of the Effective Date.   For  purposes  of  the  Loan  Agreement,  Agent  shall  deem  Assignor’s  Commitment  to  be  reduced  by  $_________, and Assignee’s Commitment to be increased by $_________.   The  address  of  Assignee  to  which  notices  and  information are to be sent under the terms of the Loan  Agreement is:                           ________________________                          ________________________                          ________________________                          ________________________         The address of Assignee to which payments are to be sent under the terms of the Loan Agreement  is shown in the Assignment.         This  Notice  is  being  delivered  to  Borrowers  and  Agent  pursuant  to Section  13.3   of  the  Loan  Agreement.  Please acknowledge your acceptance of this Notice by executing and returning to Assignee  and Assignor a copy of this Notice.      

 

                                                                                 IN WITNESS WHEREOF   , this Assignment Notice is executed as of _____________.                                              _____________________________________                                             (“Assignee”)                                                                                    By___________________________________                                             Name:                                              Title:                                                                                                                           _____________________________________                                             (“Assignor”)                                                                                    By___________________________________                                             Name:                                              Title:         ACKNOWLEDGED AND AGREED,     AS OF THE DATE SET FORTH ABOVE:    BORROWER AGENT:*   KEY TRONIC CORPORATION,   a Washington corporation    By_______________________________  Name:  Title:       BANK OF AMERICA, N.A.,  as Agent   By_______________________________  Name:  Title:

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