Document:

Exhibit 4.2

 

FIRST SUPPLEMENTAL INDENTURE

 

Dated as of February 5, 2013

 

to

 

INDENTURE

 

Dated as of October 11, 2012

 

Between

 

AIR LEASE CORPORATION

 

and

 

DEUTSCHE BANK TRUST COMPANY AMERICAS,

 

as Trustee

 

4.750% Senior Notes due 2020

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    
	
ARTICLE 1
    	
DEFINITIONS
    	
2
    
	
 
    	
 
    
	
 
    	
Section 1.1
    	
Definitions
    	
2
    
	
 
    	
 
    	
 
    
	
 
    	
Section 1.2
    	
Other   Defined Terms
    	
12
    
	
 
    	
 
    
	
ARTICLE 2
    	
TERMS   AND DESCRIPTION OF NOTES
    	
13
    
	
 
    	
 
    
	
 
    	
Section 2.1
    	
Indenture
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 2.2
    	
Designation   and Amount
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 2.3
    	
Form of   Notes
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 2.4
    	
Maturity
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 2.5
    	
Denominations   Of Notes
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 2.6
    	
Additional   Notes
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 2.7
    	
Interest
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 2.8
    	
Special   Interest
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 2.9
    	
Paying   Agent, Registrar, Place of Payment
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 2.10
    	
Sinking   Fund
    	
14
    
	
 
    	
 
    
	
ARTICLE 3
    	
SATISFACTION   AND DISCHARGE
    	
15
    
	
 
    	
 
    
	
 
    	
Section 3.1
    	
Satisfaction   and Discharge of Indenture
    	
15
    
	
 
    	
 
    
	
ARTICLE 4
    	
AMENDMENTS   AND WAIVERS
    	
16
    
	
 
    	
 
    
	
 
    	
Section 4.1
    	
Supplemental   Indentures without Consent of Holders
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 4.2
    	
Supplemental   Indentures with Consent of Holders
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 4.3
    	
Payments   for consent
    	
16
    
	
 
    	
 
    
	
ARTICLE 5
    	
CERTAIN   COVENANTS OF THE COMPANY
    	
17
    
	
 
    	
 
    
	
 
    	
Section 5.1
    	
Maintenance   of Consolidated Net Worth
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 5.2
    	
Maintenance   of Consolidated Unencumbered Assets
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 5.3
    	
Maintenance   of Interest Coverage
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 5.4
    	
Limitation   on Incurrence of Unsecured Indebtedness
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 5.5
    	
Limitation   on Restricted Payments
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 5.6
    	
Transactions   with Affiliates
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 5.7
    	
Limitation   on activities of the Company
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 5.8
    	
Future   Guarantors
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 5.9
    	
Reports
    	
21
    
							

 

i

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 5.10
    	
Compliance   Certificate
    	
22
    
	
 
    	
 
    
	
ARTICLE 6
    	
MERGER   AND CONSOLIDATION
    	
23
    
	
 
    	
 
    
	
 
    	
Section 6.1
    	
Merger,   Consolidation or Sale of All or Substantially All Assets
    	
23
    
	
 
    	
 
    
	
ARTICLE 7
    	
DEFAULTS   AND REMEDIES
    	
25
    
	
 
    	
 
    
	
 
    	
Section 7.1
    	
Events   of Default
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 7.2
    	
Acceleration
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 7.3
    	
Control   by Holders
    	
28
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 7.4
    	
Waivers
    	
28
    
	
 
    	
 
    
	
ARTICLE 8
    	
DEFEASANCE
    	
28
    
	
 
    	
 
    
	
 
    	
Section 8.1
    	
Covenant   Defeasance
    	
28
    
	
 
    	
 
    
	
ARTICLE 9
    	
REPURCHASE   OF NOTES AT OPTION OF HOLDERS
    	
28
    
	
 
    	
 
    
	
 
    	
Section 9.1
    	
Offer   to Repurchase Upon Change of Control
    	
28
    
	
 
    	
 
    
	
ARTICLE 10
    	
OPTIONAL   REDEMPTION
    	
31
    
	
 
    	
 
    
	
 
    	
Section 10.1
    	
Optional   Redemption
    	
31
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 10.2
    	
Modification   of Base Indenture
    	
32
    
	
 
    	
 
    
	
ARTICLE 11
    	
NOTE   GUARANTEES
    	
32
    
	
 
    	
 
    
	
 
    	
Section 11.1
    	
Guarantee
    	
32
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 11.2
    	
Limitation   on Guarantor Liability
    	
34
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 11.3
    	
Execution   and Delivery
    	
34
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 11.4
    	
Subrogation
    	
35
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 11.5
    	
Release   of Note Guarantees
    	
35
    
	
 
    	
 
    
	
ARTICLE 12
    	
MISCELLANEOUS   PROVISIONS
    	
36
    
	
 
    	
 
    
	
 
    	
Section 12.1
    	
Governing   Law
    	
36
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 12.2
    	
Effect   of Headings
    	
36
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 12.3
    	
Severability
    	
36
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 12.4
    	
Ratification   of Indenture
    	
36
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 12.5
    	
Trustee   Not Responsible for Recitals
    	
36
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 12.6
    	
Waiver   of Jury Trial
    	
36
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Section 12.7
    	
Counterparts
    	
36
    
							

 

ii

 

FIRST SUPPLEMENTAL INDENTURE, dated as of February 5, 2013 (this “Supplemental Indenture”), by and among Air Lease Corporation, a corporation duly organized and existing under the laws of the State of Delaware (the “Company”), and Deutsche Bank Trust Company Americas, a New York banking corporation, as Trustee (the “Trustee”).

 

RECITALS

 

WHEREAS, the Company has executed and delivered to the Trustee the Indenture, dated as of October 11, 2012 (the “Base Indenture”), to provide for the issuance of the Company’s debt securities, to be issued in one or more series;

 

WHEREAS, pursuant to the terms of the Base Indenture, the Company desires to provide for the establishment of a new series of debt securities to be known as the “4.750% Senior Notes due 2020” (the “Notes”), the form and substance and the terms, provisions and conditions thereof to be set forth as provided in the Base Indenture, as supplemented by this Supplemental Indenture;

 

WHEREAS, the Board of Directors of the Company by duly adopted resolutions has authorized certain officers of the Company to, among other things, determine the terms of the debt securities to be issued under the Indenture and execute any and all appropriate documents necessary or appropriate to effect each such issuance;

 

WHEREAS, this Supplemental Indenture is being entered into pursuant to the provisions of Sections 2.01, 3.01 and 9.01 of the Base Indenture;

 

WHEREAS, the Company has requested that the Trustee execute and deliver this Supplemental Indenture; and

 

WHEREAS, all things necessary to make this Supplemental Indenture a valid agreement of the Company, in accordance with its terms, and to make the Notes, when executed by the Company and authenticated and delivered by the Trustee, the valid obligations of the Company, have, in each case, been performed, and the execution and delivery of this Supplemental Indenture has been duly authorized in all respects;

 

NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:

 

For and in consideration of the premises and the purchase of the Notes by the Holders thereof, and for the purpose of setting forth, as provided in the Indenture, the forms and terms of the Notes, the Company covenants and agrees, with the Trustee, as follows:

 

 

ARTICLE 1
 DEFINITIONS

 

Section 1.1                                    Definitions.  For all purposes of the Indenture, except as otherwise expressly provided or unless the context otherwise requires:

 

(a)                                 the terms defined in this Article 1 shall have the respective meanings assigned to them in this Article 1 and include the plural as well as the singular and, to the extent applicable, supersede the definitions thereof in the Base Indenture with respect to the Notes;

 

(b)                                 all words, terms and phrases defined in the Base Indenture (but not otherwise defined herein) shall have the same meanings as in the Base Indenture;

 

(c)                                  unless the context otherwise requires, (i) any reference to an “Article” or “Section” refers to an Article or Section, as the case may be, of this Supplemental Indenture; and (ii) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to the Indenture as a whole as amended and/or supplemented by this Supplemental Indenture and not to any particular Article, Section or other subdivision; and

 

(d)                                 unless otherwise expressly provided, the word “including” does not limit the preceding words or terms.

 

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing. Unless the context otherwise clearly requires, any reference to an “Affiliate” is a reference to an Affiliate of the Company.

 

“Applicable Premium” means, with respect to a Note on any date of redemption, the greater of:

 

(i)                                     1.0% of the principal amount of such Note, and

 

(ii)                                  the excess, if any, of (a) the present value as of such date of redemption of (i) 100% of the principal amount of such Note plus (ii) all required interest payments due on such Note through March 1, 2020 (excluding accrued but unpaid interest to the date of redemption), computed using a discount rate equal to the Treasury Rate as of such date of redemption plus 50 basis points, over (b) the then outstanding principal of such Note.

 

“Bankruptcy Law” means Title 11, U.S. Code, as amended, or any similar federal, state or foreign law for the relief of debtors.

 

“Board of Directors” means, with respect to the Company, the board of directors of the Company or (other than for purposes of determining Change of Control) any duly authorized committee of such board; and with respect to any Guarantor, the board of directors or equivalent governing body of such Guarantor or any duly authorized committee of such board or governing body or, with respect to a Guarantor that is a limited partnership or limited liability company, the general partner, managers, members or equivalent governing body of such Guarantor.

 

2

 

“Business Day” means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in New York, New York are authorized or obligated by law or executive order to close, and when used with respect to any Place of Payment, means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in that Place of Payment are authorized or obligated by law or executive order to close.

 

“Capital Lease” means, at any time, a lease with respect to which the lessee is required concurrently to recognize the acquisition of an asset and the incurrence of a liability in accordance with GAAP.

 

“Capital Stock” of a Person means all equity interests in such Person, including any Common Stock, Preferred Stock, limited liability or partnership interests (whether general or limited), and all warrants or options with respect to, or other rights to purchase, the foregoing, but excluding Convertible Notes and Indebtedness (other than Preferred Stock) convertible into equity.

 

“Cash and Cash Equivalents” means (1) cash and cash equivalents, as defined in accordance with GAAP, and (2) commercial paper, certificates of deposit, guaranteed investment contracts, repurchase agreements and similar securities where the obligor to the Company is rated A (or equivalent rating) or above by Fitch, S&P or Moody’s (or in the case of commercial paper, rated P-1 or higher by Moody’s or A-1 or higher by S&P).

 

“Change of Control” means, an event or series of events by which:

 

(i)                                     a “person” or “group” within the meaning of Section 13(d) of the Exchange Act other than the Company, a direct or indirect Subsidiary, or any employee or executive benefit plan of the Company and/or its Subsidiaries, has become the “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of the Company’s Common Stock representing more than 50% of the total voting power of all Common Stock of the Company then outstanding and constituting Voting Stock;

 

(ii)                                  the consummation of (i) any consolidation or merger of the Company pursuant to which the Company’s Common Stock will be converted into the right to obtain cash, securities of a Person other than the Company, or other property; or (ii) any sale, lease or other transfer in one transaction or a series of related transactions of all or substantially all of the consolidated assets of the Company and its Subsidiaries, taken as a whole, to any other Person other than a direct or indirect Subsidiary of the Company; provided, however, that a transaction described in clause (i) or (ii) in which the holders of the Company’s Common Stock immediately prior to such transaction own or hold, directly or indirectly, more than 50% of the voting power of all Common Stock of the continuing or surviving corporation or the transferee, or the parent thereof, outstanding immediately after such transaction and constituting Voting Stock shall not constitute a Change of Control; or

 

3

 

(iii)                               during any period of 12 consecutive months, a majority of the members of the Board of Directors of the Company cease to be composed of individuals (i) who were members of the Board of Directors of the Company on the first day of such period, (ii) whose election or nomination to the Board of Directors of the Company was approved by individuals referred to in the immediately preceding clause (i) constituting at the time of such election or nomination at least a majority of the Board of Directors of the Company, or (iii) whose election or nomination to the Board of Directors of the Company was approved by individuals referred to in the immediately preceding clauses (i) and (ii) constituting at the time of such election or nomination at least a majority of the Board of Directors of the Company.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder from time to time.

 

“Common Stock” shall mean and include any class of capital stock of any corporation now or hereafter authorized, the right of which to share in distributions of either earnings or assets of such corporation is without limit as to any amount or percentage.

 

“Consolidated Adjusted EBITDA” means, with reference to any period, Consolidated Net Income for such period plus, to the extent deducted in determining Consolidated Net Income, depreciation, amortization, interest expense, income taxes, stock-based compensation expense and any other non-cash, non-recurring losses or charges of the Company and its consolidated Subsidiaries.

 

“Consolidated Interest Expense” means, for any period, all interest expense in respect of Indebtedness of the Company and its consolidated Subsidiaries deducted in determining Consolidated Net Income together with all interest capitalized or deferred during such period and not deducted in determining Consolidated Net Income for such period, excluding all debt discount and expense amortized or required to be amortized in the determination of Consolidated Net Income for such period.

 

“Consolidated Net Income” means, with reference to any period, the net income (or loss) of the Company and its consolidated Subsidiaries for such period, on a consolidated basis, provided that there shall be excluded any net income, gain or losses during such period from (1) any change in accounting principles in accordance with GAAP, (2) any prior period adjustment resulting from any change in accounting principles in accordance with GAAP, (3) any discontinued operations and (4) any extraordinary items.

 

4

 

“Consolidated Net Worth” means, as of any date of determination, shareholder’s equity as reflected in the Company’s consolidated financial statements as of such date.

 

“Consolidated Unencumbered Assets” means the assets of the Company and its Subsidiaries on a consolidated basis, consisting of (1) Cash and Cash Equivalents and Marketable Securities, in each case to the extent not subject to a Lien (other than customary bankers’ liens and rights of setoff and offset) and (2) non-pledged Aircraft Assets, valued at the net book value thereof.

 

“Consolidated Unsecured Indebtedness” means Unsecured Indebtedness of the Company and its Subsidiaries, on a consolidated basis after eliminating intercompany items.

 

“Convertible Notes” means Indebtedness of the Company that is optionally convertible into Common Stock of the Company (and/or cash based on the value of such Common Stock) and/or Indebtedness of a Subsidiary of the Company that is optionally exchangeable for Common Stock of the Company (and/or cash based on the value of such Common Stock).

 

“Default” means any event that is, or after notice or passage of time or both would be, an Event of Default.

 

“Disqualified Capital Stock” means Capital Stock that by its terms is:

 

(i)                                     required to be redeemed or redeemable at the option of the holder prior to the Stated Maturity of principal of the Notes for consideration other than Qualified Capital Stock; or

 

(ii)                                  convertible at the option of the holder into Disqualified Capital Stock or exchangeable for Indebtedness.

 

“DTC” means The Depository Trust Company.

 

“Equity Offering” means a public offering for cash by the Company of its Common Stock other than (1) public offerings with respect to the Company’s Common Stock registered on Form S-4 or S-8, (2) an issuance to any Subsidiary or (3) any offering of Common Stock issued in connection with a transaction that constitutes a Change of Control.

 

“Exchange Act” means the Securities Exchange Act of 1934 and any statute successor thereto, in each case as amended from time to time and the rules and regulations of the Commission promulgated thereunder.

 

“Fitch” means Fitch Rating Service, Inc.

 

“GAAP” means generally accepted accounting principles in the United States of America as in effect as of the Issue Date.

 

5

 

“Guarantee” means, with respect to any Person, any obligation (except the endorsement in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing the payment of any Indebtedness of any other Person, including (without limitation) obligations Incurred through an agreement, contingent or otherwise, by such Person:

 

(x)                                 to purchase such Indebtedness; or

 

(y)                                 to advance or supply funds for the purchase or payment of such Indebtedness.

 

In any computation of the Indebtedness under any Guarantee, the Indebtedness that is the subject of such Guarantee shall be assumed to be direct obligations of such obligor to the extent of such obligor’s liability with respect thereto.

 

“Guarantor” means the Person named as a “Guarantor” with respect to the Notes for which its Note Guarantee is endorsed thereon or otherwise provided, until a successor Person shall have become such pursuant to the applicable provisions of the Indenture or such Note Guarantee, and thereafter “Guarantor” shall mean such successor Person.

 

“Holder” means a Holder of the Notes.

 

“Incur” means issue, create, assume, guarantee, incur or otherwise become liable for; provided, however, that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Subsidiary (whether by merger, consolidation, acquisition or otherwise) will be deemed to be Incurred by such Subsidiary at the time it becomes a Subsidiary; and the terms “Incurred” and “Incurrence” have meanings correlative to the foregoing.

 

“Indebtedness” with respect to any Person means, at any time, without duplication,

 

(a)                                 its liabilities for borrowed money and its redemption obligations in respect of Preferred Stock that is mandatorily redeemable at the option of the holder thereof prior to the Stated Maturity of principal of the Notes;

 

(b)                                 its liabilities for the deferred purchase price of property acquired by such Person (excluding accounts payable and accrued expenses arising in the ordinary course of business but including all liabilities created or arising under any conditional sale or other title retention agreement with respect to any such property);

 

(c)                                  all liabilities appearing on its balance sheet in accordance with GAAP in respect of Capital Leases and (b) all liabilities which would appear on its balance sheet in accordance with GAAP in respect of Synthetic Leases assuming such Synthetic Leases were accounted for as Capital Leases;

 

6

 

(d)                                 all liabilities for borrowed money secured by any Lien with respect to any property owned by such Person (whether or not it has assumed or otherwise become liable for such liabilities);

 

(e)                                  all its reimbursement obligations in respect of drawn letters of credit or instruments serving a similar function issued or accepted for its account by banks and other financial institutions (whether or not representing obligations for borrowed money);

 

(f)                                   the net aggregate Swap Termination Value of all Swap Contracts of such Person; and

 

(g)                                  any Guarantee of such Person with respect to liabilities of a type described in any of clauses (a) through (f) of this definition.

 

“Indenture” means the Base Indenture as originally executed and as it may from time to time be supplemented or amended by one or more indentures supplemental thereto entered into pursuant to the applicable provisions thereof, including, for all purposes of the Base Indenture and any such supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be a part of and govern the Base Indenture and any such supplemental indenture, respectively. The term “Indenture”, when used with respect to a particular series of Securities (including the Notes), shall also include the terms of such particular series of Securities (including the Notes) established as contemplated by Section 3.01 of the Indenture.

 

“interest” with respect to the Notes means interest with respect thereto and “Special Interest”, if any.

 

“Investment Grade Rating” means a rating equal to or higher than BBB- (or the equivalent) by S&P or Fitch, as applicable.

 

“Issue Date” means February 5, 2013.

 

“Joint Venture” means, as to any Person, any other Person designated as a “joint venture” (1) that is not a Subsidiary of such Person and (2) in which such Person owns less than 100% of the equity or voting interests.

 

“Lien” means, with respect to any Person, any mortgage, lien, pledge, charge, security interest or other encumbrance, or any interest or title of any vendor, lessor, lender or other secured party to or of such Person under any conditional sale or other title retention agreement or Capital Lease, upon or with respect to any property or asset of such Person.

 

“Marketable Securities” means either (1) debt securities that are rated BBB- or above by Fitch, BBB- or above by S&P, or Baa3 or above by Moody’s or (2) senior debt securities of issuers that are rated BBB- or above by Fitch, BBB- or above by S&P, or Baa3 or above by Moody’s.

 

7

 

“Material” means material in relation to the business operations, financial condition or properties of the Company and its Subsidiaries taken as a whole.

 

“Moody’s” means Moody’s Investors Service, Inc.

 

“Net Cash Proceeds,” with respect to any issuance or sale of Capital Stock, means the cash proceeds of such issuance or sale, net of attorneys’ fees, accountants’ fees, underwriters’ or placement agents’ fees, listing fees, discounts or commissions and brokerage, consultant and other fees and charges actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result of such issuance or sale (after taking into account any available tax credit or deductions and any tax sharing arrangements).

 

“Non-Guarantor Subsidiary” means any Subsidiary that is not a Guarantor.

 

“Non-Rating Period” means any period of time from and after the first anniversary of the Issue Date during which a publicly available rating on the Notes is not maintained by at least one Rating Agency. For avoidance of doubt, the Company shall not have the obligation to maintain any particular minimum rating or level of rating.

 

“Non-Recourse Indebtedness” means, when used to determine whether an Event of Default described in clause (e) under Section 7.1 of this Supplemental Indenture has occurred and is continuing with respect to the Notes, Indebtedness for money borrowed that is Incurred in connection with the financing or refinancing of the acquisition, overhaul, repair or refurbishment of Aircraft Assets and with respect to which the lenders or holders thereof have no recourse to the Company or any of its Subsidiaries for the collection of principal, interest and premium on such Indebtedness other than recourse to (x) equity interests in any Special Purpose Aircraft Financing Entity; and (y) the assets (including Aircraft Assets) of Special Purpose Aircraft Financing Entities; provided that without limiting the foregoing, (i) the existence of a guarantee that does not constitute a guarantee of payment of principal, interest or premium on Indebtedness shall not cause any Indebtedness to fail to constitute Non-Recourse Indebtedness; and (ii) for the avoidance of doubt, Indebtedness under (A) that certain Warehouse Loan Agreement, dated as of May 26, 2010, among ALC Warehouse, the lenders party thereto and Credit Suisse AG, New York Branch, as Agent, and (B) (1) that certain Credit Agreement, dated as of March 8, 2012, among ALC Maillot, the subsidiary guarantors party thereto, the lenders party thereto, Credit Agricole Corporate and Investment Bank, as administrative agent, and Deutsche Bank Trust Company Americas, as collateral agent; and (2) that certain Liquidity Facility Agreement, dated as of March 8, 2012, among ALC Maillot, Credit Agricole Corporate and Investment Bank, as liquidity facility provider, and Credit Agricole Corporate and Investment Bank, as administrative agent, in the case of each of the foregoing clauses (A) and (B) as may be amended, supplemented or extended, or refinanced or renewed or replaced on substantially similar terms, shall constitute Non-Recourse Indebtedness (provided that in the case of each of the foregoing clauses (A) and (B), (x) neither the Company nor any Guarantor is a borrower of such Indebtedness, (y) such Indebtedness is not guaranteed as to payment of principal, interest and premium by the Company, a Guarantor or any Subsidiary of the Company other than a subsidiary of the applicable borrower of such Indebtedness; and (z) such Indebtedness is not secured by assets of the Company or its Subsidiaries other than assets of the applicable borrower and its subsidiaries and equity interests in such borrower and its subsidiaries).

 

8

 

“Note Guarantee” means, individually, any Guarantee of payment of the Notes and the Company’s other Obligations under the Indenture by a Guarantor pursuant to the terms of the Indenture and any supplemental indenture thereto, and, collectively, all such Guarantees.

 

“Notice of Default” means a written notice of the kind specified in clause (d) of Section 7.1 of this Supplemental Indenture.

 

“Obligations” means, with respect to Indebtedness, any principal, interest (including any interest accruing subsequent to the filing of a petition in bankruptcy, reorganization or similar proceeding at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable state, federal or foreign law), other monetary obligations, penalties, fees, indemnifications, reimbursements (including reimbursement obligations with respect to letters of credit and banker’s acceptances), damages and other liabilities.

 

“Permitted Bond Hedge Transaction” means any call or capped call option (or substantively equivalent derivative transaction) on the Company’s Common Stock purchased by the Company in connection with an issuance of any Convertible Notes; provided that the purchase price for such Permitted Bond Hedge Transaction, less the proceeds received by the Company from the sale of any related Permitted Warrant Transaction, does not exceed the net proceeds received by the Company from the sale of such Convertible Notes issued in connection with the Permitted Bond Hedge Transaction.

 

“Permitted Warrant Transaction” means any call option, warrant or right to purchase (or substantively equivalent derivative transaction) on the Company’s Common Stock sold by the Company substantially concurrently with any purchase by the Company of a related Permitted Bond Hedge Transaction.

 

“Preferred Stock,” means any class of capital stock of a Person that is preferred over any other class of capital stock (or similar equity interests) of such Person as to the payment of dividends or the payment of any amount upon liquidation or dissolution of such Person.

 

“property” or “properties” means, unless otherwise specifically limited, real or personal property of any kind, tangible or intangible, choate or inchoate.

 

“Prospectus Supplement” means the Prospectus Supplement dated January 29, 2013, relating to the offering of the Notes.

 

“Qualified Capital Stock” means all Capital Stock of a Person other than Disqualified Capital Stock.

 

9

 

“Rating Agency” means each of S&P and Fitch.

 

“S&P” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies, Inc.

 

“Secured Indebtedness” means any Indebtedness secured by a Lien.

 

“Securities Act” means the Securities Act of 1933 and any statute successor thereto, in each case as amended from time to time and the rules and regulations of the Commission promulgated thereunder.

 

“Securities Guarantee” means, with respect to the Notes, a Note Guarantee.

 

“Significant Subsidiary” means any Subsidiary that would be a “Significant Subsidiary” of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the Commission.

 

“SPC Subsidiary” means a Special Aircraft Financing Entity that has acquired from a Person other than the Company or a Subsidiary a single Aircraft Asset and is prohibited by its organizational documents or loan documents or other related financing documents, without extension, replacement, modification or renewal thereof, from Incurring Indebtedness, other than the Indebtedness Incurred to finance such acquisition.

 

“Special Aircraft Financing Entity” means (1) any Subsidiary of the Company (a) that is a borrower under a lending facility for the purpose of purchasing or financing Aircraft Assets, (b) that has no Indebtedness other than Indebtedness that is non-recourse to the Company and its Subsidiaries (other than (x) such Subsidiary and its Subsidiaries and (y) a limited recourse pledge of the equity of any such Subsidiary) and the payment of such Indebtedness is not subject to a Guarantee by the Company or would become the obligation of the Company and its Subsidiaries (other than such Subsidiary and its Subsidiaries), and (c) that engages in no business lease, sale and management of Aircraft Assets and the ownership of special purpose entities engaged in such purchase, finance, lease, sale and management, and business incidental thereto and (2) any such special purpose entity described in the foregoing clause (1)(c) that is a Subsidiary of a Special Aircraft Financing Entity; provided that “Special Aircraft Financing Entity” shall include, without limitation, ALC Warehouse and ALC Maillot.

 

“Special Purpose Aircraft Financing Entity” means, when used to determine whether an Event of Default described in clause (e) under Section 7.1 of this Supplemental Indenture has occurred and is continuing with respect to the Notes, a Subsidiary (w) that is not a Guarantor; (x) that engages in no business other than the purchase, finance, refinance, lease, sale and management of Aircraft Assets, the ownership of Special Purpose Aircraft Financing Entities and business incidental thereto; (y) substantially all of the assets of which are comprised of Aircraft Assets and/or equity interests in Special Purpose Aircraft Financing Entities; and (z) that is not obligated under, or the organizational documents or financing documents of which prevent it from incurring, in each case, indebtedness for money borrowed other than indebtedness incurred to finance or refinance the acquisition, overhaul, repair or refurbishment of Aircraft Assets.

 

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“Specified Indebtedness” with respect to any Person, means any Indebtedness of such Person the outstanding principal amount of which equals at least $100 million.

 

“Subordinated Obligation” means any Indebtedness of the Company or any Guarantor (whether outstanding on the Issue Date or thereafter Incurred) that is expressly subordinated or junior in right of payment to the Notes or the Note Guarantees, as the case may be, pursuant to a written agreement.

 

“Subsidiary” of any Person means (1) any corporation, association or similar business entity (other than a partnership, limited liability company or similar entity) of which more than 50% of the total ordinary voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors or trustees thereof (or Persons performing similar functions) or (2) any partnership, limited liability company or similar entity of which more than 50% of the capital accounts, distribution rights or total equity, as applicable, is, in the case of clauses (1) and (2), at the time owned, directly or indirectly, by (a) such Person, (b) such Person and one or more Subsidiaries of such Person or (c) one or more Subsidiaries of such Person. Unless otherwise specified herein, each reference to a Subsidiary will refer to a Subsidiary of the Company.

 

“Swap Contract” means (1) any and all interest rate swap transactions, basis swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward foreign exchange transactions, cap transactions, floor transactions, currency options, spot contracts or any other similar transactions or any of the foregoing (including, but without limitation, any options to enter into any of the foregoing), and (2) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement.

 

“Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (1) for any date of determination on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (2) for any date of determination prior to the date referenced in clause (1), the amounts(s) determined as the mark-to-market values(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts.

 

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“Synthetic Lease” means, at any time, any lease (including leases that may be terminated by the lessee at any time) of any property (1) that is accounted for as an operating lease under GAAP and (2) in respect of which the lessee retains or obtains ownership of the property so leased for U.S. federal income tax purposes, other than any such lease under which such Person is the lessor.

 

“Treasury Rate” means as of any date of redemption of Notes the yield to maturity at the time of computation of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two Business Days prior to the redemption date (or, if such Statistical Release is no longer published, any publicly available source or similar market data)) most nearly equal to the period from the Redemption Date to March 1, 2020; provided, however, that if the period from the Redemption Date to March 1, 2020 is not equal to the constant maturity of a United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the period from the Redemption Date to March 1, 2020 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.

 

“Unsecured Indebtedness” means Indebtedness as to which the obligor thereunder has not granted a Lien in favor of the holder(s) thereof as collateral security for the repayment of such Indebtedness; provided that for the avoidance of doubt obligations under Capital Leases and with respect to Swap Contracts shall not constitute Unsecured Indebtedness.

 

“Voting Stock” means Capital Stock of any class or classes, the holders of which are ordinarily, in the absence of contingencies, entitled to elect the corporate directors (or Persons performing similar functions).

 

“Wholly Owned Subsidiary” means, at any time, any Subsidiary one hundred percent of all of the equity interests (except directors’ qualifying shares) and voting interests of which are owned by any one or more of the Company and the Company’s other Wholly Owned Subsidiaries at such time.

 

Section 1.2            Other Defined Terms.  In addition to the definitions set forth in Section 1.1 above, the following terms shall have the respective meanings given in the Sections of this Supplemental Indenture set forth below:

 

	
Defined Term
    	
 
    	
Section
    
	
 
    	
 
    	
 
    
	
Additional   Notes
    	
 
    	
2.6
    
	
Bankruptcy   Default
    	
 
    	
7.1
    
	
Base   Indenture
    	
 
    	
Recitals
    
	
Change   of Control Offer
    	
 
    	
9.1
    
	
Change   of Control Payment
    	
 
    	
9.1
    

 

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Defined Term
    	
 
    	
Section
    
	
 
    	
 
    	
 
    
	
Change   of Control Payment Date
    	
 
    	
9.1
    
	
Company
    	
 
    	
Recitals
    
	
Covenant   Suspension Event
    	
 
    	
5.5
    
	
Event   of Default
    	
 
    	
7.1
    
	
Notes
    	
 
    	
Recitals
    
	
Restricted   Payments
    	
 
    	
5.5
    
	
Reversion   Date
    	
 
    	
5.5
    
	
Special   Interest
    	
 
    	
2.8
    
	
Successor   Company
    	
 
    	
6.1
    
	
Successor   Guarantor
    	
 
    	
6.1
    
	
Supplemental   Indenture
    	
 
    	
Recitals
    
	
Suspended   Covenant
    	
 
    	
5.5
    
	
Threshold   Amount
    	
 
    	
7.1
    
	
Trustee
    	
 
    	
Recitals
    
	
Unsecured   Aircraft Financing Debt
    	
 
    	
5.4
    

 

ARTICLE 2
 TERMS AND DESCRIPTION OF NOTES

 

Section 2.1            Indenture.  The changes, modifications and supplements to the Indenture effected by this Supplemental Indenture shall be applicable only with respect to, and shall only govern the terms of, the Notes that may be issued from time to time, and shall not apply to any other Securities that may be issued under the Indenture unless an Officers’ Certificate or supplemental indenture with respect to such other Securities specifically incorporates such changes, modifications and supplements. The provisions of this Supplemental Indenture shall supersede any conflicting provisions in the Indenture with respect to the Notes.

 

Section 2.2            Designation and Amount.  There is hereby authorized and established a series of Securities under the Indenture, designated as the “4.750% Senior Notes due 2020”. The aggregate principal amount of Notes that may be authenticated and delivered under the Indenture is initially limited to $400,000,000, except upon registration of transfer of, or in exchange for, or in lieu of, other Notes pursuant to Sections 3.04, 3.05, 3.06, 9.06 or 11.07 of the Indenture and any Notes that, pursuant to Section 3.03 of the Indenture, are deemed never to have been authenticated and delivered, and subject to the Company’s ability to issue additional Notes pursuant to Section 2.6.

 

Section 2.3            Form of Notes.  The Notes are to be substantially in the form set forth in Exhibit A hereto.  The Notes will initially be issued as a single Global Security and registered in the name of Cede & Co., the nominee of DTC.

 

Section 2.4            Maturity.  The Stated Maturity of principal of the Notes is March 1, 2020.

 

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Section 2.5            Denominations Of Notes.  The Notes shall be issuable in registered form without coupons in denominations of $2,000 principal amount and integral multiples of $1,000 in excess thereof.

 

Section 2.6            Additional Notes.  Pursuant to Section 3.01 of the Indenture, the Company may, from time to time reopen the series and issue additional Notes (the “Additional Notes”) without notice to or consent of the Holders; provided that such Additional Notes are fungible with the Notes issued on the Issue Date or are issued under separate CUSIP numbers (or other relevant identifying numbers); provided further that the Company will not be permitted to issue Additional Notes if, at the time of such issuance, the Company is not in compliance with Article 5 and Article 9.  The Notes and any such Additional Notes shall be consolidated and form a single series of Securities and shall vote together as one class on all matters.

 

Section 2.7            Interest.  The Notes will bear interest at the rate of 4.750% per annum. Interest payable on each Interest Payment Date will include interest accrued from the Issue Date, or from the most recent date to which interest has been paid or duly provided for. The Interest Payment Dates for the Notes are March 1 and September 1, commencing on September 1, 2013 and ending on March 1, 2020; and the Regular Record Date for the interest payable on any Interest Payment Date is the February 15 or August 15, as the case may be, next preceding the relevant Interest Payment Date.

 

Section 2.8            Special Interest.  During a Non-Rating Period, the Company shall pay additional interest (“Special Interest”) at an annual rate equal to 0.50% on the outstanding principal amount of the Notes from the first date of such Non-Rating Period to, but not including the last day of such Non-Rating Period. The Company shall pay all Special Interest, if any, in arrears on the dates and in the same manner as regular interest on the Notes. In the event the Company is required to pay Special Interest, the Company shall provide written notice to the Trustee of the Company’s obligation to pay Special Interest no later than 15 days prior to the next Interest Payment Date, which notice shall set forth the expected amount of the Special Interest to be paid by the Company.  The Trustee shall have no duty or responsibility for determining if any Special Interest is payable.

 

Section 2.9            Paying Agent, Registrar, Place of Payment.  The Company initially appoints the Trustee to act as Paying Agent and Security Registrar for the Notes, initially designates the corporate trust office of the Trustee located in The City of New York as the Place of Payment for the Notes and the office or agency described in Section 10.02 of the Indenture and initially designates DTC as the Depository for the Notes.  The Company may change the Paying Agent, the Security Registrar, the Depository or the Place of Payment without prior notice to or consent of the Holders, and the Company or any of its Subsidiaries may act as Paying Agent or Security Registrar.  The Company will pay principal of, premium, if any, and interest on Notes in global form registered in the name of or held by DTC or its nominee in immediately available funds to DTC or its nominee, as the case may be, as the Holder of such Global Security.  

 

Section 2.10          Sinking Fund.  The Notes shall not be entitled to the benefit of any sinking fund.

 

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ARTICLE 3
 SATISFACTION AND DISCHARGE

 

Section 3.1            Satisfaction and Discharge of Indenture.  Section 4.01 of the Base Indenture is amended and restated in its entirety as follows with respect to the Notes:

 

(a)           The Indenture will be discharged as to all Notes and will cease to be of further effect as to all Notes, when either:

 

(i)            all Notes that have been authenticated and delivered (except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has been deposited in trust) have been delivered to the Trustee for cancellation; or

 

(ii)           (A) all Notes not theretofore delivered to the Trustee for cancellation have become due and payable by reason of the giving of a notice of redemption or otherwise, will become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, and the Company or any Guarantor has irrevocably deposited or caused to be deposited with the Trustee, as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, U.S. Government Obligations, or a combination thereof, in such amounts as will be sufficient to pay and discharge the entire Indebtedness on the Notes not theretofore delivered to the Trustee for cancellation for principal, premium, if any, and accrued interest to the date of maturity or redemption, as the case may be; (B) no Default or Event of Default has occurred and is continuing on the date of such deposit or will occur as a result of such deposit (other than a Default or an Event of Default resulting from the borrowing of funds to be applied to make such deposit and any similar and simultaneous deposit relating to other Indebtedness and, in each case, the granting of Liens in connection therewith) and the deposit will not result in a breach or violation of, or constitute a default under, any material agreement or material instrument (other than the Indenture) to which the Company or any Guarantor is a party or by which the Company or any Guarantor is bound; (C) the Company or any Guarantor has paid or caused to be paid all sums payable or due and owing by the Company under the Indenture; and (D) the Company or any Guarantor has delivered irrevocable instructions to the Trustee to apply the deposited money toward the payment of the Notes at maturity or the Redemption Date, as the case may be.

 

(b)           In addition, the Company shall deliver to the Trustee an Officers’ Certificate and an Opinion of Counsel (which Opinion of Counsel may be subject to customary assumptions and exclusions) stating that all conditions precedent to satisfaction and discharge have been satisfied.

 

(c)           Notwithstanding the satisfaction and discharge of the Indenture, the obligations of the Company to the Trustee under Section 6.07 of the Indenture, the obligations of the Trustee to any Authenticating Agent under Section 6.14 of the Indenture and, if money shall have been deposited with the Trustee pursuant to subclause (ii)(A) of clause (a) of this Section 3.1, the obligations of the Trustee under Section 4.02 of the Indenture and the last paragraph of Section 10.03 of the Indenture shall survive.

 

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ARTICLE 4
 AMENDMENTS AND WAIVERS

 

Section 4.1            Supplemental Indentures without Consent of Holders.  Section 9.01 of the Base Indenture is hereby amended with respect to the Notes by the following:

 

(a)           replacing the language in clause (d) thereof with “to add to or change any of the provisions of the Indenture to such extent as shall be necessary to permit or facilitate the issuance of Notes in bearer form, registrable or not registrable as to principal, and with or without interest coupons, or to permit or facilitate the issuance of Notes in uncertificated form; provided that the Notes are issued in registered form for purposes of Section 163(f) of the Code”; and

 

(b)           replacing the word “indenture” in clause (q) thereof with “Indenture”.

 

Section 4.2            Supplemental Indentures with Consent of Holders.  Section 9.02 of the Base Indenture is hereby amended with respect to the Notes by the following::

 

(a)           replacing the period at the end of clause (c) thereof with “, or”;

 

(b)           adding a new clause (d) after the end of clause (c) thereof, as follows: “(d) reduce the premium payable upon the redemption or repurchase of any Note or change the time at which any Note may be redeemed or repurchased as described in Article 9 or Article 10 of the Supplemental Indenture whether through an amendment or waiver of provisions in the covenants, definitions or otherwise (except amendments to the definition of “Change of Control”), or”;

 

(c)           adding a new clause (e) after the end of clause (d) thereof, as follows: “(e) modify the Note Guarantees in any manner adverse to the Holders.”; and

 

(d)           adding the following sentence at the end thereof: “A consent to any amendment or supplement by any Holder given in connection with a sale, tender or exchange of such Holder’s Notes will not be rendered invalid by such sale, tender or exchange.”

 

Section 4.3            Payments for consent.  The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture unless such consideration is offered to be paid and is paid to all Holders that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or amendment.

 

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ARTICLE 5
 CERTAIN COVENANTS OF THE COMPANY

 

Section 5.1            Maintenance of Consolidated Net Worth.  The Company will not as of a fiscal quarter end permit Consolidated Net Worth to be less than $2,000,000,000.

 

Section 5.2            Maintenance of Consolidated Unencumbered Assets.  The Company shall as of a fiscal quarter end maintain Consolidated Unencumbered Assets at a minimum of 125% of Consolidated Unsecured Indebtedness.

 

Section 5.3            Maintenance of Interest Coverage.

 

(a)           The Company will not, as of the end of each fiscal quarter, permit the ratio of (i) the sum of (A) Consolidated Adjusted EBITDA for the fiscal quarter ending on such date together with the three fiscal quarters which immediately precede such fiscal quarter plus (B) the aggregate amount of Net Cash Proceeds received by the Company from the issuance of Capital Stock during such period to (ii) Consolidated Interest Expense during such period to be less than 1.50 to 1.00.

 

(b)           Notwithstanding the foregoing, the Company will not be subject to Section 5.3(a) of this Supplemental Indenture at any time the Notes have Investment Grade Ratings from both S&P and Fitch; provided that if at any time (i) one or both of S&P and Fitch withdraw their Investment Grade Rating for the Notes or downgrade the ratings assigned the Notes below an Investment Grade Rating, or (ii) the Company or any of its Affiliates enters into an agreement to effect a transaction and one or more of S&P and Fitch indicates that, if consummated, such transaction (alone or together with any related recapitalization or refinancing transactions) would cause either or both of S&P and Fitch to withdraw its Investment Grade Rating for the Notes or downgrade the rating assigned to the Notes below Investment Grade Rating, then the Company will thereafter again be subject to Section 5.3(a) of this Supplemental Indenture.

 

Section 5.4            Limitation on Incurrence of Unsecured Indebtedness.  The Company will not permit any Subsidiary to Incur or in any manner become liable in respect of any Unsecured Indebtedness, except:

 

(a)           Indebtedness of any Guarantor;

 

(b)           Indebtedness of a Subsidiary owed to the Company or to a Wholly Owned Subsidiary; and

 

(c)           Indebtedness of an SPC Subsidiary Incurred to finance the acquisition of a single Aircraft Asset on an unsecured basis (“Unsecured Aircraft Financing Debt”); provided that such Unsecured Aircraft Financing Debt becomes Secured Indebtedness within 90 days of Incurrence; provided, further, that, at any one time, no more than three (3) SPC Subsidiaries may have Unsecured Aircraft Financing Debt outstanding.

 

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Section 5.5            Limitation on Restricted Payments.

 

(a)           The Company will not, and will not permit any Subsidiary to, directly or indirectly (the payments and other actions described in the following clauses being collectively “Restricted Payments”):

 

(i)            declare or pay any dividend or make any distribution on its Capital Stock (other than dividends or distributions paid in the Company’s Qualified Capital Stock) held by Persons other than the Company or any of its Wholly Owned Subsidiaries;

 

(ii)           purchase, redeem or otherwise acquire or retire for value any Capital Stock of the Company held by Persons other than the Company or any of its Wholly Owned Subsidiaries; or

 

(iii)          repay, redeem, repurchase, defease or otherwise acquire or retire for value, or make any payment on or with respect to, any Subordinated Obligation except scheduled payments of interest and principal on such Subordinated Obligation and payment of principal and interest of such Subordinated Obligation at its stated maturity.

 

The foregoing will not prohibit:

 

(A)          the payment of any dividend within 60 days after the date of declaration thereof if, at the date of declaration, such payment would have complied with this Section 5.5(a) of this Supplemental Indenture

 

(B)          dividends or distributions by a Subsidiary payable, on a pro rata basis or on a basis more favorable to the Company and its Subsidiaries, to all holders of any class of Capital Stock of such Subsidiary a majority of which is held, directly or indirectly through Subsidiaries, by the Company;

 

(C)          the purchase, redemption or other acquisition or retirement for value of Capital Stock of the Company held by officers, directors or employees or former officers, directors or  employees (or their estates or beneficiaries under their estates), upon death, disability, retirement, severance or termination of employment or pursuant to any agreement under which the Capital Stock was issued or any employment agreement approved by the Company’s Board of Directors;

 

(D)          the repurchase, redemption or other acquisition for value of Capital Stock of the Company deemed to occur in connection with paying cash in lieu of fractional shares of such Capital Stock in connection with a share dividend, distribution, share split, reverse share split, merger, consolidation or other business combination of the Company, in each case, permitted by the Indenture;

 

(E)           the repurchase of Capital Stock deemed to occur upon the exercise of stock options to the extent such Capital Stock represents a portion of the exercise price of those stock options;

 

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(F)                                 the payment of cash by the Company or any of its Subsidiaries to allow the payment of cash in lieu of the issuance of fractional shares upon (a) the exercise of options, warrants or other rights to purchase or (b) the conversion or exchange of Capital Stock of such Person or Convertible Notes;

 

(G)                               the making of cash payments in connection with any conversion of Convertible Notes permitted to be Incurred under the Indenture not to exceed the sum of (a) the principal amount of such Convertible Notes plus (b) any payments received by the Company or any of its Subsidiaries pursuant to the exercise, settlement or termination of any related Permitted Bond Hedge Transaction;

 

(H)                              any payments in connection with a Permitted Bond Hedge Transaction, and the settlement of any related Permitted Warrant Transaction (a) by delivery of shares of the Company’s Common Stock upon net share settlement thereof or (b) by (i) set-off against the related Permitted Bond Hedge Transaction, (ii) payment of an early termination amount thereof in shares of the Company’s Common Stock upon any early termination thereof and (iii) payment of an amount thereof in cash upon exercise, settlement or an early termination thereof in an aggregate amount not to exceed the aggregate amount of any payments received by the Company or any of its Subsidiaries pursuant to the exercise, settlement or termination of any related Permitted Bond Hedge Transaction, less any cash payments made with respect to any related Convertible Notes pursuant to clause (G) of this Section 5.5(a) of this Supplemental Indenture; and

 

(I)                                   the purchase, redemption or other acquisition or retirement for value of Capital Stock of the Company, or any dividends or distributions by the Company on its Capital Stock, in an aggregate amount not to exceed for any fiscal year 15% of Consolidated Net Income for such fiscal year; provided that, in the case of this clause (I) no Default or Event of Default has occurred and is continuing or would occur as a result thereof.

 

(b)                                 Notwithstanding the foregoing, the Company will not be subject to Section 5.5(a) of this Supplemental Indenture (the “Suspended Covenant”) at any time the Notes have Investment Grade Ratings from both S&P and Fitch (the “Covenant Suspension Event”). In the event that the Company is not subject to the Suspended Covenant for any period of time as a result of the foregoing, and on a subsequent date (the “Reversion Date”) one or both of S&P and Fitch (1) withdraw their Investment Grade Rating for the Notes or downgrade the rating assigned to the Notes below an Investment Grade Rating, or (2) the Company or any of its Affiliates enters into an agreement to effect a transaction and one or more of S&P and Fitch indicates that, if consummated, such transaction (alone or together with any related recapitalization or refinancing transactions) would cause either or both of S&P and Fitch to withdraw its Investment Grade Rating for the Notes or downgrade the rating assigned to the Notes below Investment Grade Rating, then the Company will thereafter again be subject to the Suspended Covenant. In the event of the reinstatement of the Suspended Covenant, the amount of Restricted Payments made will be calculated as though the Suspended Covenant had been in effect prior to, but not during, any period of time between the Covenant Suspension Event and the Reversion Date.

 

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Section 5.6                                    Transactions with Affiliates.

 

(a)                                 The Company will not and will not permit any Subsidiary to enter into directly or indirectly any Material transaction or Material group of related transactions (including without limitation the purchase, lease, sale or exchange of properties of any kind or the rendering of any service) with any Affiliate (other than the Company or another Subsidiary or a Joint Venture), except upon fair and reasonable terms no less favorable to the Company or such Subsidiary than could reasonably be obtainable in a comparable arm’s-length transaction with a Person not an Affiliate.

 

(b)                                 Section 5.6(a) of this Supplemental Indenture will not apply to: (1) any leasing transaction, including, without limitation, a transaction in which an Aircraft Asset is subleased to a customer of the Company or any Subsidiary, involving one or more Subsidiaries for the purposes of effecting aircraft registration or tax planning; (2) any amendment to, or replacement of, any agreement with an Affiliate that is in effect on the Issue Date and disclosed in the Prospectus Supplement, so long as any such amendment or replacement agreement is not more disadvantageous to the Holders, as determined in good faith by the Board of Directors of the Company, in any material respect than the original agreement as in effect on the Issue Date; (3) dividends, stock repurchases and investments, so long as no Event of Default would result as a consequence thereof; (4) the issuance of Common Stock or Preferred Stock by the Company including in connection with the exercise or conversion of options, warrants, convertible securities or similar rights to acquire or purchase Common Stock or Preferred Stock; (5) transactions permitted by, and complying with, the provisions of Article 6 of this Supplemental Indenture and (6) any directors’ fees, indemnification and similar arrangements, consulting fees, employee salaries, bonuses or employment agreements, compensation or employee benefit arrangements and incentive arrangements with any officer, director or employee of the Company or a Subsidiary thereof that are (a) approved in good faith by the Company’s Board of Directors, the independent members of the Company’s Board of Directors, or the Compensation Committee of the Company’s Board of Directors, as applicable, or (b) otherwise reasonable and customary.

 

Section 5.7                                    Limitation on activities of the Company.   The Company will not and will not permit any Subsidiary to engage in any business if, as a result, the general nature of the business in which the Company and its Subsidiaries, taken as a whole, would then be engaged would be substantially changed from the general nature of the business in which the Company and its Subsidiaries, taken as a whole, are engaged on the Issue Date as disclosed in the Prospectus Supplement.

 

Section 5.8                                    Future Guarantors.  The Company will cause each Subsidiary that provides a Guarantee of any Specified Indebtedness of the Company to execute and deliver to the Trustee a supplemental indenture to the Indenture pursuant to which such Subsidiary will irrevocably and unconditionally guarantee, on a joint and several basis, the full and prompt payment of the principal of, and premium, if any, and interest (including Special Interest, if any) in respect of the Notes on a senior basis and all other Obligations of the Company under the Indenture with respect to the Notes pursuant to Article 11 of this Supplemental Indenture.

 

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Section 5.9                                    Reports.

 

(a)                                 Notwithstanding that the Company may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act or otherwise report on an annual and quarterly basis on forms provided for such annual and quarterly reporting pursuant to rules and regulations promulgated by the Commission, the Company will file with the Commission within the time periods specified in the Commission’s rules and regulations that are then applicable to the Company (or if the Company is not then subject to the reporting requirements of the Exchange Act, then the time periods for filing applicable to a filer that is not an “accelerated filer” as defined in such rules and regulations), including any additional time provided by Rule 12b-25 or any successor provision under the Exchange Act:

 

(i)                                     all financial information that would be required to be contained in an annual report on Form 10-K, or any successor or comparable form, filed with the Commission, including a “Management’s discussion and analysis of financial condition and results of operations” section and a report on the annual financial statements by the Company’s independent registered public accounting firm;

 

(ii)                                  all financial information that would be required to be contained in a quarterly report on Form 10-Q, or any successor or comparable form, filed with the Commission, including a “Management’s discussion and analysis of financial condition and results of operations” section;

 

(iii)                               all current reports that would be required to be filed with the Commission on Form 8-K, or any successor or comparable form, if the Company were required to file such reports; and

 

(iv)                              any other information, documents and other reports that the Company would be required to file with the Commission if it were subject to Section 13 or 15(d) of the Exchange Act,

 

in each case in a manner that complies in all material respects with the requirements specified in such form.

 

(b)                                 Notwithstanding Section 5.9(a) , the Company will not be obligated to file such reports with the Commission if the Commission does not permit such filing, so long as the Company provides such information to the Trustee and the Holders and makes available such information to prospective purchasers of the Notes, in each case at the Company’s expense and by the applicable date the Company would be required to file such information if it were subject to Section 13 or 15(d) of the Exchange Act.

 

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(b)                                 The requirements set forth in Section 5.9(a) and Section 5.9(b) may be satisfied by delivering such information to the Trustee and posting copies of such information on the Company’s publicly available website or a website that may be nonpublic and may be maintained by the Company or a third party and to which access will be given to Holders and prospective purchasers of the Notes.

 

(c)                                  Within 10 Business Days of filing its annual and quarterly reports with the Commission the Company will deliver to the Trustee an Officers’ Certificate containing information (including detailed calculations) required to establish whether the Company was in compliance with the requirements of Section 5.1 (Maintenance of Consolidated Net Worth), Section 5.2 (Maintenance of Consolidated Unencumbered Assets), Section 5.3 (Maintenance of Interest Coverage) and Section 5.4 (Limitation on Incurrence of Unsecured Indebtedness) during the annual or quarterly period covered by such reports (including with respect to such provisions, where applicable, the calculations of the maximum or minimum amount, ratio or percentage, as the case may be, permissible under the terms of such provisions, and the calculation of the amount, ratio or percentage then in existence).

 

Section 5.10                             Compliance Certificate.  Section 10.04 of the Base Indenture is hereby amended and restated in its entirety as follows with respect to the Notes by this Section 5.10:

 

(a)                                 The Company and each Guarantor (to the extent that such Guarantor is so required under the Trust Indenture Act) will deliver to the Trustee, within 120 days after the end of each fiscal year ending after the Issue Date, a certificate from the principal executive officer, principal financial officer or principal accounting officer stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officer with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under the Indenture, and further stating, as to such Officer signing such certificate, that to the best of his or her knowledge, the Company has kept, observed, performed and fulfilled each and every condition and covenant contained in the Indenture and is not in default in the performance or observance of any of the terms, provisions, covenants and conditions of the Indenture (or, if a Default shall have occurred, describing all such Defaults of which he or she may have knowledge and what action the Company is taking or propose to take with respect thereto).

 

(b)                                 When any Default has occurred and is continuing, or if the Trustee or the holder of any other evidence of Indebtedness of the Company or any Subsidiary gives any notice or takes any other action with respect to a claimed Default, the Company will promptly (which shall be no more than five Business Days following the date on which the Company becomes aware of such Default, receives notice or becomes aware of such action, as applicable) mail or deliver by electronic transmission to the Trustee an Officers’ Certificate specifying such event, its status and what action the Company is taking or proposes to take with respect thereof.

 

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ARTICLE 6
 MERGER AND CONSOLIDATION

 

Section 6.1                                    Merger, Consolidation or Sale of All or Substantially All Assets.  Section 8.01 of the Base Indenture is hereby amended and restated in its entirety as follows with respect to the Notes by this Section 6.1:

 

(a)                                 The Company will not consolidate with or merge with or into or wind up into (whether or not the Company is the surviving corporation), or sell, assign, convey, transfer, lease or otherwise dispose of all or substantially all of its properties and assets, in one or more related transactions, to any Person unless:

 

(i)                                     the resulting, surviving or transferee Person (the “Successor Company”) is a corporation, limited liability company or a partnership organized and existing under the laws of the United States, any state or territory thereof or the District of Columbia, and if such entity is not a corporation, a co-obligor of the Notes is a corporation organized or existing under such laws;

 

(ii)                                  the Successor Company (if other than the Company) expressly assumes all of the obligations of the Company under the Notes and the Indenture pursuant to a supplemental indenture;

 

(iii)                               immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing;

 

(iv)                              each Guarantor (unless it is the other party to the transactions described above, in which case clause (i) of Section 6.1(b) shall apply) shall have by supplemental indenture confirmed that its Note Guarantee shall apply to such Successor Company’s obligations under the Indenture and the Notes; and

 

(v)                                 the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, winding up or disposition, and such supplemental indenture, if any, comply with the Indenture.

 

(b)                                 The Successor Company will succeed to, and be substituted for, the Company under the Indenture, the Notes and the Note Guarantees. Notwithstanding Section 6.1(a):

 

(i)                                     any Subsidiary may consolidate with, merge with or into or transfer all or part of its properties and assets to the Company so long as no Capital Stock of the Subsidiary is distributed to any Person other than the Company; provided that, in the case of a Subsidiary that merges into the Company, the Company will not be required to comply with Section 6.1(a)(v);

 

(ii)                                  the Company may merge with an Affiliate of the Company solely for the purpose of reincorporating or reorganizing the Company in another state or territory of the United States or the District of Columbia, so long as the amount of Indebtedness of the Company and its Subsidiaries is not increased thereby; and

 

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(iii)                               any Non-Guarantor Subsidiary may consolidate with or merge into or transfer all or part of its properties and assets to the Company or a Guarantor.

 

(c)                                  The Company will not permit any Guarantor to consolidate with or merge with or into or wind up into (whether or not such Guarantor is the surviving corporation), or sell, assign, convey, transfer, lease or otherwise dispose of all or substantially all of its properties and assets, in one or more related transactions, to any Person (other than to the Company or another Guarantor) unless:

 

(i)                                     if such entity remains a Guarantor, the resulting, surviving or transferee Person (the “Successor Guarantor”) is a Person (other than an individual) organized and existing under the laws of the United States, any state or territory thereof or the District of Columbia;

 

(ii)                                  if such Guarantor remains a Subsidiary of the Company, the Successor Guarantor, if other than such Guarantor, expressly assumes all of the obligations of such Guarantor under the Indenture, the Notes and its Note Guarantee pursuant to a supplemental indenture;

 

(iii)                               immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing; and

 

(iv)                              the Company will have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, winding up or disposition and such supplemental indenture (if any) comply with the Indenture.

 

(d)                                 The Successor Guarantor will succeed to, and be substituted for, such Guarantor under the Indenture and the Note Guarantee of such Guarantor. Notwithstanding the foregoing, any Guarantor may (1) merge with or into or transfer all or part of its properties and assets to a Guarantor or the Company, (2) merge with an Affiliate of the Company solely for the purpose of reincorporating or reorganizing the Guarantor in a state or territory of the United States or the District of Columbia, so long as the amount of Indebtedness of such Guarantor is not increased thereby, and the resulting entity remains or becomes a Guarantor and (3) convert into a corporation, limited liability company, partnership or trust organized or existing under the laws of the jurisdiction of organization of such Guarantor, in each case of clauses (1), (2) and (3) without regard to the requirements set forth in Section 6.1(c).

 

(e)                                  For purposes of this Section 6.1, the sale, assignment, conveyance, transfer, lease or other disposition of all or substantially all of the properties and assets of one or more Subsidiaries of the Company, which properties and assets, if held by the Company instead of such Subsidiaries, would constitute all or substantially all of the properties and assets of the Company on a consolidated basis, will be deemed to be the disposition of all or substantially all of the properties and assets of the Company.

 

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(f)                                   The Company and a Guarantor, as the case may be, will be released from its obligations under the Indenture and its Note Guarantee, as the case may be, and the Successor Company and the Successor Guarantor, as the case may be, will succeed to, and be substituted for, and may exercise every right and power of, the Company or a Guarantor, as the case may be, under the Indenture, the Notes and such Note Guarantee; provided that, in the case of a lease of all or substantially all its assets, the Company will not be released from the obligation to pay the principal of and interest on the Notes and a Guarantor will not be released from its obligations under its Note Guarantee. For the avoidance of doubt, aircraft or engine leasing in the ordinary course of business of the Company or any of its Subsidiaries shall not be considered the leasing of substantially all of the Company’s or any such Subsidiary’s assets under this Article 6.

 

ARTICLE 7
 DEFAULTS AND REMEDIES

 

Section 7.1                                    Events of Default.  Section 5.01 of the Base Indenture is hereby amended and restated in its entirety as follows with respect to the Notes by this Section 7.1:

 

Each of the following is an “Event of Default”:

 

(a)                                 default in any payment of interest or Special Interest on any Note when due, continued for 30 days;

 

(b)                                 default in the payment of principal of, or premium, if any, on any Note when due at its Stated Maturity, upon optional redemption, upon required repurchase, upon declaration or otherwise;

 

(c)                                  failure by the Company or any Guarantor to comply with its obligations under Section 5.1, Section 5.2, Section 5.3, Section 5.4 or Article 6;

 

(d)                                 default in the performance, or breach, of any covenant or warranty of the Company in the Indenture with respect to the Notes (other than a covenant or warranty with respect to which a default in performance or breach is elsewhere in this Section 7.1 specifically addressed or which covenant or warranty has been included in the Indenture solely for the benefit of one or more series of notes other than the Notes), and continuance of such default or breach for a period of 60 consecutive days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the outstanding Notes, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” under the Indenture;

 

(e)                                  default under any mortgage, indenture (including the Indenture) or instrument under which there is issued, or which secures or evidences, any Indebtedness for borrowed money of the Company or any Subsidiary, or any Guarantee by the Company or any of its Subsidiaries of such Indebtedness (other than Indebtedness owed to the Company or any Subsidiary or Non-Recourse Indebtedness) now existing or hereinafter created, which default shall constitute a failure to pay principal in an amount exceeding $100.0 million (the “Threshold Amount”) when due and payable at final stated maturity, after expiration of any applicable grace period with respect thereto, or shall have resulted in an aggregate principal amount of such Indebtedness exceeding the Threshold Amount becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable;

 

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(f)                                   failure by the Company or any Significant Subsidiary or any group of Subsidiaries that, taken together (as of the date of the latest audited consolidated financial statements of the Company and its Subsidiaries), would constitute a Significant Subsidiary to pay final judgments for the payment of money aggregating in excess of the Threshold Amount (net of any amounts paid with respect to such judgments by an insurance company and amounts that a reputable and creditworthy insurance company has acknowledged liability for in writing), which judgments are not paid, discharged or stayed for a period of 60 days or more after such judgment becomes final;

 

(g)                                  (i)                                     the Company or a Significant Subsidiary or any group of Subsidiaries that, taken together (as of the date of the latest audited consolidated financial statements of the Company and its Subsidiaries), would constitute a Significant Subsidiary, pursuant to or within the meaning of any Bankruptcy Law: (A) commences proceedings to be adjudicated bankrupt or insolvent; (B) consents to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking an arrangement of debt, reorganization, dissolution, winding up or relief under applicable Bankruptcy Law; (C) consents to the appointment of a receiver, interim receiver, receiver and manager, liquidator, assignee, trustee, sequestrator or other similar official of it or for all or substantially all of its property; (D) makes a general assignment for the benefit of its creditors; or (E) generally is not paying its debts as they become due;

 

(ii)                                      a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (A) is for relief against the Company, any Subsidiary that is a Significant Subsidiary or any group of Subsidiaries that, taken together (as of the date of the latest audited consolidated financial statements of the Company and its Subsidiaries), would constitute a Significant Subsidiary, in a proceeding in which the Company, any such Subsidiary that is a Significant Subsidiary or any group of Subsidiaries that, taken together (as of the date of the latest audited consolidated financial statements of the Company and its Subsidiaries), would constitute a Significant Subsidiary, is to be adjudicated bankrupt or insolvent; (B) appoints a receiver, interim receiver, receiver and manager, liquidator, assignee, trustee, sequestrator or other similar official of the Company, any Subsidiary that is a Significant Subsidiary or any group of Subsidiaries that, taken together (as of the date of the latest audited consolidated financial statements of the Company and its Subsidiaries), would constitute a Significant Subsidiary, or for all or substantially all of the property of the Company, any Subsidiary that is a Significant Subsidiary or any group of Subsidiaries that, taken together (as of the date of the latest audited consolidated financial statements of the Company and its Subsidiaries), would constitute a Significant Subsidiary; or (C) orders the liquidation, dissolution or winding up of the Company, or any Subsidiary that is a Significant Subsidiary or any group of Subsidiaries that, taken together (as of the date of the latest audited consolidated financial statements of the Company and its Subsidiaries), would constitute a Significant Subsidiary; and the order or decree remains unstayed and in effect for 60 consecutive days (any such Event of Default specified in this clause (g), for purposes of the Notes, shall constitute a “Bankruptcy Default”); or

 

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(h)                                 any Note Guarantee of any Significant Subsidiary or any group of Guarantors that, taken together (as of the date of the latest audited consolidated financial statements of the Company and its Subsidiaries), would constitute a Significant Subsidiary ceases to be in full force and effect (except as contemplated by the terms of the Indenture) or is declared null and void in a judicial proceeding or any Guarantor that is a Significant Subsidiary or any group of Guarantors that, taken together (as of the date of the latest audited consolidated financial statements of the Company and its Subsidiaries), would constitute a Significant Subsidiary denies or disaffirms its obligations under the Indenture or its Note Guarantee.

 

In the event of a declaration of acceleration of the Notes solely because an Event of Default described in Section 7.1(e) above has occurred and is continuing, the declaration of acceleration of the Notes shall be automatically rescinded and annulled if (i) the default or defaults triggering such Event of Default pursuant to Section 7.1(e) shall be remedied or cured by the Company or a Subsidiary of the Company or waived by the holders of the relevant Indebtedness within 30 days after the declaration of acceleration with respect thereto; and (ii) the rescission and annulment of the acceleration of the Notes would not conflict with any judgment or decree of a court of competent jurisdiction.

 

Section 7.2                                    Acceleration.

 

(a)                                 The first three paragraphs of Section 5.02 of the Base Indenture are hereby replaced with the following with respect to the Notes:

 

“If an Event of Default (other than an Event of Default described in Section 7.1(g) of the Supplemental Indenture) occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of the then Outstanding Notes may declare the principal of, premium, if any, and accrued and unpaid interest, if any, on all the Notes to be due and payable by notice in writing to the Company and each Guarantor, as applicable (and to the Trustee if given by Holders). Upon such a declaration, such principal, premium, if any, and accrued and unpaid interest, if any, will be due and payable immediately.

 

If an Event of Default described in Section 7.1(g) occurs and is continuing, the principal of, premium, if any, and accrued and unpaid interest, if any, on all the Notes will become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders.”

 

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(b)                                 The fourth paragraph of Section 5.02 of the Base Indenture is hereby amended by replacing the period at the end of clause (b) thereof with “; and” and adding the following clause (c) thereafter: “(c) such rescission would not conflict with any judgment or decree of a court of competent jurisdiction.”

 

Section 7.3                                    Control by Holders.  Notwithstanding Section 5.12 of the Base Indenture, the Trustee may refuse to follow any direction that conflicts with any law, rule, regulation or court order or the Indenture, the Notes or any Note Guarantee, or that the Trustee determines in good faith is unduly prejudicial to the rights of any Holder or that would involve the Trustee in personal liability. Any application by the Trustee for written instructions from the requisite amount of Holders may, at the option of the Trustee, set forth in writing any action proposed to be taken or omitted by the Trustee under the Indenture and the date on and/or after which such action shall be taken or such omission shall be effective. The Trustee shall not be liable for any action taken by, or omission of, the Trustee in accordance with a proposal included in such application on or after the date specified in such application unless prior to taking any such action (or the effective date in the case of an omission), the Trustee shall have received written instructions from the requisite amount of Holders in response to such application specifying the action to be taken or omitted.

 

Section 7.4                                    Waivers.  It shall not be necessary for any Act of Holders to approve the particular form of any waiver, but it shall be sufficient if such Act shall approve the substance thereof.  A consent to any waiver by any Holder given in connection with a sale, tender or exchange of such Holder’s Notes will not be rendered invalid by such sale, tender or exchange.

 

ARTICLE 8
 DEFEASANCE

 

Section 8.1                                    Covenant Defeasance.  The covenants provided pursuant to Section 3.01(r), 9.01(b) or 9.01(g) of the Indenture for purposes of Section 13.03 of the Indenture are the covenants in Section 4.3, Article 5 (other than Section 5.10) and Article 9 of this Supplemental Indenture and Section 5.15 of the Indenture.

 

ARTICLE 9
 REPURCHASE OF NOTES AT OPTION OF HOLDERS

 

Section 9.1                                    Offer to Repurchase Upon Change of Control.

 

(a)                                 If a Change of Control occurs, unless the Company has exercised its right to redeem all of the Notes pursuant to Section 10.1 of this Supplemental Indenture, the Company will make an offer to purchase all of the Notes (the “Change of Control Offer”) at a purchase price in cash equal to 101% of the principal amount of the Notes plus accrued and unpaid interest, if any, to the date of purchase (the “Change of Control Payment”), subject to the right of Holders of record on the applicable Regular Record Date to receive interest due on the relevant Interest Payment Date. Within 30 days following any Change of Control, unless the Company has exercised its right to redeem all of the Notes pursuant to Section 10.1 of this Supplemental Indenture, the Company will mail a notice of such Change of Control Offer to each Holder or otherwise give notice in accordance with the applicable procedures of DTC, with a copy to the Trustee, stating:

 

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(i)                                     that a Change of Control Offer is being made pursuant to this Section 9.1 and that all Notes properly tendered pursuant to such Change of Control Offer will be accepted for purchase by the Company at a purchase price in cash equal to 101% of the principal amount of such Notes plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the applicable Regular Record Date to receive interest due on the relevant Interest Payment Date);

 

(ii)                                  the purchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed or given) (the “Change of Control Payment Date”);

 

(iii)                               that Notes must be tendered in multiples of $1,000, and any Note not properly tendered will remain outstanding and continue to accrue interest;

 

(iv)                              that, unless the Company defaults in the payment of the Change of Control Payment, any Note accepted for payment pursuant to the Change of Control Offer will cease to accrue interest on and after the Change of Control Payment Date;

 

(v)                                 that Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender such Notes, with the form entitled “Option of Holder to Elect Purchase” on the reverse of such Notes completed, to the Paying Agent specified in the notice at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date;

 

(vi)                              that Holders shall be entitled to withdraw their tendered Notes and their election to require the Company to purchase such Notes; provided that the Paying Agent receives at the address specified in the notice, not later than the close of business on the 30th day following the date of the Change of Control notice, a telegram, facsimile transmission or letter setting forth the name of the Holder of the Notes, the principal amount of Notes tendered for purchase, and a statement that such Holder is withdrawing its tendered Notes and its election to have such Notes purchased

 

(vii)                           that if a Holder is tendering less than all of its Notes, such Holder will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (the unpurchased portion of the Notes must be equal to $2,000 or an integral multiple of $1,000 in excess thereof); and

 

(viii)                        the other instructions, as determined by the Company, consistent with this Section 9.1 that a Holder must follow.

 

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The notice, if mailed or given in a manner herein provided, shall be conclusively presumed to have been given, whether or not the Holder receives such notice. If (A) the notice is mailed or given in a manner herein provided and (B) any Holder fails to receive such notice or a Holder receives such notice but it is defective, such Holder’s failure to receive such notice or such defect shall not affect the validity of the proceedings for the purchase of the Notes as to all other Holders that properly received such notice without defect.

 

(b)                                 On the Change of Control Payment Date, the Company will, to the extent lawful:

 

(i)                                     accept for payment all Notes or portions of Notes (of integral multiples of $1,000) properly tendered pursuant to the Change of Control Offer;

 

(ii)                                  deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes so tendered;

 

(iii)                               deliver or cause to be delivered to the Trustee for cancellation the Notes so accepted together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Company in accordance with this Section 9.1; and

 

(iv)                              deliver to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for in the Indenture relating to the making of such Change of Control Payment have been complied with.

 

(c)                                  The Paying Agent will promptly pay to each Holder of Notes so tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate, upon receipt of an Authentication Order, and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each such new Note will be in a principal amount of $2,000 or integral multiples of $1,000 in excess thereof.

 

(d)                                 If the Change of Control Payment Date is on or after a Regular Record Date and on or before the related Interest Payment Date, any accrued and unpaid interest to the Change of Control Payment Date will be paid on the relevant Interest Payment Date to the Person in whose name a Note is registered at the close of business on such Regular Record Date.

 

(e)                                  Prior to making a Change of Control Payment, and as a condition to such payment (i) the requisite holders of each issue of Indebtedness issued under an indenture or other agreement that would be violated by the making of such payment shall have consented to such Change of Control Payment being made and waived the event of default, if any, caused by the Change of Control or (ii) the Company will repay all outstanding Indebtedness issued under an indenture or other agreement that would be violated by the making of a Change of Control Payment or the Company will offer to repay all such Indebtedness, make payment to the holders of such Indebtedness that accept such offer and obtain waivers from the requisite remaining holders of such Indebtedness of any event of default arising under the relevant indenture or other agreement as a result of the Change of Control. The Company covenants to effect such repayment or obtain such consent prior to making a Change of Control Payment, it being a default of this Section 9.1 if the Company fails to comply with such covenant.

 

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(f)                                   The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Section 9.1 applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer.

 

(g)                                  The Company will comply, to the extent applicable, with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with provisions of the Indenture, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Indenture by virtue of the conflict.

 

(h)                                 Other than as specifically provided in this Section 9.1, any purchase pursuant to this Section 9.1 shall be made pursuant to the provisions of Sections 11.03, 11.05 and 11.07 of the Indenture.

 

ARTICLE 10
 OPTIONAL REDEMPTION

 

Section 10.1                             Optional Redemption.

 

(a)                                 At any time prior to March 1, 2020, the Company may redeem the Notes, in whole or in part, upon notice pursuant to Section 11.04 of the Indenture, at a redemption price equal to 100% of the aggregate principal amount of the Notes plus the Applicable Premium, plus accrued and unpaid interest, if any, to the Redemption Date (subject to the right of Holders of record on the relevant Regular Record Date to receive interest due on an Interest Payment Date falling on or prior to such Redemption Date). Promptly after the determination thereof, the Company shall give the Trustee written notice of the redemption price provided for in this Section 10.1(a), and the Trustee shall not be responsible for such calculation.

 

(b)                                 Prior to March 1, 2016, upon notice pursuant to Section 11.04 of the Indenture, the Company may on any one or more occasions redeem up to 40% of the original aggregate principal amount of the Notes (calculated after giving effect to any issuance of Additional Notes) with the Net Cash Proceeds of one or more Equity Offerings at a redemption price equal to 104.750% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to the applicable Redemption Date (subject to the right of Holders of record on the relevant Regular Record Date to receive interest due on an Interest Payment Date falling on or prior to such Redemption Date); provided that (i) at least 60% of the original aggregate principal amount of the Notes (calculated after giving effect to any issuance of Additional Notes) remains outstanding immediately after the occurrence of each such redemption; and (ii) such redemption occurs within 60 days after the date of closing of such Equity Offering.  The Trustee shall not be responsible for calculation of the redemption price payable pursuant to this Section 10.1(b).

 

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(c)                                  Except pursuant to clause (a) or (b) of this Section 10.1, the Notes shall not be redeemable at the Company’s option prior to March 1, 2020.

 

(d)                                 Any redemption pursuant to this Section 10.1 shall be made pursuant to the provisions of Sections 11.01 through 11.07 of the Indenture; provided that the words “by such method as the Trustee shall deem fair and appropriate and” in Section 11.03 of the Base Indenture shall be replaced with “by lot”.

 

(e)                                  Any redemption notice may, at the Company’s discretion, be subject to one or more conditions precedent, including completion of an Equity Offering or other corporate transaction.

 

(f)                                   The Company may acquire Notes by means other than a redemption, whether by tender offer, open market purchases, negotiated transactions or otherwise, in accordance with applicable securities laws, so long as such acquisition does not otherwise violate the terms of the Indenture.

 

Section 10.2                             Modification of Base Indenture.  Section 11.06 of the Base Indenture is hereby amended by deleting the words “Record Dates” and replacing them with “Regular Record Date”.

 

ARTICLE 11
 NOTE GUARANTEES

 

Section 11.1                             Guarantee.

 

(a)                                    Subject to this Article 11, each of the Guarantors hereby, jointly and severally, irrevocably and unconditionally guarantees, on a senior unsecured basis, to each Holder and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of the Indenture, the Notes or the obligations of the Company hereunder or thereunder, that: (1) the principal of, premium, if any, and interest on the Notes shall be promptly paid in full when due, whether at Stated Maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, if lawful, and all other Obligations of the Company to the Holders or the Trustee hereunder or under the Notes shall be promptly paid in full, all in accordance with the terms hereof and thereof; and (2) in case of any extension of time of payment or renewal of any Notes or any of such other Obligations, that same shall be promptly paid in full when due in accordance with the terms of the extension or renewal, whether at Stated Maturity, by acceleration or otherwise.  Failing payment by the Company when due of any amount so guaranteed for whatever reason, the Guarantors shall be jointly and severally obligated to pay the same immediately.  Each Guarantor agrees that this is a guarantee of payment and not a guarantee of collection.

 

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(b)                                    The Guarantors hereby agree that their obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or the Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor.  Each Guarantor hereby waives, to the extent permitted by law, diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that this Note Guarantee shall not be discharged except by complete payment of the Obligations contained in the Notes and the Indenture with respect to the Notes, or pursuant to Section 11.5 of this Supplemental Indenture.

 

(c)                                     Each of the Guarantors also agrees, jointly and severally, to pay any and all costs and expenses (including reasonable attorneys’ fees and expenses) incurred by the Trustee or any Holder in enforcing any rights under this Section 11.1.

 

(d)                                    If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Guarantors or any custodian, trustee, liquidator or other similar official acting in relation to the Company or the Guarantors, any amount paid either to the Trustee or such Holder, this Note Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect.

 

(e)                                     Each Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all Obligations guaranteed hereby.  Each Guarantor further agrees that, as between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (1) the maturity of the Obligations guaranteed hereby may be accelerated as provided in Section 5.02 of the Indenture for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligations guaranteed hereby, and (2) in the event of any declaration of acceleration of such Obligations as provided in Section 5.02 of the Indenture, such Obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantors for the purpose of this Note Guarantee.  The Guarantors shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Note Guarantees.

 

(f)                                      Each Note Guarantee shall remain in full force and effect and continue to be effective should any petition be filed by or against the Company for liquidation or reorganization, should the Company become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Company’s assets, and shall, to the fullest extent permitted by law, continue to be effective or be reinstated, as the case may be, if at any time payment of the Notes are, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee on the Notes or the Note Guarantees, whether as a “voidable preference,” “fraudulent transfer” or otherwise, all as though such payment had not been made.  In the event that any payment or any part thereof, is rescinded, reduced, restored or returned, the Notes shall, to the fullest extent permitted by law, be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

 

33

 

(g)                                     In case any provision of any Note Guarantee shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

(h)                                    Each payment to be made by a Guarantor in respect of its Note Guarantee shall be made without set-off, counterclaim, reduction or diminution of any kind or nature.

 

Section 11.2                             Limitation on Guarantor Liability.  Each Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it is the intention of all such parties that the Note Guarantee of such Guarantor not constitute a fraudulent conveyance or a fraudulent transfer for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any Note Guarantee.  To effectuate the foregoing intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree that the obligations of each Guarantor shall be limited to the maximum amount as will, after giving effect to such maximum amount and all other contingent and fixed liabilities of such Guarantor that are relevant under such laws and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under this Article 11, result in the obligations of such Guarantor under its Note Guarantee not constituting a fraudulent conveyance or fraudulent transfer under applicable law.  Each Guarantor that makes a payment under its Note Guarantee will be entitled upon payment in full of all guaranteed obligations under the Indenture to a contribution from each other Guarantor in an amount equal to such other Guarantor’s pro rata portion of such payment based on the respective net assets of all the Guarantors at the time of such payment, determined in accordance with GAAP.

 

Section 11.3                             Execution and Delivery.

 

(a)                                    To evidence its Note Guarantee set forth in Section 11.1 of this Supplemental Indenture, each Guarantor hereby agrees that a joinder to this Supplemental Indenture shall be executed on behalf of such Guarantor by an Officer or person holding an equivalent title.

 

(b)                                    Each Guarantor hereby agrees that its Note Guarantee set forth in Section 11.1 of this Supplemental Indenture shall remain in full force and effect notwithstanding the absence of the endorsement of any notation of such Note Guarantee on the Notes.

 

34

 

(c)                                     If an Officer of a Guarantor whose signature is on this Supplemental Indenture no longer holds that office at the time the Trustee authenticates the Notes, the Note Guarantees shall be valid as to such Guarantor nevertheless.

 

(d)                                    he delivery of any Note by the Trustee, after the authentication thereof under the Indenture, shall constitute due delivery of the Note Guarantee set forth in this Supplemental Indenture on behalf of the Guarantors.

 

(e)                                     If required by Section 5.8, the Company shall cause any Subsidiary to comply with the provisions of Section 5.8 and this Article 11, to the extent applicable.

 

Section 11.4                             Subrogation.  Each Guarantor shall be subrogated to all rights of Holders against the Company in respect of any amounts paid by any Guarantor pursuant to the provisions of Section 11.1 of this Supplemental Indenture; provided that, if an Event of Default has occurred and is continuing, no Guarantor shall be entitled to enforce or receive any payments arising out of, or based upon, such right of subrogation until all amounts then due and payable by the Company under the Indenture with respect to the Notes or the Notes shall have been paid in full.

 

Section 11.5                             Release of Note Guarantees.

 

(a)                                    A Note Guarantee by a Guarantor will be automatically and unconditionally released and discharged, and no further action by such Guarantor, the Company or the Trustee shall be required for the release of such Guarantor’s Note Guarantee, upon:

 

(i)                                  (A) any sale, assignment, transfer, conveyance, exchange or other disposition (by merger, consolidation or otherwise) of the Capital Stock of such Guarantor after which the applicable Guarantor is no longer a Subsidiary or all or substantially all of the assets of such Guarantor, which sale, assignment, transfer, conveyance, exchange or other disposition is made in compliance with the provisions of the Indenture; provided that each Guarantee of such Guarantor of other Indebtedness of the Company and its Subsidiaries terminates upon consummation of such transaction;

 

(B) the release or discharge of such Guarantor from its Guarantee of all Specified Indebtedness of the Company (other than the Notes), including each Guarantee that resulted in the obligation of such Guarantor to guarantee the Notes, if such Guarantor would not then otherwise be required to guarantee the Notes pursuant to the Indenture, except a discharge or release by or as a result of payment under such Guarantee; or

 

(C) the Company’s exercise of its Legal Defeasance option or Covenant Defeasance option in accordance with Article 13 of the Indenture or the discharge of the Company’s Obligations under the Indenture in accordance with the terms of the Indenture; and

 

35

 

(ii)                                      the Company delivering to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for in the Indenture relating to such transaction and/or release have been complied with.

 

(b)                             At the written request of the Company, the Trustee shall execute and deliver any documents reasonably required in order to evidence such release, discharge and termination in respect of the applicable Note Guarantee.

 

ARTICLE 12
 MISCELLANEOUS PROVISIONS

 

Section 12.1                             Governing Law.  This Supplemental Indenture and each Note shall be governed by, and construed in accordance with, the laws of the State of New York.

 

Section 12.2                             Effect of Headings.  The article and section headings herein and in the Table of Contents are for convenience only and shall not affect the construction hereof.

 

Section 12.3                             Severability.  In case any one or more of the provisions contained in the Indenture, this Supplemental Indenture or the Notes shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of the Indenture, this Supplemental Indenture or the Notes, but the Indenture, this Supplemental Indenture and the Notes shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein or therein.

 

Section 12.4                             Ratification of Indenture.  The Indenture, as supplemented by this Supplemental Indenture, is in all respects ratified and confirmed, and this Supplemental Indenture shall be deemed part of the Indenture in the manner and to the extent herein and therein provided; provided, however, that the provisions of this Supplemental Indenture shall apply solely to the Notes.

 

Section 12.5                             Trustee Not Responsible for Recitals.  The recitals herein contained are made by the Company and not by the Trustee, and the Trustee assumes no responsibility for the correctness thereof.  The Trustee makes no representation as to the validity or sufficiency of this Supplemental Indenture

 

Section 12.6                             Waiver of Jury Trial.  Section 1.15 of the Base Indenture is hereby incorporated herein.

 

Section 12.7                             Counterparts.  This Supplemental Indenture may be executed in any number of counterparts each of which shall be an original; but such counterparts shall together constitute but one and the same instrument.

 

[Signature page follows]

 

36

 

IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed, all as of the day and year first above written.

 

 

	
 
    	
AIR   LEASE CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Steven F. Udvar-Házy
    
	
 
    	
 
    	
Name:   Steven F. Udvar-Házy
    
	
 
    	
 
    	
Title:   Chairman and Chief Executive Officer
    

 

 

 

	
 
    	
DEUTSCHE   BANK TRUST COMPANY AMERICAS, as Trustee
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Diana Vasconez
    
	
 
    	
 
    	
Name:   Diana Vasconez
    
	
 
    	
 
    	
Title:   Associate
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mark Esposito
    
	
 
    	
 
    	
Name:   Mark Esposito
    
	
 
    	
 
    	
Title:   Assistant Vice President
    

 

 

Exhibit A

 

Form of Note

 

 

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

 

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO AIR LEASE CORPORATION OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

 

AIR LEASE CORPORATION

 

**************************

 

4.750% Senior Notes due 2020

 

CUSIP: [                   ]

ISIN: [                       ]

 

	
No. [     ]
    	
$[                       ]
    
	
 
    	
(as revised by the Schedule of Increases and
   Decreases in Global Security attached hereto)
    

 

AIR LEASE CORPORATION, a corporation duly organized and existing under the laws of the State of Delaware (herein called the “Company”, which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to CEDE & CO., the registered Holder hereof, the principal sum of [                             ] Dollars ($[                       ]) (as revised by the Schedule of Increases and Decreases in Global Security attached hereto) on March 1, 2020, and to pay interest thereon from and including [                         ] or from and including the most recent date to which interest has been paid or duly provided for, semi-annually on March 1 and September 1 in each year, commencing [                           ], or, if any such day is not a Business Day, on the next succeeding Business Day (each an “Interest Payment Date”), at the rate of 4.750% per annum (the “Interest Rate”), until the principal hereof is paid or made available for payment; provided that the Company shall pay Special Interest as provided in the Indenture; provided further that any principal, and any such installment of interest, that is overdue shall bear interest at the Interest Rate (to the extent that the payment of such interest shall be legally enforceable), from the dates such amounts are due until they are paid or made available for payment, and such interest shall be payable on demand. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the February 15 or August 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest so payable but not so punctually paid or duly provided for on any Interest Payment Date will forthwith cease to be payable to the Holder on such Regular Record Date and, at the Company’s election, may either be paid to the Person in whose name this Note (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof to be given to Holders of Notes not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, all as more fully provided in such Indenture.

 

Payment of the principal of and interest on this Note will be made at the office or agency of the Company maintained for that purpose in The City of New York, New York (or, if the Company does not maintain such office or agency, at the corporate trust office of the Trustee in The City of New York or if the Trustee does not maintain an office in The City of New York, at the office of a Paying Agent in The City of New York), in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that payment of principal and interest on Global Securities shall be made by wire transfer in accordance with the procedures of the Depositary.

 

Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

 

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature of one or more authorized signatories, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

 

 

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

 

	
Dated:   [                           ]
    	
 
    	
AIR   LEASE CORPORATION
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Name:   
    
	
 
    	
 
    	
 
    	
 
    	
Title:   
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
TRUSTEE’S   CERTIFICATE OF AUTHENTICATION
   This is one of the Securities of the series designated therein referred to in   the within-mentioned Indenture.
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
DEUTSCHE   BANK TRUST COMPANY AMERICAS,
   as Trustee
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
Authorized   Signatory
    	
 
    	
 
    	
 
    	
 
    

 

 

[REVERSE OF NOTE]

 

This Note is one of a duly authorized series of securities of the Company designated as the “4.750% Senior Notes due 2020” (herein called the “Notes”), issued under an Indenture, dated as of October 11, 2012 (herein called the “Base Indenture”), as supplemented by the First Supplemental Indenture dated February 5, 2013 (the “First Supplemental Indenture”; the Base Indenture, as so supplemented, is herein called the “Indenture”), among the Company, as issuer, and Deutsche Bank Trust Company Americas, as Trustee (herein called the “Trustee”, which term includes any successor trustee under the Indenture), and reference is hereby made to the Indenture for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered.  This Note is one of the series designated on the face hereof, initially limited in aggregate principal amount to $[                          ]. The Company may at any time issue additional Notes under the Indenture in unlimited amounts having the same terms as the Notes, except as otherwise permitted by the Indenture.

 

The Notes do not have the benefit of any sinking fund obligation.

 

The Notes are redeemable prior to the Stated Maturity Date as provided in the Indenture.  In the event of redemption of this Note in part only, a new Note or Notes in an authorized denomination for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.

 

The Indenture contains provisions for defeasance at any time of the entire Indebtedness of this Note or of certain restrictive covenants and Events of Default with respect to the Notes, in each case upon compliance with certain conditions set forth in the Indenture.

 

If an Event of Default with respect to the Notes shall occur and be continuing, the principal of the Notes may be declared due and payable in the manner and with the effect provided in the Indenture.

 

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Notes to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in principal amount of the Notes at the time Outstanding. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Notes at the time Outstanding, on behalf of the Holders of all Notes, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note.

 

As provided in and subject to the provisions of the Indenture, the Holder of this Note shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Notes, the Holders of at least 25% in principal amount of the Notes at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee indemnity or security reasonably satisfactory to it, and the Trustee shall not have received from the Holders of a majority in principal amount of Notes at the time Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Note for the enforcement of any payment of principal hereof or any premium or interest hereon on or after the respective due dates expressed herein.

 

 

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any interest on this Note at the times, place and rate, and in the coin or currency, herein prescribed.

 

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Security Register, upon surrender of this Note for registration of transfer at the office or agency of the Company in any place where the principal of and any premium and interest on this Note are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or the Holder’s attorney duly authorized in writing, and thereupon one or more new Notes, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.

 

The Indenture and this Note are governed by and construed in accordance with the laws of the State of New York.

 

The Notes are issuable in registered form without coupons in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Notes are exchangeable for a like aggregate principal amount of Notes of any authorized denomination, as requested by the Holder surrendering the same.

 

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

 

Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent thereof may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and none of the Company, the Trustee or any such agent shall be affected by notice to the contrary.

 

All terms used in this Note that are not defined herein and are defined in the Indenture shall have the meanings assigned to them in the Indenture.

 

To the extent that any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling.

 

 

SCHEDULE OF INCREASES AND DECREASES IN GLOBAL SECURITY

 

The following increases or decreases in this Note have been made:

 

	
Date of decrease or
   increase
    	
 
    	
Amount of decrease in
   principal amount of
   this Note
    	
 
    	
Amount of increase in
   principal amount of this
   Note
    	
 
    	
Principal amount of this
   Note following such
   decrease or increase
    	
 
    	
Signature of authorized
   signatory of Trustee or
   Security Custodian
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

 

ASSIGNMENT

 

FOR VALUE RECEIVED, the undersigned assigns and transfers this Note to:

 

 

 

(Insert assignee’s social security or tax identification number)

 

 

 

 

(Insert address and zip code of assignee)

 

and irrevocably appoints                as agent to transfer this Note on the Security Register. The agent may substitute another to act for him or her.

 

	
Dated:
    	
Signature:
    
	
 
    	
 
    
	
 
    	
Signature   Guarantee:
    

 

(Sign exactly as your name appears on the other side of this Note)

 

Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Security Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Security Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

 

 

OPTION OF HOLDER TO ELECT PURCHASE

 

If you want to elect to have this Note purchased by the Company pursuant to Section 9.1 of the First Supplemental Indenture, check the box below:

 

[   ] Section 9.1

 

If you want to elect to have only part of this Note purchased by the Company pursuant to Section 9.1 of the First Supplemental Indenture, state the amount you elect to have purchased:

 

	
$
    	
 
    	
(integral   multiples of $1,000, provided that   the unpurchased portion must be in a minimum principal amount of $2,000)
    

 

 

 

	
Date:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Your   Signature:
    	
 
    
	
 
    	
 
    	
(Sign   exactly as your name appears on the face of this Note)
    
	
 
    	
Tax   Identification No.:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Signature   Guarantee*:
    	
 
    	
 
    
							

 

* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).Exhibit 10.1

 

Execution Version

 

 

 

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

Dated as of January 30, 2013

 

among

 

 

POWER-ONE, INC.

 

and

 

CERTAIN SUBSIDIARIES,
 as the Borrowers,

 

BANK OF AMERICA, N.A.,
 as Administrative Agent, Swing Line Lender
 and
 L/C Issuer,

 

and

 

The Other Lenders Party Hereto

 

 

 

 

 

 

TABLE OF CONTENTS

 

	
Section
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE I.
    	
DEFINITIONS AND ACCOUNTING TERMS
    	
1
    
	
 
    	
 
    	
 
    
	
1.01
    	
Defined   Terms
    	
1
    
	
1.02
    	
Other   Interpretive Provisions
    	
31
    
	
1.03
    	
Accounting   Terms
    	
32
    
	
1.04
    	
Rounding
    	
32
    
	
1.05
    	
Times   of Day
    	
32
    
	
1.06
    	
Letter   of Credit Amounts
    	
32
    
	
 
    	
 
    	
 
    
	
ARTICLE II.
    	
THE COMMITMENTS AND CREDIT EXTENSIONS
    	
33
    
	
 
    	
 
    	
 
    
	
2.01
    	
Loans
    	
33
    
	
2.02
    	
Borrowings,   Conversions and Continuations of Loans; Overadvances and Protective Advances
    	
33
    
	
2.03
    	
Letters   of Credit
    	
35
    
	
2.04
    	
Swing   Line Loans
    	
35
    
	
2.05
    	
Prepayments
    	
47
    
	
2.06
    	
Termination   or Reduction of Commitments
    	
48
    
	
2.07
    	
Repayment   of Loans
    	
49
    
	
2.08
    	
Interest
    	
50
    
	
2.09
    	
Fees
    	
50
    
	
2.10
    	
Computation   of Interest and Fees
    	
51
    
	
2.11
    	
Evidence   of Debt
    	
51
    
	
2.12
    	
Payments   Generally; Administrative Agent’s Clawback
    	
52
    
	
2.13
    	
Sharing   of Payments by Lenders
    	
54
    
	
2.14
    	
Increase   in Commitments
    	
54
    
	
2.15
    	
Cash   Collateral
    	
55
    
	
2.16
    	
Defaulting   Lenders
    	
57
    
	
2.17
    	
Designated   Borrowers
    	
59
    
	
 
    	
 
    	
 
    
	
ARTICLE III.
    	
TAXES, YIELD PROTECTION AND ILLEGALITY
    	
60
    
	
 
    	
 
    	
 
    
	
3.01
    	
Taxes
    	
60
    
	
3.02
    	
Illegality
    	
65
    
	
3.03
    	
Inability   to Determine Rates
    	
65
    
	
3.04
    	
Increased   Costs; Reserves on Eurodollar Rate Loans
    	
66
    
	
3.05
    	
Compensation   for Losses
    	
67
    
	
3.06
    	
Mitigation   Obligations; Replacement of Lenders
    	
68
    
	
3.07
    	
Survival
    	
69
    
	
 
    	
 
    	
 
    
	
ARTICLE IV.
    	
CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
    	
69
    
	
 
    	
 
    	
 
    
	
4.01
    	
Conditions   of Amendment and Restatement
    	
69
    
	
4.02
    	
Conditions   to all Credit Extensions
    	
71
    

 

i

 

	
ARTICLE V.
    	
REPRESENTATIONS AND WARRANTIES
    	
72
    
	
 
    	
 
    	
 
    
	
5.01
    	
Existence,   Qualification and Power
    	
72
    
	
5.02
    	
Authorization;   No Contravention
    	
72
    
	
5.03
    	
Governmental   Authorization; Other Consents
    	
73
    
	
5.04
    	
Binding   Effect
    	
73
    
	
5.05
    	
Financial   Statements; No Material Adverse Effect
    	
73
    
	
5.06
    	
Litigation
    	
73
    
	
5.07
    	
No   Default
    	
74
    
	
5.08
    	
Ownership   of Property; Liens
    	
74
    
	
5.09
    	
Environmental   Compliance
    	
74
    
	
5.10
    	
Insurance
    	
74
    
	
5.11
    	
Taxes
    	
74
    
	
5.12
    	
ERISA   Compliance
    	
74
    
	
5.13
    	
Subsidiaries;   Equity Interests
    	
75
    
	
5.14
    	
Margin   Regulations; Investment Company Act
    	
75
    
	
5.15
    	
Disclosure
    	
76
    
	
5.16
    	
Compliance   with Laws
    	
76
    
	
5.17
    	
Taxpayer   Identification Number
    	
76
    
	
5.18
    	
Intellectual   Property; Licenses, Etc.
    	
76
    
	
5.19
    	
Solvency
    	
77
    
	
5.20
    	
Collateral   Documents
    	
77
    
	
 
    	
 
    	
 
    
	
ARTICLE VI.
    	
AFFIRMATIVE COVENANTS
    	
77
    
	
 
    	
 
    	
 
    
	
6.01
    	
Financial   Statements
    	
77
    
	
6.02
    	
Certificates;   Other Information
    	
79
    
	
6.03
    	
Notices
    	
81
    
	
6.04
    	
Payment   of Obligations
    	
82
    
	
6.05
    	
Preservation   of Existence, Etc.
    	
82
    
	
6.06
    	
Maintenance   of Properties
    	
82
    
	
6.07
    	
Maintenance   of Insurance
    	
82
    
	
6.08
    	
Compliance   with Laws
    	
83
    
	
6.09
    	
Books   and Records
    	
83
    
	
6.10
    	
Inspection   Rights
    	
83
    
	
6.11
    	
Use   of Proceeds
    	
83
    
	
6.12
    	
Additional   Subsidiaries; Covenant to Guarantee Obligations and Give Security
    	
83
    
	
6.13
    	
Further   Assurances
    	
85
    
	
6.14
    	
Material   Subsidiaries
    	
85
    
	
6.15
    	
Maintenance   of Dominion Accounts
    	
86
    
	
6.16
    	
Account   Verification; Proceeds of Collateral
    	
86
    
	
 
    	
 
    	
 
    
	
ARTICLE VII.
    	
NEGATIVE COVENANTS
    	
87
    
	
 
    	
 
    	
 
    
	
7.01
    	
Liens
    	
87
    
	
7.02
    	
Investments
    	
88
    
	
7.03
    	
Indebtedness
    	
90
    

 

ii

 

	
7.04
    	
Fundamental   Changes
    	
91
    
	
7.05
    	
Dispositions
    	
92
    
	
7.06
    	
Restricted   Payments
    	
93
    
	
7.07
    	
Change   in Nature of Business
    	
93
    
	
7.08
    	
Transactions   with Affiliates
    	
94
    
	
7.09
    	
Burdensome   Agreements
    	
94
    
	
7.10
    	
Use   of Proceeds
    	
95
    
	
7.11
    	
Minimum   Fixed Charge Coverage Ratio
    	
95
    
	
7.12
    	
Amendments   to Organization Documents
    	
95
    
	
7.13
    	
Limitations   on Sales and Leasebacks
    	
95
    
	
 
    	
 
    	
 
    
	
ARTICLE VIII.
    	
EVENTS OF DEFAULT AND REMEDIES
    	
95
    
	
 
    	
 
    	
 
    
	
8.01
    	
Events   of Default
    	
95
    
	
8.02
    	
Remedies   Upon Event of Default
    	
97
    
	
8.03
    	
Application   of Funds
    	
98
    
	
 
    	
 
    	
 
    
	
ARTICLE IX.
    	
ADMINISTRATIVE AGENT
    	
99
    
	
 
    	
 
    	
 
    
	
9.01
    	
Appointment   and Authority
    	
99
    
	
9.02
    	
Rights   as a Lender
    	
100
    
	
9.03
    	
Exculpatory   Provisions
    	
100
    
	
9.04
    	
Reliance   by Administrative Agent
    	
101
    
	
9.05
    	
Delegation   of Duties
    	
102
    
	
9.06
    	
Resignation   of Administrative Agent
    	
102
    
	
9.07
    	
Non-Reliance   on Administrative Agent and Other Lenders
    	
103
    
	
9.08
    	
No   Other Duties, Etc.
    	
104
    
	
9.09
    	
Administrative   Agent May File Proofs of Claim
    	
104
    
	
9.10
    	
Collateral   and Guaranty Matters
    	
105
    
	
9.11
    	
Secured   Cash Management Agreements and Secured Hedge Agreements
    	
105
    
	
 
    	
 
    	
 
    
	
ARTICLE X.
    	
MISCELLANEOUS
    	
106
    
	
 
    	
 
    	
 
    
	
10.01
    	
Amendments,   Etc.
    	
106
    
	
10.02
    	
Notices;   Effectiveness; Electronic Communication
    	
107
    
	
10.03
    	
No   Waiver; Cumulative Remedies; Enforcement
    	
109
    
	
10.04
    	
Expenses;   Indemnity; Damage Waiver
    	
110
    
	
10.05
    	
Payments   Set Aside
    	
112
    
	
10.06
    	
Successors   and Assigns
    	
112
    
	
10.07
    	
Treatment   of Certain Information; Confidentiality
    	
117
    
	
10.08
    	
Right   of Setoff
    	
118
    
	
10.09
    	
Interest   Rate Limitation
    	
118
    
	
10.10
    	
Counterparts;   Integration; Effectiveness
    	
119
    
	
10.11
    	
Survival   of Representations and Warranties
    	
119
    
	
10.12
    	
Severability
    	
119
    
	
10.13
    	
Replacement   of Lenders
    	
120
    
	
10.14
    	
Governing   Law; Jurisdiction; Etc.
    	
120
    

 

iii

 

	
10.15
    	
Waiver   of Jury Trial
    	
121
    
	
10.16
    	
No   Advisory or Fiduciary Responsibility
    	
122
    
	
10.17
    	
Electronic   Execution of Assignments and Certain Other Documents
    	
122
    
	
10.18
    	
USA   PATRIOT Act
    	
122
    
	
10.19
    	
Amendment   and Restatement
    	
123
    
	
 
    	
 
    	
 
    
	
SIGNATURES
    	
S-1
    

 

iv

 

SCHEDULES

 

2.01        Commitments and Applicable Percentages
 5.06        Litigation
 5.13        Subsidiaries; Other Equity Investments
 5.18        Intellectual Property Matters
 7.01        Existing Liens
 7.03        Existing Indebtedness
 10.02      Administrative Agent’s Office; Certain Addresses for Notices

 

EXHIBITS

 

Form of

 

A             Loan Notice

B             Swing Line Loan Notice

C             Note

D             Compliance Certificate

E             Assignment and Assumption

F              Guaranty

G             Security Agreement

H             Pledge Agreement

I              Opinion

J              Patent Security Agreement

K             Designated Borrower Request and Assumption Agreement

L             Designated Borrower Notice

M            U.S. Tax Compliance Certificates

N             Borrowing Base Certificate

 

v

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

This AMENDED AND RESTATED CREDIT AGREEMENT (“Agreement”) is entered into as of January 30, 2013, among POWER-ONE, INC. a Delaware corporation (the “Company”), certain Subsidiaries of the Company party hereto pursuant to Section 2.17 (each a “Designated Borrower” and, together with the Company, the “Borrowers” and, each a “Borrower”), each lender from time to time party hereto (collectively, the “Lenders” and individually, a “Lender”), and BANK OF AMERICA, N.A.,  as Administrative Agent, Swing Line Lender and L/C Issuer.

 

The Company, certain of the Lenders (the “Existing Lenders”) and Bank of America, N.A., as administrative agent, entered into that certain Credit Agreement dated as of March 29, 2011 (as amended, restated, supplemented or otherwise modified from time to time, the “Existing Credit Agreement”), pursuant to which the Existing Lenders agreed to make certain credit facilities available to the Company in accordance with the terms thereof.

 

The Company, the Lenders and the Administrative Agent desire to amend and restate the Existing Credit Agreement in its entirety on the terms and conditions set forth herein.

 

In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

 

ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS

 

1.01        Defined Terms.  As used in this Agreement, the following terms shall have the meanings set forth below:

 

“Acceptance Credit” means a commercial Letter of Credit in which the L/C Issuer engages with the beneficiary of such Letter of Credit to accept a time draft.

 

“Acceptance Documents” means such general acceptance agreements, applications, certificates and other documents as the L/C Issuer may require in connection with the creation of Bankers’ Acceptances.

 

“Account” shall have the meaning as defined in the UCC, including all rights to payment for goods sold or leased, or for services rendered.

 

“Account Debtor” means a Person obligated under an Account, chattel paper or general intangible.

 

“Acquisition” means any transaction, or any series of related transactions, by which any of the Borrowers, any Guarantor and any Material Subsidiary (a) acquires any ongoing business or all or substantially all of the assets of, any firm, corporation or division thereof, whether through purchase of assets, purchase of stock, merger, amalgamation or otherwise, (b) directly or indirectly acquires control of at least a majority (in number of votes) of the securities of a corporation which have ordinary voting power for the election of directors or (c) directly or indirectly acquires control of a majority ownership interest in any partnership, joint venture or similar arrangement; provided, however, that, in each case, such acquisition is not a “hostile”

 

1

 

acquisition and, if required by applicable Law, has been approved by the board of directors and/or shareholders (or comparable persons or groups) of such Borrower or such Material Subsidiary, as applicable, and such other Person.

 

“Adjustment Date” means, with respect to determinations of the Applicable Rate and the Quarterly Average Excess Availability, the first Business Day of each January, April, July and October, commencing on July 1, 2013.

 

“Administrative Agent” means Bank of America in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.

 

“Administrative Agent’s Office” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 10.02, or such other address or account as the Administrative Agent may from time to time notify to the Company and the Lenders.

 

“Administrative Questionnaire” means an Administrative Questionnaire in form approved by the Administrative Agent.

 

“Advisor” has the meaning specified in Section 10.06(d).

 

“Affiliate” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

 

“Aggregate Commitments” means the Commitments of all the Lenders.

 

“Agreement” means this Credit Agreement.

 

“Applicable Percentage” means with respect to any Lender at any time, the percentage (carried out to the ninth decimal place) of the Aggregate Commitments represented by such Lender’s Commitment at such time, subject to adjustment as provided in Section 2.16.  If the commitment of each Lender to make Loans and the obligation of the L/C Issuer to make L/C — BA Credit Extensions have been terminated pursuant to Section 8.02 or if the Aggregate Commitments have expired, then the Applicable Percentage of each Lender shall be determined based on the Applicable Percentage of such Lender most recently in effect, giving effect to any subsequent assignments.  The initial Applicable Percentage of each Lender is set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.

 

“Applicable Rate” means, from time to time, the following percentages per annum, based upon the Quarterly Average Excess Availability as of the most recent Adjustment Date; provided that from the Closing Date until the first Adjustment Date occurring on or after the date that is six months after the Closing Date, the Applicable Rate shall be the applicable percentage per annum set forth below in Pricing Level 1:

 

2

 

Applicable Rate

 

	
Pricing
   Level
    	
 
    	
Quarterly
   Average Excess
   Availability
    	
 
    	
Commitment
   Fee
    	
 
    	
Eurodollar Rate +
    Letters of Credit —
   BAs
    	
 
    	
Base Rate +
    	
 
    
	
1
    	
 
    	
Greater than or equal to 66%
    	
 
    	
0.50
    	
%
    	
1.75
    	
%
    	
0.75
    	
%
    
	
2
    	
 
    	
Greater than 33% but less than 66%
    	
 
    	
0.375
    	
%
    	
2.00
    	
%
    	
1.00
    	
%
    
	
3
    	
 
    	
Equal to or less than 33%
    	
 
    	
0.25
    	
%
    	
2.25
    	
%
    	
1.25
    	
%
    

 

The Applicable Rate shall be adjusted as per the Administrative Agent’s books and records, in accordance with the table above, quarterly on a prospective basis on each Adjustment Date based upon the Quarterly Average Excess Availability on such date.

 

“Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

 

“Assignee Group” means two or more Eligible Assignees that are Affiliates of one another or two or more Approved Funds managed by the same investment advisor.

 

“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 10.06(b)), and accepted by the Administrative Agent, in substantially the form of Exhibit E or any other form approved by the Administrative Agent.

 

“Attributable Indebtedness” means, on any date, (a) in respect of any capital lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a capital lease.

 

“Audited Financial Statements” means the audited consolidated balance sheet of the Company and its Subsidiaries for the fiscal year ended January 1, 2012, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of the Company and its Subsidiaries, including the notes thereto.

 

“Availability” means at any time (a) the Line Cap minus (b) Total Outstandings.

 

“Availability Reserve” means the sum (without duplication) of (a) the Inventory Reserve; (b) the Rent and Charges Reserve; (c) the L/C Reserve; (d) the Cash Management Reserve; (e) the Hedge Agreement Reserve; (f) the Dilution Reserve; (g) the aggregate amount of liabilities

 

3

 

secured by Liens upon Collateral that are senior to Liens in favor of the Administrative Agent (but imposition of any such reserve shall not waive an Event of Default arising therefrom); and (h) such additional reserves, in such amounts and with respect to such matters, as the Administrative Agent in the exercise of its commercially reasonable discretion may elect to impose from time to time.

 

“Availability Period” means the period from and including the Closing Date to the earliest of (a) the Maturity Date, (b) the date of termination of the Aggregate Commitments pursuant to Section 2.06, and (c) the date of termination of the commitment of each Lender to make Loans and of the obligation of the L/C Issuer to make L/C — BA Credit Extensions pursuant to Section 8.02.

 

“Bank of America” means Bank of America, N.A. and its successors.

 

“Bankers’ Acceptance” or “BA” means shall mean a time draft, drawn by the beneficiary under an Acceptance Credit and accepted by the L/C Issuer upon presentation of documents by the beneficiary of an Acceptance Credit pursuant to Section 2.03 hereof, in the standard form for bankers’ acceptances of the L/C Issuer.

 

“Base Rate” means for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate,” and (c) the Eurodollar Rate plus 1.00%.  The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s 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 announced rate.  Any change in such prime rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.

 

“Base Rate Loan” means a Revolving Credit Loan that bears interest based on the Base Rate.

 

“Borrower” and “Borrowers” each has the meaning specified in the introductory paragraph hereto.

 

“Borrower Materials” has the meaning specified in Section 6.02.

 

“Borrowing” means a Revolving Credit Borrowing or a Swing Line Borrowing, as the context may require.

 

“Borrowing Base” means, on any date of determination, an amount equal to:

 

(a)           the sum of:

 

(i)            one hundred percent (100%) of Qualified Cash; plus

 

(ii)           eighty-five percent (85%) of the Value of Eligible Accounts; plus

 

4

 

(iii)          the lesser of (A) thirty percent (30)% of the Value of Eligible Raw Material Inventory and (B) eighty-five percent (85%) of the NOLV Percentage of the Value of Eligible Raw Material Inventory; plus

 

(iv)          the lesser of (A) sixty percent (60%) of the Value of Eligible Finished Goods Inventory and (B) eighty-five percent (85%) of the NOLV Percentage of the Value of Eligible Finished Goods Inventory; minus

 

(b)           the Availability Reserve;

 

provided, that any and all items of Collateral acquired pursuant to an Acquisition shall not be included in the Borrowing Base until such time as the Administrative Agent shall have had the opportunity to perform a diligence review of such Collateral with results satisfactory to the Administrative Agent.

 

“Borrowing Base Certificate” means a certificate, substantially in the form of Exhibit N, by which the Borrowers certify calculation of the Borrowing Base.

 

“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent’s Office is located and, if such day relates to any Eurodollar Rate Loan, means any such day that is also a London Banking Day.

 

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

 

“Cash Management Agreement” means any agreement to provide cash management services, including treasury, depository, overdraft, credit or debit card, electronic funds transfer and other cash management arrangements.

 

“Cash Management Bank” means any Person that, (a) at the time it enters into a Cash Management Agreement, is a Lender or an Affiliate of a Lender as of the Closing Date after giving effect to this Agreement, or (b) at the time it (or its Affiliate) becomes a Lender, is a party to a Cash Management Agreement, in each case in its capacity as a party to such Cash Management Agreement.

 

“Cash Management Reserve” means the aggregate amount of reserves established by the Administrative Agent from time to time in the exercise of its commercially reasonable discretion in respect of obligations with respect to Secured Cash Management Agreements.

 

5

 

“Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

 

“Change of Control” means an event or series of events by which any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) (but excluding (i) any employee benefit plan of such person or its subsidiaries, (ii) any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan, (iii) any “nominating shareholder group” meeting the applicable eligibility requirements contained in Rule 14a-11(b) under the Exchange Act (or any successor thereto) (the “Proxy Access Rule”), to the extent the Proxy Access Rule becomes effective, including, without limitation, that such nominating shareholder group is not holding any securities of the Company with the purpose, or with the effect, of changing control of the Company, provided, however, that if such “nominating shareholder group” files a Schedule 13D or Schedule 13G, other than in connection with the performance of activities arising in connection with a nomination under Rule 14a-11, then such group shall after such occurrence not be excluded pursuant to this item (iii), and (iv) subject to clause (x) below, the holders of the equity interests issued in connection with, or pursuant to, the Senior Convertible Note Documents (the “Silver Lake Holders”)), directly or indirectly, from voting for members of the board of directors or equivalent governing body of the Company) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option right”)), directly or indirectly, of (x) in the case of the Silver Lake Holders, 45% or more, and (y) in the case of each other such “person” or “group”, 20% or more, of the equity securities of the Company entitled to vote for members of the board of directors or equivalent governing body of the Company on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right).

 

“Closing Date” means the first date all the conditions precedent in Section 4.01 are satisfied or waived in accordance with Section 10.01.

 

“Code” means the Internal Revenue Code of 1986.

 

“Collateral” means all of the “Collateral” referred to in the Collateral Documents and all of the other property that is or is intended under the terms of the Collateral Documents to be subject to Liens in favor of the Administrative Agent for the benefit of the Secured Parties.

 

6

 

“Collateral Documents” means, collectively, the Security Agreement, the Pledge Agreement, the Patent Security Agreement, and each of the other agreements, instruments or documents that creates or purports to create a Lien in favor of the Administrative Agent for the benefit of the Secured Parties.

 

“Commitment” means, as to each Lender, its obligation to (a) make Loans to the Borrowers pursuant to Section 2.01, (b) purchase participations in L/C — BA Obligations, and (c) purchase participations in Swing Line Loans, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.

 

“Company” has the meaning specified in the introductory paragraph hereto.

 

“Compliance Certificate” means a certificate substantially in the form of Exhibit D.

 

“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

 

“Consolidated EBITDA” means, for any period of the four fiscal quarters most recently ended, for the Company and its Subsidiaries on a consolidated basis, an amount equal to Consolidated Net Income of the Company and its Subsidiaries for such period plus (a) the following to the extent deducted in calculating such Consolidated Net Income: (i) Consolidated Interest Expense of the Company and its Subsidiaries for such period, (ii) the provision for Federal, state, local and foreign income taxes payable by the Company and its Subsidiaries for such period, (iii) depreciation and amortization expense, and (iv) other non-recurring expenses of the Company and its Subsidiaries reducing such Consolidated Net Income which do not represent a cash item in such period or any future period and minus (b) the following to the extent included in calculating such Consolidated Net Income of the Company and its Subsidiaries: (i) Federal, state, local and foreign income tax credits of the Company and its Subsidiaries for such period and (ii) all non-cash items increasing Consolidated Net Income for such period.

 

“Consolidated Interest Expense” means, for any period, for any Person and its Subsidiaries on a consolidated basis, the sum of (a) all interest, premium payments, debt discount, fees, charges and related expenses of such Person and its Subsidiaries in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP, and (b) the portion of rent expense of such Person and its Subsidiaries with respect to such period under capital leases that is treated as interest in accordance with GAAP.

 

“Consolidated Net Income” means, for any period, for any Person and its Subsidiaries on a consolidated basis, the net income of such Person and its Subsidiaries (excluding extraordinary gains and extraordinary losses) for that period.

 

7

 

“Consolidated Target EBITDA” means, with respect to Section 7.02, for any period of the four fiscal quarters most recently ended, for any Person and its Subsidiaries on a consolidated basis, an amount equal to Consolidated Net Income of such Person and its Subsidiaries for such period plus (a) the following to the extent deducted in calculating such Consolidated Net Income: (i) Consolidated Interest Expense of such Person and its Subsidiaries for such period, (ii) the provision for Federal, state, local and foreign income taxes payable by such Person and its Subsidiaries for such period, (iii) depreciation and amortization expense and (iv) other non-recurring expenses of such Person and its Subsidiaries reducing such Consolidated Net Income which do not represent a cash item in such period or any future period and minus (b) the following to the extent included in calculating such Consolidated Net Income of such Person: (i) Federal, state, local and foreign income tax credits of such Person and its Subsidiaries for such period and (ii) all non-cash items increasing Consolidated Net Income for such period.

 

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

 

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled” have meanings correlative thereto.

 

“Controlled Foreign Corporation” means any Subsidiary of the Company which is a “controlled foreign corporation” within the meaning of Section 957 of the Code.

 

“Credit Extension” means each of the following: (a) a Borrowing and (b) an L/C — BA Credit Extension.

 

“Debt Service” means, with respect to the North American Entities for any period of four consecutive fiscal quarters ending on the date of computation thereof, the sum of, without duplication, Interest Expense of the North American Entities and the scheduled payments of principal of all Indebtedness of the North American Entities, all determined on a consolidated basis (exclusive of any arrangement fee and mandatory and voluntary prepayments of Obligations) payable during such period, all determined for such North American Entities on a consolidated basis in accordance with GAAP.

 

“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

 

“Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

 

“Default Rate” means (a) when used with respect to Obligations other than Letter of Credit — BA Fees, an interest rate equal to the interest rate (including any Applicable Rate) 

 

8

 

otherwise applicable to such Loan plus 2% per annum, and (b) when used with respect to Letter of Credit — BA Fees, a rate equal to the Applicable Rate plus 2% per annum.

 

“Defaulting Lender” means, subject to  Section 2.16(b), any Lender that (a) has failed to (i) fund all or any portion of its Loans within two Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Company in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent, the L/C Issuer, the Swing Line Lender or any other Lender any other amount required to be paid by it hereunder (including, in respect of its participation in Letters of Credit, Bankers’ Acceptances or Swing Line Loans) within two Business Days of the date when due, (b) has notified the Company, the Administrative Agent, the L/C Issuer or the Swing Line Lender in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after written request by the Administrative Agent or the Company, to confirm in writing to the Administrative Agent and the Company that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Company), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any Equity Interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender.  Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above, and of the effective date of such status, shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.16(b)) as of the date established therefor by the Administrative Agent in a written notice of such determination, which shall be delivered by the Administrative Agent to the Company, the L/C Issuer, the Swing Line Lender and each other Lender promptly following such determination.

 

“Designated Borrower” has the meaning specified in the introductory paragraph hereto.

 

“Designated Borrower Notice” has the meaning specified in Section 2.17.

 

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“Designated Borrower Request and Assumption Agreement” has the meaning specified in Section 2.17.

 

“Dilution Percent” means the percent, determined monthly by the Administrative Agent based on the most recent trailing twelve consecutive month period of (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” means a reserve established monthly by the Administrative Agent equal to the product of (a) the Dilution Percent exceeding 5% for the immediately prior month, multiplied by (b) the then dollar amount of Eligible Accounts.

 

“Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.

 

“Dollar” and “$” mean lawful money of the United States.

 

“Dominion Account” means a special account established by the Borrowers at Bank of America or another bank acceptable to the Administrative Agent, over which the Administrative Agent has exclusive control for withdrawal purposes.

 

“EBITDA” means, for any period of the four fiscal quarters most recently ended, for the North American Entities on a consolidated basis, an amount equal to Net Income of the North American Entities for such period plus (a) the following to the extent deducted in calculating such Net Income: (i) Interest Expense of the North American Entities for such period, (ii) the provision for Federal, state, local and foreign income taxes payable by the North American Entities for such period, (iii) depreciation and amortization expense and (iv) other non-recurring expenses of the North American Entities reducing such Net Income which do not represent a cash item in such period or any future period and minus (b) the following to the extent included in calculating such Net Income of the North American Entities: (i) Federal, state, local and foreign income tax credits of the North American Entities for such period and (ii) all non-cash items increasing Net Income for such period.

 

“Eligible Account” means an Account owing to a Borrower that arises in the ordinary course of business from the sale of goods,  is payable in Dollars and is deemed by the Administrative Agent, in its sole discretion, to be an Eligible Account.  Without limiting the foregoing, no Account shall be an Eligible Account if (a)(i) it is unpaid for more than 60  days after the original due date or (ii)(A) with respect to Accounts with terms of 60 days or more, it is unpaid for more than 120  days after the original invoice date, (B) with respect to Accounts with terms of less than 60 days, it is unpaid for more than 90 days after the original invoice date and (C) with respect to Accounts owing by Alcatel Lucent and Xyratex with terms of 90 days or more, it is unpaid more than 150 days after the original invoice date; (b) 50% or more of the aggregate Accounts owing by the Account Debtor are not Eligible Accounts; (c) when aggregated with other Accounts owing by the Account Debtor, it exceeds 15%  of the aggregate Eligible Accounts (or such higher percentage as the Administrative Agent may establish for the

 

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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 a potential offset, counterclaim, dispute, deduction, discount, 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 subject to any country sanctions program or specially designated nationals list maintained by the Office of Foreign Assets Control of the U.S. Treasury Department; or such 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, unless the Account is supported by a letter of credit (delivered to and directly drawable by the Administrative Agent) or credit insurance satisfactory in all respects to the Administrative Agent; provided that this clause (g) shall not apply to Accounts owing by Alcatel Lucent, Flextronics and Xyratex in an aggregate amount not to exceed $15,000,000; (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 the Administrative 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 the Administrative Agent, or is subject to any other Lien; (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, 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; or (o) it includes a billing for interest, fees or late charges, but ineligibility shall be limited to the extent thereof.  In calculating delinquent portions of Accounts under clauses (a) and (b), credit balances more than 90, 120 or 150 days old, as applicable, will be excluded.

 

“Eligible Assignee” means any Person that meets the requirements to be an assignee under Section 10.06(b)(iii), and (v) (subject to such consents, if any, as may be required under Section 10.06(b)(iii)).

 

“Eligible Finished Goods Inventory” means Inventory consisting of finished goods which otherwise would constitute Eligible Inventory.

 

“Eligible Inventory” means Inventory owned by a Borrower that the Administrative Agent, in its sole discretion, deems to be Eligible Inventory.  Without limiting the foregoing, no Inventory shall be Eligible Inventory unless it (a) is finished goods or raw materials, and not work-in-process, packaging or shipping materials, labels, samples, display items, bags, replacement parts or manufacturing supplies; (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, and does not constitute hazardous materials under any

 

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Environmental Law; (f) conforms with the covenants and representations herein; (g) is subject to the Administrative Agent’s duly perfected, first priority Lien, and no other Lien other than Permitted Liens; (h) is within the continental United States or Canada, is not in transit except between locations of the Borrowers, and is not consigned to any Person; (i) is not subject to any warehouse receipt or negotiable document; (j) is not subject to any license or other arrangement that restricts a Borrower’s or the Administrative Agent’s right to dispose of such Inventory, unless the Administrative 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 Raw Material Inventory” means Inventory consisting of raw materials which otherwise would constitute Eligible Inventory.

 

“Environmental Laws” means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.

 

“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Company, any other Loan Party or any of their respective Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

 

“Equity Interests” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.

 

“ERISA” means the Employee Retirement Income Security Act of 1974.

 

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

 

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“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) the withdrawal of the Company or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Company or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA; (e) the institution by the PBGC of proceedings to terminate a Pension Plan; (f) any event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (g) the determination that any Pension Plan is considered an at-risk plan or a plan in endangered or critical status within the meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of ERISA; or (h) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Company or any ERISA Affiliate.

 

“Eurodollar Rate” means:

 

(a)           for any Interest Period with respect to a Eurodollar Rate Loan, the rate per annum equal to (i) the British Bankers Association LIBOR Rate or the successor thereto if the British Bankers Association is no longer making a LIBOR rate available (“LIBOR”), as published by Reuters (or such other commercially available source providing quotations of LIBOR as may be designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, two London Banking Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period or, (ii) if such rate is not available at such time for any reason, the rate per annum determined by the Administrative Agent to be the rate at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Eurodollar Rate Loan being made, continued or converted and with a term equivalent to such Interest Period would be offered by Bank of America’s London Branch to major banks in the London interbank eurodollar market at their request at approximately 11:00 a.m. (London time) two London Banking Days prior to the commencement of such Interest Period; and

 

(b)           for any interest calculation with respect to a Base Rate Loan on any date, the rate per annum equal to (i) LIBOR, at approximately 11:00 a.m., London time determined two London Banking Days prior to such date for Dollar deposits being delivered in the London interbank market for a term of one month commencing that day or (ii) if such published rate is not available at such time for any reason, the rate per annum determined by the Administrative Agent to be the rate at which deposits in Dollars for delivery on the date of determination in same day funds in the approximate amount of the Base Rate Loan being made or maintained and with a term equal to one month would be offered by Bank of America’s London Branch to major banks in the London interbank Eurodollar market at their request at the date and time of determination.

 

“Eurodollar Rate Loan” means a Revolving Credit Loan that bears interest at a rate based on clause (a) of the definition of “Eurodollar Rate.”

 

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“Event of Default” has the meaning specified in Section 8.01.

 

“Excluded Taxes” means any of the following Taxes imposed on or with respect to any Recipient or required to be withheld or deducted from a payment to a Recipient, (a) any Taxes (including Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes), in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Company under Section 10.13)  or (ii) such Lender changes its Lending Office, except in each case to the extent that, pursuant to Section 3.01(a)(ii), (a)(iii) or (c), amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its Lending Office, (c) Taxes attributable to such Recipient’s failure to comply with Section 3.01(e) and (d) any U.S. federal withholding Taxes imposed pursuant to FATCA.

 

“Existing Credit Agreement” has the meaning specified in the introductory paragraph hereto.

 

“Existing Letters of Credit” means those certain letters of credit issued by Bank of America under the Existing Credit Agreement in an aggregate amount of no more than $25,000.

 

“Existing Lenders” has the meaning specified in the introductory paragraph hereto.

 

“Facility Termination Date” means the date as of which all of the following shall have occurred:  (a) the Aggregate Commitments have terminated, (b) all Obligations have been paid in full (other than (x) contingent indemnification obligations and (y) obligations and liabilities under Secured Cash Management Agreements and Secured Hedge Agreements as to which arrangements satisfactory to the applicable Cash Management Bank or Hedge Bank have been made),  and (c) all Letters of Credit and Bankers’ Acceptances have terminated or expired (other than Letters of Credit or Bankers’ Acceptances, as applicable, as to which other arrangements with respect thereto satisfactory to the Administrative Agent and the L/C Issuer shall have been made).

 

“FASB ASC” means the Accounting Standards Codification of the Financial Accounting Standards Board.

 

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.

 

“Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal

 

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Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent.

 

“Fee Letter” means the engagement letter agreement, dated January 28, 2013, among the Company and the Administrative Agent.

 

“Fixed Charge Coverage Ratio” means, with respect solely to the North American Entities for the period of four consecutive fiscal quarters most recently ended on the date of computation thereof, the ratio of (a)(i) EBITDA for such period less (ii) capital expenditures made in cash during such period, to (b) Debt Service for such period plus (without duplication) (i) the sum of all cash income Taxes paid by the North American Entities during such period and (ii) the sum of all Restricted Payments made by the North American Entities in cash during such period (other than share repurchases if foreign cash is used).

 

“Foreign Holding Company” means any Subsidiary of the Company organized under the laws of the United States or a political subdivision thereof substantially all of the assets of which consist of Equity Interests or other securities of one or more Controlled Foreign Corporations.

 

“Foreign Lender” means any Lender that is not a “U.S. Person”.

 

“Foreign Subsidiary” means any Subsidiary that is not a “United States person” as defined in Section 7701(a)(30) of the Code.

 

“FRB” means the Board of Governors of the Federal Reserve System of the United States.

 

“Fronting Exposure” means, at any time there is a Defaulting Lender, (a) with respect to the L/C Issuer, such Defaulting Lender’s Applicable Percentage of the outstanding L/C — BA Obligations other than L/C — BA Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof, and (b) with respect to the Swing Line Lender, such Defaulting Lender’s Applicable Percentage of Swing Line Loans other than Swing Line Loans as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders in accordance with the terms hereof.

 

“Fund” means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.

 

“GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting

 

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Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.

 

“Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

 

“Gross Global Unencumbered Liquidity” means, for the Company and its Subsidiaries, on a consolidated basis, the sum of  unencumbered cash and cash-equivalents on-hand.  For the avoidance of doubt, unencumbered cash and cash-equivalents shall not include cash held in (a) the People’s Republic of China or (b) short-term marketable securities.

 

“Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien); provided, however, that the term “Guarantee” shall not include (w) any liability by endorsement of instruments for deposit or collection or similar transactions in the ordinary course of business, (x) indemnification obligations of the Company or any of its Subsidiaries entered into in the ordinary course of business, (y) obligations of the Company or any of its Subsidiaries under arrangements entered into in the ordinary course of business whereby the Company or such Subsidiary sells goods or inventory to other Persons under agreements obligating the Borrower or such Subsidiary to repurchase such goods or inventory, at a price not exceeding the original sale price, upon the occurrence of certain specified events and (z) indemnification obligations arising in connection with any Acquisition or Disposition or the incurrence of Indebtedness in any case to the extent subject transaction is otherwise permitted hereby.  The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith.  The term “Guarantee” as a verb has a corresponding meaning.

 

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“Guarantors” means, collectively, the Company and each existing and future direct and indirect wholly-owned U.S. Subsidiary of the Company, other than (a) any U.S. Subsidiary that is a Subsidiary of a direct or indirect Foreign Subsidiary of the Company or (b) any Foreign Holding Company.

 

“Guaranty” means the Amended and Restated Guaranty made by the Guarantors in favor of the Secured Parties, substantially in the form of Exhibit F.

 

“Guaranty Joinder Agreement” means each guaranty joinder agreement, substantially in the form thereof attached to the Guaranty, executed and delivered by a Guarantor or any other Person to the Administrative Agent pursuant to Section 6.12.

 

“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

 

“Hedge Agreement Reserve” means the aggregate amount of reserves established by the Administrative Agent from time to time in its sole discretion in respect of the mark-to-market value of outstanding obligations with respect to Secured Hedge Agreements.

 

“Hedge Bank” means any Person that, (a) at the time it enters into a  Swap Contract not prohibited under Article VI or VII, is a Lender or an Affiliate of a Lender as of the Closing Date after giving effect to this Agreement, or (b) at the time it (or its Affiliate) becomes a Lender, is a party to a Swap Contract not prohibited under Article VI or VII, in each case, in its capacity as a party to such Swap Contract.

 

“Immaterial Subsidiary” means any Subsidiary that is not a Material Subsidiary.

 

“Indebtedness” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

 

(a)                                 all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

 

(b)                                 all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments;

 

(c)                                  net obligations of such Person under any Swap Contract;

 

(d)                                 all obligations of such Person to pay the deferred purchase price of property or services (other than (i) trade accounts payable and accrued expenses in either case incurred in the ordinary course of business, (ii) any earn-out obligations until such obligations becomes a liability on the balance sheet of such Person in accordance with

 

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GAAP and if not paid after becoming due and payable and (iii) any deferred compensation);

 

(e)                                  indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;

 

(f)                                   capital leases and Synthetic Lease Obligations;

 

(g)                                  all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interest in such Person or any other Person, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; and

 

(h)                                 all Guarantees of such Person in respect of any of the foregoing.

 

For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person.  The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date.  The amount of any capital lease or Synthetic Lease Obligation as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date.

 

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in clause (a), Other Taxes.

 

“Indemnitees” has the meaning specified in Section 10.04(b).

 

“Information” has the meaning specified in Section 10.07.

 

“Interest Expense” means, for any period, for the North American Entities on a consolidated basis, the sum of (a) all interest, premium payments, debt discount, fees, charges and related expenses of such North American Entities in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP, and (b) the portion of rent expense of such North American Entities with respect to such period under capital leases that is treated as interest in accordance with GAAP.

 

“Interest Payment Date” means, (a) as to any Loan other than a Base Rate Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date; provided, however, that if any Interest Period for a Eurodollar Rate Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan (including a Swing Line Loan), the last Business Day of each month and the Maturity Date.

 

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“Interest Period” means as to each Eurodollar Rate Loan, the period commencing on the date such Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan and ending on the date one, two, three or six months thereafter, as selected by the Company in its Loan Notice; provided that:

 

(a)                                 any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless, in the case of a Eurodollar Rate Loan, such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;

 

(b)                                 any Interest Period pertaining to a Eurodollar Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and

 

(c)                                  no Interest Period shall extend beyond the Maturity Date.

 

“Internal Restructuring” means, collectively, the organization by the Company of one or more wholly-owned Foreign Subsidiaries (each, a “New Foreign Subsidiary Holding Company”) and the contribution, sale or other disposition by the Company or another Subsidiary to any such New Foreign Subsidiary Holding Company of the Equity Interests of one or more now owned or hereafter organized Foreign Subsidiaries.

 

“Inventory” shall have the meaning 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 the Borrower’s business (but excluding equipment).

 

“Inventory Reserve” means reserves established by the Administrative Agent in its sole 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” means as to any Person, (a) the acquisition (whether for cash, Property, services or securities or otherwise) by such Person of capital stock, bonds, notes, debentures, partnership or other ownership interests or other securities of any other Person or any agreement to make any such acquisition (including any “short sale” or any sale of any securities at a time when such securities are not owned by the Person entering into such sale), and the making by such Person of any capital contribution to any other Person, (b) the making by such Person of any deposit with, or advance, loan or other extension of credit to, any other Person (including the purchase of Property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such Property to such Person), but excluding any such advance, loan or extension of credit or actual amount of any repurchase obligation arising in the ordinary course of business in connection with the sale or other disposition of Property or services by such Person, (c) the Guarantee by such Person of any obligations of any other Person and (d) the entering into by such Person of any Swap Contract.

 

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“IRS” means the United States Internal Revenue Service.

 

“ISP” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of issuance).

 

“Issuer Documents” means with respect to any Letter of Credit, the Letter of Credit Application, and any other document, agreement and instrument entered into by the L/C Issuer and the Company (or any Subsidiary) or in favor of the L/C Issuer and relating to such Letter of Credit.

 

“Laws” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

 

“L/C — BA Advance” means, with respect to each Lender, such Lender’s funding of its participation in any L/C — BA Borrowing in accordance with its Applicable Percentage.

 

“L/C — BA Borrowing” means an extension of credit resulting from a (a) drawing under any Letter of Credit (other than an Acceptance Credit) or (b) a payment of a Bankers’ Acceptance upon presentation, in each case which has not been reimbursed on the date when made or refinanced as a Borrowing.

 

“L/C — BA Credit Extension” means, with respect to any Letter of Credit or Bankers’ Acceptance, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.

 

“L/C Issuer” means Bank of America in its capacity as issuer of Letters of Credit hereunder or Bankers’ Acceptance, or any successor issuer of Letters of Credit or Bankers’ Acceptance hereunder.

 

“L/C — BA Obligations” means, as at any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit, plus the sum of the maximum aggregate amount which is, or at any time thereafter may become, payable by the L/C Issuer under all then outstanding Bankers’ Acceptances, plus the aggregate of all Unreimbursed Amounts, including all L/C — BA Borrowings.  For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.06.  For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.

 

“L/C Reserve” means the aggregate of all L/C — BA Obligations, other than those that have been Cash Collateralized by the Borrower.

 

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“Lender” has the meaning specified in the introductory paragraph hereto and, as the context requires, includes the Swing Line Lender.

 

“Lending Office” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Company and the Administrative Agent.

 

“Letter of Credit” means any letter of credit issued hereunder and shall include the Existing Letters of Credit.  A Letter of Credit may be a documentary commercial letter of credit or a standby letter of credit, provided, however, that any commercial letter of credit issued hereunder shall provide for cash payment upon presentation of a sight draft or a time draft, as applicable.

 

“Letter of Credit Application” means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the L/C Issuer and, in the case of any Acceptance Credit, shall include the related Acceptance Documents.

 

“Letter of Credit — BA Expiration Date” means the day that is seven days prior to the Maturity Date then in effect (or, if such day is not a Business Day, the next preceding Business Day).

 

“Letter of Credit — BA Fee” has the meaning specified in Section 2.03(h).

 

“Letter of Credit — BA Sublimit” means an amount equal to $50,000,000.  The Letter of Credit — BA Sublimit is part of, and not in addition to, the Aggregate Commitments.

 

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).

 

“Lien Waiver” means an agreement, in form and substance reasonably satisfactory to the Administrative Agent, by which (a) for any material Collateral located on leased premises, the lessor waives or subordinates any Lien it may have on the Collateral, and agrees to permit the Administrative Agent to enter upon the premises and remove the Collateral or to use the premises to store or dispose of the Collateral; (b) for any Collateral held by a warehouseman, processor, shipper, customs broker or freight forwarder, such Person waives or subordinates any Lien it may have on the Collateral, agrees to hold any documents in its possession relating to the Collateral as agent for the Administrative Agent, and agrees to deliver the Collateral to the Administrative Agent upon request; (c) for any Collateral held by a repairman, mechanic or bailee, such Person acknowledges the Lien in favor of the Administrative Agent, waives or subordinates any Lien it may have on the Collateral, and agrees to deliver the Collateral to the Administrative Agent upon request; and (d) for any Collateral subject to a licensor’s intellectual property rights, the licensor grants to the Administrative Agent the right, vis-à-vis such licensor, to enforce the Liens in favor of the Administrative Agent with respect to the Collateral, including

 

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the right to dispose of it with the benefit of the intellectual property, whether or not a default exists under any applicable license.

 

“Line Cap” means, at any time, the lesser of (a) the Aggregate Commitments as of such date and (b) the Borrowing Base as of such date.

 

“Loan” means an extension of credit by a Lender to a Borrower under Article II in the form of a Revolving Credit Loan, a Swing Line Loan, an Overadvance Loan or a Protective Advance.

 

“Loan Documents” means this Agreement, each Designated Borrower Request and Assumption Agreement, each Note, each Issuer Document, any agreement creating or perfecting rights in Cash Collateral pursuant to the provisions of Section 2.15 of this Agreement, the Fee Letter, the Guaranty, and each Collateral Document.

 

“Loan Notice” means a notice of (a) a Borrowing, (b) a conversion of Loans from one Type to the other, or (c) a continuation of Eurodollar Rate Loans, pursuant to Section 2.02(a), which, if in writing, shall be substantially in the form of Exhibit A and executed by a Responsible Officer of the Company.

 

“Loan Parties” means, collectively, the Company, each Guarantor and each Designated Borrower.

 

“London Banking Day” means any day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.

 

“Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole; (b) a material impairment of the ability of any Loan Party to perform its obligations under any Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party.

 

“Material Subsidiary” means, as of any date of determination thereof, each direct or indirect Subsidiary of the Company that holds, owns or contributes, as the case may be, 3% or more of the gross revenues, total assets (including Equity Interests in other Subsidiaries) or Consolidated EBITDA, in each case, of the Company and its Subsidiaries, on a consolidated basis (calculated as of the most recent fiscal period with respect to which the Administrative Agent shall have received financial statements required to be delivered pursuant to Sections 6.01(a) or (b)).  The Company shall designate one or more Immaterial Subsidiaries (including, without limitation, any Foreign Subsidiaries) as “Material Subsidiaries” if, in the absence of such designation, the aggregate gross revenues, total assets (including Equity Interests in other Subsidiaries) or contribution to Consolidated EBITDA, in each case, of all Immaterial Subsidiaries would exceed 10% of the gross revenues, total assets or Consolidated EBITDA of the Company and all of its Subsidiaries (calculated as of the most recent fiscal period with respect to which the Administrative Agent shall have received financial statements required to be delivered pursuant to Sections 6.01(a) or (b)).

 

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“Maturity Date” means January 30, 2018.

 

“Minimum Collateral Amount” means, at any time, (a) with respect to Cash Collateral consisting of cash or deposit account balances provided to reduce or eliminate Fronting Exposure during the existence of a Defaulting Lender, an amount equal to 105% of the Fronting Exposure of the L/C Issuer with respect to Letters of Credit issued and outstanding at such time, (b) with respect to Cash Collateral consisting of cash or deposit account balances provided in accordance with the provisions of Section 2.15(a)(i), (a)(ii) or (a)(iii), an amount equal to 105% of the Outstanding Amount of all L/C Obligations, and (c) otherwise, an amount determined by the Administrative Agent and the L/C Issuer in their sole discretion.

 

“Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Company or any 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” means a Plan which has two or more contributing sponsors (including the Company or any ERISA Affiliate) at least two of whom are not under common control, as such a plan is described in Section 4064 of ERISA.

 

“Net Income” means, for any period, for the North American Entities on a consolidated basis, the net income of such North American Entities (excluding extraordinary gains and extraordinary losses) for that period.

 

“NOLV Percentage” means 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 the Borrower’s Inventory performed by an appraiser and on terms satisfactory to the Administrative Agent.

 

“Non-Consenting Lender” means any Lender that does not approve any consent, waiver or amendment that (a) requires the approval of all Lenders or all affected Lenders in accordance with the terms of Section 10.01 and (b) has been approved by the Required Lenders.

 

“Non-Defaulting Lender” means, at any time, each Lender that is not a Defaulting Lender at such time.

 

“North American Entities” means the Company and any Subsidiary of the Company organized under the laws of any political subdivision of the United States, Canada or Mexico.

 

“Note” means a promissory note made by a Borrower in favor of a Lender evidencing Loans made by such Lender to such Borrower, substantially in the form of Exhibit C.

 

“Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan, Letter of Credit or Bankers’ Acceptance, Secured Cash Management Agreement or Secured Hedge Agreement, in each case whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and

 

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including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.

 

“Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

 

“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

 

“Other Taxes” means all present or future stamp, court or 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 security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 3.06).

 

“Outstanding Amount” means (i) with respect to Revolving Credit Loans and Swing Line Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Revolving Credit Loans and Swing Line Loans, as the case may be, occurring on such date; and (ii) with respect to any L/C — BA Obligations on any date, the amount of such L/C — BA Obligations on such date after giving effect to any L/C — BA Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C — BA Obligations as of such date, including as a result of any reimbursements by the Company of Unreimbursed Amounts.

 

“Overadvance” has the meaning specified in Section 2.02(f).

 

“Overadvance Loan” means a Base Rate Loan made when an Overadvance exists or is caused by the funding thereof.

 

“Participant” has the meaning specified in Section 10.06(d).

 

“Participant Register” has the meaning specified in Section 10.06(d).

 

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“Patent Security Agreement” means the Patent Security Agreement dated as of the Closing Date by the Company and one or more of the Guarantors to the Administrative Agent for the benefit of the Secured Parties, in substantially the form of Exhibit J.

 

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

 

“PBGC” means the Pension Benefit Guaranty Corporation.

 

“Pension Act” means the Pension Protection Act of 2006.

 

“Pension Funding Rules” means the rules of the Code and ERISA regarding minimum required contributions (including any installment payment thereof) to Pension Plans and set forth in, with respect to plan years ending prior to the effective date of the Pension Act, Section 412 of the Code and Section 302 of ERISA, each as in effect prior to the Pension Act and, thereafter, Section 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.

 

“Pension Plan” means any employee pension benefit plan (including a Multiple Employer Plan or a Multiemployer Plan) that is maintained or is contributed to by the Company and any ERISA Affiliate and is either covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code.

 

“Permitted Liens” means Liens permitted by Section 7.01.

 

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

 

“Plan” means any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Plan), maintained for employees of the Company or any ERISA Affiliate or any such Plan to which the Company or any ERISA Affiliate is required to contribute on behalf of any of its employees.

 

“Platform” has the meaning specified in Section 6.02.

 

“Pledge Agreement” means that certain Amended and Restated Securities Pledge Agreement dated as of the Closing Date among the Borrowers, certain Guarantors and the Administrative Agent, in substantially the form of Exhibit H, as supplemented from time to time by the execution and delivery of Pledge Joinder Agreements and Pledge Agreement Supplements.

 

“Pledge Agreement Supplement” means each Pledge Agreement Supplement, substantially in the form thereof attached to the Pledge Agreement, executed and delivered by a Loan Party pursuant to Section 6.12 or otherwise.

 

“Pledge Joinder Agreement” means each Pledge Joinder Agreement, substantially in the form thereof attached to the Pledge Agreement, executed and delivered by a Guarantor to the Administrative Agent pursuant to Section 6.12.

 

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“Pledged Interests”  has the meaning specified in the Pledge Agreement.

 

“Property” or “assets” of a Person means any personal property or assets, or interest therein, of such Person, whether tangible or intangible, and whether now owned or hereafter acquired.

 

“Protective Advances” has the meaning specified in Section 2.02(g).

 

“Public Lender” has the meaning specified in Section 6.02.

 

“Qualified Cash” means unrestricted cash held in the United States in one or more designated Dominion Accounts at Bank of America (or another United States financial institution acceptable to the Administrative Agent), which shall be non-operating accounts subject to the sole dominion and control of the Administrative Agent on terms acceptable to the Administrative Agent.

 

“Quarterly Average Excess Availability” means, on any date of determination, the percentage based upon the average balances of (a) Availability for each day of the immediately preceding calendar quarter ending prior to such date divided by (b) the Line Cap for each day of the immediately preceding calendar quarter prior to such date, in each of clause (a) and (b) as calculated by the Administrative Agent (which shall be conclusive absent manifest error).

 

“Recipient” means the Administrative Agent, any Lender, the L/C Issuer or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder.

 

“Register” has the meaning specified in Section 10.06(c).

 

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

 

“Rent and Charges Reserve” means the aggregate of (a) all past due rent and other amounts owing by a Loan Party 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.

 

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

 

“Request for Credit Extension” means (a) with respect to a Borrowing, conversion or continuation of Revolving Credit Loans, a Loan Notice, (b) with respect to an L/C — BA Credit Extension, a Letter of Credit Application, and (c) with respect to a Swing Line Loan, a Swing Line Loan Notice.

 

“Required Lenders” means, at any time, Lenders having Total Credit Exposures representing more than 50% of the Total Credit Exposures of all Lenders.  The Total Credit

 

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Exposure of any Defaulting Lender shall be disregarded in determining Required Lenders at any time; provided that, the amount of any participation in any Swing Line Loan and Unreimbursed Amounts that any Defaulting Lender has failed to fund that have not been reallocated to and funded by another Lender shall be deemed to be held by the Lender that is the Swing Line Lender or L/C Issuer, as the case may be, in making such determination.

 

“Responsible Officer” means the chief executive officer, president, chief financial officer, treasurer, assistant treasurer or controller of a Loan Party  and  solely for purposes of the delivery of incumbency certificates and certified Senior Convertible Notes Documents pursuant to Section 4.01, the secretary or any assistant secretary of a Loan Party.  Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.

 

“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any capital stock or other Equity Interest of the Company or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption (including, without limitation, the redemption of up to $80,000,000 of common stock and/or quarterly dividends in connection with any Equity Interests issued in connection with the Senior Convertible Notes Documents), retirement, acquisition, cancellation or termination of any such capital stock or other Equity Interest, or on account of any return of capital to the Company’s stockholders, partners or members (or the equivalent Person thereof).

 

“Revolving Credit Borrowing” means a borrowing consisting of simultaneous Revolving Credit Loans of the same Type and, in the case of Eurodollar Rate Loans, having the same Interest Period made by each of the Lenders pursuant to Section 2.01.

 

“Revolving Credit Exposure” means, as to any Lender at any time, the aggregate principal amount at such time of its outstanding Revolving Credit Loans and such Lender’s participation in L/C — BA Obligations and Swing Line Loans at such time.

 

“Revolving Credit Loan” has the meaning specified in Section 2.01.

 

“SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

 

“Secured Cash Management Agreement” means any Cash Management Agreement that is entered into by and between any Loan Party and any Cash Management Bank, provided such Cash Management Bank delivers written notice to the Administrative Agent, in form and substance satisfactory to the Administrative Agent, within ten (10) days following the later of the Closing Date or creation of the Cash Management Agreement, (i) describing the Cash Management Agreement 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 the Sections 8.03 and 9.11.

 

“Secured Hedge Agreement” means any Swap Contract permitted under Article VII that

 

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is entered into by and between any Loan Party and any Hedge Bank, provided such Hedge Bank delivers written notice to the Administrative Agent, in form and substance satisfactory to the Administrative Agent, within ten (10) days following the later of the Closing Date or creation of the Swap Contract, (i) describing the Swap Contract 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 the Sections 8.03 and 9.11.

 

“Secured Parties” means, collectively, the Administrative Agent, the Lenders, the L/C Issuer, the Hedge Banks, the Cash Management Banks, each co-agent or sub-agent appointed by the Administrative Agent from time to time pursuant to Section 9.05, and the other Persons the Obligations owing to which are or are purported to be secured by the Collateral under the terms of the Collateral Documents or guaranteed by the Guaranties.

 

“Security Agreement” means the Amended and Restated Security Agreement dated as of the Closing Date by the Borrowers and one or more of the Guarantors to the Administrative Agent for the benefit of the Secured Parties, in substantially the form of Exhibit G, as supplemented from time to time by the execution and delivery of Security Joinder Agreements.

 

“Security Joinder Agreement” means each Security Joinder Agreement, substantially in the form thereof attached to the Security Agreement, executed and delivered by a Guarantor or any other Person to the Administrative Agent pursuant to Section 6.12.

 

“Senior Convertible Notes Documents” means, collectively, (a) the Indenture dated as of May 8, 2009 between the Company, as Issuer, and The Bank of New York Mellon Trust Company, N.A., as Trustee, (b) the 6.0%/8.0%/10.0% Convertible Senior Notes due 2019 issued and outstanding thereunder, (c) the Securities Purchase Agreement dated as of April 23, 2009 among the Company, Silver Lake Sumeru Fund, L.P., and Silver Lake Technology Investors Sumeru, L.P and (d) the warrants to purchase Equity Interests issued pursuant thereto.

 

“Solvent” means, at any time for any Person, that (a) the fair value of the Property of such Person is greater than the fair value of the total amount of liabilities (including contingent liabilities) of such Person, (b) the present fair saleable value of the Property of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature and (d) such Person is not engaged in a business and is not about to engage in a business for which such Person’s property would constitute an unreasonably small capital.  The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

 

“Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person.  Unless otherwise

 

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specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Company.  The foregoing notwithstanding, “Shenzhen SED — IPD Industry Co. Ltd” shall not constitute a Subsidiary hereunder.

 

“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

 

“Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).

 

“Swing Line Borrowing” means a borrowing of a Swing Line Loan pursuant to Section 2.04.

 

“Swing Line Lender” means Bank of America in its capacity as provider of Swing Line Loans, or any successor swing line lender hereunder.

 

“Swing Line Loan” has the meaning specified in Section 2.04(a).

 

“Swing Line Loan Notice” means a notice of a Swing Line Borrowing pursuant to Section 2.04(b), which, if in writing, shall be substantially in the form of Exhibit B.

 

“Swing Line Sublimit” means an amount equal to the lesser of (a) $10,000,000 and (b) the Aggregate Commitments.  The Swing Line Sublimit is part of, and not in addition to, the Aggregate Commitments.

 

“Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as

 

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the indebtedness of such Person (without regard to accounting treatment); provided, however, that, the term “Synthetic Lease Obligation” shall in any event exclude any obligations that are liabilities of any such Person, as lessee, under any operating lease entered into in the ordinary course of business.

 

“Taxes” means 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.

 

“Total Credit Exposure” means, as to any Lender at any time, the unused Commitments and Revolving Credit Exposure of such Lender at such time.

 

“Total Outstandings” means the aggregate Outstanding Amount of all Loans and all L/C — BA Obligations.

 

“Trigger Grace Period” means the period (a) commencing on the day when both (i) Availability is less than $15,000,000 and (ii) the Fixed Charge Coverage Ratio is less than 1.00 to 1.00 and (b) ending on the sooner to occur of (x) a Trigger Period or (y) either clause (a)(i) or (a)(ii) no longer being true.

 

“Trigger Period” means the period (a) commencing on the day that (i) Gross Global Unencumbered Liquidity is less than $100,000,000 or (ii) Availability is less than $15,000,000 for five (5) consecutive Business Days and (b) ending on the date thereafter that (A) in the event clause (i) above was triggered, Gross Global Unencumbered Liquidity is greater than $100,000,000 and (B) in the event clause (ii) above was triggered, Availability has been greater than $25,000,000 in each case at all times and no Event of Default has existed for a period of sixty (60) consecutive days.

 

“Type” means, with respect to a Revolving Credit Loan, its character as a Base Rate Loan or a Eurodollar Rate Loan.

 

“UCC” means the Uniform Commercial Code as in effect in the State of New York; provided that, if perfection or the effect of perfection or non-perfection or the priority of any security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, “UCC” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection or priority.

 

“United States” and “U.S.” mean the United States of America.

 

“Unreimbursed Amount” has the meaning specified in Section 2.03(c)(i).

 

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

 

“U.S. Subsidiary” means any Subsidiary that is organized under the laws of any political subdivision of the United States.

 

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“U.S. Tax Compliance Certificate” has the meaning specified in Section 3.01(e)(ii)(B)(III).

 

“Value” means (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 Borrower 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.

 

“Withholding Agent” means any Loan Party and the Administrative Agent.

 

1.02                        Other Interpretive Provisions.  With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

 

(a)                                 The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”  The word “will” shall be construed to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “hereto,” “herein,” “hereof” and “hereunder,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

 

(b)                                 In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”

 

(c)                                  Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.

 

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(d)                                 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 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.  Borrowing Base calculations shall be consistent with historical methods of valuation and calculation, and otherwise satisfactory to the Administrative Agent (and not necessarily calculated in accordance with GAAP).

 

1.03                        Accounting Terms.

 

(a)                                 Generally.  All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein. Notwithstanding the foregoing, for purposes of determining compliance with any covenant (including the computation of any financial covenant) contained herein, Indebtedness of the Company and its Subsidiaries shall be deemed to be carried at 100% of the outstanding principal amount thereof, and the effects of FASB ASC 825 and FASB ASC 470-20  on financial liabilities shall be disregarded.

 

(b)                                 Changes in GAAP.  If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Company or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Company shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided  that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Company shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.

 

1.04                        Rounding.  Any financial ratios required to be maintained by the Company pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

 

1.05                        Times of Day.  Unless otherwise specified, all references herein to times of day shall be references to Pacific time (daylight or standard, as applicable).

 

1.06                        Letter of Credit Amounts.  Unless otherwise specified herein, the amount of a Letter of Credit or Bankers’ Acceptance at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; provided, however, that with respect to any Letter of Credit or Bankers’ Acceptance that, by its terms or the terms of any Issuer Document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of

 

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such Letter of Credit or Bankers’ Acceptance shall be deemed to be the maximum stated amount of such Letter of Credit or Bankers’ Acceptance after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.

 

ARTICLE II.THE COMMITMENTS AND CREDIT EXTENSIONS

 

2.01                        Loans.  Subject to the terms and conditions set forth herein, each Lender severally agrees to make loans (each such loan, a “Revolving Credit Loan”) to the Borrowers from time to time, on any Business Day during the Availability Period, in an aggregate amount not to exceed at any time outstanding the amount of such Lender’s Commitment; provided, however, that after giving effect to any Revolving Credit Borrowing, (i) the Total Outstandings shall not exceed the lesser of (A) the Aggregate Commitments and (B) the Borrowing Base and (ii) the Revolving Credit Exposure of any Lender shall not exceed such Lender’s Commitment (except for Loans made pursuant to Sections 2.02(f) and (g) below).  Within the limits of each Lender’s Commitment, and subject to the other terms and conditions hereof, the Borrowers may borrow under this Section 2.01, prepay under Section 2.05, and reborrow under this Section 2.01.  Revolving Credit Loans may be Base Rate Loans or Eurodollar Rate Loans, as further provided herein.

 

2.02                        Borrowings, Conversions and Continuations of Loans; Overadvances and Protective Advances.

 

(a)                                 Each Revolving Credit Borrowing, each conversion of Revolving Credit Loans from one Type to the other, and each continuation of Eurodollar Rate Loans shall be made upon the Company’s irrevocable notice to the Administrative Agent, which may be given by telephone.  Each such notice must be received by the Administrative Agent not later than 11:00 a.m. (i) three Business Days prior to the requested date of any Borrowing of, conversion to or continuation of Eurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to Base Rate Loans, and (ii) on the requested date of any Borrowing of Base Rate Loans.  Each telephonic notice by the Company pursuant to this Section 2.02(a) must be confirmed promptly by delivery to the Administrative Agent of a written Loan Notice, appropriately completed and signed by a Responsible Officer of the Company.  Each Borrowing of, conversion to or continuation of Eurodollar Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of $100,000 in excess thereof.  Each Loan Notice (whether telephonic or written) shall specify (i) whether the Company is requesting a Revolving Credit Borrowing, a conversion of Revolving Credit Loans from one Type to the other, or a continuation of Eurodollar Rate Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Revolving Credit Loans to be borrowed, converted or continued, (iv) the Type of Revolving Credit Loans to be borrowed or to which existing Revolving Credit Loans are to be converted, and (v) if applicable, the duration of the Interest Period with respect thereto.  If the Company fails to specify a Type of Revolving Credit Loan in a Loan Notice or if the Company fails to give a timely notice requesting a conversion or continuation, then the applicable Revolving Credit Loans shall be made as, or converted to, Base Rate Loans.  Any such automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurodollar Rate Loans.  If the Company requests a Borrowing of, conversion to, or continuation of Eurodollar Rate Loans

 

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in any such Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month.

 

(b)                                 Following receipt of a Loan Notice, the Administrative Agent shall promptly notify each Lender of the amount of its Applicable Percentage of the applicable Revolving Credit Loans, and if no timely notice of a conversion or continuation is provided by the Company, the Administrative Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans described in the preceding subsection.  In the case of a Revolving Credit Borrowing, each Lender shall make the amount of its Revolving Credit Loan available to the Administrative Agent in immediately available funds at the Administrative Agent’s Office not later than 1:00 p.m. on the Business Day specified in the applicable Loan Notice.  Upon satisfaction of the applicable conditions set forth in Section 4.02 (and, if such Borrowing is the initial Credit Extension, Section 4.01), the Administrative Agent shall make all funds so received available to the Company or the other applicable Borrower in like funds as received by the Administrative Agent either by (i) crediting the account of such Borrower on the books of Bank of America with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Company; provided, however, that if, on the date the Loan Notice with respect to such Borrowing is given by the Company, there are L/C — BA Borrowings outstanding, then the proceeds of such Borrowing, first, shall be applied to the payment in full of any such L/C — BA Borrowings, and second, shall be made available to the applicable Borrower as provided above.

 

(c)                                  Except as otherwise provided herein, a Eurodollar Rate Loan may be continued or converted only on the last day of an Interest Period for such Eurodollar Rate Loan.  During the existence of a Default, no Loans may be requested as, converted to or continued as Eurodollar Rate Loans without the consent of the Required Lenders.

 

(d)                                 The Administrative Agent shall promptly notify the Company and the Lenders of the interest rate applicable to any Interest Period for Eurodollar Rate Loans upon determination of such interest rate.  At any time that Base Rate Loans are outstanding, the Administrative Agent shall notify the Company and the Lenders of any change in Bank of America’s prime rate used in determining the Base Rate promptly following the public announcement of such change.

 

(e)                                  After giving effect to all Revolving Credit Borrowings, all conversions of Revolving Credit Loans from one Type to the other, and all continuations of Revolving Credit Loans as the same Type, there shall not be more than eight Interest Periods in effect with respect to Revolving Credit Loans.

 

(f)                                   If the aggregate Revolving Credit Loans exceed the Borrowing Base (an “Overadvance”) at any time, the excess amount shall be payable by the Borrowers on demand by the Administrative Agent (or within five Business Days of demand therefor in the event the Overadvance was the result of the imposition of reserves by the Administrative Agent), but all such Revolving Credit Loans shall nevertheless constitute Obligations secured by the Collateral and entitled to all benefits of the Loan Documents.  The Administrative Agent may require the Lenders to honor requests for Overadvance Loans and to forbear from requiring the Borrowers to cure an Overadvance, (i) when no other Event of Default is known to the Administrative Agent, as long as (A) the Overadvance does not continue for more than 30 consecutive days (and no

 

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Overadvance may exist for at least five consecutive days thereafter before further Overadvance Loans are required), and (B) the Overadvance is not known by the Administrative Agent to exceed 10% of the Borrowing Base; and (ii) regardless of whether an Event of Default exists, if the Administrative Agent discovers an Overadvance not previously known by it to exist, as long as from the date of such discovery the Overadvance (A) is not increased by more than $2,000,000, and (B) does not continue for more than 30 consecutive days.  In no event shall Overadvance Loans be required that would cause the outstanding Revolving Credit Loans and L/C - BA Obligations to exceed the Aggregate Commitments.  Any funding of an Overadvance Loan or sufferance of an Overadvance shall not constitute a waiver by the Administrative Agent or the Lenders of the Event of Default caused thereby.  In no event shall any Borrower or other Loan Party be deemed a beneficiary of this clause (f) nor authorized to enforce any of its terms.

 

(g)                                  The Administrative Agent shall be authorized, in its sole discretion, at any time that any conditions in Article IV are not satisfied to make Base Rate Loans (“Protective Advances”) (i) up to an aggregate amount of $5,000,000 outstanding at any time, if the Administrative Agent deems such Loans necessary or desirable to preserve or protect Collateral, as long as such Loans do not cause the outstanding Revolving Credit Loans and L/C - BA Obligations to exceed the Aggregate Commitments; or (ii) to pay any other amounts chargeable to the Loan Parties under any Loan Documents, including interest, costs, fees and expenses.  Each Lender shall participate in each Protective Advance on a pro rata basis.  The Required Lenders may at any time revoke the Administrative Agent’s authority to make further Protective Advances under clause (i) by written notice to the Administrative Agent.  Absent such revocation, the Administrative Agent’s determination that funding of a Protective Advance is appropriate shall be conclusive.

 

2.03                        Letters of Credit.

 

(a)                                 The Letter of Credit Commitment.

 

(i)                                     Subject to the terms and conditions set forth herein, (A) the L/C Issuer agrees, in reliance upon the agreements of the Lenders set forth in this Section 2.03, (1) from time to time on any Business Day during the period from the Closing Date until the Letter of Credit — BA Expiration Date, to issue Letters of Credit for the account of the Company or any U.S. Subsidiary, or for the account of the Company or any U.S. Subsidiary for the benefit of any Subsidiary, and to amend Letters of Credit previously issued by it, in accordance with subsection (b) below, (2) to honor drawings under the Letters of Credit, and (3) with respect to Acceptance Credits, to create Bankers’ Acceptances in accordance with the terms thereof and hereof; and (B) the Lenders severally agree to participate in Letters of Credit and Bankers’ Acceptances issued for the account of the Company or any U.S. Subsidiary, or for the account of the Company or any U.S. Subsidiary for the benefit of any Subsidiary, and any drawings thereunder; provided that the L/C Issuer shall not be obligated to make any L/C — BA Credit Extension with respect to any Letter of Credit, and no Lender shall be obligated to participate in any Letter of Credit if (A) after giving effect to any L/C — BA Credit Extension with respect to any Letter of Credit, (w) the Total Outstandings shall not exceed the lesser of the Aggregate Commitments and the Borrowing Base (without giving effect to the L/C Reserve for purposes of this calculation), (x) no Overadvance

 

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exists, (y) the Revolving Credit Exposure of any Lender shall not exceed such Lender’s Commitment, and (z) the Outstanding Amount of the L/C — BA Obligations shall not exceed the Letter of Credit — BA Sublimit or (B) as to Acceptance Credits, the Bankers’ Acceptance created or to be created thereunder shall not be an eligible bankers’ acceptance under Section 13 of the Federal Reserve Act (12 U.S.C. § 372).  Each request by the Company for the issuance or amendment of a Letter of Credit or Bankers’ Acceptance shall be deemed to be a representation by the Company that the L/C — BA Credit Extension so requested complies with the conditions set forth in the proviso to the preceding sentence.  Within the foregoing limits, and subject to the terms and conditions hereof, the Company’s ability to obtain Letters of Credit and Bankers’ Acceptances shall be fully revolving, and accordingly the Company may, during the foregoing period, obtain Letters of Credit or Bankers’ Acceptances to replace Letters of Credit or Bankers’ Acceptances, as applicable, that have expired or that have been drawn upon and reimbursed.  All Existing Letters of Credit shall be deemed to have been issued pursuant hereto, and from and after the Closing Date shall be subject to and governed by the terms and conditions hereof.

 

(ii)                                  The L/C Issuer shall not issue any Letter of Credit, if:

 

(A)                               Subject to Section 2.03(b)(iii), the expiry date of the requested Letter of Credit, or the maturity date of any Bankers’ Acceptance issued under such requested Letter of Credit, would occur more than twelve months after the date of issuance or last extension, unless the Required Lenders have approved such expiry date; or

 

(B)                               the expiry date of the requested Letter of Credit, or the maturity date of any Bankers’ Acceptance issued under such requested Letter of Credit, would occur after the Letter of Credit — BA Expiration Date, unless all the Lenders have approved such expiry date.

 

(iii)                               The L/C Issuer shall not be under any obligation to issue any Letter of Credit if:

 

(A)                               any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the L/C Issuer from issuing the Letter of Credit or any related Bankers’ Acceptance, or any Law applicable to the L/C Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, the issuance of letters of credit or related bankers’ acceptances generally or the Letter of Credit or any Bankers’ Acceptance in particular or shall impose upon the L/C Issuer with respect to the Letter of Credit or related Bankers’ Acceptance any restriction, reserve or capital requirement (for which the L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the L/C Issuer in good faith deems material to it;

 

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(B)                               the maturity date of any Bankers’ Acceptance issued under an any such requested Acceptance Credit would occur no earlier than 30 nor later than 90 days from date of issuance and in any event not later than 60 days before the Letter of Credit - BA Expiration Date, unless the Required Lenders have approved such expiry date;

 

(C)                               the issuance of the Letter of Credit or any related Bankers’ Acceptance would violate one or more policies of the L/C Issuer applicable to letters of credit generally or the creation of any related bankers’ acceptance would cause the L/C Issuer to exceed the maximum amount of outstanding bankers’ acceptances permitted by applicable law;

 

(D)                               except as otherwise agreed by the Administrative Agent and the L/C Issuer, the Letter of Credit or related Bankers’ Acceptance is in an initial stated amount less than $100,000, in the case of a commercial Letter of Credit, or $500,000, in the case of a standby Letter of Credit;

 

(E)                                the Letter of Credit is to be denominated in a currency other than Dollars; or

 

(F)                                 any Lender is at that time a Defaulting Lender, unless the L/C Issuer has entered into arrangements, including the delivery of Cash Collateral, satisfactory to the L/C Issuer (in its sole discretion) with the Company or such Lender to eliminate the L/C Issuer’s actual or potential Fronting Exposure (after giving effect to Section 2.16(a)(iv)) with respect to the Defaulting Lender arising from either the Letter of Credit then proposed to be issued or that Letter of Credit and all other L/C — BA Obligations as to which the L/C Issuer has actual or potential Fronting Exposure, as it may elect in its sole discretion.

 

(iv)                              The L/C Issuer shall not amend any Letter of Credit if the L/C Issuer would not be permitted at such time to issue the Letter of Credit in its amended form under the terms hereof.

 

(v)                                 The L/C Issuer shall be under no obligation to amend any Letter of Credit if (A) the L/C Issuer would have no obligation at such time to issue the Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of the Letter of Credit does not accept the proposed amendment to the Letter of Credit.

 

(vi)                              The L/C Issuer shall act on behalf of the Lenders with respect to any Letters of Credit or Bankers’ Acceptance issued by it and the documents associated therewith, and the L/C Issuer shall have all of the benefits and immunities (A) provided to the Administrative Agent in Article IX with respect to any acts taken or omissions suffered by the L/C Issuer in connection with Letters of Credit or Bankers’ Acceptances issued by it or proposed to be issued by it and Issuer Documents and Acceptance Documents, pertaining to such Letters of Credit or Bankers’ Acceptances, as applicable, as fully as if the term “Administrative Agent” as used in Article IX included the L/C

 

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Issuer with respect to such acts or omissions, and (B) as additionally provided herein with respect to the L/C Issuer.

 

(b)                                 Procedures for Issuance and Amendment of Letters of Credit; Auto-Extension.

 

(i)                                     Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Company delivered to the L/C Issuer (with a copy to the Administrative Agent) in the form of a Letter of Credit Application, appropriately completed and signed by a Responsible Officer of the Company.  Such Letter of Credit Application must be received by the L/C Issuer and the Administrative Agent not later than 8:00 a.m. at least two Business Days (or such later date and time as the Administrative Agent and the L/C Issuer may agree in a particular instance in their sole discretion) prior to the proposed issuance date or date of amendment, as the case may be.  In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing or presentation thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing or presentation thereunder; (G) the purpose and nature of the requested Letter of Credit; (H) the identity of the applicant and if such requested Letter of Credit is to be issued for the account of the Company or any U.S. Subsidiary for the benefit of any Subsidiary, the identity of such Subsidiary; and (I) such other matters as the L/C Issuer may require.  In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a Business Day); (C) the nature of the proposed amendment; and (D) such other matters as the L/C Issuer may require.  Additionally, the Company shall furnish to the L/C Issuer and the Administrative Agent such other documents and information pertaining to such requested Letter of Credit issuance or amendment, including any Issuer Documents, as the L/C Issuer or the Administrative Agent may require.

 

(ii)                                  Promptly after receipt of any Letter of Credit Application, the L/C Issuer will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit Application from the Company and, if not, the L/C Issuer will provide the Administrative Agent with a copy thereof.  Unless the L/C Issuer has received written notice from any Lender, the Administrative Agent or any Loan Party, at least one Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions contained in Article IV shall not then be satisfied, then, subject to the terms and conditions hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of the Company or any U.S. Subsidiary, or for the account of the Company or any U.S. Subsidiary for the benefit of any Subsidiary, or enter into the applicable amendment, as the case may be, in each case in accordance with the L/C Issuer’s usual and customary business practices.  Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and 

 

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unconditionally agrees to, purchase from the L/C Issuer a risk participation in such Letter of Credit in an amount equal to the product of such Lender’s Applicable Percentage times the amount of such Letter of Credit.  Immediately upon the creation of each Bankers’ Acceptance, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the L/C Issuer a risk participation in such Bankers’ Acceptance in an amount equal to the product of such Lender’s Applicable Percentage times the amount of such Bankers’ Acceptance.

 

(iii)                               If the Company so requests in any applicable Letter of Credit Application, the L/C Issuer may, in its sole discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an “Auto-Extension Letter of Credit”); provided that any such Auto-Extension Letter of Credit must permit the L/C Issuer to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “Non-Extension Notice Date”) in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued.  Unless otherwise directed by the L/C Issuer, the Company shall not be required to make a specific request to the L/C Issuer for any such extension.  Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the L/C Issuer to permit the extension of such Letter of Credit at any time to an expiry date not later than the Letter of Credit - BA Expiration Date; provided, however, that the L/C Issuer shall not permit any such extension if (A) the L/C Issuer has determined that it would not be permitted, or would have no obligation, at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of clause (ii) or (iii) of Section 2.03(a) or otherwise), or (B) it has received notice (which may be by telephone or in writing) on or before the day that is seven Business Days before the Non-Extension Notice Date (1) from the Administrative Agent that the Required Lenders have elected not to permit such extension or (2) from the Administrative Agent, any Lender or the Company that one or more of the applicable conditions specified in Section 4.02 is not then satisfied, and in each such case directing the L/C Issuer not to permit such extension.

 

(iv)                              Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the L/C Issuer will also deliver to the Company and the Administrative Agent a true and complete copy of such Letter of Credit or amendment.

 

(c)                                  Drawings and Reimbursements; Funding of Participations.

 

(i)                                     Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing or, with respect to any Acceptance Credit, presentation of documents, under such Letter of Credit, or any presentation for payment of a Bankers’ Acceptance, the L/C Issuer shall notify the Company and the Administrative Agent thereof.  Not later than 12:00 noon on the date of any payment by the L/C Issuer under a Letter of Credit or Bankers’ Acceptance (provided the Company received notice thereof prior to 10:00 a.m. on such date; each such date, an “Honor Date”), the Company shall reimburse the L/C Issuer through the Administrative Agent in an amount equal to the amount of such

 

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drawing or Bankers’ Acceptance, as applicable; and, if notice of drawing is not received by 10:00 a.m. on such date, the Company shall reimburse the L/C Issuer through the Administrative Agent on the next Business Day.  If the Company fails to so reimburse the L/C Issuer by such time, the Administrative Agent shall promptly notify each Lender of the Honor Date, the amount of the unreimbursed drawing or payment (the “Unreimbursed Amount”), and the amount of such Lender’s Applicable Percentage thereof.  In such event, the Company shall be deemed to have requested a Revolving Credit Borrowing of Base Rate Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, without regard to the minimum and multiples specified in Section 2.02 for the principal amount of Base Rate Loans, but subject to the amount of the unutilized portion of the Aggregate Commitments and the conditions set forth in Section 4.02 (other than the delivery of a Loan Notice).  Any notice given by the L/C Issuer or the Administrative Agent pursuant to this Section 2.03(c)(i) may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.

 

(ii)                                  Each Lender shall upon any notice pursuant to Section 2.03(c)(i) make funds available (and the Administrative Agent may apply Cash Collateral provided for this purpose) for the account of the L/C Issuer at the Administrative Agent’s Office in an amount equal to its Applicable Percentage of the Unreimbursed Amount not later than 2:00 p.m. on the Business Day specified in such notice by the Administrative Agent, whereupon, subject to the provisions of Section 2.03(c)(iii), each Lender that so makes funds available shall be deemed to have made a Base Rate Loan to the Company in such amount.  The Administrative Agent shall remit the funds so received to the L/C Issuer.

 

(iii)                               With respect to any Unreimbursed Amount that is not fully refinanced by a Revolving Credit Borrowing of Base Rate Loans because the conditions set forth in Section 4.02 cannot be satisfied or for any other reason, the Company shall be deemed to have incurred from the L/C Issuer an L/C — BA Borrowing in the amount of the Unreimbursed Amount that is not so refinanced, which L/C — BA Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate.  In such event, each Lender’s payment to the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(ii) shall be deemed payment in respect of its participation in such L/C — BA Borrowing and shall constitute an L/C — BA Advance from such Lender in satisfaction of its participation obligation under this Section 2.03.

 

(iv)                              Until each Lender funds its Revolving Credit Loan or L/C — BA Advance pursuant to this Section 2.03(c) to reimburse the L/C Issuer for any amount drawn under any Letter of Credit or payments made on any Bankers’ Acceptance, interest in respect of such Lender’s Applicable Percentage of such amount shall be solely for the account of the L/C Issuer.

 

(v)                                 Each Lender’s obligation to make Revolving Credit Loans or L/C — BA Advances to reimburse the L/C Issuer for amounts drawn under Letters of Credit and payments made on Bankers’ Acceptances, as contemplated by this Section 2.03(c), shall be absolute and unconditional and shall not be affected by any circumstance, including

 

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(A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the L/C Issuer, the Company, any Subsidiary or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided, however, that each Lender’s obligation to make Revolving Credit Loans pursuant to this Section 2.03(c) is subject to the conditions set forth in Section 4.02 (other than delivery by the Company of a Loan Notice).  No such making of an L/C — BA Advance shall relieve or otherwise impair the obligation of the Company to reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer under any Letter of Credit or Bankers’ Acceptance, together with interest as provided herein.

 

(vi)                              If any Lender fails to make available to the Administrative Agent for the account of the L/C Issuer any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.03(c) by the time specified in Section 2.03(c)(ii), then, without limiting the other provisions of this Agreement, the L/C Issuer shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the L/C Issuer at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by the L/C Issuer in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the L/C Issuer in connection with the foregoing.  If such Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such Lender’s Revolving Credit Loan included in the relevant Revolving Credit Borrowing or L/C — BA Advance in respect of the relevant L/C — BA Borrowing, as the case may be.  A certificate of the L/C Issuer submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (vi) shall be conclusive absent manifest error.

 

(d)                                 Repayment of Participations.

 

(i)                                     At any time after the L/C Issuer has made a payment under any Letter of Credit or Bankers’ Acceptance and has received from any Lender such Lender’s L/C — BA Advance in respect of such payment in accordance with Section 2.03(c), if the Administrative Agent receives for the account of the L/C Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from the Company or otherwise, including proceeds of Cash Collateral applied thereto by the Administrative Agent), the Administrative Agent will distribute to such Lender its Applicable Percentage thereof in the same funds as those received by the Administrative Agent.

 

(ii)                                  If any payment received by the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(i) is required to be returned under any of the circumstances described in Section 10.05 (including pursuant to any settlement entered into by the L/C Issuer in its discretion), each Lender shall pay to the Administrative Agent for the account of the L/C Issuer its Applicable Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal to the Federal Funds

 

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Rate from time to time in effect.  The obligations of the Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.

 

(e)                                  Obligations Absolute.  The obligation of the Company to reimburse the L/C Issuer for each drawing under each Letter of Credit and each payment under any Bankers’ Acceptance, and to repay each L/C — BA Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:

 

(i)                                     any lack of validity or enforceability of such Letter of Credit or Bankers’ Acceptance, this Agreement, or any other Loan Document;

 

(ii)                                  the existence of any claim, counterclaim, setoff, defense or other right that the Company or any Subsidiary may have at any time against any beneficiary or any transferee of such Letter of Credit or Bankers’ Acceptance (or any Person for whom any such beneficiary or any such transferee may be acting), the L/C Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or Bankers’ Acceptance or any agreement or instrument relating thereto, or any unrelated transaction;

 

(iii)                               any draft, demand, certificate or other document or endorsement presented under or in connection with such Letter of Credit or Bankers’ Acceptance proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit or obtain payment under any Bankers’ Acceptance;

 

(iv)                              any payment by the L/C Issuer under such Letter of Credit or Bankers’ Acceptance against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the L/C Issuer under such Letter of Credit or Bankers’ Acceptance to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit or Bankers’ Acceptance, including any arising in connection with any proceeding under any Debtor Relief Law; or

 

(v)                                 any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Company or any Subsidiary.

 

The Company shall promptly examine a copy of each Letter of Credit and each amendment thereto and each Bankers’ Acceptance that is delivered to it and, in the event of any claim of noncompliance with the Company’s instructions or other irregularity, the Company will immediately notify the L/C Issuer.  The Company shall be conclusively deemed to have waived any such claim against the L/C Issuer and its correspondents unless such notice is given as aforesaid.

 

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(f)                                   Role of L/C Issuer.  Each Lender and the Company agree that, in paying any drawing under a Letter of Credit or making any payment under a Bankers’ Acceptance, the L/C Issuer shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document.  None of the L/C Issuer, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Lenders or the Required Lenders, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit, Bankers’ Acceptance or Issuer Document.  The Company hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit or Bankers’ Acceptance; provided, however, that this assumption is not intended to, and shall not, preclude the Company’s pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement.  None of the L/C Issuer, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall be liable or responsible for any of the matters described in clauses (i) through (v) of Section 2.03(e); provided, however, that anything in such clauses to the contrary notwithstanding, the Company may have a claim against the L/C Issuer, and the L/C Issuer may be liable to the Company, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Company which the Company proves were caused by the L/C Issuer’s willful misconduct or gross negligence or the L/C Issuer’s willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit or to honor any Bankers’ Acceptance presented for payment in strict compliance with its terms and conditions.   In furtherance and not in limitation of the foregoing, the L/C Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and the L/C Issuer shall not be responsible for the validity or sufficiency of any instrument endorsing, transferring or assigning or purporting to endorse, transfer or assign a Letter of Credit or Bankers’ Acceptance or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.

 

(g)                                  Applicability of ISP and UCP.  Unless otherwise expressly agreed by the L/C Issuer and the Company when a Letter of Credit is issued (including any such agreement applicable to an Existing Letter of Credit), (i) the rules of the ISP shall apply to each standby Letter of Credit, and (ii) the rules of the Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce at the time of issuance shall apply to each commercial Letter of Credit.

 

(h)                                 Letter of Credit — BA Fees.  The Company shall pay to the Administrative Agent for the account of each Lender in accordance with its Applicable Percentage a Letter of Credit or BA fee, as applicable (the “Letter of Credit — BA Fees”),  (i) for each commercial Letter of Credit and each Bankers’ Acceptance equal to  the Applicable Rate  per annum  times the daily amount available to be drawn under such Letter of Credit or the maximum stated amount of such Bankers’ Acceptance, as the case may be, and (ii) for each standby Letter of Credit equal to the

 

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Applicable Rate times the daily amount available to be drawn under such Letter of Credit.  For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.06.  Letter of Credit — BA Fees shall be (i) due and payable on the last Business Day of each month, commencing with the first such date to occur after the issuance of such Letter of Credit or Bankers’ Acceptance (as the case may be), on the Letter of Credit — BA Expiration Date and thereafter on demand and (ii) computed on a quarterly basis in arrears.  If there is any change in the Applicable Rate during any quarter, the daily amount available to be drawn under each standby Letter of Credit and Bankers’ Acceptance shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect.  Notwithstanding anything to the contrary contained herein, upon the request of the Required Lenders, while any Event of Default exists, all Letter of Credit — BA Fees shall accrue at the Default Rate.

 

(i)                                     Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer.  The Company shall pay directly to the L/C Issuer for its own account a fronting fee (i) with respect to each commercial Letter of Credit and each Bankers’ Acceptance, at a rate equal to  0.125%  per annum, computed on the amount of such Letter of Credit or the maximum stated amount of such Bankers’ Acceptance, as the case may be, and payable upon the issuance thereof, (ii) with respect to any amendment of a commercial Letter of Credit increasing the amount of such Letter of Credit, at a rate separately agreed between the Company and the L/C Issuer, computed on the amount of such increase, and payable upon the effectiveness of such amendment, and (iii) with respect to each standby Letter of Credit, at the rate per annum specified in the Fee Letter, computed on the daily amount available to be drawn under such Letter of Credit on a quarterly basis in arrears  Such fronting fee shall be due and payable on the last Business Day of each month in respect of the most recently-ended quarterly period (or portion thereof, in the case of the first payment), commencing with the first such date to occur after the issuance of such Letter of Credit or Bankers’ Acceptance, as applicable, on the Letter of Credit — BA Expiration Date and thereafter on demand.  For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.06.  In addition, the Company shall pay directly to the L/C Issuer for its own account the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of the L/C Issuer relating to letters of credit and bankers’ acceptances as from time to time in effect.  Such customary fees and standard costs and charges are due and payable on demand and are nonrefundable.

 

(j)                                    Conflict with Issuer Documents.  In the event of any conflict between the terms hereof and the terms of any Issuer Document, the terms hereof shall control.

 

(k)                                 Letters of Credit Issued for Subsidiaries.  Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of any obligations or, or is for the account of, a Subsidiary, the Company shall be obligated to reimburse the L/C Issuer hereunder for any and all drawings under such Letter of Credit.  The Company hereby acknowledges that the issuance of Letters of Credit for the account of Subsidiaries inures to the benefit of the Company, and that the Company’s business derives substantial benefits from the businesses of such Subsidiaries.

 

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2.04                        Swing Line Loans.

 

(a)                                 The Swing Line.  Subject to the terms and conditions set forth herein, the Swing Line Lender, in reliance upon the agreements of the other Lenders set forth in this Section 2.04, may in its sole discretion make loans (each such loan, a “Swing Line Loan”) to the Company from time to time on any Business Day during the Availability Period in an aggregate amount not to exceed at any time outstanding the amount of the Swing Line Sublimit, notwithstanding the fact that such Swing Line Loans, when aggregated with the Applicable Percentage of the Outstanding Amount of Revolving Credit Loans and L/C — BA Obligations of the Lender acting as Swing Line Lender, may exceed the amount of such Lender’s Commitment; provided, however, that (x) after giving effect to any Swing Line Loan, (i) the Total Outstandings shall not exceed the Aggregate Commitments, and (ii) the Revolving Credit Exposure of any Lender shall not exceed such Lender’s Commitment, (y) the Company shall not use the proceeds of any Swing Line Loan to refinance any outstanding Swing Line Loan and (z) the Swing Line Lender shall not be under any obligation to make any Swing Line Loan if it shall determine (which determination shall be conclusive and binding absent manifest error) that it has, or by such Credit Extension may have, Fronting Exposure.  Within the foregoing limits, and subject to the other terms and conditions hereof, the Company may borrow under this Section 2.04, prepay under Section 2.05, and reborrow under this Section 2.04.  Each Swing Line Loan shall be a Base Rate Loan.  Immediately upon the making of a Swing Line Loan, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Swing Line Lender a risk participation in such Swing Line Loan in an amount equal to the product of such Lender’s Applicable Percentage times the amount of such Swing Line Loan.

 

(b)                                 Borrowing Procedures.  Each Swing Line Borrowing shall be made upon the Company’s irrevocable notice to the Swing Line Lender and the Administrative Agent, which may be given by telephone. Each such notice must be received by the Swing Line Lender and the Administrative Agent not later than 1:00 p.m. on the requested borrowing date, and shall specify (i) the amount to be borrowed, and (ii) the requested borrowing date, which shall be a Business Day.  Each such telephonic notice must be confirmed promptly by delivery to the Swing Line Lender and the Administrative Agent of a written Swing Line Loan Notice, appropriately completed and signed by a Responsible Officer of the Company.  Promptly after receipt by the Swing Line Lender of any telephonic Swing Line Loan Notice, the Swing Line Lender will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has also received such Swing Line Loan Notice and, if not, the Swing Line Lender will notify the Administrative Agent (by telephone or in writing) of the contents thereof.  Unless the Swing Line Lender has received notice (by telephone or in writing) from the Administrative Agent (including at the request of any Lender) prior to 2:00 p.m. on the date of the proposed Swing Line Borrowing (A) directing the Swing Line Lender not to make such Swing Line Loan as a result of the limitations set forth in the first proviso to the first sentence of Section 2.04(a), or (B) that one or more of the applicable conditions specified in Article IV is not then satisfied, then, subject to the terms and conditions hereof, the Swing Line Lender will, not later than 3:00 p.m. on the borrowing date specified in such Swing Line Loan Notice, make the amount of its Swing Line Loan available to the Company.

 

(c)                                  Refinancing of Swing Line Loans.

 

(i)                                     The Swing Line Lender at any time in its sole discretion may request, on behalf of the Company (which hereby irrevocably authorizes the Swing Line Lender to so

 

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request on its behalf), that each Lender make a Base Rate Loan in an amount equal to such Lender’s Applicable Percentage of the amount of Swing Line Loans then outstanding.  Such request shall be made in writing (which written request shall be deemed to be a Loan Notice for purposes hereof) and in accordance with the requirements of Section 2.02, without regard to the minimum and multiples specified therein for the principal amount of Base Rate Loans, but subject to the unutilized portion of the Aggregate Commitments and the conditions set forth in Section 4.02.  The Swing Line Lender shall furnish the Company with a copy of the applicable Loan Notice promptly after delivering such notice to the Administrative Agent.  Each Lender shall make an amount equal to its Applicable Percentage of the amount specified in such Loan Notice available to the Administrative Agent in immediately available funds (and the Administrative Agent may apply Cash Collateral available with respect to the applicable Swing Line Loan) for the account of the Swing Line Lender at the Administrative Agent’s Office not later than 10:00 a.m. on the day specified in such Loan Notice, whereupon, subject to Section 2.04(c)(ii), each Lender that so makes funds available shall be deemed to have made a Base Rate Loan to the Company in such amount.  The Administrative Agent shall remit the funds so received to the Swing Line Lender.

 

(ii)                                  If for any reason any Swing Line Loan cannot be refinanced by such a Revolving Credit Borrowing in accordance with Section 2.04(c)(i), the request for Base Rate Loans submitted by the Swing Line Lender as set forth herein shall be deemed to be a request by the Swing Line Lender that each of the Lenders fund its risk participation in the relevant Swing Line Loan and each Lender’s payment to the Administrative Agent for the account of the Swing Line Lender pursuant to Section 2.04(c)(i) shall be deemed payment in respect of such participation.

 

(iii)                               If any Lender fails to make available to the Administrative Agent for the account of the Swing Line Lender any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.04(c) by the time specified in Section 2.04(c)(i), the Swing Line Lender shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the Swing Line Lender at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by the Swing Line Lender in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the Swing Line Lender in connection with the foregoing.  If such Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such Lender’s Revolving Credit Loan included in the relevant Revolving Credit Borrowing or funded participation in the relevant Swing Line Loan, as the case may be.  A certificate of the Swing Line Lender submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (iii) shall be conclusive absent manifest error.

 

(iv)                              Each Lender’s obligation to make Revolving Credit Loans or to purchase and fund risk participations in Swing Line Loans pursuant to this Section 2.04(c) shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have

 

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against the Swing Line Lender, the Company or any other Person for any reason whatsoever, (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided, however, that each Lender’s obligation to make Revolving Credit Loans pursuant to this Section 2.04(c) is subject to the conditions set forth in Section 4.02.  No such funding of risk participations shall relieve or otherwise impair the obligation of the Company to repay Swing Line Loans, together with interest as provided herein.

 

(d)                                 Repayment of Participations.

 

(i)                                     At any time after any Lender has purchased and funded a risk participation in a Swing Line Loan, if the Swing Line Lender receives any payment on account of such Swing Line Loan, the Swing Line Lender will distribute to such Lender its Applicable Percentage thereof in the same funds as those received by the Swing Line Lender.

 

(ii)                                  If any payment received by the Swing Line Lender in respect of principal or interest on any Swing Line Loan is required to be returned by the Swing Line Lender under any of the circumstances described in Section 10.05 (including pursuant to any settlement entered into by the Swing Line Lender in its discretion), each Lender shall pay to the Swing Line Lender its Applicable Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned, at a rate per annum equal to the Federal Funds Rate.  The Administrative Agent will make such demand upon the request of the Swing Line Lender.  The obligations of the Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.

 

(e)                                  Interest for Account of Swing Line Lender.  The Swing Line Lender shall be responsible for invoicing the Company for interest on the Swing Line Loans.  Until each Lender funds its Base Rate Loan or risk participation pursuant to this Section 2.04 to refinance such Lender’s Applicable Percentage of any Swing Line Loan, interest in respect of such Applicable Percentage shall be solely for the account of the Swing Line Lender.

 

(f)                                   Payments Directly to Swing Line Lender.  The Company shall make all payments of principal and interest in respect of the Swing Line Loans directly to the Swing Line Lender.

 

2.05                        Prepayments.

 

(a)                                 Each Borrower may, upon notice from the Company to the Administrative Agent, at any time or from time to time voluntarily prepay Revolving Credit Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by the Administrative Agent not later than 11:00 a.m. (A) three Business Days prior to any date of prepayment of Eurodollar Rate Loans and (B) on the date of prepayment of Base Rate Loans; and (ii) any prepayment of Eurodollar Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of $100,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding.  Each such notice shall specify the date and amount of such prepayment and the Type(s) of Revolving Credit Loans to be prepaid and, if Eurodollar Rate Loans are to be prepaid, the Interest Period(s) of such Loans.  The Administrative Agent will promptly notify

 

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each Lender of its receipt of each such notice, and of the amount of such Lender’s Applicable Percentage of such prepayment.  If such notice is given by the Company, the applicable Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein; provided that such notice, if accompanied by a commitment reduction notice in accordance with Section 2.06, may state that it is conditioned upon the effectiveness of other credit facilities or the incurrence of other Indebtedness, the consummation of a particular Disposition or the occurrence of a Change of Control, in which case such notice may be revoked by the Company (by notice to the Administrative Agent on or prior to the specified prepayment date) if such condition is not satisfied.  Any prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.05.  Subject to Section 2.16, each such prepayment shall be applied to the Revolving Credit Loans of the Lenders in accordance with their respective Applicable Percentages.

 

(b)                                 The Company may, upon notice to the Swing Line Lender (with a copy to the Administrative Agent), at any time or from time to time, voluntarily prepay Swing Line Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by the Swing Line Lender and the Administrative Agent not later than 1:00 p.m. on the date of the prepayment, and (ii) any such prepayment shall be in a minimum principal amount of $100,000.  Each such notice shall specify the date and amount of such prepayment.  If such notice is given by the Company, the Company shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein.

 

(c)                                  If for any reason the Total Outstandings at any time exceed the lesser of (i) the Aggregate Commitments and (ii) the Borrowing Base then in effect, the Borrowers shall immediately (or within five Business Days of demand therefor in the event the overage was the result of the imposition of reserves by the Administrative Agent) prepay Loans and/or the Company shall Cash Collateralize the L/C — BA Obligations in an aggregate amount equal to such excess; provided, however, that the Company shall not be required to Cash Collateralize the L/C — BA Obligations pursuant to this Section 2.05(c) unless after the prepayment in full of the Revolving Credit Loans and Swing Line Loans the Total Outstandings exceed the Aggregate Commitments then in effect.

 

2.06                        Termination or Reduction of Commitments.  The Company may, upon notice to the Administrative Agent, terminate the Aggregate Commitments, or from time to time permanently reduce the Aggregate Commitments; provided that (a) any such notice shall be received by the Administrative Agent not later than 11:00 a.m. five Business Days prior to the date of termination or reduction, (b) any such partial reduction shall be in an aggregate amount of $5,000,000 or any whole multiple of $1,000,000 in excess thereof, (c) the Company shall not terminate or reduce the Aggregate Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Total Outstandings would exceed the Aggregate Commitments, and (d) if, after giving effect to any reduction of the Aggregate Commitments, the Letter of Credit — BA Sublimit or the Swing Line Sublimit exceeds the amount of the Aggregate Commitments, such Sublimit shall be automatically reduced by the amount of such excess.  The Administrative Agent will promptly notify the Lenders of any such notice of termination or reduction of the Aggregate Commitments.  Any reduction of the Aggregate Commitments shall be applied to the Commitment of each Lender according to its Applicable Percentage.  All fees

 

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accrued until the effective date of any termination of the Aggregate Commitments shall be paid on the effective date of such termination.  A notice to reduce the Aggregate Commitments hereunder may state that it is conditioned upon the effectiveness of other credit facilities or the incurrence of other Indebtedness, the consummation of a particular Disposition or the occurrence of a Change of Control, in which case such notice may be revoked by the Company (by notice to the Administrative Agent on or prior to the specified commitment reduction date) if such condition is not satisfied.

 

2.07                        Repayment of Loans.

 

(a)                                 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, during any Trigger Period.  If, as a result of such application, a credit balance exists, the balance shall not accrue interest in favor of the Borrower and shall be made available to the Borrower as long as no Default or Event of Default exists.

 

(b)                                 Each Borrower shall repay to the Lenders on the Maturity Date the aggregate principal amount of Revolving Credit Loans made to such Borrower outstanding on such date.

 

(c)                                  The Company shall repay each Swing Line Loan on the earlier to occur of (i) the date ten Business Days after such Loan is made and (ii) the Maturity Date.

 

(d)                                 Notwithstanding anything herein to the contrary, if an Overadvance exists (i) as a result of a Borrowing hereunder, the Borrowers shall, on the sooner of the Administrative Agent’s demand or the first Business Day after any Borrower has knowledge thereof, repay the outstanding Revolving Credit Loans in an amount sufficient to reduce the principal balance of Revolving Credit Loans to the Borrowing Base or (ii) for any other reason, the Borrowers shall, at the Administrative Agent’s demand (or within five Business Days of demand therefor in the event the Overadvance was the result of the imposition of reserves by the Administrative Agent), repay the outstanding Revolving Credit Loans in an amount sufficient to reduce the principal balance of Revolving Credit Loans to the Borrowing Base.

 

(e)                                  Unless payment is otherwise timely made by the Borrowers, the becoming due of any Obligations (whether principal, interest, fees or other charges, including L/C — BA Obligations, Cash Collateral and obligations with respect to Secured Cash Management Agreements and Secured Hedge Agreements) shall be deemed to be a request for Base Rate Loans on the due date, in the amount of such Obligations.  The proceeds of such Revolving Credit Loans shall be disbursed as direct payment of the relevant Obligation.  In addition, the Administrative Agent may, at its option, charge such Obligations against any operating, investment or other account of a Borrower maintained with the Administrative Agent or any of its Affiliates.  If the Borrowers maintain any disbursement account with the Administrative Agent or any Affiliate of the Administrative Agent, then presentation for payment of any Payment Item when there are insufficient funds to cover it shall be deemed to be a request for a Base Rate Loan on the date of such presentation, in the amount of the Payment Item.  The proceeds of such Revolving Credit Loan may be disbursed directly to the disbursement account.

 

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2.08                        Interest.

 

(a)                                 Subject to the provisions of subsection (b) below, (i) each Eurodollar Rate Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Eurodollar Rate for such Interest Period plus the Applicable Rate; (ii) each Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate; and (iii) each Swing Line Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate.

 

(b)                                 (i)                                     If any amount of principal of any Loan is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

 

(ii)                                  If any amount (other than principal of any Loan) payable by any Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then upon the request of the Required Lenders, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

 

(iii)                               Upon the request of the Required Lenders, while any Event of Default exists (other than as set forth in clauses (b)(i) and (b)(ii) above), the Borrowers shall pay interest on the principal amount of all outstanding Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

 

(iv)                              Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.

 

(c)                                  Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein.  Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

 

2.09                        Fees.  In addition to certain fees described in subsections (h) and (i) of Section 2.03:

 

(a)                                 Commitment Fee.  The Company shall pay to the Administrative Agent for the account of each Lender in accordance with its Applicable Percentage, a commitment fee equal to the Applicable Rate times the actual daily amount by which the Aggregate Commitments exceed the sum of (i) the Outstanding Amount of Revolving Credit Loans and (ii) the Outstanding Amount of L/C — BA Obligations, subject to adjustment as provided in Section 2.16.  For the avoidance of doubt, the Outstanding Amount of Swing Line Loans shall not be counted towards or considered usage of the Aggregate Commitments for purposes of determining the commitment

 

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fee.  The commitment fee shall accrue at all times during the Availability Period, including at any time during which one or more of the conditions in Article IV is not met, and shall be due and payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the Closing Date, and on the last day of the Availability Period.  The commitment fee shall be calculated quarterly in arrears, and if there is any change in the Applicable Rate during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect.

 

(b)                                 Other Fees.  (i) The Company shall pay to the Administrative Agent for its own account fees in the amounts and at the times specified in the Fee Letter.  Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

 

(ii)                                  The Company shall pay to the Lenders such fees as shall have been separately agreed upon in writing in the amounts and at the times so specified.  Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

 

2.10                        Computation of Interest and Fees.  All computations of interest for Base Rate Loans (including Base Rate Loans determined by reference to the Eurodollar Rate) shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed.  All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year).  Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.12(a), bear interest for one day.  Each determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.

 

2.11                        Evidence of Debt.

 

(a)                                 The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business.  The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made by the Lenders to the Borrowers and the interest and payments thereon.  Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrowers hereunder to pay any amount owing with respect to the Obligations.  In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.  Upon the request of any Lender to a Borrower made through the Administrative Agent, such Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Note, which shall evidence such Lender’s Loans to such Borrower in addition to such accounts or records.  Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto.

 

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(b)                                 In addition to the accounts and records referred to in subsection (a), each Lender and the Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit, Bankers’ Acceptances and Swing Line Loans.  In the event of any conflict between the accounts and records maintained by the Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.

 

2.12                        Payments Generally; Administrative Agent’s Clawback.

 

(a)                                 General.  All payments to be made by the Borrowers shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff.  Except as otherwise expressly provided herein, all payments by the Borrowers hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent’s Office in Dollars and in immediately available funds not later than 11:00 a.m. on the date specified herein.  The Administrative Agent will promptly distribute to each Lender its Applicable Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office.  All payments received by the Administrative Agent after 2:00 p.m. shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue.  If any payment to be made by any Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.

 

(b)                                 (i)  Funding by Lenders; Presumption by Administrative Agent.  Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Revolving Credit Borrowing of Eurodollar Rate Loans (or, in the case of any Revolving Credit Borrowing of Base Rate Loans, prior to 12:00 noon on the date of such Revolving Credit Borrowing) that such Lender will not make available to the Administrative Agent such Lender’s share of such Revolving Credit Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.02 (or, in the case of a Revolving Credit Borrowing of Base Rate Loans, that such Lender has made such share available in accordance with and at the time required by Section 2.02) and may, in reliance upon such assumption, make available to the applicable Borrower a corresponding amount.  In such event, if a Lender has not in fact made its share of the applicable Revolving Credit Borrowing available to the Administrative Agent, then the applicable Lender and the applicable Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in immediately available funds with interest thereon, for each day from and including the date such amount is made available to such Borrower to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing, and (B) in the case of a payment to be made by such Borrower, the interest rate applicable to Base Rate Loans.  If such Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to such Borrower the amount of such interest paid by such Borrower for such period.  If such

 

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Lender pays its share of the applicable Revolving Credit Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Revolving Credit Loan included in such Revolving Credit Borrowing.  Any payment by such Borrower shall be without prejudice to any claim such Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.

 

(ii)                                  Payments by Borrowers; Presumptions by Administrative Agent.  Unless the Administrative Agent shall have received notice from a Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the L/C Issuer hereunder that such Borrower will not make such payment, the Administrative Agent may assume that such Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the L/C Issuer, as the case may be, the amount due.  In such event, if such Borrower has not in fact made such payment, then each of the Lenders or the L/C Issuer, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or the L/C Issuer, in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

 

A notice of the Administrative Agent to any Lender or Borrower with respect to any amount owing under this subsection (b) shall be conclusive, absent manifest error.

 

(c)                                  Failure to Satisfy Conditions Precedent.  If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender to any Borrower as provided in the foregoing provisions of this Article II, and such funds are not made available to such Borrower by the Administrative Agent because the conditions to the applicable Credit Extension set forth in Article IV are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.

 

(d)                                 Obligations of Lenders Several.  The obligations of the Lenders hereunder to make Revolving Credit Loans, to fund participations in Letters of Credit, Bankers’ Acceptances and Swing Line Loans and to make payments pursuant to Section 10.04(c) are several and not joint.  The failure of any Lender to make any Revolving Credit Loan, to fund any such participation or to make any payment under Section 10.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Revolving Credit Loan, to purchase its participation or to make its payment under Section 10.04(c).

 

(e)                                  Funding Source.  Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.

 

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2.13                        Sharing of Payments by Lenders.  If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of the Revolving Credit Loans made by it, or the participations in L/C — BA Obligations or in Swing Line Loans held by it resulting in such Lender’s receiving payment of a proportion of the aggregate amount of such Revolving Credit Loans or participations and accrued interest thereon greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Revolving Credit Loans and subparticipations in L/C — BA Obligations and Swing Line Loans of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Revolving Credit Loans and other amounts owing them, provided that:

 

(i)                                     if any such participations or subparticipations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations or subparticipations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and

 

(ii)                                  the provisions of this Section shall not be construed to apply to (x) any payment made by or on behalf of any Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender), (y) the application of Cash Collateral provided for in Section 2.15, or (z) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Revolving Credit Loans or subparticipations in L/C — BA Obligations or Swing Line Loans to any assignee or participant, other than an assignment to the Company or any Subsidiary  thereof (as to which the provisions of this Section shall apply).

 

Each Loan Party  consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of such participation.

 

2.14                        Increase in Commitments.

 

(a)                                 Request for Increase.  Provided there exists no Default, upon notice to the Administrative Agent (which shall promptly notify the Lenders), the Company may from time to time request an increase in the Aggregate Commitments by an amount for all such requests not exceeding $25,000,000; provided that (i) any such request for an increase shall be in a minimum amount of $5,000,000  and (ii) the Company may make a maximum of three such requests.  At the time of sending such notice, the Company (in consultation with the Administrative Agent) shall specify the time period within which each Lender is requested to respond (which shall in no event be less than ten Business Days from the date of delivery of such notice to the Lenders).

 

(b)                                 Lender Elections to Increase.  Each Lender shall notify the Administrative Agent within such time period whether or not it agrees to increase its Commitment and, if so, whether

 

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by an amount equal to, greater than, or less than its Applicable Percentage of such requested increase.  Any Lender not responding within such time period shall be deemed to have declined to increase its Commitment.

 

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

 

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

 

(e)                                  Conditions to Effectiveness of Increase.  As a condition precedent to such increase, the Company shall deliver to the Administrative Agent a certificate of each Loan Party dated as of the Increase Effective Date signed by a Responsible Officer of such Loan Party (x) certifying and attaching the resolutions adopted by such Loan Party approving or consenting to such increase, and (y) in the case of the Company, certifying that, before and after giving effect to such increase, (A) the representations and warranties contained in Article V and the other Loan Documents are true and correct in all material respects on and as of the Increase Effective Date, except (i) if a qualifier relating to materiality, Material Adverse Effect or a similar concept applies, then such representation or warranty shall be required to be true and correct in all respects, (ii) to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct in all material respects as of such earlier date (unless a qualifier relating to materiality, Material Adverse Effect or a similar concept applies, in which case such representation or warranty shall be required to be true and correct in all respects), and except that for purposes of this Section 2.14, the representations and warranties contained in subsections (a) and (b) of Section 5.05 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01, and (B) no Default exists.  The Company shall prepay any Revolving Credit Loans outstanding on the Increase Effective Date (and pay any additional amounts required pursuant to Section 3.05) to the extent necessary to keep the outstanding Revolving Credit Loans ratable with any revised Applicable Percentages arising from any nonratable increase in the Commitments under this Section.

 

(f)                                   Conflicting Provisions.  This Section shall supersede any provisions in Section 2.13 or 10.01 to the contrary.

 

2.15                        Cash Collateral.

 

(a)                                 Certain Credit Support Events.  If (i) the L/C Issuer has honored any full or partial drawing request under any Letter of Credit or made any payment under any Bankers’ Acceptance

 

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and such drawing has resulted in an L/C — BA Borrowing, (ii) as of the Letter of Credit — BA Expiration Date, any L/C — BA Obligation for any reason remains outstanding, (iii) the Company shall be required to provide Cash Collateral pursuant to Section 8.02(d), or (iv) there shall exist a Defaulting Lender, the Company shall immediately (in the case of clause (iii) above) or within one Business Day (in all other cases) following any request by the Administrative Agent or the L/C Issuer, provide Cash Collateral in an amount not less than the applicable Minimum Collateral Amount (determined in the case of Cash Collateral provided pursuant to clause (iv) above, after giving effect to Section 2.16(a)(iv) and any Cash Collateral provided by the Defaulting Lender).

 

(b)                                 Grant of Security Interest.  The Company, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby grants to (and subjects to the control of) the Administrative Agent, for the benefit of the Administrative Agent, the L/C Issuer and the Lenders, and agrees to maintain, a first priority security interest in all such cash, deposit accounts and all balances therein, and all other property so provided as collateral pursuant hereto, and in all proceeds of the foregoing, all as security for the obligations to which such Cash Collateral may be applied pursuant to Section 2.15(c).  If at any time the Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Administrative Agent or the L/C Issuer as herein provided, or that the total amount of such Cash Collateral is less than the Minimum Collateral Amount, the Company will, promptly upon demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency.  All Cash Collateral (other than credit support not constituting funds subject to deposit) shall be maintained in blocked, non-interest bearing deposit accounts at Bank of America.  The Company shall pay on demand therefor from time to time all customary account opening, activity and other administrative fees and charges in connection with the maintenance and disbursement of Cash Collateral.

 

(c)                                  Application.  Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under any of this Section 2.15 or Sections 2.03, 2.04, 2.16 or 8.02 in respect of Letters of Credit or Bankers’ Acceptances shall be held and applied to the satisfaction of the specific L/C — BA Obligations, obligations to fund participations therein (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) and other obligations for which the Cash Collateral was so provided, prior to any other application of such property as may otherwise be provided for herein.

 

(d)                                 Release.  Cash Collateral (or the appropriate portion thereof) provided to reduce Fronting Exposure or to secure other obligations shall be released promptly following (i) the elimination of the applicable Fronting Exposure or other obligations giving rise thereto (including by the termination of Defaulting Lender status of the applicable Lender (or, as appropriate, its assignee following compliance with Section 10.06(b)(vi))) or (ii) the determination by the Administrative Agent and the L/C Issuer that there exists excess Cash Collateral; provided, however, the Person providing Cash Collateral and the L/C Issuer may agree that Cash Collateral shall not be released but instead held to support future anticipated Fronting Exposure or other obligations.

 

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2.16                        Defaulting Lenders.  Adjustments.  Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable Law:

 

(i)                                     Waivers and Amendments.  Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of “Required Lenders” and Section 10.01.

 

(ii)                                  Defaulting Lender Waterfall.  Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VIII or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 10.08 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to the L/C Issuer or Swing Line Lender hereunder; third, to Cash Collateralize the L/C Issuer’s Fronting Exposure with respect to such Defaulting Lender in accordance with Section 2.15; fourth, as the Company may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth, if so determined by the Administrative Agent and the Company, to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement and (y) Cash Collateralize the L/C Issuer’s future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued and Bankers’ Acceptances made under this Agreement, in accordance with Section 2.15; sixth, to the payment of any amounts owing to the Lenders, the L/C Issuer or Swing Line Lender as a result of any judgment of a court of competent jurisdiction obtained by any Lender, the L/C Issuer or the Swing Line Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Company as a result of any judgment of a court of competent jurisdiction obtained by the Company against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans or L/C — BA Borrowings in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 4.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and L/C — BA Obligations owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or L/C — BA Obligations owed to, such Defaulting Lender until such time as all Loans and funded and unfunded participations in L/C — BA Obligations and Swing Line Loans are held by the Lenders pro rata in accordance with the Commitments hereunder without giving effect to Section 2.16(a)(iv). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a

 

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Defaulting Lender or to post Cash Collateral pursuant to this Section 2.16(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

 

(iii)                               Certain Fees.

 

(A)                               No Defaulting Lender shall be entitled to receive any fee payable under Section 2.09(a) for any period during which that Lender is a Defaulting Lender (and the Company shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender).

 

(B)                               Each Defaulting Lender shall be entitled to receive Letter of Credit — BA Fees for any period during which that Lender is a Defaulting Lender only to the extent allocable to its Applicable Percentage of the stated amount of Letters of Credit and Bankers’ Acceptances for which it has provided Cash Collateral pursuant to Section 2.15.

 

(C)                               With respect to any Letter of Credit — BA Fee not required to be paid to any Defaulting Lender pursuant to clause (A) or (B) above, the Company shall (x) pay to each Non-Defaulting Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in L/C — BA Obligations or Swing Line Loans that has been reallocated to such Non-Defaulting Lender pursuant to clause (iv) below, (y) pay to the L/C Issuer and Swing Line Lender, as applicable, the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to such L/C Issuer’s or Swing Line Lender’s Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such fee.

 

(iv)                              Reallocation of Applicable Percentages to Reduce Fronting Exposure.  All or any part of such Defaulting Lender’s participation in L/C — BA Obligations and Swing Line Loans shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Applicable Percentages (calculated without regard to such Defaulting Lender’s Commitment) but only to the extent that (x) the conditions set forth in Section 4.02 are satisfied at the time of such reallocation (and, unless the Company shall have otherwise notified the Administrative Agent at such time, the Company shall be deemed to have represented and warranted that such conditions are satisfied at such time), and (y) such reallocation does not cause the aggregate Revolving Credit Exposure of any Non-Defaulting Lender to exceed such Non-Defaulting Lender’s Commitment.  No reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation.

 

(v)                                 Cash Collateral, Repayment of Swing Line Loans.  If the reallocation described in clause (a)(iv) above cannot, or can only partially, be effected, the Company shall, without prejudice to any right or remedy available to it hereunder or under applicable Law, (x) first, prepay Swing Line Loans in an amount equal to the Swing Line

 

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Lender’s Fronting Exposure and (y) second, Cash Collateralize the L/C Issuers’ Fronting Exposure in accordance with the procedures set forth in Section 2.15.

 

(b)                                 Defaulting Lender Cure.  If the Company, the Administrative Agent, the Swing Line Lender and the L/C Issuer agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Revolving Credit Loans and funded and unfunded participations in Letters of Credit, Bankers’ Acceptances and Swing Line Loans to be held on a pro rata basis by the Lenders in accordance with their Applicable Percentages (without giving effect to Section 2.16(a)(iv)), whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Company while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

 

2.17                        Designated Borrowers.

 

(a)                                 Effective as of the date hereof, Power-One Renewable Energy Solutions LLC, a Delaware limited liability company, shall be a “Designated Borrower” hereunder and may receive Loans for its account on the terms and conditions set forth in this Agreement.

 

(b)                                 The Company shall at any time, upon not less than 15 Business Days’ notice from the Company to the Administrative Agent (or such shorter period as may be agreed by the Administrative Agent in its sole discretion), designate any U.S.  Subsidiary of the Company which owns assets (an “Applicant Borrower”) to be included in the Borrowing Base as a Designated Borrower to receive Loans hereunder by delivering to the Administrative Agent (which shall promptly deliver counterparts thereof to each Lender) a duly executed notice and agreement in substantially the form of Exhibit K (a “Designated Borrower Request and Assumption Agreement”).  The parties hereto acknowledge and agree that prior to any Applicant Borrower becoming entitled to utilize the credit facilities provided for herein the Administrative Agent and the Lenders shall have received such supporting resolutions, incumbency certificates, opinions of counsel and other documents or information, in form, content and scope reasonably satisfactory to the Administrative Agent, as may be required by the Administrative Agent or the Required Lenders in their sole discretion, and Notes signed by such new Borrowers to the extent any Lenders so require.  If the Administrative Agent and the Required Lenders agree that an Applicant Borrower shall be entitled to receive Loans hereunder, then promptly following receipt of all such requested resolutions, incumbency certificates, opinions of counsel and other documents or information, the Administrative Agent shall send a notice in substantially the form of Exhibit L (a “Designated Borrower Notice”) to the Company and the Lenders specifying the effective date upon which the Applicant Borrower shall constitute a Designated Borrower for purposes hereof, whereupon each of the Lenders agrees to permit such Designated Borrower to receive Loans hereunder, on the terms and conditions set forth herein, and each of the parties

 

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agrees that such Designated Borrower otherwise shall be a Borrower for all purposes of this Agreement; provided that no Loan Notice or Letter of Credit Application may be submitted by or on behalf of such Designated Borrower until the date five Business Days after such effective date.

 

(c)                                  The Obligations of the Company and each Designated Borrower that is a U.S. Subsidiary shall be joint and several in nature.

 

(d)                                 Each Subsidiary of the Company that becomes a “Designated Borrower” pursuant to this Section 2.17 hereby irrevocably appoints the Company as its agent for all purposes relevant to this Agreement and each of the other Loan Documents, including (i) the giving and receipt of notices, (ii) the execution and delivery of all documents, instruments and certificates contemplated herein and all modifications hereto, and (iii) the receipt of the proceeds of any Loans made by the Lenders to any such Designated Borrower hereunder.  Any acknowledgment, consent, direction, certification or other action which might otherwise be valid or effective only if given or taken by all Borrowers, or by each Borrower acting singly, shall be valid and effective if given or taken only by the Company, whether or not any such other Borrower joins therein.  Any notice, demand, consent, acknowledgement, direction, certification or other communication delivered to the Company in accordance with the terms of this Agreement shall be deemed to have been delivered to each Designated Borrower.

 

ARTICLE III.                TAXES, YIELD PROTECTION AND ILLEGALITY

 

3.01                        Taxes.

 

(a)                                 Payments Free of Taxes; Obligation to Withhold; Payments on Account of Taxes.

 

(i)                                     Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable Laws.  If any applicable Laws (as determined in the good faith discretion of an applicable Withholding Agent) require the deduction or withholding of any Tax from any such payment by the Administrative Agent or a Loan Party, then the Administrative Agent or such Loan Party shall be entitled to make such deduction or withholding, upon the basis of the information and documentation to be delivered pursuant to subsection (e) below.

 

(ii)                                  If any Loan Party or the Administrative Agent shall be required by the Code to withhold or  deduct any Taxes, including both United States Federal backup withholding and withholding taxes, from any payment, then (A) the Administrative Agent shall withhold or make such deductions as are determined by the Administrative Agent to be required based upon the information and documentation it has received pursuant to subsection (e) below, (B) the Administrative Agent shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with the Code, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the applicable Loan Party shall be increased as necessary so that after any such required withholding or the making of all such required deductions (including deductions applicable to additional sums payable under this

 

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Section 3.01) the applicable Recipient receives an amount equal to the sum it would have received had no such withholding or deduction been made.

 

(iii)                               If any Loan Party or the Administrative Agent shall be required by any applicable Laws other than the Code to withhold or  deduct any Taxes from any payment, then (A) the applicable Withholding Agent shall withhold or make such deductions as are determined by it to be required based upon the information and documentation it has received pursuant to subsection (e) below, (B) the applicable Withholding Agent shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with such Laws, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the applicable Loan Party shall be increased as necessary so that after any such required withholding or the making of all such required deductions (including such deductions applicable to additional sums payable under this Section 3.01) the applicable Recipient receives an amount equal to the sum it would have received had no such withholding or deduction been made.

 

(b)                                 Payment of Other Taxes by the Loan Parties.  Without limiting or duplicating the provisions of subsection (a) above, the Loan Parties shall timely pay to the relevant Governmental Authority in accordance with applicable Law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.

 

(c)                                  Tax Indemnifications.  (i) Each of the Loan Parties shall, and does hereby, jointly and severally indemnify each Recipient, and shall make payment in respect thereof within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 3.01) payable or paid by such Recipient or required to be withheld or deducted from a payment to such 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.  A certificate as to the amount of such payment or liability delivered to the Company by a Lender or the L/C Issuer (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender or the L/C Issuer, shall be conclusive absent manifest error.  Each of the Loan Parties shall, and does hereby, jointly and severally indemnify the Administrative Agent, and shall make payment in respect thereof within 10 days after demand therefor, for any amount which a Lender or the L/C Issuer for any reason fails to pay indefeasibly to the Administrative Agent as required pursuant to Section 3.01(c)(ii) below.

 

(ii)                                  Each Lender and the L/C Issuer shall, and does hereby, severally indemnify, and shall make payment in respect thereof within 10 days after demand therefor, (x) the Administrative Agent against any Indemnified Taxes attributable to such Lender or the L/C Issuer (but only to the extent that any Loan Party has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Loan Party to do so), (y) the Administrative Agent and the Loan Parties, as applicable, against any Taxes attributable to such Lender’s failure to comply with the provisions of Section 10.06(d) relating to the maintenance of a Participant Register and (z) the Administrative Agent and the Loan Parties, as applicable, against any Excluded Taxes attributable to such Lender or the L/C Issuer, in each case, that are

 

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payable or paid by the Administrative Agent or any Loan Party in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to any Lender by the Loan Parties or the Administrative Agent shall be conclusive absent manifest error.  Each Lender and the L/C Issuer hereby authorizes the Loan Parties and the Administrative Agent, as applicable, to set off and apply any and all amounts at any time owing to such Lender or the L/C Issuer, as the case may be, under this Agreement or any other Loan Document against any amount due to the Loan Parties or the Administrative Agent, as applicable, under this clause (ii).

 

(d)                                 Evidence of Payments.  Upon request by the Company or the Administrative Agent, as the case may be, after any payment of Taxes by any Loan Party or by the Administrative Agent to a Governmental Authority as provided in this Section 3.01, the Company shall deliver to the Administrative Agent or the Administrative Agent shall deliver to the Company, as the case may be, the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of any return required by Laws to report such payment or other evidence of such payment reasonably satisfactory to the Company or the Administrative Agent, as the case may be.

 

(e)                                  Status of Lenders; Tax Documentation.  (i)  Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Company and the Administrative Agent, at the time or times reasonably requested by the Company or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Company or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding.  In addition, any Lender, if reasonably requested by the Company or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Company or the Administrative Agent as will enable the Company or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.  Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 3.01(e)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

 

(ii)                                  Without limiting the generality of the foregoing,

 

(A)                               any Lender that is a U.S. Person shall deliver to the Company and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Company or the Administrative Agent), executed originals of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;

 

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(B)                               any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Company and the Administrative 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 under this Agreement (and from time to time thereafter upon the reasonable request of the Company or the Administrative Agent), whichever of the following is applicable:

 

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

 

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

 

(III)                         in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit M-1 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 any of the Borrowers 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 (a “U.S. Tax Compliance Certificate”) and (y) executed originals of IRS Form W-8BEN; or

 

(IV)                          to the extent a Foreign Lender is not the beneficial owner, executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, a U.S. Tax Compliance Certificate substantially in the form of Exhibit M-2 or Exhibit M-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit M-4 on behalf of each such direct and indirect partner;

 

(C)                               any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Company and the Administrative 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 under this Agreement (and from time to time thereafter upon the reasonable request of the Company or the Administrative Agent), executed originals of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax,

 

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duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Company or the Administrative Agent to determine the withholding or deduction required to be made; and

 

(D)                               if a payment made to a Lender under any Loan Document 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, as applicable), such Lender shall deliver to the Company and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Company or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Company or the Administrative Agent as may be necessary for the Company and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment.  Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

 

(iii)                               Each Lender agrees that if any form or certification it previously delivered pursuant to this Section 3.01 expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Company and the Administrative Agent in writing of its legal inability to do so.

 

(f)                                   Treatment of Certain Refunds.  Unless required by applicable Laws, at no time shall the Administrative Agent have any obligation to file for or otherwise pursue on behalf of a Lender or the L/C Issuer, or have any obligation to pay to any Lender or the L/C Issuer, any refund of Taxes withheld or deducted from funds paid for the account of such Lender or the L/C Issuer, as the case may be.  If any Recipient determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes (including any potential refund of Taxes that are treated as an advance against future Taxes) as to which it has been indemnified by any Loan Party or with respect to which any Loan Party has paid additional amounts pursuant to this Section 3.01, it shall pay to such Loan Party an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by a Loan Party under this Section 3.01 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) incurred by such Recipient, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that each Loan Party, upon the request of the Recipient, agrees to repay the amount paid over to such Loan Party (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Recipient in the event the Recipient is required to repay such refund to such Governmental Authority.  Notwithstanding anything to the contrary in this subsection, in no event will the applicable Recipient be required to pay any amount to such Loan Party pursuant to this subsection the payment of which would place the Recipient in a less favorable net after-Tax position than such Recipient 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.

 

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This subsection shall not be construed to require any Recipient to make available its tax returns (or any other information relating to its taxes that it deems confidential) to any Loan Party or any other Person.

 

(g)                                  Survival.  Each party’s obligations under this Section 3.01 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender or the L/C Issuer, the termination of the Commitments and the repayment, satisfaction or discharge of all other Obligations.

 

3.02                        Illegality.  If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Loans whose interest is determined by reference to the Eurodollar Rate, or to determine or charge interest rates based upon the Eurodollar Rate, 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 the Company through the Administrative Agent, (i) any obligation of such Lender to make or continue Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate Loans shall be suspended, and (ii) if such notice asserts the illegality of such Lender making or maintaining Base Rate Loans the interest rate on which is determined by reference to the Eurodollar Rate component of the Base Rate, the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Eurodollar Rate component of the Base Rate, in each case until such Lender notifies the Administrative Agent and the Company that the circumstances giving rise to such determination no longer exist.  Upon receipt of such notice, (x) the Borrowers shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate Loans (the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Eurodollar Rate component of the Base Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Rate Loans and (y) if such notice asserts the illegality of such Lender determining or charging interest rates based upon the Eurodollar Rate, the Administrative Agent shall during the period of such suspension compute the Base Rate applicable to such Lender without reference to the Eurodollar Rate component thereof until the Administrative Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon the Eurodollar Rate.  Upon any such prepayment or conversion, the Borrowers shall also pay accrued interest on the amount so prepaid or converted.

 

3.03                        Inability to Determine Rates.  If the Required Lenders determine that for any reason in connection with any request for a Eurodollar Rate Loan or a conversion to or continuation thereof that (a) Dollar deposits are not being offered to banks in the London interbank eurodollar market for the applicable amount and Interest Period of such Eurodollar Rate Loan, (b) adequate and reasonable means do not exist for determining the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan or in connection with an existing or proposed Base Rate Loan, or (c) the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan does not adequately 

 

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and fairly reflect the cost to such Lenders of funding such Loan, the Administrative Agent will promptly so notify the Company and each Lender.  Thereafter, (x) the obligation of the Lenders to make or maintain Eurodollar Rate Loans shall be suspended, and (y) in the event of a determination described in the preceding sentence with respect to the Eurodollar Rate component of the Base Rate, the utilization of the Eurodollar Rate component in determining the Base Rate shall be suspended, in each case until the Administrative Agent (upon the instruction of the Required Lenders) revokes such notice.  Upon receipt of such notice, the Company may revoke any pending request for a Borrowing of, conversion to or continuation of Eurodollar Rate Loans or, failing that, will be deemed to have converted such request into a request for a Revolving Credit Borrowing of Base Rate Loans in the amount specified therein.

 

3.04                        Increased Costs; Reserves on Eurodollar Rate Loans.

 

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

 

(i)                                     impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement contemplated by Section 3.04(e)) or the L/C Issuer;

 

(ii)                                  subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or

 

(iii)                               impose on any Lender or the L/C Issuer or the London interbank market any other condition, cost or expense affecting this Agreement or Eurodollar Rate Loans made by such Lender or any Letter of Credit or Bankers’ Acceptance or participation therein;

 

and the result of any of the foregoing shall be to increase the cost to such Lender of making, converting to, continuing or maintaining any Loan the interest on which is determined by reference to the Eurodollar Rate (or of maintaining its obligation to make any such Loan), or to increase the cost to such Lender or the L/C Issuer of participating in, issuing or maintaining any Letter of Credit or Bankers’ Acceptance (or of maintaining its obligation to participate in or to issue any Letter of Credit or Bankers’ Acceptance), or to reduce the amount of any sum received or receivable by such Lender or the L/C Issuer hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or the L/C Issuer, the Company will pay (or cause the applicable Designated Borrower to pay) to such Lender or the L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the L/C Issuer, as the case may be, for such additional costs incurred or reduction suffered.

 

(b)                                 Capital Requirements.  If any Lender or the L/C Issuer determines that any Change in Law affecting such Lender or the L/C Issuer or any Lending Office of such Lender or such Lender’s or the L/C Issuer’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s or the 

 

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L/C Issuer’s capital or on the capital of such Lender’s or the L/C Issuer’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the L/C Issuer, to a level below that which such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or the L/C Issuer’s policies and the policies of such Lender’s or the L/C Issuer’s holding company with respect to capital adequacy), then from time to time the Company will pay (or cause the applicable Designated Borrower to pay) to such Lender or the L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding company for any such reduction suffered.

 

(c)                                  Certificates for Reimbursement.  A certificate of a Lender or the L/C Issuer setting forth the amount or amounts necessary to compensate such Lender or the L/C Issuer or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to the Company shall be conclusive absent manifest error.  The Company shall pay (or cause the applicable Designated Borrower to pay) to such Lender or the L/C Issuer, as the case may be, the amount shown as due on any such certificate within ten days after receipt thereof.

 

(d)                                 Delay in Requests.  Failure or delay on the part of any Lender or the L/C Issuer to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a waiver of such Lender’s or the L/C Issuer’s right to demand such compensation, provided that no Borrower shall be required to compensate a Lender or the L/C Issuer pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than nine months prior to the date that such Lender or the L/C Issuer, as the case may be, notifies the Company of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the L/C Issuer’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).

 

(e)                                  Reserves on Eurodollar Rate Loans.  The Company shall pay (or cause the applicable Designated Borrower to pay) to each Lender, as long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as “Eurocurrency liabilities”), additional interest on the unpaid principal amount of each Eurodollar Rate Loan equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), which shall be due and payable on each date on which interest is payable on such Loan, provided the Company shall have received at least ten days’ prior notice (with a copy to the Administrative Agent) of such additional interest from such Lender.  If a Lender fails to give notice ten days prior to the relevant Interest Payment Date, such additional interest shall be due and payable ten days from receipt of such notice.

 

3.05                        Compensation for Losses.  Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Company shall promptly compensate (or cause the applicable Designated Borrower to compensate) such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of: 

 

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(a)                                 any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);

 

(b)                                 any failure by any Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or in the amount notified by the Company or the applicable Designated Borrower; or

 

(c)                                  any assignment of a Eurodollar Rate Loan on a day other than the last day of the Interest Period therefor as a result of a request by the Company pursuant to Section 10.13;

 

including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained.  The Company shall also pay (or cause the applicable Designated Borrower to pay) any customary administrative fees charged by such Lender in connection with the foregoing.

 

For purposes of calculating amounts payable by the Company (or the applicable Designated Borrower) to the Lenders under this Section 3.05, each Lender shall be deemed to have funded each Eurodollar Rate Loan made by it at the Eurodollar Rate  for such Loan by a matching deposit or other borrowing in the London interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Eurodollar Rate Loan was in fact so funded.

 

3.06                        Mitigation Obligations; Replacement of Lenders.

 

(a)                                 Designation of a Different Lending Office.  If any Lender requests compensation under Section 3.04, or requires any Borrower to pay any Indemnified Taxes or additional amounts to any Lender, the L/C Issuer, or any Governmental Authority for the account of any Lender or the L/C Issuer pursuant to Section 3.01, or if any Lender gives a notice pursuant to Section 3.02, then at the request of the Company such Lender or the L/C Issuer shall, as applicable, use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender or the L/C Issuer, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04, as the case may be, in the future, or eliminate the need for the notice pursuant to Section 3.02, as applicable, and (ii) in each case, would not subject such Lender or the L/C Issuer, as the case may be, to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender or the L/C Issuer, as the case may be.  The Company hereby agrees to pay (or cause the applicable Designated Borrower to pay) all reasonable costs and expenses incurred by any Lender or the L/C Issuer in connection with any such designation or assignment.

 

(b)                                 Replacement of Lenders.  If any Lender requests compensation under Section 3.04, or if any Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01 and, in each case, such Lender has declined or is unable to designate a different lending office in accordance with Section 3.06(a), the Company may replace such Lender in accordance with Section 10.13.

 

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3.07                        Survival.  All obligations of the Loan Parties under this Article III shall survive termination of the Aggregate Commitments, repayment of all other Obligations hereunder, and resignation of the Administrative Agent.

 

ARTICLE IV.                 CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

 

4.01                        Conditions of Amendment and Restatement.  The effectiveness of this Agreement as an amendment and restatement of the Existing Credit Agreement is subject to satisfaction of the following conditions precedent:

 

(a)                                 The Administrative Agent’s receipt of the following, each of which shall be originals or telecopies (followed promptly by originals), each properly executed by a Responsible Officer of the signing Loan Party, each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance satisfactory to the Administrative Agent and each of the Lenders:

 

(i)                                     executed counterparts of this Agreement, the Security Agreement, the Patent Security Agreement, the Pledge Agreement and the Guaranty, sufficient in number for distribution to the Administrative Agent, each Lender and the Company;

 

(ii)                                  a Note executed by the Borrowers in favor of each Lender requesting a Note;

 

(iii)                               such certificates of resolutions or other action, incumbency certificates including specimen signatures and/or other certificates of Responsible Officers of each Loan Party as the Administrative Agent may require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which such Loan Party is a party;

 

(iv)                              such documents and certifications as the Administrative Agent may reasonably require to evidence that each Loan Party is duly organized or formed, and that each Loan Party is validly existing, in good standing and qualified to engage in business in each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect;

 

(v)                                 a favorable opinion of Gibson, Dunn & Crutcher LLP, counsel to the Loan Parties, addressed to the Administrative Agent and each Lender, in the form set forth in Exhibit I;

 

(vi)                              a certificate of a Responsible Officer of the Company either (A) attaching copies of all consents, licenses and approvals required in connection with the execution, delivery and performance by such Loan Party and the validity against such Loan Party of the Loan Documents to which it is a party, and such consents, licenses and approvals shall be in full force and effect, or (B) stating that no such consents, licenses or approvals are so required;

 

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(vii)                           a certificate signed by a Responsible Officer of the Company certifying (A) that the conditions specified in Sections 4.02(a) and (b) have been satisfied (other than any such conditions as are subject to the judgment or discretion of the Administrative Agent or any Lender), and (B) that there has been no event or circumstance since the date of the Audited Financial Statements that has had or could be reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect;

 

(viii)                        a certificate signed by the chief financial officer of the Company certifying that the Company and its Subsidiaries on a consolidated basis are Solvent, after giving effect to this Agreement and the other Loan Documents and the Indebtedness pursuant hereto and thereto;

 

(ix)                              evidence that all insurance required to be maintained pursuant to the Loan Documents has been obtained and is in effect;

 

(x)                                 an initial Loan Notice, if applicable;

 

(xi)                              (A) the annual (or other audited) consolidated financial statements of the Company and its Subsidiaries for the fiscal year ended January 1, 2012, (B) interim consolidated financial statements of the Company and its Subsidiaries dated the end of the most recent fiscal quarter for which financial statements are available, and (C) the projections and operating budgets set forth in Section 6.01(d) for the 2013 fiscal year;

 

(xii)                           copies of all material Senior Convertible Notes Documents, certified by a Responsible Officer of the Company;

 

(xiii)                        Uniform Commercial Code search results showing only those Liens as are permitted to exist hereunder and with file currency dates that are reasonably acceptable to the Administrative Agent;

 

(xiv)                       delivery of Uniform Commercial Code financing statements, suitable in form and substance for filing in all places required by applicable law to perfect the Liens of the Administrative Agent under the Collateral Documents as to items of Collateral in which a security interest may be perfected by the filing of financing statements, and such other documents and/or evidence of other actions as may be reasonably necessary under applicable law to perfect the Liens of the Administrative Agent under such Collateral Documents in and to such other Collateral as the Administrative Agent may require, including without limitation the delivery by the Loan Parties of all certificates evidencing Pledged Interests (as defined in the Pledge Agreement), accompanied in each case by duly executed stock powers (or other appropriate transfer documents) in blank affixed thereto;

 

(xv)                          delivery of duly executed control agreements establishing each Dominion Account and related lockbox, in form and substance, and with financial institutions, satisfactory to the Administrative Agent;

 

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(xvi)                       delivery of a Borrowing Base Certificate prepared as of December 30, 2012.  Upon giving effect to the initial funding of Revolving Credit Loans and issuance of Letters of Credit, and the payment by the 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 $25,000,000;

 

(xvii)                    delivery of a duly executed Assignment and Assumption from each Existing Lender (other than Bank of America) in accordance with the Existing Credit Agreement; and

 

(xviii)                 such other assurances, certificates, documents, consents or opinions as the Administrative Agent, the L/C Issuer, the Swing Line Lender or the Required Lenders reasonably may require.

 

(b)                                 Any fees required to be paid on or before the Closing Date shall have been paid.

 

(c)                                  Unless waived by the Administrative Agent, the Company shall have paid all reasonable and documented fees, charges and disbursements of counsel to the Administrative Agent (directly to such counsel if requested by the Administrative Agent) to the extent invoiced prior to or on the Closing Date, plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between the Company and the Administrative Agent).

 

4.02                        Conditions to all Credit Extensions.  The obligation of each Lender to honor any Request for Credit Extension (other than a Loan Notice requesting only a conversion of Loans to the other Type, or a continuation of Eurodollar Rate Loans) is subject to the following conditions precedent:

 

(a)                                 The representations and warranties of (x) the Borrowers contained in Article V of this Agreement and (y) each Loan Party contained in each other Loan Document or in any document furnished at any time under or in connection herewith or therewith, shall be true and correct in all material respects on and as of the date of such Credit Extension, except that (i) if a qualifier relating to materiality, Material Adverse Effect or a similar concept applies, such representation or warranty shall be required to be true and correct in all respects, (ii) to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date (except that if a qualifier relating to materiality, Material Adverse Effect or a similar concept applies, such representation or warranty shall be required to be true and correct in all respects as of such earlier date) and (iii) for purposes of this Section 4.02, the representations and warranties contained in subsections (a) and (b) of Section 5.05 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01.

 

(b)                                 No Default shall exist, or would result from such proposed Credit Extension or from the application of the proceeds thereof.

 

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(c)                                  The Administrative Agent and, if applicable, the L/C Issuer or the Swing Line Lender shall have received a Request for Credit Extension in accordance with the requirements hereof.

 

(d)                                 If the applicable Borrower is a Designated Borrower, then the conditions of Section 2.17 to the designation of such Borrower as a Designated Borrower shall have been met to the satisfaction of the Administrative Agent.

 

(e)                                  No Trigger Grace Period shall be in effect.

 

Each Request for Credit Extension (other than a Loan Notice requesting only a conversion of Loans to the other Type or a continuation of Eurodollar Rate Loans) submitted by the Company shall be deemed to be a representation and warranty that the conditions specified in Sections 4.02(a) and (b) have been satisfied on and as of the date of the applicable Credit Extension.

 

ARTICLE V. REPRESENTATIONS AND WARRANTIES

 

Each Borrower represents and warrants to the Administrative Agent and the Lenders that:

 

5.01                        Existence, Qualification and Power.  Each Loan Party and each Material Subsidiary thereof (a) is duly organized or formed, validly existing and, as applicable, in good standing under the Laws of the jurisdiction of its incorporation or organization (to the extent such concepts apply in such jurisdictions), (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party, and (c) is duly qualified and is licensed and, as applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except (1) in each case referred to in clause (b)(i) or (c), to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect, and (2) in the case of clause (a), where the failure to be duly organized or formed, validly existing or otherwise in good standing is the result of a transaction not otherwise prohibited under Section 7.04 or 7.05 or the failure to be in good standing results from, in the reasonable discretion of the Administrative Agent, a non-volitional, or otherwise inadvertent, administrative oversight by the Company, which the Company is diligently seeking to remedy.

 

5.02                        Authorization; No Contravention.  The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is party, have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of such Person’s Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien (other than a Permitted Lien) under, or require any payment to be made under (i) any material Contractual Obligation to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) violate any Law.

 

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5.03                        Governmental Authorization; Other Consents.  No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document, other than such filings that may be required under any applicable securities laws, or pursuant to the laws of the jurisdictions of organization of any Foreign Subsidiary the equity interests of which compose an item of Collateral, in either case in connection with the enforcement of the Loan Documents against the Loan Parties and the Liens created thereunder).

 

5.04                        Binding Effect.  This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto.  This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms.

 

5.05                        Financial Statements; No Material Adverse Effect.

 

(a)                                 The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present in all material respects the financial condition of the Company and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show all material indebtedness and other liabilities, direct or contingent, of the Company and its Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Indebtedness, in each case required to be shown on financial statements prepared in accordance with GAAP.

 

(b)                                 The unaudited consolidated and consolidating balance sheets of the Company and its Subsidiaries dated September 30, 2012, and the related consolidated and consolidating  statements of income or operations and cash flows for the fiscal quarter ended on that date (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present in all material respects the financial condition of the Company and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to normal year-end audit adjustments.

 

(c)                                  Since the date of the Audited Financial Statements, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.

 

5.06                        Litigation.  There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Company after due and diligent investigation, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against the Company or any of its Subsidiaries or against any of their properties or revenues that (a) purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby, or (b) except as specifically disclosed in Schedule 5.06, either individually or in the aggregate could reasonably be expected to have a Material Adverse Effect.

 

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5.07                        No Default.  No Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.

 

5.08                        Ownership of Property; Liens.  Each of the Company and each Subsidiary has good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business and purported to be owned or leased by the Company or any Subsidiary, except for such defects in title as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  The property of the Company and its Subsidiaries is subject to no Liens, other than Liens permitted by Section 7.01.

 

5.09                        Environmental Compliance.  The Company and its Subsidiaries conduct in the ordinary course of business a review of the effect of existing Environmental Laws and claims alleging potential liability or responsibility for violation of any Environmental Law on their respective businesses, operations and properties, and as a result thereof the Company has reasonably concluded that  such Environmental Laws and claims could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

5.10                        Insurance.  The properties of the Company and its Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of the Company, in such amounts with such deductibles and covering such risks, on a commercially reasonable and prudent basis.

 

5.11                        Taxes.  The Borrowers, the Guarantors and their Material Subsidiaries have filed all Federal, state and other material tax returns and reports required to be filed, and have paid all Federal, state and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP.  There is no tax assessment proposed in writing against the Company or any Subsidiary that would, if made, have a Material Adverse Effect.  Neither any Loan Party nor any Subsidiary thereof is party to any tax sharing agreement.

 

5.12                        ERISA Compliance.

 

(a)                                 Each Plan is in compliance with the applicable provisions of ERISA, the Code and other Federal or state laws except for such noncompliance which could not reasonably be expected to have a Material Adverse Effect.  Each Pension Plan that is intended to be a qualified plan under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service to the effect that the form of such Plan is qualified under Section 401(a) of the Code and the trust related thereto has been determined by the Internal Revenue Service to be exempt from federal income tax under Section 501(a) of the Code, or an application for such a letter is currently being processed by the Internal Revenue Service.  To the best knowledge of the Company, nothing has occurred that would prevent or cause the loss of such tax-qualified status.

 

(b)                                 There are no pending or, to the best knowledge of the Company, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan

 

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that could reasonably be expected to have a Material Adverse Effect.  There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect.

 

(c)                                  (i) No ERISA Event has occurred, and neither the Company nor any ERISA Affiliate is aware of any fact, event or circumstance that could reasonably be expected to constitute or result in an ERISA Event with respect to any Pension Plan; (ii) the Company and each ERISA Affiliate has met all applicable requirements under the Pension Funding Rules in respect of each Pension Plan, and no waiver of the minimum funding standards under the Pension Funding Rules has been applied for or obtained; (iii) 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 60% or higher and neither the Company nor any ERISA Affiliate knows of any facts or circumstances that could reasonably be expected to cause the funding target attainment percentage for any such plan to drop below 60% as of the most recent valuation date; (iv) neither the Company nor any ERISA Affiliate has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due that are unpaid; (v) neither the Company nor any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or Section 4212(c) of ERISA; and (vi) no Pension Plan has been terminated by the plan administrator thereof nor by the PBGC, and no event or circumstance has occurred or exists that could reasonably be expected to cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Pension Plan.

 

5.13                        Subsidiaries; Equity Interests.  As of the Closing Date, the Company has no Subsidiaries other than those specifically disclosed in Part (a) of Schedule 5.13, and all of the outstanding Equity Interests in such Subsidiaries have been validly issued, are fully paid and nonassessable and are owned, as of the Closing Date, by a Loan Party in the amounts specified on Part (a) of Schedule 5.13 free and clear of all Liens, other than Permitted Liens.  As of the Closing Date, the Company has no equity investments in any other corporation or entity other than (1) those specifically disclosed in Part (b) of Schedule 5.13 and (2) equity investments having an aggregate value of no more $3,000,000.

 

5.14                        Margin Regulations; Investment Company Act.

 

(a)                                 No Borrower is engaged or will engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock.  Following the application of the proceeds of each Borrowing or drawing under each Letter of Credit or each Bankers’ Acceptance, not more than 25% of the value of the assets (either of the applicable Borrower only or of the Company and its Subsidiaries on a consolidated basis) subject to the provisions of Section 7.01 or Section 7.05 or subject to any restriction contained in any agreement or instrument between any Borrower and any Lender or any Affiliate of any Lender relating to Indebtedness and within the scope of Section 8.01(e) will be margin stock.

 

(b)                                 None of the Company, any Person Controlling the Company, or any Subsidiary is or is required to be registered as an “investment company” under the Investment Company Act of 1940.

 

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5.15                        Disclosure.  The Company has disclosed to the Administrative Agent and the Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.  To the best knowledge of the Company, no report, financial statement, certificate or other information furnished (whether in writing or orally), other than projected financial information and other forward looking information and information of a general economic or industry specific nature, when taken as a whole with all other information furnished by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Loan Document (in each case, as modified or supplemented by other information so furnished) contained, when furnished, any material misstatement of fact or omitted to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, the Company represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time; and provided, further that, with respect to any financial statements not constituting projected financial information, the Company only represents that such financial statements present fairly in all material respects the consolidated financial condition of the applicable Persons as of the dates indicated.

 

5.16                        Compliance with Laws.  Each Loan Party and each Subsidiary thereof is in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

5.17                        Taxpayer Identification Number.  The true and correct U.S. taxpayer identification number of the Company and each Designated Borrower that is a U.S. Subsidiary and a party hereto on the Closing Date is set forth on Schedule 10.02.

 

5.18                        Intellectual Property; Licenses, Etc.  The Company and its Subsidiaries own, or possess the right to use, all of the trademarks, service marks, trade names, copyrights, patents, patent rights, franchises, licenses and other intellectual property rights (collectively, “IP Rights”) that are reasonably necessary for the operation of their respective businesses, without conflict with the rights of any other Person, except for IP Rights the failure of which to own or be licensed or otherwise have the right to use would not reasonably be expected to have a Material Adverse Effect.  To the best knowledge of the Company, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by the Company or any Subsidiary infringes upon any rights held by any other Person, except for any infringement that would not reasonably be expected to have a Material Adverse Effect.  Except as specifically disclosed in Schedule 5.18, no claim or litigation regarding any of the foregoing is pending or, to the best knowledge of the Company, threatened, which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

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5.19                        Solvency.  The Company and its Subsidiaries on a consolidated basis are Solvent.

 

5.20                        Collateral Documents.  The provisions of the Collateral Documents are effective to create in favor of the Administrative Agent for the benefit of the Secured Parties a legal, valid and enforceable first priority Lien (subject to Permitted Liens) on the Collateral described therein. Upon the filing of appropriate Uniform Commercial Code financing statements in the appropriate governmental offices, the Liens created by the Collateral Documents will be perfected Liens, to the extent the filing of such financing statements are effective to perfect such Liens.

 

ARTICLE VI.                 AFFIRMATIVE COVENANTS

 

So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, any Letter of Credit shall remain outstanding, or any Bankers’ Acceptance shall remain outstanding, the Company shall, and shall (except in the case of the covenants set forth in Sections 6.01, 6.02, and 6.03, 6.14, 6.15 and 6.16) cause each Designated Borrower, each Guarantor and each Material Subsidiary of the Borrower (as applicable) to:

 

6.01                        Financial Statements.  Deliver to the Administrative Agent:

 

(a)                                 as soon as available, but in any event within 120 days after the end of each fiscal year of the Company (commencing with the fiscal year ended December 30, 2012):

 

(i)                                     a consolidated balance sheet of the Company and its Subsidiaries as at the end of such fiscal year, and the related consolidated statements of income or operations, changes in shareholders’ equity, and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all prepared in accordance with GAAP, audited and accompanied by a report and opinion of an independent certified public accountant of nationally recognized standing, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit;

 

(ii)                                  the consolidating balance sheets of the Company and its Subsidiaries as at the end of such fiscal year, and the related consolidating statements of income or operations, changes in shareholders’ equity, and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all prepared in accordance with GAAP, such consolidating statements to be certified by the chief executive officer, chief financial officer, treasurer or controller of the Company to the effect that such statements are fairly stated in all material respects when considered in relation to the consolidated financial statements of the Company and its Subsidiaries; and

 

(iii)                               a consolidated balance sheet of the North American Entities as at the end of such fiscal year, and the related consolidated statements of income or operations, and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year (to the extent such fiscal year ended on or after the date hereof), all prepared in accordance with GAAP (except for the absence of footnotes), 

 

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such consolidated statements to be certified by the chief executive officer, chief financial officer, treasurer or controller of the Company to the effect that such statements are fairly stated in all material respects when considered in relation to the consolidated financial statements of the Company and its Subsidiaries;

 

(b)                                 as soon as available, but in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Company (commencing with the fiscal quarter ended March 31, 2013):

 

(i)                                     a consolidated balance sheet of the Company and its Subsidiaries as at the end of such fiscal quarter, the related consolidated statements of income or operations for such fiscal quarter and for the portion of the Company’s fiscal year then ended, and the related consolidated statements of cash flows for the portion of the Company’s fiscal year then ended, in each case setting forth in comparative form, as applicable, the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail, certified by the chief executive officer, chief financial officer, treasurer or controller of the Company as fairly presenting in all material respects the financial condition, results of operations, and cash flows of the Company and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes;

 

(ii)                                  the consolidating balance sheets of the Company and its Subsidiaries as at the end of such fiscal quarter, the related consolidating statements of income or operations for such fiscal quarter and for the portion of the Company’s fiscal year then ended, and the related consolidating statements of cash flows for the portion of the Company’s fiscal year then ended, in each case setting forth in comparative form, as applicable, the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, certified by the chief executive officer, chief financial officer, treasurer or controller of the Company to the effect that such statements are fairly stated in all material respects when considered in relation to the consolidated financial statements of the Company and its Subsidiaries; and

 

(iii)                               the consolidated balance sheet of the North American Entities as at the end of such fiscal quarter, the related statements of income or operations for such fiscal quarter and for the portion of the Company’s fiscal year then ended, and the related statement of cash flows for the portion of the Company’s fiscal year then ended, in each case setting forth in comparative form, as applicable, the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year (in each case, to the extent such fiscal year ended on or after the date hereof), all in reasonable detail, certified by the chief executive officer, chief financial officer, treasurer or controller of the Company as fairly presenting in all material respects the financial condition, results of operations, and cash flows of the North American Entities;

 

(c)                                  as soon as available, but in any event within 30 days after the end of each month, the consolidated balance sheet of the North American Entities as at the end of such month, the related statements of income or operations for such month and for the portion of the Company’s fiscal year then ended, in each case setting forth in comparative form, as applicable, the figures 

 

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for the corresponding month of the previous fiscal year and the corresponding portion of the previous fiscal year (in each case, to the extent such fiscal year ended on or after the date hereof), all in reasonable detail, certified by the chief executive officer, chief financial officer, treasurer or controller of the Company as fairly presenting in all material respects the financial condition, results of operations, and cash flows of the North American Entities; and

 

(d)                                 as soon as available, but in any event within 30 days after the end of each fiscal year of the Company (commencing with the projections for the 2014 fiscal year), (i) a consolidated operating budget (including revenues and expenses) and consolidated financial projections for the Company and its Subsidiaries on a quarterly basis for such upcoming fiscal year (including the fiscal year in which the Maturity Date occurs), prepared by management of the Company, in form reasonably satisfactory to the Administrative Agent and (ii) an operating budget (including revenues and expenses) and financial projections for the North American Entities on a quarterly basis for such upcoming fiscal year (including the fiscal year in which the Maturity Date occurs), prepared by management of the Company, in form reasonably satisfactory to the Administrative Agent.

 

As to any information contained in materials furnished pursuant to Section 6.02(d), the Company shall not be separately required to furnish such information under clause (a) or (b) above, but the foregoing shall not be in derogation of the obligation of the Company to furnish the information and materials described in clauses (a) and (b) above at the times specified therein.

 

6.02                        Certificates; Other Information.  Deliver to the Administrative Agent, in form and detail reasonably satisfactory to the Administrative Agent:

 

(a)                                 concurrently with the delivery of the financial statements referred to in Section 6.01(a)(i), a certificate of its independent certified public accountants certifying such financial statements and stating that in making the examination necessary therefor no knowledge was obtained of any Default under the financial covenants set forth herein  or, if any such Default shall exist, stating the nature and status of such event;

 

(b)                                 concurrently with the delivery of the financial statements referred to in Sections 6.01(a)(i), (a)(iii) and (b) (commencing with the delivery of the financial statements for the fiscal quarter ended  December 30, 2012, a duly completed Compliance Certificate signed by the chief executive officer, chief financial officer, treasurer or controller of the Company (which delivery may, unless the Administrative Agent, or a Lender requests executed originals, be by electronic communication including fax or email and shall be deemed to be an original authentic counterpart thereof for all purposes);

 

(c)                                  promptly after any request by the Administrative Agent, copies of any detailed audit reports, management letters or recommendations submitted to the board of directors (or the audit committee of the board of directors) of the Company by independent accountants in connection with the accounts or books of the Company or any Subsidiary, or any audit of any of them;

 

(d)                                 promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of the Company, 

 

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and copies of all annual, regular, periodic and special reports and registration statements which the Company may file or be required to file with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934, and not otherwise required to be delivered to the Administrative Agent pursuant hereto;

 

(e)                                  promptly after the furnishing thereof, copies of any statement or report furnished to any holder of public debt securities of any Loan Party or any Subsidiary thereof pursuant to the terms of any indenture, loan or credit or similar agreement and not otherwise required to be furnished to the Lenders pursuant to Section 6.01 or any other clause of this Section 6.02;

 

(f)                                   promptly, such additional information regarding the business, financial or corporate affairs of the Company or any Subsidiary, or compliance with the terms of the Loan Documents, as the Administrative Agent (for itself or on behalf of any Lender) may from time to time reasonably request;

 

(g)                                  by the 20th day of each month, the Borrowers shall deliver to the Administrative Agent (and the Administrative Agent shall promptly deliver same to Lenders) (i) a Borrowing Base Certificate prepared as of the close of business of the previous fiscal month, (ii) a detailed aged trial balance of all Accounts as of the close of business of the previous fiscal month, specifying each Account’s Account Debtor name and address, amount, invoice date and due date, showing any discount, allowance, credit, authorized return or dispute, and including such proof of delivery, copies of invoices and invoice registers, copies of related documents, repayment histories, status reports and other information as the Administrative Agent may reasonably request, (iii) a perpetual inventory report and (iv) inventory reconciliation reports as the Administrative Agent may reasonably request; provided, however, during a Trigger Period, the Borrowing Base Certificate shall be provided weekly by the third calendar day of the following week, and at such other times as the Administrative Agent may request.  All calculations of Availability in any Borrowing Base Certificate shall originally be made by the Borrowers and certified by a Responsible Officer, provided that the Administrative Agent may from time to time review and adjust any such calculation (i) to reflect its reasonable estimate of declines in value of any Collateral, due to collections received in the Dominion Account or otherwise; (ii) to adjust advance rates to reflect changes in dilution, quality, mix and other factors affecting Collateral; and (iii) to the extent the calculation is not made in accordance with this Agreement or does not accurately reflect the Availability Reserve; and

 

(h)                                 concurrently with the delivery of the financial statements referred to in Section 6.01(c), the Company shall deliver to the Administrative Agent a certificate signed by the chief executive officer, chief financial officer, treasurer or controller of the Company certifying that a Trigger Period is not then in effect and setting forth the amount of both Gross Global Unencumbered Liquidity and Availability as of the end of the previous month.

 

Documents required to be delivered pursuant to Section 6.01(a) or (b) or Section 6.02(d) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Company posts such documents, or provides a link thereto on the Company’s website on the Internet at the website address listed on Schedule 10.02; or (ii) on which such documents are posted on the Company’s behalf on an Internet or intranet website, if 

 

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any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that: (i) the Company shall deliver paper copies of such documents to the Administrative Agent or any Lender upon its request to the Company to deliver such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (ii) the Company shall notify the Administrative Agent (by telecopier or electronic mail) of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents.  The Administrative Agent shall have no obligation to request the delivery of or to maintain paper copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Company with any such request by a Lender for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.

 

Each Borrower hereby acknowledges that (a) the Administrative Agent will make available to the Lenders and the L/C Issuer materials and/or information provided by or on behalf of such Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on DebtDomain, IntraLinks, Syndtrak, CashPro or another similar electronic system (the “Platform”) and (b) certain of the Lenders (each, a “Public Lender”) may have personnel who do not wish to receive material non-public information with respect to any of the Borrowers or their respective Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities.  Each Borrower hereby agrees that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrowers shall be deemed to have authorized the Administrative Agent, the L/C Issuer and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to the Borrowers or their respective securities for purposes of United States Federal and state securities laws (provided, however, that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 10.07); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information;” and (z) the Administrative Agent shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information.”  Notwithstanding the foregoing, no Borrower shall be under any obligation to mark any Borrower Materials “PUBLIC.”

 

6.03                        Notices.  Promptly notify the Administrative Agent:

 

(a)                                 of the occurrence of any Default;

 

(b)                                 of any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect;

 

(c)                                  the commencement of, or any material development in, any litigation or proceeding affecting the Company or any Subsidiary, including pursuant to any applicable Environmental Laws, with requested damages in excess of $10,000,000;

 

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(d)                                 of any actual or probable contingent liability of the Company or any Subsidiary having an aggregate amount in excess of $10,000,000;

 

(e)                                  of the occurrence of any ERISA Event; and

 

(f)                                   of any material change in accounting policies or financial reporting practices by the Borrower or any Subsidiary, other than pursuant to or in connection with the implementation of, or transition to, the International Financial Reporting Standards.

 

Each notice pursuant to this Section 6.03 shall be accompanied by a statement of a Responsible Officer of the Company setting forth details of the occurrence referred to therein and stating what action the Company has taken and proposes to take with respect thereto.  Each notice pursuant to Section 6.03(a) shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached.

 

6.04                        Payment of Obligations.  Pay and discharge as the same shall become due and payable, all its obligations and liabilities to the extent the failure to do so could reasonably be expected to result in a Material Adverse Effect, including (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by the Company, such Designated Borrower, such Guarantor or such Material Subsidiary; (b) all lawful claims which, if unpaid, would by law become a Lien upon its property, other than a Permitted Lien; and (c) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness, if the non-payment thereof could reasonably be expected to result in a Material Adverse Effect.

 

6.05                        Preservation of Existence, Etc.  (a) Preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization except in a transaction permitted by Section 7.04 or 7.05; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which could reasonably be expected to have a Material Adverse Effect.

 

6.06                        Maintenance of Properties.  (a) Maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted; and (b) make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so could not reasonably be expected to have a Material Adverse Effect.

 

6.07                        Maintenance of Insurance.  Maintain with reputable insurance companies, insurance of the kinds, covering risks and in the relative proportionate amounts (after giving effect to any self-insurance) on a commercially reasonable and prudent basis, and will furnish to the Administrative Agent, upon request from the Administrative Agent, information presented in reasonable detail as to the insurance so carried.

 

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6.08                        Compliance with Laws.  Comply in all material respects with the requirements of all Laws (including, without limitation, Environmental Laws) and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.

 

6.09                        Books and Records.  (a)  Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of the Company, such Designated Borrower, such Guarantor or such Material Subsidiary, as the case may be; and (b) maintain such books of record and account in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over the Company, such Designated Borrower, such Guarantor or such Material Subsidiary, as the case may be.

 

6.10                        Inspection Rights.  Permit representatives and independent contractors of the Administrative Agent to visit and inspect any of its properties, to conduct appraisals, field exams and audits of Collateral, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants, at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Company; provided, however, that only two field exams, one full inventory appraisal and one desktop inventory appraisal per fiscal year and one inspection per fiscal quarter shall be at the Company’s expense; provided  further, however, that when an Event of Default exists the Administrative Agent or any Lender (or any of their respective representatives or independent contractors) may do any of the foregoing at the expense of the Company at any time during normal business hours and without advance notice.

 

6.11                        Use of Proceeds.  Use the proceeds of the Credit Extensions to provide ongoing working capital, for capital expenditures, for permitted Restricted Payments (including dividends and stock repurchases), permitted Acquisitions and Investments, and for other general corporate purposes not in contravention of any Law or of any Loan Document.

 

6.12                        Additional Subsidiaries; Covenant to Guarantee Obligations and Give Security.

 

(a)                                 Notify the Administrative Agent at the time that any Person, all of the Equity Interests of which are held by a Loan Party or Subsidiary thereof, becomes a U.S. Subsidiary or a Material Subsidiary, or any Immaterial Subsidiary is designated to be a “Material Subsidiary” pursuant to Section 6.14 or pursuant to the definition of “Material Subsidiary” or otherwise, or any Subsidiary ceases to be a “Foreign Holding Company” as defined herein, and promptly thereafter (and in any event within 45 days or such longer period of time as acceptable to the Administrative Agent in its reasonable discretion) cause to be delivered to the Administrative Agent, if applicable:

 

(i)                                     (A) in the case of each such Subsidiary subject to this Section 6.12(a) (including any Subsidiary that ceases to be a “Foreign Holding Company” as defined 

 

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herein) that is a U.S. Subsidiary or Person that is organized under the laws of any political subdivision of the United States (other than any (I) U.S. Subsidiary that is a Subsidiary of a direct or indirect Foreign Subsidiary of the Company or (II) Foreign Holding Company) (each a “U.S. Person”), a Guaranty Joinder Agreement, a Security Joinder Agreement and, in the case of each such U.S. Person that owns any Equity Interests in any Person, a Pledge Joinder Agreement, executed by such U.S. Person or (B) in all other cases for each Material Subsidiary that is a Foreign Subsidiary, to the extent no material adverse tax consequences would result (as determined by the Code), such guaranty agreements, pledge agreements, security agreements or other such related instruments as the Administrative Agent may reasonably request;

 

(ii)                                  such Uniform Commercial Code and other financing statements, in form and substance sufficient in the reasonable opinion of the Administrative Agent and its counsel to be filed in all Uniform Commercial Code and other filing offices in all jurisdictions in which filing is advisable or necessary to perfect in favor of the Administrative Agent for the benefit of the Secured Parties the Lien on Collateral conferred under such Collateral Document to the extent such Lien may be perfected by Uniform Commercial Code or other filings;

 

(iii)                               (A) if the Person owning the Equity Interests (the “Parent Entity”) in such Subsidiary subject to this Section 6.12(a) is a U.S. Person, then if such Parent Entity has not already done so, a Pledge Joinder Agreement or other such joinder agreement, as applicable, executed by such Parent Entity (to be subject to any limitations on Pledged Interests as set forth in the Pledge Agreement); (B) if such Parent Entity is delivering documentation pursuant to clause (A), if requested by the Administrative Agent, customary opinions of counsel to such Person (which shall cover, among other things, the legality, validity, binding effect and enforceability of the documentation referred to in clause (A)); and (C) if such Parent Entity has already become a “Pledgor” under the Pledge Agreement, a Pledge Agreement Supplement, all in form, content and scope reasonably satisfactory to the Administrative Agent;

 

(iv)                              such other documents as the Administrative Agent, in consultation with the Borrower, shall reasonably deem appropriate in connection with the foregoing; and

 

(v)                                 documents of the types referred to in clauses (iii) and (iv) of Section 4.01(a) and, if requested by the Administrative Agent, customary opinions of counsel to such U.S. Person (which shall cover, among other things, the legality, validity, binding effect and enforceability of the foregoing documentation);

 

(b)                                 Upon the acquisition of any personal Property intended to constitute “Collateral” under the Security Agreement by any Loan Party, if such personal Property, in the judgment of the Administrative Agent, shall not already be subject to a perfected first priority security interest (other than Permitted Liens) in favor of the Administrative Agent for the benefit of the Secured Parties, then the Company shall, at the Company’s expense:

 

(i)                                     within 15 days after such acquisition of Property by any Loan Party (or such longer period of time as acceptable to the Administrative Agent in its reasonable 

 

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discretion), furnish to the Administrative Agent a description and location of such Property so acquired in detail satisfactory to the Administrative Agent;

 

(ii)           within 60 days after such acquisition (or such longer period of time as acceptable to the Administrative Agent in its reasonable discretion), cause the applicable Loan Party to duly execute and deliver to the Administrative Agent such documents and instruments (including the filing of Uniform Commercial Code financing statements) as are required by the Security Agreement or Pledge Agreement, as the case may be, each as specified by and in form and substance reasonably satisfactory to the Administrative Agent, granting a Lien over all such Property to secure the Obligations; and

 

(iii)          within 60 days after such acquisition (or such longer period of time as acceptable to the Administrative Agent in its reasonable discretion), deliver to the Administrative Agent, upon the request of the Administrative Agent in its sole discretion, a signed copy of a favorable opinion, addressed to the Administrative Agent and the other Secured Parties, of counsel for the Loan Parties acceptable to the Administrative Agent as to the matters contained in clause (ii) above and as to such other matters as the Administrative Agent may reasonably request.

 

Except as to any foreign documentation that may be executed pursuant to this Section 6.12, the foregoing provisions and any other provisions herein notwithstanding, the Loan Parties (nor any issuer of any equity interests) shall not be required to execute and deliver any documentation governed by the laws of any jurisdiction other than the laws of the State of New York or another political subdivision of the United States.

 

6.13        Further Assurances.  Promptly upon reasonable request by the Administrative Agent, do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register any and all such further acts, deeds, conveyances, security agreements, mortgages, pledge agreements, assignments, financing statements and continuations thereof, termination statements, notices of assignment, transfers, certificates, assurances and other instruments as the Administrative Agent may reasonably require from time to time in order to (a) to the fullest extent permitted by applicable law, subject any Loan Party’s Properties to the Liens now or hereafter intended to be covered by any of the Collateral Documents, (b) perfect and maintain the validity, effectiveness and priority of any of the Collateral Documents and the Liens intended to be created thereby (except to the extent that, in consultation with the Company, the Administrative Agent determines in its sole discretion that the taking of such steps is not justified by cost efficiency considerations, including adverse tax consequences to the Company and the other Loan Parties) and (c) assure, convey, grant, assign, transfer, preserve, protect and confirm more effectively unto the Secured Parties the rights granted or now or hereafter intended to be granted to the Secured Parties under any Collateral Document or under any other instrument executed in connection with any Collateral Document to which the Company or any other Loan Party is or may become a party; provided, that the Loan Parties shall only be required to use commercially reasonable efforts to obtain any necessary third-party consents in connection with the obligations described in this Section 6.13.

 

6.14        Material Subsidiaries.  If in conjunction with the delivery of financial statements pursuant to Section 6.01 hereof, and the related Compliance Certificate pursuant to 

 

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Section 6.02(b), it is determined that (a) the aggregate amount of gross revenues or total assets of the Immaterial Subsidiaries (including, without limitation, Foreign Subsidiaries) exceeds 10% of the aggregate amount of gross revenues or total assets (as applicable) of the Company and its Subsidiaries on a consolidated basis or (b) the consolidated EBITDA (measured on the same basis as “Consolidated EBITDA” provided herein, but for the Immaterial Subsidiaries only) of the Immaterial Subsidiaries exceeds 10% of the Consolidated EBITDA of the Company and all of its Subsidiaries on a consolidated basis, then in any such case the Company will promptly, and in any event within ten days of the delivery of the related Compliance Certificate, designate in a written notice to the Administrative Agent one or more Immaterial Subsidiaries (including, without limitation, Foreign Subsidiaries) as “Material Subsidiaries” so that, after such designation, none of the tests provided for in clauses (a) and (b) herein is then violated.

 

6.15        Maintenance of Dominion Accounts.

 

(a)           Maintain the Administrative Agent as each Borrower’s principal depositary bank, including, without limitation, using the Administrative Agent for the maintenance of the business, cash management, operating and administrative deposit accounts.

 

(b)           Maintain Dominion Accounts pursuant to lockbox or other arrangements acceptable to the Administrative Agent.  The Borrowers shall obtain an agreement (in form and substance satisfactory to Agent) from each lockbox servicer and Dominion Account bank, establishing the Administrative Agent’s control over and Lien in the lockbox or Dominion Account, which may be exercised by the Administrative Agent during any Trigger Period, 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, the Administrative Agent may, during any Trigger Period, require immediate transfer of all funds in such account to a Dominion Account maintained with Bank of America.  The Administrative Agent and the Lenders assume no responsibility to the 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.

 

6.16        Account Verification; Proceeds of Collateral.

 

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

 

(b)           The 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 a Borrower or Subsidiary receives cash or Payment Items with respect to any Collateral, it shall hold same in trust for the Administrative Agent and promptly (not later than the next Business Day) deposit same into a Dominion Account.

 

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ARTICLE VII.    NEGATIVE COVENANTS

 

So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, any Letter of Credit shall remain outstanding, or any Bankers’ Acceptance shall remain outstanding, the Company shall not, nor shall it permit, in the case of Sections 7.01, 7.02, 7.03, 7.06, 7.08, 7.09, 7.10, 7.12 and 7.13, any Designated Borrower, Guarantor or Material Subsidiary or, in the case of Sections 7.04, 7.05, 7.07 and 7.11 only, any Subsidiary, to (in each case, as applicable), directly or indirectly:

 

7.01        Liens.  Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, other than the following:

 

(a)           Liens pursuant to any Loan Document;

 

(b)           Liens existing on the date hereof and listed on Schedule 7.01 and any renewals or extensions thereof, provided that (i) the property covered thereby is not changed (other than improvements thereon), (ii) the amount secured or benefited thereby is not increased except as contemplated by Section 7.03(b), (iii) the direct or any contingent obligor with respect thereto is not changed, and (iv) any renewal or extension of the obligations secured or benefited thereby is permitted by Section 7.03(b);

 

(c)           Liens for taxes not yet due or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP;

 

(d)           carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 60 days or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person;

 

(e)           pledges or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA;

 

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

 

(g)           easements, rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person;

 

(h)           Liens securing judgments not constituting an Event of Default under Section 8.01(h);

 

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(i)            Liens securing Indebtedness permitted under Section 7.03(e)(i); provided that (i) such Liens do not at any time encumber any property other than the property financed by such Indebtedness (and any improvements thereon) and (ii) the Indebtedness secured thereby does not exceed the cost or fair market value, whichever is lower, of the property being acquired on the date of acquisition;

 

(j)            any Lien arising in connection with any Indebtedness permitted by Section 7.03(d);

 

(k)           any Lien arising in connection with any Indebtedness permitted by Section 7.03(f);

 

(l)            Liens on assets of Foreign Subsidiaries of the Company securing Indebtedness of such Foreign Subsidiaries permitted pursuant to Section 7.03;

 

(m)          licenses of intellectual property granted by the Company or any of its Subsidiaries in the ordinary course of business and not interfering in any material respect with the ordinary conduct of the business;

 

(n)           Liens on assets of an Immaterial Subsidiary in existence on the date that such Immaterial Subsidiary becomes a Material Subsidiary by designation pursuant to Section 6.14, or pursuant to the definition of “Material Subsidiary”, together with any replacement liens thereon; and

 

(o)           Subject to restrictions set forth in the Pledge Agreement, Liens securing Indebtedness and other obligations (including without limitation liens securing surety appeal or similar bonds and completion guarantees provided by the Company or any Subsidiary in the ordinary course of its business pursuant to Section 7.03(e)(ii)) not to exceed in the aggregate $5,000,000 at any time.

 

7.02        Investments.  Make any Investments, except:

 

(a)           Investments held by the Company, any Designated Borrower, any Guarantor or any Material Subsidiary in the form of cash equivalents;

 

(b)           advances to officers, directors and employees of the Company, the Designated Borrowers, the Guarantors and Material Subsidiaries in an aggregate amount not to exceed $1,000,000 at any time outstanding, for travel, entertainment, relocation and analogous ordinary business purposes;

 

(c)           Investments of the Company in any Guarantor and Investments of any Guarantor in the Company or in another Guarantor; and Investments of Subsidiaries that are not Guarantors in other Subsidiaries that are not Guarantors;

 

(d)           (i) Investments constituting intercompany loans permitted by Section 7.03(g); and (ii) Investments of the Company or any Guarantor in any Subsidiary that is not a Guarantor or any other Person, and Investments by a Subsidiary that is not a Guarantor in any other Person, in 

 

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each case, so long as, immediately prior to and after giving effect to such Investment, Availability is not less than $20,000,000;

 

(e)           Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss, together with Investments received in satisfaction of judgments, foreclosure of Liens or the settlement of Indebtedness or other obligations;

 

(f)            Guarantees permitted by Section 7.03;

 

(g)           Acquisitions by any Borrower, any Guarantor or any Material Subsidiary consummated after the Closing Date; provided that:

 

(i)            the Property or business to be acquired in such Acquisition shall in all material respects be in a line or lines of business substantially similar to or ancillary, complementary or related to that permitted under Section 7.07, and such Borrower, such Guarantor or such Material Subsidiary shall (within the time frames contemplated thereby) have complied with the requirements of Section 6.12, if applicable, in the case of any new Material Subsidiary acquired in connection therewith;

 

(ii)           each such Acquisition by any Borrower, any Guarantor or any of the Material Subsidiaries (if by purchase of stock) shall be effected in such manner so that the acquired entity is Controlled by any Borrower, any Guarantor or one or more of its Material Subsidiaries;

 

(iii)          the personal Property acquired in the Acquisition (to the extent acquired by a Loan Party and contemplated to be “Collateral” under the Security Agreement or the Pledge Agreement) is at all times subject to a first and prior security interest (subject to Permitted Liens, if any, and subject to exceptions specified in Section 6.12) in favor of the Administrative Agent, such security interest to be perfected promptly following such Acquisition;

 

(iv)          immediately prior to each such Acquisition and after giving effect thereto, such Borrower shall be in compliance with all covenants hereunder (including without limitation the financial covenants set forth in Section 7.11), and no Default shall have occurred and be continuing;

 

(v)           if in connection with the consummation of such proposed Acquisition cash or cash equivalents of the Loan Parties are used to finance the proposed Acquisition (excluding any cash or cash equivalents received from one or more Subsidiaries that are not a Loan Party), immediately prior to and after giving effect to such proposed Acquisition, such Borrower shall have minimum Availability in an amount of at least $15,000,000; and

 

(vi)          in the case of any Acquisition (whether in a singular transaction or in a series of related transactions) in which the total consideration paid by the buyer equals or 

 

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exceeds $10,000,000, such Borrower must have provided evidence satisfactory to the Administrative Agent, prior to such Acquisition, that the Person being acquired exhibited positive Consolidated Target EBITDA during the period of four consecutive fiscal quarters most recently ended prior to the proposed Acquisition;

 

(h)           Investments arising in connection with Swap Contracts permitted by Section 7.03(d);

 

(i)            Investments in respect of prepaid expenses, negotiable instruments held for collection or lease, workers’ compensation, utility, lease, performance and other similar deposits provided to third parties in the ordinary course of business;

 

(j)            Investments constituting non-cash consideration received by any Borrower or any Subsidiary in connection with the asset sales permitted hereby; and

 

(k)           Investments of Equity Interests required to consummate the Internal Restructuring.

 

7.03        Indebtedness.  Create, incur, assume or suffer to exist any Indebtedness, except:

 

(a)           Indebtedness under the Loan Documents;

 

(b)           Indebtedness outstanding on the date hereof and listed on Schedule 7.03, and Indebtedness of an Immaterial Subsidiary in existence on the date that such Immaterial Subsidiary becomes a Material Subsidiary by designation pursuant to Section 6.14, or pursuant to the definition of “Material Subsidiary”, in each case together with any refinancings, refundings, renewals or extensions thereof; provided that (i) the amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such refinancing and by an amount equal to any existing commitments unutilized thereunder and (ii) the terms relating to principal amount, amortization, maturity, collateral (if any) and subordination (if any), and other material terms, of any such refinancing, refunding, renewing or extending Indebtedness, and of any agreement entered into and of any instrument issued in connection therewith, are no less favorable, taken as a whole, in any material respect to the Borrowers, any Guarantor, any Material Subsidiaries of the Borrower or the Lenders than the terms of any agreement or instrument governing the Indebtedness being refinanced, refunded, renewed or extended and the interest rate applicable to any such refinancing, refunding, renewing or extending Indebtedness does not exceed the then applicable market interest rate;

 

(c)           Guarantees of the Company or any Designated Borrower, any Guarantor or any Material Subsidiary in respect of Indebtedness otherwise permitted hereunder of the Company or any other Designated Borrower, any other Guarantor or any other Material Subsidiary;

 

(d)           (i) Swap Contracts (or other agreements securing a fixed rate of interest) in connection with the Obligations due hereunder, such Swap Contracts in form and with parties reasonably acceptable to the Administrative Agent, the terms of which shall be governed by the standard ISDA Master Agreement and related schedule; and (ii) obligations (contingent or 

 

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otherwise) of the Company, any Designated Borrower, any Guarantor, or any Material Subsidiaries of the Borrower existing or arising under any other Swap Contract, provided that such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments, investments, assets, or property held or reasonably anticipated by such Person, or changes in the value of securities issued by such Person, and not for purposes of speculation or taking a “market view”;

 

(e)           (i) Indebtedness in respect of capital leases, Synthetic Lease Obligations, purchase money obligations and mortgage financings for fixed or capital assets within the limitations set forth in Section 7.01(i) and (ii) Indebtedness in respect of surety, appeal or similar bonds and completion guarantees provided by the Company or any Subsidiary in the ordinary course of its business; provided, however, that the aggregate amount of all such Indebtedness pursuant to this clause (e) at any one time outstanding shall not exceed $10,000,000 (exclusive of Indebtedness in respect of appeal bonds issued in respect of the SynQor judgment);

 

(f)            Indebtedness that is assumed in connection with an Acquisition permitted under Section 7.02(g), and extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof; provided that (i) such Indebtedness is not incurred or created in connection with, or in anticipation or contemplation of, such Acquisition, and (ii) the aggregate principal amount of Indebtedness permitted by this clause (f) shall not exceed $15,000,000  at any time outstanding;

 

(g)           unsecured intercompany Indebtedness for loans and advances made by and between the Borrowers and/or their Subsidiaries;

 

(h)           (i) unsecured funded Indebtedness issued and outstanding pursuant to the Senior Convertible Notes Documents in an aggregate principal amount not to exceed $36,000,000 at any time outstanding so long as the maturity of such Indebtedness is at least one year after the Maturity Date hereunder and (ii) the Company’s preferred stock issued pursuant to the Senior Convertible Notes Documents;

 

(i)            Indebtedness incurred in respect of Cash Management Agreements in the ordinary course of business;

 

(j)            Indebtedness in respect of surety, appeal or similar bonds and completion guarantees in each case incurred in the ordinary course of business, so long as the indemnity or guaranty obligations in respect thereof are cash collateralized or credit-enhanced through the issuance of a Letter of Credit issued hereunder (except in the case of Indebtedness in respect of appeal bonds issued in respect of the SynQor judgment); and

 

(k)           additional unsecured Indebtedness in an aggregate principal amount not to exceed $20,000,000  at any time outstanding so long as the maturity of such unsecured Indebtedness is at least one year after the Maturity Date hereunder.

 

7.04        Fundamental Changes.  Merge, dissolve, liquidate, consolidate with or into another Person, or Dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person, except that:

 

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(a)           any Subsidiary may merge with (i) the Company, provided that the Company shall be the continuing or surviving Person, or (ii) any one or more other Subsidiaries, provided that when any Guarantor is merging with another Subsidiary, the Guarantor shall be the continuing or surviving Person;

 

(b)           any Subsidiary may Dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise, and not otherwise permitted by Section 7.05(f) below) to a Borrower or a Guarantor or to another Material Subsidiary; provided that if the transferor in such a transaction is a Guarantor, then the transferee must either be a Borrower or a Guarantor;

 

(c)           in connection with any permitted Acquisition, any Subsidiary may merge or consolidate with or into another Person, or any Person may merge or consolidate with or into any Subsidiary; provided that when any Guarantor is merging with another Person, the Guarantor shall be the continuing or surviving Person; and

 

(d)           any Immaterial Subsidiary may be dissolved or liquidated (upon voluntary liquidation, insolvency or otherwise), so long as no Event of Default has occurred and is continuing or would result therefrom.

 

7.05        Dispositions.  Make any Disposition, except:

 

(a)           Dispositions of obsolete or worn out or surplus property, or otherwise no longer used or useful, whether now owned or hereafter acquired, in the ordinary course of business;

 

(b)           Dispositions of inventory, the non-exclusive licensing of intellectual property, the lease or subleasing of interests in real property, the surrender or waiver of contractual rights or the settlement and the release or surrender of contract or tort, in each case, in the ordinary course of business;

 

(c)           Dispositions of equipment or real property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property, (ii) the proceeds of such Disposition are reasonably promptly applied to the purchase price of replacement property, or (iii) in the case of real property, the proceeds of such Disposition are reinvested in the continuing business activities of the Company and its Subsidiaries; provided that reinvestments of proceeds pursuant to clause (iii) shall not exceed $15,000,000 in the aggregate;

 

(d)           Dispositions of property between or among the Borrowers and/or one or more Subsidiaries; provided that if the transferor of such property is a Borrower or a Guarantor, the transferee thereof must either be a Borrower or a Guarantor;

 

(e)           Dispositions permitted by Section 7.04;

 

(f)            Dispositions by the Company and its Subsidiaries not otherwise permitted under this Section 7.05; provided that (i) at the time of such Disposition, no Default shall exist or would result from such Disposition, (ii) such Disposition is made for at least 75% cash consideration (including cash payable over time pursuant to a promissory note or similar instrument), (iii) the consideration received in connection with any Disposition made in reliance on this clause (f) shall, in the reasonable judgment of the Company, approximate the fair market 

 

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value of the asset that is the subject of the Disposition, and (iv) the aggregate book value of all property Disposed of in reliance on this clause (f) in any fiscal year shall not exceed $3,000,000;

 

provided, however, that any Disposition pursuant to clauses (a) through  (f) shall be for fair market value; and

 

(g)           Dispositions of Equity Interests required to consummate the Internal Restructuring.

 

7.06        Restricted Payments.  Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so; provided that, each Subsidiary may make Restricted Payments to the Borrower and any Guarantors, ratably according to their respective holdings of the type of Equity Interest in respect of which such Restricted Payment is being made; and provided, further, that so long as (i) immediately prior to each such Restricted Payment and after giving effect thereto, no Default shall have occurred and be continuing, and (ii) immediately prior to and after giving effect to such proposed Restricted Payments, such Borrower shall have minimum Availability in an amount of at least $20,000,000, then:

 

(a)           each Subsidiary may make Restricted Payments to any other Person that owns an Equity Interest in such Subsidiary, ratably according to their respective holdings of the type of Equity Interest in respect of which such Restricted Payment is being made;

 

(b)           the Company and each Subsidiary may declare and make dividend payments or other distributions payable solely in the common stock or other common Equity Interests of such Person;

 

(c)           the Company and each Subsidiary may purchase, redeem or otherwise acquire Equity Interests issued by it with the proceeds received from the substantially concurrent issue of new shares of its common stock or other common Equity Interests;

 

(d)           the Company may make Restricted Payments constituting the repurchase of Equity Interests, to the extent deemed to occur upon the exercise of warrants, stock options or similar instruments if the Equity Interests represent a portion of the exercise price thereof; and

 

(e)           the Company may make any other Restricted Payments not otherwise permitted by the foregoing clauses (a) through (d) above;

 

provided, further, however, if any Restricted Payments made by any Borrower are funded with proceeds received from one or more Subsidiaries that do not constitute Loan Parties, such Borrower shall not be required to satisfy clause (ii) above as a condition to making such Restricted Payments.

 

7.07        Change in Nature of Business.  Engage in any material line of business substantially different from those lines of business conducted by the Company and its Material Subsidiaries on the date hereof or any business substantially related or incidental thereto.

 

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7.08        Transactions with Affiliates.  Enter into any transaction of any kind with any Affiliate of the Company, whether or not in the ordinary course of business, other than on fair and reasonable terms substantially as favorable to the Company, any Designated Borrower, any Guarantor or any Material Subsidiary as could reasonably be obtainable by the Company, any such Designated Borrower, any such Guarantor or any such Material Subsidiary at the time in a comparable arm’s length transaction with a Person other than an Affiliate; provided that the foregoing restriction shall not apply to (a) transactions between and among the Company, any Designated Borrower, any Guarantors and/or any Material Subsidiaries, (b) Restricted Payments permitted by Section 7.06, (c) Investments permitted by Section 7.02(b) and (d) customary compensation and indemnification arrangements with officers, directors and employees entered into in the ordinary course of business and approved by the Board of Directors of the Company or such Subsidiary.

 

7.09        Burdensome Agreements.  Enter into any Contractual Obligation (other than this Agreement or any other Loan Document or the Senior Convertible Notes Documents) that (a) limits the ability (i) of any Subsidiary to make Restricted Payments to the Company or any Guarantor or to otherwise transfer property to the Company or any Guarantor, (ii) of any Subsidiary to Guarantee the Indebtedness of the Company or (iii) of the Company or any Subsidiary to create, incur, assume or suffer to exist Liens on property of such Person or (b) requires the grant of a Lien to secure an obligation of such Person if a Lien is granted to secure another obligation of such Person; provided, however, that this Section 7.09 shall not prohibit:

 

(A)          a negative pledge contained in either (x) Indebtedness of an Immaterial Subsidiary in existence on the date that such Immaterial Subsidiary becomes a Material Subsidiary by designation pursuant to Section 6.14, or pursuant to the definition of “Material Subsidiary” or (y) Indebtedness outstanding on the date hereof and listed on Schedule 7.03, in each case so long as such provision does not impair or conflict with any Collateral Document or with Section 6.12 hereof;

 

(B)          provisions limiting Liens on property as may be contained in the terms of any Indebtedness permitted under Section 7.03(e) or (f) solely to the extent any such limitations relates to the property financed by or the subject of such Indebtedness;

 

(C)          provisions limiting Liens on property, and only on such property, subject to a prior Lien permitted under Section 7.01(c), (d), (e), (f), (i) and (l);

 

(D)          such provisions as may be contained in any refinancing or replacing Indebtedness permitted under Section 7.03, provided that the terms of such provisions shall be no less favorable in any material respect to the Administrative Agent and the Lenders as were contained in the Indebtedness being refinanced or replaced;

 

(E)           customary restrictions and conditions contained in any agreement relating to the sale of any property permitted under Section 7.05 pending consummation of such sale;

 

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(F)           agreements restricting assignments, subletting or other transfers contained in leases, licenses, joint venture agreements and similar agreements entered into in the ordinary course of business, in each case relating solely to the assets subject to such lease or license or assets relating solely to such joint venture agreement; and

 

(G)          any such limitations or requirements that are binding on a Person at the time such Person first became a Subsidiary of the Company, so long as all such limitations and requirements were not entered into in contemplation of such Person becoming a Subsidiary of the Company, together with any replacement agreement thereof so long as the terms thereof are not materially less favorable to such Subsidiary.

 

7.10        Use of Proceeds.  Use the proceeds of any Credit Extension, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose, and in any case in a manner that violates any applicable or requirements of Law.

 

7.11        Minimum Fixed Charge Coverage Ratio.  During any Trigger Period, permit the Fixed Charge Coverage Ratio, as of the fiscal quarter of the Company most recently ended prior to the commencement of the Trigger Period and thereafter during the pendency of the Trigger Period, to be less than 1.00 to 1.00.

 

7.12        Amendments to Organization Documents.  With respect to each Borrower and each Guarantor, amend, modify or change its Organization Documents  in any material respect if such amendment, modification or change is, in the reasonable opinion of the Administrative Agent and the Board of Directors of such Borrower, less favorable in any material respect to the Administrative Agent and the Lenders than the terms thereof on the Closing Date.

 

7.13        Limitations on Sales and Leasebacks.  With respect to each Borrower and each Guarantor, enter into any arrangement or arrangements with any Person providing for the leasing by any Borrower or any Guarantor of real or personal property, whether now owned or hereafter acquired in a single transaction or series of related transactions, which has been or is to be sold or transferred by any Borrower or any Guarantor to such Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of any Borrower or any Guarantor.

 

ARTICLE VIII.     EVENTS OF DEFAULT AND REMEDIES

 

8.01        Events of Default.  Any of the following shall constitute an Event of Default:

 

(a)           Non-Payment.  Any Borrower or any other Loan Party fails to pay (i) when and as required to be paid herein, any amount of principal of any Loan or any L/C — BA Obligation, or (ii) within five days after the same becomes due, any interest on any Loan or on any L/C — BA Obligation, or any fee due hereunder, or (iii) within five days after the same becomes due, any other amount payable hereunder or under any other Loan Document; or

 

(b)           Specific Covenants.  The Company fails to perform or observe any term, covenant or agreement contained in any of Section 6.03(a), 6.05, 6.10, 6.11, 6.12 or 6.16 or Article VII; or

 

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(c)           Other Defaults.  Any Loan Party fails to perform or observe any other covenant or agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for 30 days after the earlier of (i) actual knowledge by any Loan Party of such failure or (ii) the receipt by the Borrower of written notice thereof from the Administrative Agent; or

 

(d)           Representations and Warranties.  Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Company or any other Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be incorrect or misleading when made or deemed made; or

 

(e)           Cross-Default.  (i) The Company or any Subsidiary (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap Contracts) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than $2,000,000, or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness or Guarantee or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which the Company or any Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which the Company or any Subsidiary is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by the Company or such Subsidiary as a result thereof is greater than $2,000,000; or

 

(f)            Insolvency Proceedings, Etc.  Any Loan Party or any Material Subsidiary institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or

 

(g)           Inability to Pay Debts; Attachment.  (i) The Company or any Subsidiary becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against 

 

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all or any material part of the property of any such Person and is not released, vacated or fully bonded within 30 days after its issue or levy; or

 

(h)           Judgments.  There is entered against the Company or any Subsidiary (i) one or more final judgments or orders for the payment of money in an aggregate amount (as to all such judgments or orders then outstanding) exceeding $5,000,000 (or $30,000,000 in the case of the SynQor judgment), in the case of the Company or any Material Subsidiary, or $15,000,000, in the case of any Immaterial Subsidiary (in each case to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage), or (ii) any one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of thirty consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or

 

(i)            ERISA.  (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of the Company under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of $5,000,000, or (ii) the Company or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of $5,000,000; or

 

(j)            Invalidity of Loan Documents.  Any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party or any other Person contests in any manner the validity or enforceability of any Loan Document; or any Loan Party denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any Loan Document; or

 

(k)           Change of Control.  There occurs any Change of Control; or

 

(l)            Change in Management.  Either of the Chief Executive Officer (as of the Closing Date) or the Chief Financial Officer (as of the Closing Date) of the Company shall at any time cease to be the Chief Executive Officer or the Chief Financial Officer, as applicable, of the Company, whether by death, disability or otherwise, and a suitable replacement Chief Executive Officer or the Chief Financial Officer, as applicable, has not been made by the board of directors or other equivalent governing body of the Company (the “Board”), upon the commercially reasonable efforts of such Board within 270 days thereof.

 

8.02        Remedies Upon Event of Default.  If any Event of Default occurs and is continuing, the Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders, take any or all of the following actions:

 

(a)           declare the commitment of each Lender to make Loans and any obligation of the L/C Issuer to make L/C — BA Credit Extensions to be terminated, whereupon such commitments and obligation shall be terminated;

 

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(b)           declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrowers;

 

(c)           make any adjustment to the Borrowing Base;

 

(d)           require that the Company Cash Collateralize the L/C — BA Obligations (in an amount equal to the Minimum Collateral Amount with respect thereto); and

 

(e)           exercise on behalf of itself, the Lenders and the L/C Issuer all rights and remedies available to it, the Lenders and the L/C Issuer under the Loan Documents;

 

provided, however, that upon the occurrence of an actual or deemed entry of an order for relief with respect to any Borrower under the Bankruptcy Code of the United States, the obligation of each Lender to make Loans and any obligation of the L/C Issuer to make L/C — BA Credit Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, and the obligation of the Company to Cash Collateralize the L/C — BA Obligations as aforesaid shall automatically become effective, in each case without further act of the Administrative Agent or any Lender.

 

8.03        Application of Funds.  After the exercise of remedies provided for in Section 8.02 (or after the Loans have automatically become immediately due and payable and the L/C — BA Obligations have automatically been required to be Cash Collateralized as set forth in the proviso to Section 8.02), any amounts received on account of the Obligations shall, subject to the provisions of Sections 2.15 and 2.16, be applied by the Administrative Agent in the following order:

 

First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Administrative Agent and amounts payable under Article III) payable to the Administrative Agent in its capacity as such;

 

Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal, interest and Letter of Credit — BA Fees) payable to the Lenders and the L/C Issuer under the Loan Documents (including fees, charges and disbursements of counsel to the respective Lenders and the L/C Issuer and amounts payable under Article III), ratably among them in proportion to the respective amounts described in this clause Second payable to them;

 

Third, to payment of that portion of the Obligations constituting accrued and unpaid Letter of Credit — BA Fees and interest on the Loans, L/C — BA Borrowings and other Obligations, ratably among the Lenders and the L/C Issuer in proportion to the respective amounts described in this clause Third payable to them;

 

Fourth, to payment of that portion of the Obligations constituting unpaid principal of the Loans, L/C — BA Borrowings and Obligations then owing under Secured Hedge Agreements and 

 

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Secured Cash Management Agreements, ratably among the Lenders, the L/C Issuer, the Hedge Banks and the Cash Management Banks in proportion to the respective amounts described in this clause Fourth held by them;

 

Fifth, to the Administrative Agent for the account of the L/C Issuer, to Cash Collateralize that portion of L/C — BA Obligations comprised of the aggregate undrawn amount of Letters of Credit and Bankers’ Acceptances to the extent not otherwise Cash Collateralized by the Company pursuant to Sections 2.03 and 2.15; and

 

Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Company or as otherwise required by Law.

 

Subject to Sections 2.03(c) and 2.15, amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit and Bankers’ Acceptances pursuant to clause Fifth above shall be applied to satisfy drawings under such Letters of Credit as they occur.  If any amount remains on deposit as Cash Collateral after all Letters of Credit and Bankers’ Acceptances have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above.

 

Notwithstanding the foregoing, Obligations arising under Secured Cash Management Agreements and Secured Hedge Agreements shall be excluded from the application described above if the Administrative Agent has not received written notice thereof, together with such supporting documentation as the Administrative Agent may request (including, without limitation, the methodology used in calculating the amounts owed under such agreements), from the applicable Cash Management Bank or Hedge Bank, as the case may be.  Amounts distributed with respect to any Secured Cash Management Agreement or Secured Hedge Agreement shall be calculated using the methodology reported to the Administrative Agent for such Obligation (but no greater than the maximum amount reported to the Administrative Agent).  The Administrative Agent shall have no obligation to calculate the amount of any such Obligation and may request a reasonably detailed calculation thereof from the applicable Cash Management Bank or Hedge Bank.  If the bank fails to deliver the calculation within five days following request, the Administrative Agent may assume the amount is zero.  Each Cash Management Bank or Hedge Bank not a party to this Agreement that has given the notice contemplated by the preceding sentence and the definitions of “Secured Cash Management Agreement” and “Secured Hedge Agreement” shall, by such notice, be deemed to have acknowledged and accepted the appointment of the Administrative Agent pursuant to the terms of Article IX for itself and its Affiliates as if a “Lender” party hereto.

 

ARTICLE IX.     ADMINISTRATIVE AGENT

 

9.01        Appointment and Authority.

 

(a)           Each of the Lenders and the L/C Issuer hereby irrevocably appoints Bank of America to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto.  The provisions of 

 

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this Article are solely for the benefit of the Administrative Agent, the Lenders and the L/C Issuer, and neither the Company nor any other Loan Party shall not have rights as a third party beneficiary of any of such provisions.  It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.

 

(b)           The Administrative Agent shall also act as the “collateral agent” under the Loan Documents, and each of the Lenders (including in its capacities as a potential Hedge Bank and a potential Cash Management Bank) and the L/C Issuer hereby irrevocably appoints and authorizes the Administrative Agent to act as the agent of such Lender and such L/C Issuer for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Obligations, together with such powers and discretion as are reasonably incidental thereto.  In this connection, the Administrative Agent, as “collateral agent”, and any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent pursuant to Section 9.05 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Collateral Documents, or for exercising any rights and remedies thereunder at the direction of the Administrative Agent), shall be entitled to the benefits of all provisions of this Article IX and Article X (including Section 10.04(c), as though such co-agents, sub-agents and attorneys-in-fact were the “collateral agent” under the Loan Documents) as if set forth in full herein with respect thereto.

 

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

 

9.03        Exculpatory Provisions.  The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents.  Without limiting the generality of the foregoing, the Administrative Agent:

 

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

 

(b)           shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided that the Administrative Agent shall not be required to take any 

 

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action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Debtor Relief Law; and

 

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

 

The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 10.01 and 8.02) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment.  The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Administrative Agent by the Company, a Lender or the L/C Issuer.

 

The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

 

9.04        Reliance by Administrative Agent.  The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person.  The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon.  In determining compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit of a Bankers’ Acceptance, that by its terms must be fulfilled to the satisfaction of a Lender or the L/C Issuer, the Administrative Agent may presume that such condition is satisfactory to such Lender or the L/C Issuer unless the Administrative Agent shall have received notice to the contrary from such Lender or the L/C Issuer prior to the making of such Loan or the issuance of such Letter of Credit or Bankers’ Acceptance.  The Administrative Agent may consult with legal counsel (who may be counsel for the Company), independent 

 

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accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

 

9.05        Delegation of Duties.  The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent.  The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties.  The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.  The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and non-appealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agents.

 

9.06        Resignation of Administrative Agent.

 

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

 

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

 

(c)           With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (1) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders or the L/C Issuer under any of the Loan Documents, the retiring or removed Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (2) except for any indemnity payments or other amounts then owed to the retiring 

 

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or removed Administrative Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and the L/C Issuer directly, until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above.  Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or removed) Administrative Agent (other than as provided in Section 3.01(g) and other than any rights to indemnity payments or other amounts owed to the retiring or removed Administrative Agent as of the Resignation Effective Date or the Removal Effective Date, as applicable), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section).  The fees payable by the Company to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Company and such successor.  After the retiring or removed Administrative Agent’s resignation or removal hereunder and under the other Loan Documents, the provisions of this Article IX and Section 10.04 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Administrative Agent was acting as Administrative Agent.

 

(d)           Any resignation by Bank of America as Administrative Agent pursuant to this Section shall also constitute its resignation as L/C Issuer and Swing Line Lender.  If Bank of America resigns as an L/C Issuer, it shall retain all the rights, powers, privileges and duties of the L/C Issuer hereunder with respect to all Letters of Credit and Bankers’ Acceptances outstanding as of the effective date of its resignation as L/C Issuer and all L/C — BA Obligations with respect thereto, including the right to require the Lenders to make Base Rate Loans or fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(c).  If Bank of America resigns as Swing Line Lender, it shall retain all the rights of the Swing Line Lender provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make Base Rate Loans or fund risk participations in outstanding Swing Line Loans pursuant to Section 2.04(c).  Upon the appointment by the Company of a successor L/C Issuer or Swing Line Lender hereunder (which successor shall in all cases be a Lender other than a Defaulting Lender), (i) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer or Swing Line Lender, as applicable, (ii) the retiring L/C Issuer and Swing Line Lender shall be discharged from all of their respective duties and obligations hereunder or under the other Loan Documents, and (iii) the successor L/C Issuer shall issue letters of credit and bankers’ acceptances in substitution for the Letters of Credit and Bankers’ Acceptances, if any, outstanding at the time of such succession or make other arrangements satisfactory to Bank of America to effectively assume the obligations of Bank of America with respect to such Letters of Credit or Bankers’ Acceptances, as applicable.

 

9.07        Non-Reliance on Administrative Agent and Other Lenders.  Each Lender and the L/C Issuer acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Lender and the L/C Issuer also acknowledges that it 

 

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will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

 

9.08        No Other Duties, Etc.  Anything herein to the contrary notwithstanding, no other agent or arranger listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, a Lender or the L/C Issuer hereunder.

 

9.09        Administrative Agent May File Proofs of Claim.  In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan or L/C — BA Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on any Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise

 

(a)           to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, L/C — BA Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the L/C Issuer and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the L/C Issuer and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders, the L/C Issuer and the Administrative Agent under Sections 2.03(h) and (i), 2.09 and 10.04) allowed in such judicial proceeding; and

 

(b)           to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

 

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and the L/C Issuer to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders and the L/C Issuer, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.09 and 10.04.

 

Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or the L/C Issuer any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or the L/C Issuer to authorize the Administrative Agent to vote in respect of the claim of any Lender or the L/C Issuer in any such proceeding.

 

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9.10                        Collateral and Guaranty Matters.  Each of  the Lenders (including in its capacities as a potential Cash Management Bank and a potential Hedge Bank) and the L/C Issuer irrevocably authorize the Administrative Agent, at its option and in its discretion:

 

(a)                                 to release any Lien on any property granted to or held by the Administrative Agent under any Loan Document (i) upon termination of the Aggregate Commitments and payment in full of all Obligations (other than (A) contingent indemnification obligations and (B) obligations and liabilities under Secured Cash Management and Secured Hedge Agreements as to which arrangements satisfactory to the applicable Cash Management Bank of Hedge Bank shall have been made) and the expiration or termination of all Letters of Credit and Bankers’ Acceptances (other than Letters of Credit and Bankers’ Acceptances as to which other arrangements satisfactory to the Administrative Agent and the L/C Issuer shall have been made), (ii) that either is sold or to be sold as part of or in connection with any sale or Disposition permitted hereunder or under any other Loan Document (including, without limitation, as a result of an Investment permitted to be made hereunder), or (iii) subject to Section 10.01, if approved, authorized or ratified in writing by the Required Lenders;

 

(b)                                 to subordinate any Lien on any property granted to or held by the Administrative Agent under any Loan Document to the holder of any Lien on such property that is permitted by Section 7.01(i) or 7.01(k); and

 

(c)                                  to release any Guarantor from its obligations under the Guaranty if such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder.

 

Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority to release or subordinate its interest in particular types or items of property, or to release any Guarantor from its obligations under the Guaranty pursuant to this Section 9.10.

 

9.11                        Secured Cash Management Agreements and Secured Hedge Agreements.  Except as otherwise expressly set forth herein, no Cash Management Bank or Hedge Bank that obtains the benefit of the provisions of Section 8.03, the Guaranty or any Collateral by virtue of the provisions hereof or of the Guaranty or any Collateral Document shall have any right to notice of any action or to consent to, direct or object to any action hereunder or under any other Loan Document or otherwise in respect of the Collateral (including the release or impairment of any Collateral) (or to notice of or to consent to any amendment, waiver or modification of the provisions hereof or of the Guaranty or any Collateral Document) other than in its capacity as a Lender and, in such case, only to the extent expressly provided in the Loan Documents.  Notwithstanding any other provision of this Article IX to the contrary, the Administrative Agent shall not be required to verify the payment of, or that other satisfactory arrangements have been made with respect to, Obligations arising under Secured Cash Management Agreements and Secured Hedge Agreements unless the Administrative Agent has received written notice of such Obligations, together with such supporting documentation as the Administrative Agent may request, from the applicable Cash Management Bank or Hedge Bank, as the case may be.

 

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ARTICLE X. MISCELLANEOUS

 

10.01                 Amendments, Etc.  No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Company or any other Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders and the Company or the applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall:

 

(a)                                 waive any condition set forth in Section 4.01(a) without the written consent of each Lender;

 

(b)                                 extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 8.02) without the written consent of such Lender, other than any Commitment increase pursuant to Section 2.14;

 

(c)                                  postpone any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby;

 

(d)                                 reduce the principal of, or the rate of interest specified herein on, any Loan or L/C — BA Borrowing, or (subject to clause (iv) of the second proviso to this Section 10.01) any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby; provided, however, that only the consent of the Required Lenders shall be necessary to amend the definition of “Default Rate” or to waive any obligation of any Borrower to pay interest or Letter of Credit — BA Fees at the Default Rate;

 

(e)                                  change Section 8.03 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender;

 

(f)                                   (i) change any provision of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, (ii) change the definition of Borrowing Base (or any defined term used in such definition) or (iii) increase any advance rate, in each case without the written consent of each Lender;

 

(g)                                  release all or substantially all of the Collateral in any transaction or series of related transactions, without the written consent of each Lender, except to the extent the release of any Collateral is permitted pursuant to Section 9.10 (in which case such release may be made by the Administrative Agent acting alone); or

 

(h)                                 release all or substantially all of the value of the Guaranty without the written consent of each Lender, except to the extent the release of any Guarantor is permitted pursuant to Section 9.10 (in which case such release may be made by the Administrative Agent acting alone); 

 

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and, provided  further, that (i) no amendment, waiver or consent shall, unless in writing and signed by the L/C Issuer in addition to the Lenders required above, affect the rights or duties of the L/C Issuer under this Agreement, any Issuer Document relating to any Letter of Credit issued or to be issued by it, or any Acceptance Document relating to any Bankers’ Acceptance created or to be created by it; (ii) no amendment, waiver or consent shall, unless in writing and signed by the Swing Line Lender in addition to the Lenders required above, affect the rights or duties of the Swing Line Lender under this Agreement; (iii) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document; and (iv) the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto.  Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender more adversely than other affected Lenders shall require the consent of such Defaulting Lender.

 

If any Lender does not consent to a proposed amendment, waiver, consent or release with respect to any Loan Document that requires the consent of each Lender and that has been approved by the Required Lenders, the Borrowers may replace such non-consenting Lender in accordance with Section 10.13.

 

10.02                 Notices; Effectiveness; Electronic Communication.

 

(a)                                 Notices Generally.  Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

 

(i)                                     if to the Company or any other Loan Party, the Administrative Agent, the L/C Issuer or the Swing Line Lender, to the address, telecopier number, electronic mail address or telephone number specified for such Person on Schedule 10.02; and

 

(ii)                                  if to any other Lender, to the address, telecopier number, electronic mail address or telephone number specified in its Administrative Questionnaire (including, as appropriate, notices delivered solely to the Person designated by a Lender on its Administrative Questionnaire then in effect for the delivery of notices that may contain material non-public information relating to the Company).

 

Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by telecopier shall be deemed to have been given when sent (except that, if 

 

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not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient).  Notices and other communications delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b).

 

(b)                                 Electronic Communications.  Notices and other communications to the Lenders and the L/C Issuer hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices to any Lender or the L/C Issuer pursuant to Article II if such Lender or the L/C Issuer, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication.  The Administrative Agent or the Company may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.

 

Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii), if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice, email or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.

 

(c)                                  The Platform.  THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.”  THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS.  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 ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM.  In no event shall the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to any Borrower, any Lender, the L/C Issuer or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Company’s, any Loan Party’s or the Administrative Agent’s transmission of Borrower Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided, however, that in no event shall any Agent Party have any liability to any Borrower, any Lender, 

 

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the L/C Issuer or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).

 

(d)                                 Change of Address, Etc.  Each of the Borrowers, the Administrative Agent, the L/C Issuer and the Swing Line Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the other parties hereto.  Each other Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the Company, the Administrative Agent, the L/C Issuer and the Swing Line Lender.  In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, telecopier number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender.  Furthermore, each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable Law, including United States Federal and state securities Laws, to make reference to Borrower Materials that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to the Company or its securities for purposes of United States Federal or state securities laws.

 

(e)                                  Reliance by Administrative Agent, L/C Issuer and Lenders.  The Administrative Agent, the L/C Issuer and the Lenders shall be entitled to rely and act upon any notices (including telephonic Loan Notices and Swing Line Loan Notices) purportedly given by or on behalf of any Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof.  The Company shall indemnify the Administrative Agent, the L/C Issuer, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of any Borrower.  All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.

 

10.03                 No Waiver; Cumulative Remedies; Enforcement.  No failure by any Lender, the L/C Issuer or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges herein provided, and provided under each other Loan Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

 

Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained 

 

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exclusively by, the Administrative Agent in accordance with Section 8.02 for the benefit of all the Lenders and the L/C Issuer; provided, however, that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan Documents, (b) the L/C Issuer or the Swing Line Lender from exercising the rights and remedies that inure to its benefit (solely in its capacity as L/C Issuer or Swing Line Lender, as the case may be) hereunder and under the other Loan Documents, (c) any Lender from exercising setoff rights in accordance with Section 10.08 (subject to the terms of Section 2.13), or (d) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law; and provided, further, that if at any time there is no Person acting as Administrative Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 8.02 and (ii) in addition to the matters set forth in clauses (b), (c) and (d) of the preceding proviso and subject to Section 2.14, any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.

 

10.04                 Expenses; Indemnity; Damage Waiver.

 

(a)                                 Costs and Expenses.  The Company shall pay (i) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (including the reasonable and documented fees, charges and disbursements of counsel for the Administrative Agent), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the L/C Issuer in connection with the issuance, amendment, renewal or extension of any Letter of Credit or Bankers’ Acceptance or any demand for payment thereunder and (iii) all out-of-pocket expenses incurred by the Administrative Agent, any Lender or the L/C Issuer (including the fees, charges and disbursements of any counsel for the Administrative Agent, any Lender or the L/C Issuer), in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made or Letters of Credit or Bankers’ Acceptances issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans, Letters of Credit or Bankers’ Acceptances.

 

(b)                                 Indemnification by the Company.  The Company shall indemnify the Administrative Agent (and any sub-agent thereof), each Lender and the L/C Issuer, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Company or any other Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder, the consummation of the transactions 

 

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contemplated hereby or thereby, or, in the case of the Administrative Agent (and any sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents (including in respect of any matters addressed in Section 3.01 and Section 10.06(c) or Section 10.06(d)), (ii) any Loan, Letter of Credit or Bankers’ Acceptance or the use or proposed use of the proceeds therefrom (including any refusal by the L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by any Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to any Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Company or any other Loan Party, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by the Company or any other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Loan Document, if the Company or such other Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.  Without limiting the provisions of Section 3.01(c), this Section 10.04(b) shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.

 

(c)                                  Reimbursement by Lenders.  To the extent that the Company for any reason fails to indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof), the L/C Issuer, the Swing Line Lender or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), the L/C Issuer, the Swing Line Lender or such Related Party, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought based on each Lender’s share of the Total Credit Exposure at such time) of such unpaid amount (including any such unpaid amount in respect of a claim asserted by such Lender), such payment to be made severally among them based on such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought), provided, further that, the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent), the L/C Issuer or the Swing Line Lender in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent), the L/C Issuer or the Swing Line Lender in connection with such capacity.  The obligations of the Lenders under this subsection (c) are subject to the provisions of Section 2.12(d).

 

(d)                                 Waiver of Consequential Damages, Etc.  To the fullest extent permitted by applicable law, no Borrower shall assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any 

 

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other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan, Letter of Credit or Bankers’ Acceptance or the use of the proceeds thereof.  No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby other than for direct or actual damages resulting from the gross negligence or willful misconduct of such Indemnitee as determined by a final and nonappealable judgment of a court of competent jurisdiction.

 

(e)                                  Payments.  All amounts due under this Section shall be payable not later than ten Business Days after demand therefor.

 

(f)                                   Survival.  The agreements in this Section shall survive the resignation of the Administrative Agent, the L/C Issuer and the Swing Line Lender, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.

 

10.05                 Payments Set Aside.  To the extent that any payment by or on behalf of any Borrower is made to the Administrative Agent, the L/C Issuer or any Lender, or the Administrative Agent, the L/C Issuer or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent, the L/C Issuer or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender and the L/C Issuer severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect.  The obligations of the Lenders and the L/C Issuer under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.

 

10.06                 Successors and Assigns.

 

(a)                                 Successors and Assigns Generally.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that neither the Company nor any other Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void).  Nothing in this Agreement, 

 

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expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the L/C Issuer and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

 

(b)                                 Assignments by Lenders.  Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans (including for purposes of this subsection (b), participations in L/C — BA Obligations and in Swing Line Loans) at the time owing to it); provided that any such assignment shall be subject to the following conditions:

 

(i)                                     Minimum Amounts.

 

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

 

(B)                               in any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $5,000,000  unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Company otherwise consents (each such consent not to be unreasonably withheld or delayed); provided, however, that concurrent assignments to members of an Assignee Group and concurrent assignments from members of an Assignee Group to a single Eligible Assignee (or to an Eligible Assignee and members of its Assignee Group) will be treated as a single assignment for purposes of determining whether such minimum amount has been met.

 

(ii)                                  Proportionate Amounts.  Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loans or the Commitment assigned, except that this clause (ii) shall not apply to rights in respect of the Swing Line Lender’s rights and obligations in respect of Swing Line Loans;

 

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

 

(A)                               the consent of the Company (such consent not to be unreasonably withheld) shall be required unless (1) an Event of Default has occurred and is continuing at the time of such assignment or (2) such assignment is to a Lender, 

 

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an Affiliate of a Lender or an Approved Fund; provided that the Company shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within ten (10) Business Days after having received notice thereof;

 

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

 

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

 

(D)                               the consent of the Swing Line Lender (such consent not to be unreasonably withheld or delayed) shall be required for any assignment.

 

(iv)                              Assignment and Assumption.  The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee in the amount of $3,500; provided, however, that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment.  The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

 

(v)                                 No Assignment to Certain Persons.  No such assignment shall be made (A) to the Company or any of the Company’s Affiliates or Subsidiaries, or (B) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B), or (C) to a natural person.

 

(vi)                              Certain Additional Payments.  In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Company and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent or any Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata share of all Loans and participations in Letters of Credit, Bankers’ Acceptances and Swing Line Loans in accordance with its Applicable Percentage.  Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under

 

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applicable Law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

 

Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 3.01, 3.04, 3.05, and 10.04 with respect to facts and circumstances occurring prior to the effective date of such assignment; provided, that except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.  Upon request, each Borrower (at its expense) shall execute and deliver a Note to the assignee Lender.  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.

 

(c)                                  Register.  The Administrative Agent, acting solely for this purpose as an agent of the Borrowers (and such agency being solely for tax purposes), shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it (or the equivalent thereof in electronic form) and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive absent manifest error, and the Borrowers, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement.  The Register shall be available for inspection by the Borrowers and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

 

(d)                                 Participations.  Any Lender may at any time, without the consent of, or notice to, any Borrower or the Administrative Agent, sell participations to any Person (other than a natural Person, a Defaulting Lender or the Company or any of the Company’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans (including such Lender’s participations in L/C — BA Obligations and/or Swing Line Loans) owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrowers, the Administrative Agent, the Lenders and the L/C Issuer shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.  For the avoidance of doubt, each Lender 

 

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shall be responsible for the indemnity under Section 10.04(c) without regard to the existence of any participation.

 

Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any  provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 10.01 that affects such Participant.  The Company agrees that each Participant shall be entitled to the benefits of Sections 3.01, 3.04 and 3.05  to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section (it being understood that the documentation required under Section 3.01(e) shall be delivered to the Lender who sells the participation) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section; provided that such Participant (A) agrees to be subject to the provisions of Sections 3.06 and 10.13 as if it were an assignee under subsection (b) of this Section and (B) shall not be entitled to receive any greater payment under Sections 3.01 or 3.04, with respect to any participation, than the Lender from whom it acquired the applicable participation would have been entitled to receive.  Each Lender that sells a participation agrees, at the Company’s request and expense, to use reasonable efforts to cooperate with the Company to effectuate the provisions of Section 3.06 with respect to any Participant.  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.08  as though it were a Lender; provided that such Participant agrees to be subject to Section 2.13  as though it were a Lender.  Each Lender that sells a participation shall, acting solely for this purpose as an agent of the Company, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations or to comply with other requirements under applicable tax Law.  The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.  For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

 

(e)                                  Certain Pledges.  Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

 

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(f)                                   Resignation as L/C Issuer or Swing Line Lender after Assignment.  Notwithstanding anything to the contrary contained herein, if at any time Bank of America assigns all of its Commitment and Loans pursuant to subsection (b) above, Bank of America may, (i) upon 30 days’ notice to the Company and the Lenders, resign as L/C Issuer and/or (ii) upon 30 days’ notice to the Company, resign as Swing Line Lender.  In the event of any such resignation as L/C Issuer or Swing Line Lender, the Company shall be entitled to appoint from among the Lenders a successor L/C Issuer or Swing Line Lender hereunder; provided, however, that no failure by the Company to appoint any such successor shall affect the resignation of Bank of America as L/C Issuer or Swing Line Lender, as the case may be.  If Bank of America resigns as L/C Issuer, it shall retain all the rights, powers, privileges and duties of the L/C Issuer hereunder with respect to all Letters of Credit and Bankers’ Acceptances outstanding as of the effective date of its resignation as L/C Issuer and all L/C — BA Obligations with respect thereto (including the right to require the Lenders to make Base Rate Loans or fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(c)).  If Bank of America resigns as Swing Line Lender, it shall retain all the rights of the Swing Line Lender provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make Base Rate Loans or fund risk participations in outstanding Swing Line Loans pursuant to Section 2.04(c).  Upon the appointment of a successor L/C Issuer and/or Swing Line Lender, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer or Swing Line Lender, as the case may be, and (b) the successor L/C Issuer shall issue letters of credit and bankers’ acceptances in substitution for the Letters of Credit and Bankers’ Acceptances, as applicable, if any, outstanding at the time of such succession or make other arrangements satisfactory to Bank of America to effectively assume the obligations of Bank of America with respect to such Letters of Credit or Bankers’ Acceptance.

 

10.07                 Treatment of Certain Information; Confidentiality.  Each of the Administrative Agent, the Lenders and the L/C Issuer agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, trustees, advisors and representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or any Eligible Assignee invited to be a Lender pursuant to Section 2.14(c) or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrowers and its obligations, (g) with the consent of the Borrowers or (h) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent, any Lender, the L/C Issuer or any of their respective Affiliates on a non-confidential basis from a source other than the Company.  For 

 

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

 

Each of the Administrative Agent, the Lenders and the L/C Issuer acknowledges that (a) the Information may include material non-public information concerning the Company or a Subsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable Law, including United States Federal and state securities Laws.

 

10.08                 Right of Setoff.  If an Event of Default shall have occurred and be continuing, each Lender, the L/C Issuer and each of their respective Affiliates is hereby authorized at any time and from time to time, 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 such Lender, the L/C Issuer or any such Affiliate to or for the credit or the account of the Company or any other Loan Party against any and all of the obligations of the Company or such Loan Party now or hereafter existing under this Agreement or any other Loan Document to such Lender or the L/C Issuer, irrespective of whether or not such Lender or the L/C Issuer shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Company or such Loan Party may be contingent or unmatured or are owed to a branch or office of such Lender or the L/C Issuer different from the branch or office holding such deposit or obligated on such indebtedness; provided, that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.16 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff.  The rights of each Lender, the L/C Issuer and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, the L/C Issuer or their respective Affiliates may have.  Each Lender and the L/C Issuer agrees to notify the Company and the Administrative Agent promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application.  No Lender shall set off against any Dominion Account without the Administrative Agent’s prior consent.

 

10.09                 Interest Rate Limitation.  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 (the “Maximum Rate”).  If the Administrative 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 Loans or, 

 

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if it exceeds such unpaid principal, refunded to the Company.  In determining whether the interest contracted for, charged, or received by the Administrative 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.

 

10.10                 Counterparts; Integration; Effectiveness.   This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent or the L/C Issuer, constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.  Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto.  Delivery of an executed counterpart of a signature page of this Agreement by telecopy or other electronic imaging means shall be effective as delivery of a manually executed counterpart of this Agreement.

 

10.11                 Survival of Representations and Warranties.   All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof.  Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit or Bankers’ Acceptance shall remain outstanding.

 

10.12                 Severability.  If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions.  The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.  Without limiting the foregoing provisions of this Section 10.12, if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in good faith by the Administrative Agent, the L/C Issuer or the Swing Line Lender, as applicable, then such provisions shall be deemed to be in effect only to the extent not so limited.

 

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10.13                 Replacement of Lenders.  If the Company is entitled to replace a Lender pursuant to the provisions of Section 3.06, or  if any Lender is a Defaulting Lender or a Non-Consenting Lender, then the Company may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.06), all of its interests, rights (other than its existing rights to payments pursuant to Sections 3.01 and 3.04) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that:

 

(a)                                 the Company shall have paid (or caused a Designated Borrower to pay) to the Administrative Agent the assignment fee specified in Section 10.06(b);

 

(b)                                 such Lender shall have received payment of an amount equal to 100% of the outstanding principal of its Loans and L/C — BA Advances, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 3.05) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Company or applicable Designated Borrower (in the case of all other amounts);

 

(c)                                  in the case of any such assignment resulting from a claim for compensation under Section 3.04 or payments required to be made pursuant to Section 3.01, such assignment will result in a reduction in such compensation or payments thereafter;

 

(d)                                 such assignment does not conflict with applicable Laws; and

 

(e)                                  in the case of an assignment resulting from a Lender becoming a Non-Consenting Lender, the applicable assignee shall have consented to the applicable amendment, waiver or consent.

 

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Company to require such assignment and delegation cease to apply.

 

10.14                 Governing Law; Jurisdiction; Etc.

 

(a)                                 GOVERNING LAW.  THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (EXCEPT, AS TO ANY OTHER LOAN DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

(b)                                 SUBMISSION TO JURISDICTION.  THE COMPANY AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE ANY ACTION, LITIGATION OR PROCEEDING OF ANY KIND OR 

 

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DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE, AGAINST THE ADMINISTRATIVE AGENT, ANY LENDER, THE L/C ISSUER, OR ANY RELATED PARTY OF THE FOREGOING IN ANY WAY RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS RELATING HERETO OR THERETO, IN ANY FORUM OTHER THAN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH COURTS  AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION, LITIGATION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR THE L/C ISSUER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE COMPANY OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

(c)                                  WAIVER OF VENUE.  THE COMPANY AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (b) OF THIS SECTION.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(d)                                 SERVICE OF PROCESS.  EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02.  NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

10.15                 Waiver of Jury Trial.   EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR

 

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ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

10.16                 No Advisory or Fiduciary Responsibility.  In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Company and each other Loan Party acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent, are arm’s-length commercial transactions between the Borrower and its Affiliates, on the one hand, and the Administrative Agent, on the other hand, (B) each of the Company and the other Loan Parties have consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Company and each other Loan Party is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) the Administrative Agent 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 the Company, any other Loan Party or any of their respective Affiliates, or any other Person and (B) the Administrative Agent has no obligation to the Company, any other Loan Party or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Administrative Agent and its Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Company, the other Loan Parties and their respective Affiliates, and the Administrative Agent has no obligation to disclose any of such interests to the Company, any other Loan Party or any of their respective Affiliates.  To the fullest extent permitted by law, each of the Company and each other Loan Party hereby waives and releases any claims that it may have against the Administrative Agent with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.

 

10.17                 Electronic Execution of Assignments and Certain Other Documents.  The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption or in any amendment or other modification hereof (including waivers and consents) shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

 

10.18                 USA PATRIOT Act.  Each Lender that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrowers that pursuant to the requirements of the USA PATRIOT Act (Title III of 

 

122

 

Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies the Borrowers, which information includes the name and address of each Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to identify such Borrower in accordance with the Act.  Each Borrower shall, promptly following a request by the Administrative Agent or any Lender, provide all documentation and other information that the Administrative Agent or such Lender requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Act.

 

10.19                 Amendment and Restatement.  In order to facilitate this amendment and restatement and otherwise to effectuate the desires of the Borrowers, the Administrative Agent and the Lenders:

 

The Borrowers, the Administrative Agent and the Lenders hereby agree that, on the Closing Date, the terms and provisions of the Existing Credit Agreement shall be and hereby are amended and restated in their entirety by the terms, conditions and provisions of this Agreement, and the terms and provisions of the Existing Credit Agreement, except as otherwise expressly provided herein, shall be superseded by this Agreement.

 

Notwithstanding this amendment and restatement of the Existing Credit Agreement, including anything in this Section 10.19, and of any related “Loan Documents” (as such term is defined in the Existing Credit Agreement and referred to herein, individually or collectively, as the “Prior Loan Documents”), (i) all Obligations (as defined in the Existing Credit Agreement) outstanding under the Existing Credit Agreement and other Prior Loan Documents (the “Existing Obligations”) shall continue as Obligations hereunder to the extent not repaid on or before the Closing Date, (ii) each of this Agreement and the Notes and any other Loan Document (as defined herein) that is amended and restated in connection with this Agreement is given as a substitution for, and not as a payment of, the indebtedness, liabilities and Existing Obligations of the Company and each Loan Party under the Existing Credit Agreement or any other Prior Loan Document and (iii) neither the execution and delivery of such documents nor the consummation of any other transaction contemplated hereunder is intended to constitute a novation of the Existing Credit Agreement or of any of the other Prior Loan Documents or any obligations thereunder.  On the Closing Date, the Interest Periods for all Eurodollar Rate Loans outstanding under the Existing Credit Agreement shall be terminated, the Company shall pay all accrued interest with respect to such Loans, and the Company shall furnish to the Administrative Agent Loan Notices selecting the interest rates for existing Loans.

 

The parties hereby agree that, on the Closing Date, the Commitments shall be as set forth in Schedule 2.01.

 

[Remainder of page intentionally left blank; signature pages follow.]

 

123

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

 

	
 
    	
POWER-ONE, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Gary R. Larsen
    
	
 
    	
Name:
    	
Gary   R. Larsen
    
	
 
    	
Title:
    	
Senior   Vice President-Finance and
    
	
 
    	
 
    	
Chief   Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
POWER-ONE   RENEWABLE ENERGY SOLUTIONS LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Gary R. Larsen
    
	
 
    	
Name:
    	
Gary   R. Larsen
    
	
 
    	
Title:
    	
Manager
    
					

 

Power-One, Inc.
 Amended and Restated Credit Agreement
 Signature Page

 

 

	
 
    	
BANK   OF AMERICA, N.A., as
    
	
 
    	
Administrative   Agent
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Stephen King 
    
	
 
    	
Name:
    	
Stephen   King 
    
	
 
    	
Title:
    	
Senior   Vice President
    
				

 

Power-One, Inc.
 Amended and Restated Credit Agreement
 Signature Page

 

 

	
 
    	
BANK   OF AMERICA, N.A., as a Lender, L/C Issuer and Swing Line Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Stephen King
    
	
 
    	
Name:
    	
Stephen   King
    
	
 
    	
Title:
    	
Senior   Vice President
    
				

 

Power-One, Inc.
 Amended and Restated Credit Agreement
 Signature Page

 

 

 

SCHEDULE 2.01

 

COMMITMENTS
 AND APPLICABLE PERCENTAGES

 

	
Lender
    	
 
    	
Commitment
    	
 
    	
Applicable
   Percentage
    	
 
    
	
Bank of America, N.A.
    	
 
    	
$
    	
50,000,000.00
    	
 
    	
100.000000000
    	
%
    
	
Total
    	
 
    	
$
    	
50,000,000.00
    	
 
    	
100.000000000
    	
%
    

 

S-1

 

SCHEDULE 5.06

 

LITIGATION

 

On December 22, 2010, a United States District Court assessed a judgment against the Company indicating that certain of our products directly or indirectly infringe on patents established by SynQor, Inc. and awarded damages plus interest against the Company. See “Legal Proceedings” under Part II, Item 1 of this Quarterly Report on Form 10-Q. In accordance with ASC 450-20, “Accounting for Contingencies: Loss Contingencies,” we accrued the portion of the contingency that was deemed to be probable and reasonably estimable. During the nine-month periods ended September 30, 2012 and October 2, 2011, we recorded approximately $0.1 million and $1.1 million, respectively, for interest charges related to the damages accrued. During the quarter ended September 30, 2012, we also recorded approximately $0.2 million to increase our estimates for damages based on a refinement of the potentially infringing sales.

 

NOTE 7—OTHER ACCRUED EXPENSES

 

Other accrued expenses consist of the following, in millions:

 

	
 
    	
 
    	
September 30,
   2012
    	
 
    	
January 1,
   2012
    	
 
    
	
Litigation reserve 
    	
 
    	
$
    	
23.4
    	
 
    	
$
    	
23.1
    	
 
    
								

 

SynQor, Inc. v Power-One, Inc, et. al.     United States District Court, Eastern District of Texas, Civil Action No. 2:07cv497 TJW/CE (parent case). This action was initiated by SynQor, Inc. against the Company and eight other power supply manufacturers on November 13, 2007. The complaint alleged that certain products of the Company infringe certain patents held by SynQor in relation to unregulated bus converters and/or point of load (POL) converters used in Intermediate Bus Architecture (IBA) power supply systems. On December 21, 2010, a jury verdict in favor of SynQor was returned, finding that the defendants directly or indirectly infringed all of the asserted claims in the five patents-in-suit and finding Power-One liable for damages in the amount of approximately $25.6 million. The patents-in-suit are United States patents and the decision covers only the sales or uses of infringing products in the United States. On August 17, 2011, final judgment in the amount of approximately $27 million was entered, including supplemental damages of $1.1 million covering sales of accused products from November 1, 2010 through trial and pre-judgment interest in the amount of $0.4 million.

 

On October 28, 2011 notice was filed in the United States District Court, Eastern District of Texas, of Power-One’s intent to appeal the district court’s final judgment entered on August 17, 2011, the court’s partial judgment entered on December 29, 2010, and all other orders decided adversely, in whole or in part, against Power-One. On November 22, 2011, Power-One filed a motion to stay the appeal pending re-examination of the patents-in-suit. On January 31, 2012, the Court denied the motion. The company filed its appeal brief with the Court of Appeals, Federal Circuit (CAFC) on March 20, 2012. Oral argument was heard on October 2, 2012.

 

S-2

 

Currently all of the asserted claims of the ‘190 and ‘021 patent (upon which half of the damages against Power-One are based), have been fully rejected and are now before the Board of Patent Appeals and Interferences (“BPAI”). The initial round of briefing on the appeal of those two patents was completed as of April 2012 and the BPAI heard oral argument on the appeal of the ‘190 patent on October 17, 2012. In the ‘702 and ‘083 reexaminations, actions closing prosecution have been issued in which the asserted claims of the ‘702 and ‘083 patents have been rejected. Right of Appeal Notices were issued for the ‘702 and ‘803 patents on August 21, 2012 and SynQor has filed its Notice of Appeal. Appeal briefs are due on October 27, 2012 for the ‘083 patent and on November 21, 2012 for the ‘702 patent.

 

On October 6, 2011, SynQor filed a separate action, SynQor, Inc. v Power-One, Inc., et. al. United States District Court, Eastern District of Texas, Civil Action 2:11-CV-00444-DF. This action was initiated by SynQor against the Company and the other power supply manufacturers sued in the above described lawsuit. The complaint seeks post injunction damages against all of the defendants for inducement of infringement. Power-One, Inc. has filed a motion to be dismissed from the lawsuit on grounds that all accused products sold by Power-One, Inc. after December 21, 2010, the date of the jury verdict, were sold outside the United States and were marked, as required by the injunction, as being subject to an injunction and not available for use in products for the U.S. market. Trial was scheduled to begin on October 15, 2012. On October 2-3, 2012 the parties participated in mediation but were unsuccessful in settling the case. On October 5, 2012 defendants filed a motion to continue the trial pending the CAFC’s decision on the appeal of the parent case. On October 12, 2012 the motion was granted. SynQor filed a motion for reconsideration on October 17, 2012.

 

Including interest, supplemental damages and other items, the Company believes that its maximum exposure related to these matters is $30.0 million. As of September 30, 2012 the Company accrued $23.4 million for the SynQor claims, covering what the Company believes to be its probable exposure, including interest and supplemental damages.

 

In addition, the Company is involved in various other claims and legal proceedings which have arisen in the normal course of business. Management does not believe that the outcome of any currently pending claims or legal proceedings in which the Company is involved will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flow.

 

S-3

 

SCHEDULE 5.13

 

SUBSIDIARIES,

OTHER EQUITY INVESTMENTS

 

 

Part (a).Subsidiaries

 

	
 
    	
 
    	
% of Equity
    	
 
    	
Equity
    	
 
    
	
 
    	
 
    	
Interests
    	
 
    	
Interests
    	
 
    
	
DOMESTIC
    	
 
    	
Owned
    	
 
    	
Owned by
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
P-O Nevada Corp. (NV)
    	
 
    	
100
    	
%
    	
Power-One, Inc.
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
PAI Capital LLC (DE)
    	
 
    	
100
    	
%
    	
Power-One, Inc.
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One Renewable Energy Solutions LLC (DE)
    	
 
    	
100
    	
%
    	
Power-One, Inc.
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One   Renewable Energy Solutions Asia Pacific LLC (DE)
    	
 
    	
100
    	
%
    	
Power-One, Inc.
    	
 
    

 

	
 
    	
 
    	
% of Equity
    	
 
    	
Equity
    	
 
    
	
 
    	
 
    	
Interests
    	
 
    	
Interests
    	
 
    
	
1st Tier FOREIGN
    	
 
    	
Owned
    	
 
    	
Owned by
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One LLC
    	
 
    	
100
    	
%
    	
Power-One, Inc.
    	
 
    
	
(Russia)
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One Co. Ltd.
    	
 
    	
100
    	
%
    	
Power-One, Inc.
    	
 
    
	
(China)
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One Ltd.
    	
 
    	
100
    	
%
    	
Power-One, Inc.
    	
 
    
	
(Hong Kong)
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One Pte Ltd.
    	
 
    	
100
    	
%
    	
Power-One, Inc.
    	
 
    
	
(Singapore)
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One Energy Solutions SDN BHD
    	
 
    	
100
    	
%
    	
Power-One, Inc.
    	
 
    
	
(Malaysia)
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

S-4

 

Part (a).Subsidiaries cont’d

 

	
 
    	
 
    	
% of Equity
    	
 
    	
Equity
    	
 
    
	
 
    	
 
    	
Interests
    	
 
    	
Interests
    	
 
    
	
1st Tier FOREIGN
    	
 
    	
Owned
    	
 
    	
Owned by
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One   Energy Solutions Pty Ltd.
    	
 
    	
100
    	
%
    	
Power-One, Inc.
    	
 
    
	
(Australia)
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One   AG
    	
 
    	
100
    	
%
    	
Power-One, Inc.
    	
 
    
	
(Switzerland)
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One   Limited
    	
 
    	
66
    	
%
    	
Power-One, Inc.
    	
 
    
	
(UK)
    	
 
    	
34
    	
%
    	
Power-One AG   (Switzerland)
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One   I/S
    	
 
    	
25
    	
%
    	
Power-One, Inc.
    	
 
    
	
(Denmark)
    	
 
    	
75
    	
%
    	
P-O Nevada Corp.
    	
 
    
	
Danish   general partnership 
    	
 
    	
 
    	
 
    	
(USA)
    	
 
    

 

	
 
    	
 
    	
% of Equity
    	
 
    	
Equity
    	
 
    
	
 
    	
 
    	
Interests
    	
 
    	
Interests
    	
 
    
	
Other FOREIGN
    	
 
    	
Owned
    	
 
    	
Owned by
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One   Asia Pacific Electronics (Shenzhen) Co. Ltd.
    	
 
    	
100
    	
%
    	
PAI   Capital LLC
    	
 
    
	
(China)
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One Renewable Energy (China) Co. Ltd. 
    	
 
    	
100
    	
%
    	
Power-One   Renewable Energy Solutions Asia Pacific LLC
    	
 
    
	
(China)
    	
 
    	
 
    	
 
    	
(USA)
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One GmbH
    	
 
    	
100
    	
%
    	
Power-One   AG
    	
 
    
	
(Germany)
    	
 
    	
 
    	
 
    	
(Switzerland)
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One s.r.o. 
    	
 
    	
100
    	
%
    	
Power-One   AG
    	
 
    
	
(Slovakia)
    	
 
    	
 
    	
 
    	
(Switzerland)
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One Ireland Limited 
    	
 
    	
100
    	
%
    	
Power-One   AG
    	
 
    
	
(Ireland)
    	
 
    	
 
    	
 
    	
(Switzerland)
    	
 
    

 

S-5

 

Part (a).Subsidiaries cont’d

 

	
Power-One B.V.
    	
 
    	
100
    	
%
    	
Power-One AG
    	
 
    
	
(Netherlands)
    	
 
    	
 
    	
 
    	
(Switzerland)
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One SAS
    	
 
    	
100
    	
%
    	
Power-One   AG
    	
 
    
	
(France)
    	
 
    	
 
    	
 
    	
(Switzerland)
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One Denmark Aps 
    	
 
    	
100
    	
%
    	
Power-One   I/S
    	
 
    
	
(Danish private limited company)
    	
 
    	
 
    	
 
    	
(Denmark)
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One AS
    	
 
    	
100
    	
%
    	
Power-One   Norge AS
    	
 
    
	
(Norway)
    	
 
    	
 
    	
 
    	
(Norway)
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One   Renewable Energy International B.V.
   (Netherlands)
    	
 
    	
100
    	
%
    	
Power-One   Renewable Energy Solutions Asia Pacific LLC
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One   Italy Holdings S.p.A. 
   (Italy)
    	
 
    	
100
    	
%
    	
Power-One   Renewable Energy International B.V.
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One   Renewable Energy Solutions Canada, Inc. (Canada)
    	
 
    	
100
    	
%
    	
Power-One   Renewable Energy Solutions LLC
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One   Renewable Energy China Co. Ltd. (China)
    	
 
    	
100
    	
%
    	
Power-One   Renewable Energy Solutions Asia Pacific LLC
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One   Renewable Energy Solutions India Private Limited (India)
    	
 
    	
99
    	
%
    	
Power-One   Renewable Energy International, B.V.
    	
 
    
	
 
    	
 
    	
1
    	
%
    	
Power-One   Renewable Energy Solutions Asia Pacific LLC
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One   Renewable Energy Solutions Israel Ltd. (Israel)
    	
 
    	
100
    	
%
    	
Power-One   Renewable Energy International B.V.
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One   Renewable Energy Solutions Spain, S.L. (Spain)
    	
 
    	
100
    	
%
    	
Power-One   Renewable Energy International B.V.
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One   Renewable Energy Solutions Greece, S.A. (Greece)
    	
 
    	
100
    	
%
    	
Power-One   Renewable Energy International B.V.
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One   Renewable Energy Solutions Japan, KK (Japan)
    	
 
    	
100
    	
%
    	
Power-One   Renewable Energy International B.V.
    	
 
    

 

S-6

 

Part (b). Other Equity Investments.

 

	
 
    	
 
    	
% of Equity
    	
 
    	
Equity
    	
 
    
	
 
    	
 
    	
Interests
    	
 
    	
Interests
    	
 
    
	
Other FOREIGN
    	
 
    	
Owned
    	
 
    	
Owned by
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Shenzhen SEZ
    	
 
    	
49
    	
%
    	
Power-One, Inc.   (USA)
    	
 
    
	
Joint Venture Company
    	
 
    	
51
    	
%
    	
Third   Party
    	
 
    
	
(China)
    	
 
    	
 
    	
 
    	
(Shenzhen   SED Industry Inc.)
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
(China)
    	
 
    

 

S-7

 

SCHEDULE 5.18

 

INTELLECTUAL PROPERTY MATTERS

 

Refer to Schedule 5.06

 

S-8

 

SCHEDULE 7.01

 

EXISTING LIENS

 

	
DEBTOR
    	
 
    	
SECURED PARTY
    	
 
    	
COLLATERAL
    	
 
    	
FILING DATA
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One, Inc.
    	
 
    	
AT&T Capital Services, Inc.
    	
 
    	
All   telecommunications and data equipment including telephones, modems, private   branch exchanges, switchboards, key service units, call distributors, call   accounting systems, laptops, etc. and other customer premises equipment   including additions, upgrades and accessions thereto and proceeds thereof and   all other Equipment and other items and rights leased or otherwise provided   to Lessee under Schedule No. 001-4363700-002 and all supplementary   schedules, etc.;  [Lessee-Lessor];

 

a   true lease
    	
 
    	
#2008 2084166

 

filed 6/18/2008

 

Delaware Secretary of State
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Winmark Capital Corporation
    	
 
    	
All   equipment the subject of any lease agreement or schedule between parties   including equipment subject to Lease Agreement # PO051909 and all affiliated   schedules together with all other assets, property, rent, proceeds etc.,   related to the equipment.  SP is the   owner of all the assets and property.

 

[Lessee-Lessor]; a true lease
    	
 
    	
#2009 2088141

 

filed 6/30/2009

 

Delaware Secretary of State
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Winmark Capital Corporation
    	
 
    	
Specific   equipment; [Lessee-Lessor]
    	
 
    	
#2009 3408728

 
    

 

S-9

 

	
DEBTOR
    	
 
    	
SECURED PARTY
    	
 
    	
COLLATERAL
    	
 
    	
FILING DATA
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
filed 10/23/2009

 

Delaware Secretary of State
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Hitachi High Technologies America, Inc.
    	
 
    	
Continuing   purchase money security interest in specific equipment — limited to outstanding   obligations between SP and Debtor.
    	
 
    	
#2011 0300320

 

filed 1/26/2011

 

Delaware Secretary of State

 

Amendment: (restated collateral)

 

#2011 0354988

 

filed 1/31/2011
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Hitachi High Technologies America, Inc.
    	
 
    	
All   equipment sold by SP to Customer listed on Purchase Order #432, together with   all parts and accessories hereafter acquired or received by Customer from SP   as well as all proceeds of foregoing and all replacements, additions, etc.   provided by SP to Customer.
    	
 
    	
#2011 1415804

 

filed 4/14/2011

 

Delaware Secretary of State
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Comerica Leasing, a division of Comerica Bank
    	
 
    	
One   2011 Ford F150 with VIN: 1FTVX1EF2BKD49060, and all parts, additions,   attachments, accessories and accessions thereto and all substitutions, etc.   therefore; a trac lease
    	
 
    	
#2011 4180587

 

filed 10/28/2011

 

Delaware Secretary of
    

 

S-10

 

	
DEBTOR
    	
 
    	
SECURED PARTY
    	
 
    	
COLLATERAL
    	
 
    	
FILING DATA
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
State
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Hewlett-Packard Financial Services Company
    	
 
    	
All   equipment and software now or hereafter acquired, which SP has leased to or   financed for Debtor, including, computer, printing, imaging, copying,   scanning, projection and storage equipment, any and all related attachments, etc.   and any right, title or interest in any license for any software used to   operate or otherwise installed in foregoing and products and proceeds of   foregoing.
    	
 
    	
#2011 4245158

 

filed 11/03/2011

 

Delaware Secretary of State
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Hewlett-Packard Financial Services Company
    	
 
    	
All   equipment and software now or hereafter acquired, which SP has leased to or   financed for Debtor, including, computer, printing, imaging, copying,   scanning, projection and storage equipment, any and all related attachments, etc.   and any right, title or interest in any license for any software used to   operate or otherwise installed in foregoing and products and proceeds of   foregoing
    	
 
    	
#2011 4286202

 

filed 11/07/2011

 

Delaware Secretary of State
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
NMHG Financial Services, Inc.
    	
 
    	
All   of the equipment now or hereafter leased by Lessor to Lessee and all   accessions, additions, replacements, and substitutions thereto and therefore   and all proceeds including insurance proceeds thereof. [Lessee-Lessor]
    	
 
    	
#2012 0544967

 

filed 2/10/2012

 

Delaware Secretary of State
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Comerica Leasing, a division of Comerica Bank
    	
 
    	
Four   2012 Ford F150’s and all parts, additions, attachments, accessories and   accessions thereto and any and all substitutions, replacements or exchanges   therefore (including any required 
    	
 
    	
#2012 0987687

 

filed 3/14/2012

 
    

 

S-11

 

	
DEBTOR
    	
 
    	
SECURED PARTY
    	
 
    	
COLLATERAL
    	
 
    	
FILING DATA
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
alterations,   replacements and improvements); a trac lease
    	
 
    	
Delaware Secretary of State
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
NMHG Financial Services, Inc.
    	
 
    	
All   of the equipment now or hereafter leased by Lessor to Lessee and all   accessions, additions, replacements, and substitutions thereto and therefore   and all proceeds including insurance proceeds thereof. [Lessee-Lessor]
    	
 
    	
#2012 1102468

 

filed 3/22/2012

 

Delaware Secretary of State
    

 

1.              The indebtedness of Power-One Italy SpA, due to Monte dei Paschi di Siena, in the amount of EURO 77,000, is secured by certain buildings and land of the obligor.

 

2.              Liens in favor of the Trustee under the Senior Convertible Note Documents to secure compensation and reimbursement obligations of such Trustee.

 

S-12

 

SCHEDULE 7.03

 

EXISTING INDEBTEDNESS

 

Existing Guarantees:

 

	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
(in Local Currency)
    	
 
    
	
Entity
    	
 
    	
Bank
    	
 
    	
Currency
    	
 
    	
Guarantee
    	
 
    
	
Power-One Italy SpA
    	
 
    	
Monte   dei Paschi
    	
 
    	
EUR
    	
 
    	
358,092
    	
 
    
	
Power-One AG 
    	
 
    	
Credit   Swiss 
    	
 
    	
CHF   
    	
 
    	
59,000 
    	
 
    
	
Power-One Ltd. UK
    	
 
    	
Credit   Swiss
    	
 
    	
GBP
    	
 
    	
40,000
    	
 
    

 

The guarantee of EUR 358,092 refers to a Public-Supply Contract at the request of the following customers: ENEL Green Power SpA, ENEL Sole Srl, and ENEXON.

 

The guarantee of CHF 59,000 and GBP 40,000 are arranged as pledged money.

 

Existing Credit Facilities:

 

	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
(in Local Currency)
    	
 
    
	
Entity
    	
 
    	
Bank
    	
 
    	
Currency
    	
 
    	
Available
    	
 
    
	
Power-One Italy SpA
    	
 
    	
Monte   dei Paschi
    	
 
    	
EUR
    	
 
    	
641,908
    	
 
    
	
Power-One Pte Ltd.
    	
 
    	
Skandinaviska   Enskilda Banken
    	
 
    	
SGD
    	
 
    	
1,000,000
    	
 
    

 

S-13

 

SCHEDULE 10.02

 

ADMINISTRATIVE AGENT’S OFFICE;
 CERTAIN ADDRESSES FOR NOTICES

 

BORROWERS:

 

c/o Power-One, Inc.

740 Calle Plano

Camarillo, California 93012

Attention:                                         Richard F. Gerrity, Treasurer

Telephone:                                   805.389.9046

Telecopier:                                    805.388.0904

Electronic Mail: richard.gerrity@power-one.com

Website Address:   www.power-one.com

U.S. Taxpayer Identification Number:  77-0420182

 

ADMINISTRATIVE AGENT:

 

Administrative Agent’s Office  
 (for payments and Requests for Credit Extensions):

Bank of America, N.A.

Credit Services

135 S. LaSalle Street, Suite 960

Mail Code:  IL4-135-09-61

Chicago, Illinois 60603

Attention:                                         Raequell L Howard

Telephone:                                   312.904.8714

Telecopier:                                    312.453.6307

Electronic Mail:  raequell.howard@baml.com

 

L/C ISSUER:

Bank of America, N.A.

Trade Operations

1000 W. Temple Street, Floor 7

Mail Code:  CA9-705-07-05

Los Angeles, California 90012

Attention:                                         Standby Customer Service LA

Telephone:                                   800.541.6096

Telecopier:                                    213.457.8841

Electronic Mail:  los_angeles_standby_lc@bankofamerica.com

 

S-14

 

SWING LINE LENDER:

 

Bank of America, N.A.

Credit Services

135 S. LaSalle Street, Suite 960

Mail Code:  IL4-135-09-61

Chicago, Illinois 60603

Attention:                                         Raequell L Howard

Telephone:                                   312.904.8714

Telecopier:                                    312.453.6307

Electronic Mail:  raequell.howard@baml.com

 

S-15

 

EXHIBIT A

 

FORM OF LOAN NOTICE

 

Date:                        ,              

 

To:                             Bank of America, N.A., as Administrative Agent

 

Ladies and Gentlemen:

 

Reference is made to that certain Amended and Restated Credit Agreement, dated as of January 30, 2013 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), among Power-One, Inc., a Delaware corporation (the “Company”), the Designated Borrowers from time to time party thereto (together with the Company, the “Borrowers”), the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer.

 

The undersigned hereby requests (select one):

 

	
o A Borrowing   of Loans
    	
o A conversion   or continuation of Loans
    

 

1.                                      On                                                                                      (a Business Day).

 

2.                                      In the amount of $                                                             .

 

3.                                      Comprised of                                                                    .

[Type of Loan requested]

 

4.                                      For Eurodollar Rate Loans:  with an Interest Period of               months.

 

The Borrowing, if any, requested herein complies with the provisos to the first sentence of Section 2.01 of the Agreement.

 

	
 
    	
POWER-ONE, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

A-1

 

EXHIBIT B

 

FORM OF SWING LINE LOAN NOTICE

 

Date:                    ,               

 

To:                             Bank of America, N.A., as Swing Line Lender
 Bank of America, N.A., as Administrative Agent

 

Ladies and Gentlemen:

 

Reference is made to that certain Amended and Restated Credit Agreement, dated as of January 30, 2013 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), among Power-One, Inc., a Delaware corporation (the “Company”), the Designated Borrowers from time to time party thereto (together with the Company, the “Borrowers”), the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer.

 

The undersigned hereby requests a Swing Line Loan:

 

1.                                      On                                                                                      (a Business Day).

 

2.                                      In the amount of $                                                            .

 

The Swing Line Borrowing requested herein complies with the requirements of the provisos to the first sentence of Section 2.04(a) of the Agreement.

 

	
 
    	
POWER-ONE, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

B-1

 

EXHIBIT C

 

FORM OF NOTE

 

 

FOR VALUE RECEIVED, the undersigned (the “Borrowers”), hereby promises to pay to                                      or registered assigns (the “Lender”), in accordance with the provisions of the Agreement (as hereinafter defined), the principal amount of each Loan from time to time made by the Lender to the Borrowers under that certain Amended and Restated Credit Agreement, dated as of January 30, 2013 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), among Power-One, Inc., a Delaware corporation (the “Company”), the Designated Borrowers from time to time party thereto (together with the Company, the “Borrowers”), the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer.

 

The Borrowers promise to pay interest on the unpaid principal amount of each Loan from the date of such Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Agreement.  All payments of principal and interest shall be made to the Administrative Agent for the account of the Lender in Dollars in immediately available funds at the Administrative Agent’s Office.  If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Agreement.

 

This Note is one of the Notes referred to in the Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and conditions provided therein.  This Note is also entitled to the benefits of the Guaranty.  Upon the occurrence and continuation of one or more of the Events of Default specified in the Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable all as provided in the Agreement.  Loans made by the Lender shall be evidenced by one or more loan accounts or records maintained by the Lender in the ordinary course of business. The Lender may also attach schedules to this Note and endorse thereon the date, amount and maturity of its Loans and payments with respect thereto.

 

The Borrowers, for themselves, their successors and assigns, hereby waive diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note.

 

[This Note is issued in substitution for and replacement of, but not repayment or novation of, the Note dated March 29, 2011, executed by Power-One, Inc. and payable to the order of                                               .]

 

C-1

 

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

	
 
    	
POWER   ONE, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
POWER-ONE   RENEWABLE ENERGY SOLUTIONS LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[DESIGNATED   BORROWER]
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

C-2

 

LOANS AND PAYMENTS WITH RESPECT THERETO

 

	
Date
    	
 
    	
Type of
   Loan Made
    	
 
    	
Amount of
   Loan Made
    	
 
    	
End of
   Interest
   Period
    	
 
    	
Amount of
   Principal or
   Interest
   Paid This
   Date
    	
 
    	
Outstanding
   Principal
   Balance
   This Date
    	
 
    	
Notation
   Made By
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

C-3

 

EXHIBIT D

 

FORM OF COMPLIANCE CERTIFICATE

 

Financial Statement Date:                 ,          

 

To:                             Bank of America, N.A., as Administrative Agent

 

Ladies and Gentlemen:

 

Reference is made to that certain Amended and Restated Credit Agreement, dated as of January 30, 2013 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), among Power-One, Inc., a Delaware corporation (the “Company”), the Designated Borrowers from time to time party thereto (together with the Company, the “Borrowers”), the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer.

 

The undersigned Responsible Officer hereby certifies as of the date hereof that he/she is the                                                    of the Company, and that, as such, he/she is authorized to execute and deliver this Certificate to the Administrative Agent on the behalf of the Company, and that:

 

[Use following paragraph 1 for fiscal year-end financial statements]

 

1.                                      The Company has delivered the year-end audited financial statements and other financial statements required by Sections 6.01(a)(i) and (iii) of the Agreement for the fiscal year of the Company ended as of the above date, together with the report and opinion of an independent certified public accountant required by such section.

 

[Use following paragraph 1 for fiscal quarter-end financial statements]

 

1.                                      The Company has delivered the unaudited financial statements required by Section 6.01(b) of the Agreement for the fiscal quarter of the Company ended as of the above date.  Such financial statements fairly present the financial condition, results of operations and cash flows of the Company and its Subsidiaries in accordance with GAAP as at such date and for such period, subject only to normal year-end audit adjustments and the absence of footnotes.

 

2.                                      The undersigned has reviewed and is familiar with the terms of the Agreement and has made, or has caused to be made under his/her supervision, a detailed review of the transactions and condition (financial or otherwise) of the Company during the accounting period covered by such financial statements.

 

3.                                      A review of the activities of the Company during such fiscal period has been made under the supervision of the undersigned with a view to determining whether during such fiscal period the Company performed and observed all its Obligations under the Loan Documents, and

 

D-1

 

[select one:]

[to the best knowledge of the undersigned, during such fiscal period the Company performed and observed each covenant and condition of the Loan Documents applicable to it, and no Default has occurred and is continuing.]

 

—or—

[to the best knowledge of the undersigned, during such fiscal period the following covenants or conditions have not been performed or observed and the following is a list of each such Default and its nature and status:]

 

4.                                      The representations and warranties of (x) the Company contained in Article V of the Agreement and (y) each Loan Party contained in each other Loan Document or in any document furnished at any time under or in connection herewith or therewith, are true and correct in all material respects on and as of the date hereof, except that (i) if a qualifier relating to materiality, Material Adverse Effect or a similar concept applies, such representation or warranty is true and correct in all respects, (ii) to the extent that such representations and warranties specifically refer to an earlier date, they are true and correct in all material respects as of such earlier date (except that if a qualifier relating to materiality, Material Adverse Effect or a similar concept applies, such representation or warranty is true and correct in all respects as of such earlier date) and (iii) except that for purposes of this Compliance Certificate, the representations and warranties contained in subsections (a) and (b) of Section 5.05 of the Agreement shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01 of the Agreement, including the statements in connection with which this Compliance Certificate is delivered.

 

5.                                      The financial covenant analysis and information set forth on Schedule 1 attached hereto is true and accurate on and as of the date of this Certificate.

 

IN WITNESS WHEREOF, the undersigned has executed this Certificate as of                                    ,                               .

 

	
 
    	
POWER-ONE, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

D-2

 

For the Quarter/Year ended                                 (“Statement Date”)

 

SCHEDULE 1
  to the Compliance Certificate
 ($ in 000’s)

 

I.                                        Section 7.11 — Minimum Fixed Charge Coverage Ratio.

 

	
A.
    	
EBITDA   for the North American Entities for four consecutive fiscal quarters ending   on above date (“Subject Period”):
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.
    	
Net   Income for Subject Period:
    	
 
    	
$                         
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.
    	
Interest   Expense for Subject Period:
    	
 
    	
$                         
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
3.
    	
Provision   for income taxes for Subject Period:
    	
 
    	
$                         
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.
    	
Depreciation   expenses for Subject Period:
    	
 
    	
$                         
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.
    	
Amortization   expenses for Subject Period:
    	
 
    	
$                         
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.
    	
Non-recurring   non-cash reductions of Net Income for Subject Period:
    	
 
    	
$                         
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.
    	
Income   tax credits for Subject Period:
    	
 
    	
$                         
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
8.
    	
Non-cash   additions to Net Income for Subject Period:
    	
 
    	
$                         
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
9.
    	
EBITDA   (Lines I.A1 + 2 + 3 + 4 + 5 + 6 - 7 - 8):
    	
 
    	
$                         
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
B.
    	
Capital   expenditures made in cash during the Subject Period:
    	
 
    	
$                         
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
C.
    	
Debt   Service for Subject Period:
    	
 
    	
$                         
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
D.
    	
The   sum of all cash income Taxes for Subject Period:
    	
 
    	
$                         
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
E.
    	
The   sum of all Restricted Payments made by the North American Entities in cash   made during Subject Period:
    	
 
    	
$                         
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
F.
    	
Fixed   Charge Coverage Ratio ((Line I.A.9 – Line I.B)  ̧ (Lines I.C +   I.D + I.E)):
    	
 
    	
                      to   1
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
Minimum   required during a Trigger Period:
    	
 
    	
1.00 to 1.00
    

 

II.                                   Section 6.14 — Material Subsidiaries.

 

[select one:]

 

[(a) The aggregate amount of gross revenues or total assets of the Immaterial Subsidiaries (including, without limitation, Foreign Subsidiaries) does not exceed 10% of the aggregate amount of gross revenues or total assets (as applicable) of the Company and its Subsidiaries on a consolidated basis and (b) the consolidated EBITDA (measured on the same basis as “Consolidated EBITDA” provided herein, but for the Immaterial Subsidiaries only) of the Immaterial Subsidiaries does not exceed 10% of the Consolidated EBITDA of the Company and all of its Subsidiaries on a consolidated basis.]

 

—or—

 

D-3

 

[Either  (a) The aggregate amount of gross revenues or total assets of the Immaterial Subsidiaries (including, without limitation, Foreign Subsidiaries) exceeds 10% of the aggregate amount of gross revenues or total assets (as applicable) of the Company and its Subsidiaries on a consolidated basis or (b) the consolidated EBITDA (measured on the same basis as “Consolidated EBITDA” provided herein, but for the Immaterial Subsidiaries only) of the Immaterial Subsidiaries exceeds 10% of the Consolidated EBITDA of the Company and all of its Subsidiaries on a consolidated basis.  As a result, the following Immaterial Subsidiaries shall be deemed to be Material Subsidiaries under the Agreement and the other Loan Documents so that, after such designation, none of the tests provided for in clauses (a) and (b) herein is then violated:]

 

(list designated Subsidiaries)

 

D-4

 

EXHIBIT E

 

ASSIGNMENT AND ASSUMPTION

 

This Assignment and Assumption (this “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between [the][each](1) Assignor identified in item 1 below ([the][each, an] “Assignor”) and [the][each](2) Assignee identified in item 2 below ([the][each, an] “Assignee”).  [It is understood and agreed that the rights and obligations of [the Assignors][the Assignees](3) hereunder are several and not joint.](4)  Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

 

For an agreed consideration, [the][each] Assignor hereby irrevocably sells and assigns to [the Assignee][the respective Assignees], and [the][each] Assignee hereby irrevocably purchases and assumes from [the Assignor][the respective Assignors], subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of [the Assignor’s][the respective Assignors’] rights and obligations in [its capacity as a Lender][their respective capacities as Lenders] under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of [the Assignor][the respective Assignors] under the respective facilities identified below (including, without limitation, the Letters of Credit and the Swing Line Loans included in such facilities(5)) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of [the Assignor (in its capacity as a Lender)][the respective Assignors (in their respective capacities as Lenders)] against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations

 

(1)  For bracketed language here and elsewhere in this form relating to the Assignor(s), if the assignment is from a single Assignor, choose the first bracketed language.  If the assignment is from multiple Assignors, choose the second bracketed language.

 

(2)  For bracketed language here and elsewhere in this form relating to the Assignee(s), if the assignment is to a single Assignee, choose the first bracketed language.  If the assignment is to multiple Assignees, choose the second bracketed language.

 

(3)  Select as appropriate.

 

(4)  Include bracketed language if there are either multiple Assignors or multiple Assignees.

 

(5)  Include all applicable subfacilities.

 

E-1

 

sold and assigned by [the][any] Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as [the][an] “Assigned Interest”).  Each such sale and assignment is without recourse to [the][any] Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by [the][any] Assignor.

 

1.                                      Assignor[s]:                                                                                             

 

                                                            

 

2.                                      Assignee[s]:                                                                                            

 

                                                            

[for each Assignee, indicate [Affiliate][Approved Fund] of [identify Lender]]

 

3.                                      Borrowers:                                     Power-One, Inc. and the Designated Borrowers from time to time party thereto

 

4.                                      Administrative Agent:  Bank of America, N.A., as the administrative agent under the Credit Agreement

 

5.                                      Credit Agreement:                                             Amended and Restated Credit Agreement, dated as of January 30, 2013, among Power-One, Inc., (the “Company”), the Designated Borrowers from time to time party thereto (together with the Company, the “Borrowers”), the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, L/C Issuer, and Swing Line Lender

 

E-2

 

6.                                      Assigned Interest[s]:

 

	
 

 

 

Assignor[s](6)
    	
 
    	
Assignee[s](7)
    	
 
    	
Facility
   Assigned
    	
 
    	
Aggregate
   Amount of
   Commitment
   for all Lenders
    	
 
    	
Amount of
   Commitment
   Assigned
    	
 
    	
Percentage
   Assigned of
   Commitment
    	
 
    	
CUSIP
    Number
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
 
    	
%
    	
 
    	
 
    
																

 

[7.                             Trade Date:                                                                  ](8)

 

Effective Date:                                   , 20        [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

 

(6)  List each Assignor, as appropriate.

 

(7)  List each Assignee, as appropriate.

 

(8)  To be completed if the Assignor and the Assignee intend that the minimum assignment amount is to be determined as of the Trade Date.

 

E-3

 

The terms set forth in this Assignment and Assumption are hereby agreed to:

	
 
    	
 
    
	
 
    	
ASSIGNOR
    
	
 
    	
[NAME   OF ASSIGNOR]
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
ASSIGNEE
    
	
 
    	
[NAME   OF ASSIGNEE]
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

[Consented to and](9) Accepted:

 

BANK OF AMERICA, N.A., as Administrative Agent

 

	
By:   
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
[Consented   to:](10)
    	
 
    
	
 
    	
 
    
	
[                                    ]
    	
 
    
	
 
    	
 
    
	
By:   
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
				

 

(9)  To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.

 

(10)  To be added only if the consent of the Borrowers and/or other parties (e.g. Swing Line Lender, L/C Issuer) is required by the terms of the Credit Agreement.

 

E-4

 

ANNEX 1 TO ASSIGNMENT AND ASSUMPTION

 

Amended and Restated Credit Agreement dated as of January 30, 2013 among Power-One, Inc., (the “Company”), the Designated Borrowers from time to time party thereto, the Lenders from time to time party thereto and Bank of America, N.A., as Administrative Agent,Swing Line Lender and L/C Issuer

 

STANDARD TERMS AND CONDITIONS FOR

 

ASSIGNMENT AND ASSUMPTION

 

1.                          Representations and Warranties.

 

1.1.                Assignor.  [The][Each] Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of [the][[the relevant] Assigned Interest, (ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Company, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Company, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

 

1.2.                Assignee.  [The][Each] Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all the requirements to be an assignee under Section 10.06(b)(iii) and (v) of the Credit Agreement (subject to such consents, if any, as may be required under Section 10.06(b)(iii) of the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of [the][the relevant] Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by [the][such] Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire [the][such] Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 6.01 thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, (vi) it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, and (vii) if it is a Foreign Lender, attached hereto is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and 

 

E-5

 

executed by [the][such] Assignee; and (b) agrees that (i) it will, independently and without reliance upon the Administrative Agent, [the][any] Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

 

2.                          Payments.  From and after the Effective Date, the Administrative Agent shall make all payments in respect of [the][each] Assigned Interest (including payments of principal, interest, fees and other amounts) to [the][the relevant] Assignor for amounts which have accrued to but excluding the Effective Date and to [the][the relevant] Assignee for amounts which have accrued from and after the Effective Date.

 

3.                          General Provisions.  This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.  This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption.  This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.

 

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EXHIBIT F

 

FORM OF GUARANTY

 

F-1

 

Execution Version

 

AMENDED AND RESTATED GUARANTY AGREEMENT

 

THIS AMENDED AND RESTATED GUARANTY AGREEMENT dated as of January 30, 2013 (this “Guaranty Agreement”), is being entered into among EACH OF THE UNDERSIGNED AND EACH OTHER PERSON WHO SHALL BECOME A PARTY HERETO BY EXECUTION OF A GUARANTY JOINDER AGREEMENT (each a “Guarantor” and collectively the “Guarantors”) and BANK OF AMERICA, N.A., as Administrative Agent (in such capacity, the “Administrative Agent”) for the benefit of the Secured Parties (as defined in the Credit Agreement referenced below).   All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Credit Agreement.

 

RECITALS:

 

A.            Power-One, Inc., a Delaware corporation (the “Company”), the lenders party thereto, and Bank of America, N.A., as administrative agent, are parties to that certain Credit Agreement dated as of March 29, 2011 (as amended, restated, supplemented, or otherwise modified from time to time prior to the date hereof, the “Existing Credit Agreement”), pursuant to which the then lenders originally agreed to provide the Company with a revolving credit facility, including a swingline subfacility and a letter of credit subfacility.

 

B.            In connection with the Existing Credit Agreement, the Guarantors thereunder (collectively, the “Existing Guarantors”) entered into that certain Guaranty Agreement dated as of March 29, 2011 (the “Existing Guaranty Agreement”) pursuant to which the Existing Guarantors guaranteed (the “Existing Guaranty”) to the Administrative Agent for the benefit of the Secured Parties the payment and performance in full of the Guaranteed Liabilities as defined therein.

 

C.            The Company has requested that the Existing Credit Agreement be amended and restated, which shall be evidenced by that certain Amended and Restated Credit Agreement dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the “Restatement”, the Exiting Credit Agreement as amended and restated by the Restatement, the “Credit Agreement”), among the Company, the Subsidiaries of the Company from time to time party thereto (collectively with the Company, the “Borrowers”, and each a “Borrower”), the Administrative Agent, Bank of America, N.A., as L/C Issuer and Swing Line Lender, and the lenders now or hereafter party thereto (the “Lenders”).

 

D.            Certain additional extensions of credit may be made from time to time for the benefit of the Guarantors pursuant to certain Secured Cash Management Agreements and Secured Hedge Agreements (each as defined in the Credit Agreement).

 

E.            It is a condition precedent to the Secured Parties’ obligations to amend and restate the Existing Credit Agreement and make and maintain such extensions of credit that the

 

 

Guarantors shall have executed and delivered this Guaranty Agreement to the Administrative Agent.

 

F.             Each Guarantor (other than the Company) is, directly or indirectly, a U.S. Subsidiary of the Company and will materially benefit from such extensions of credit.

 

In order to induce the Secured Parties to from time to time make and maintain extensions of credit under the Credit Agreement and under the Secured Cash Management Agreements and Secured Hedge Agreements, the parties hereto agree as follows:

 

1.             Guaranty.  Each Guarantor hereby jointly and severally,  unconditionally, absolutely, continually and irrevocably guarantees to the Administrative Agent and the other Secured Parties the payment and performance in full of the Guaranteed Liabilities (as defined below).  For all purposes of this Guaranty Agreement, “Guaranteed Liabilities” means:  (a) each Borrower’s prompt payment in full, when due or declared due and at all such times, of all Obligations and all other amounts pursuant to the terms of the Credit Agreement, the Notes, and all other Loan Documents heretofore, now or at any time or times hereafter owing, arising, due or payable from such Borrower to any one or more of the Secured Parties, including principal, interest, premiums and fees (including all fees and expenses of counsel (collectively, “Attorneys’  Costs”)); (b) each Loan Party’s prompt, full and faithful performance, observance and discharge of each and every agreement, undertaking, covenant and provision to be performed, observed or discharged by such Loan Party under the Credit Agreement, the Notes and all other Loan Documents; and (c) the prompt payment in full by each Loan Party, when due or declared due and at all such times, of obligations and liabilities now or hereafter arising under the Secured Cash Management Agreements and Secured Hedge Agreements.  The Guarantors’ obligations to the Secured Parties under this Guaranty Agreement are hereinafter collectively referred to as the “Guarantors’ Obligations” and, with respect to each Guarantor individually, the “Guarantor’s Obligations”.  Notwithstanding the foregoing, the liability of each Guarantor individually with respect to its Guarantor’s Obligations shall be limited to an aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance under Section 548 of the United States Bankruptcy Code or any comparable provisions of any applicable state law.

 

Each Guarantor agrees that it is jointly and severally, directly and primarily liable (subject to the limitation in the immediately preceding sentence) for the Guaranteed Liabilities.

 

The Guarantors’ Obligations are secured by various Collateral Documents referred to in the Credit Agreement, including without limitation the Security Agreement, the Patent Security Agreement and the Pledge Agreement.

 

Notwithstanding any provision hereof or in any other Loan Document to the contrary, in the event that any Guarantor is not an “eligible contract participant” as such term is defined in Section 1(a)(18) of the Commodity Exchange Act, at the time (i) any Secured Hedge Agreement that constitutes a “Swap” under the Commodity Exchange Act is entered into or (ii) such Guarantor becomes a Guarantor hereunder, the Guaranteed Liabilities of such Guarantor shall not include (x) in the case of clause (i) above, such Secured Hedge Agreement and (y) in the case of clause (ii)  above,  any Secured Hedge Agreement that constitutes a “Swap” under the

 

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Commodity Exchange Act as of such the date such Guarantor becomes a Guarantor hereunder; provided, however, that if such Guarantor becomes an eligible contract participant as of a date subsequent to the date described in clause (i) or (ii) above, as the case may be, then the Guaranteed Liabilities of such Guarantor shall include all Secured Hedge Agreements outstanding on such date.

 

2.             Payment.  If any Borrower shall default in payment or performance of any of the Guaranteed Liabilities, whether principal, interest, premium, fees (including, but not limited to, Attorneys’ Costs), or otherwise, when and as the same shall become due, and after expiration of any applicable grace period, whether according to the terms of the Credit Agreement, by acceleration, or otherwise, or upon the occurrence and during the continuance of any Event of Default under the Credit Agreement, then any or all of the Guarantors will, upon demand thereof by the Administrative Agent, (i) fully pay to the Administrative Agent, for the benefit of the Secured Parties, subject to any restriction on each Guarantor’s Obligations set forth in Section 1 hereof, an amount equal to all the Guaranteed Liabilities then due and owing or declared or deemed to be due and owing, including for this purpose, in the event of any Event of Default under Section 8.01(f) of the Credit Agreement (and irrespective of the applicability of any restriction on acceleration or other action as against any other Loan Party under any Debtor Relief Laws), the entire outstanding or accrued amount of all Obligations or (ii) perform such Guaranteed Liabilities, as applicable. For purposes of this Section 2, the Guarantors acknowledge and agree that “Guaranteed Liabilities” shall be deemed to include any amount (whether principal, interest, premium, fees) which would have been accelerated in accordance with Section 8.02 of the Credit Agreement but for the fact that such acceleration could be unenforceable or not allowable under any Debtor Relief Law.

 

3.             Absolute Rights and Obligations.  This is a guaranty of payment and not of collection.  The Guarantors’ Obligations under this Guaranty Agreement shall be joint and several, absolute and unconditional irrespective of, and each Guarantor hereby expressly waives, to the extent permitted by law, any defense to its obligations under this Guaranty Agreement and all Collateral Documents to which it is a party by reason of:

 

(a)           any lack of legality, validity or enforceability of the Credit Agreement, of any of the Notes, of any other Loan Document, or of any other agreement or instrument creating, providing security for, or otherwise relating to any of the Guarantors’ Obligations, any of the Guaranteed Liabilities, or any other guaranty of any of the Guaranteed Liabilities (the Loan Documents and all such other agreements and instruments being collectively referred to as the “Related Agreements”);

 

(b)           any action taken under any of the Related Agreements, any exercise of any right or power therein conferred, any failure or omission to enforce any right conferred thereby, or any waiver of any covenant or condition therein provided;

 

(c)           any acceleration of the maturity of any of the Guaranteed Liabilities, of the Guarantor’s Obligations of any other Guarantor, or of any other obligations or liabilities of any Person under any of the Related Agreements;

 

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(d)           any release,  exchange,  non-perfection,  lapse in perfection, disposal, deterioration in value, or impairment of any security for any of the Guaranteed Liabilities, for any of the Guarantor’s Obligations of any Guarantor, or for any other obligations or liabilities of any Person under any of the Related Agreements;

 

(e)           any dissolution of any Borrower, any Guarantor, any other Loan Party or any other party to a Related Agreement, or the combination or consolidation of any Borrower, any Guarantor, any other Loan Party or any other party to a Related Agreement into or with another entity or any transfer or disposition of any assets of any Borrower, any Guarantor or any other Loan Party or any other party to a Related Agreement;

 

(f)             any extension (including without limitation extensions of time for payment), renewal, amendment, restructuring or restatement of, any acceptance of late or partial payments under, or any change in the amount of any borrowings or any credit facilities available under, the Credit Agreement, any of the Notes or any other Loan Document or any other Related Agreement, in whole or in part;

 

(g)           the existence, addition, modification, termination, reduction or impairment of value, or release of any other guaranty (or security therefor) of the Guaranteed Liabilities (including without limitation the Guarantor’s Obligations of any other Guarantor and obligations arising under any other Guaranty or any other Loan Document now or hereafter in effect);

 

(h)           any waiver of, forbearance or indulgence under, or other consent to any change in or departure from any term or provision contained in the Credit Agreement, any other Loan Document or any other Related Agreement, including without limitation any term pertaining to the payment or performance of any of the Guaranteed Liabilities, any of the Guarantor’s Obligations of any other Guarantor, or any of the obligations or liabilities of any party to any other Related Agreement;

 

(i)             any other circumstance whatsoever (with or without notice to or knowledge of any Guarantor or any other Loan Party) which might in any manner or to any extent vary the risks of such Loan Party, or might otherwise constitute a legal or equitable defense available to, or discharge of, a surety or a guarantor, including without limitation any right to require or claim that resort be had to any Borrower or any other Loan Party or to any collateral in respect of the Guaranteed Liabilities or Guarantors’ Obligations.

 

It is the express purpose and intent of the parties hereto that this Guaranty Agreement and the Guarantors’  Obligations hereunder and under each Guaranty Joinder Agreement shall be absolute and unconditional under any and all circumstances and shall not be discharged except by payment and performance as herein provided.

 

4.             Events of Default.   Without limiting the provisions of Section 2 hereof, in the event that there shall occur and be continuing an Event of Default, then notwithstanding any

 

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collateral or other security or credit support for the Guaranteed Liabilities, at the Administrative Agent’s election and without notice thereof or demand therefor, each of the Guaranteed Liabilities and the Guarantors’ Obligations shall immediately be and become due and payable.

 

5.             Subordination.  Until this Guaranty Agreement is terminated in accordance with Section 21 hereof, each Guarantor hereby unconditionally subordinates all present and future debts, liabilities or obligations now or hereafter owing to such Guarantor (a) of any Borrower, to the payment in full of the Guaranteed Liabilities, (b) of every other Guarantor (an “obligated guarantor”), to the payment in full of the Guarantors’ Obligations of such obligated guarantor, and (c) of each other Person now or hereafter constituting a Loan Party, to the payment in full of the obligations of such Loan Party owing to any Secured Party and arising under the Loan Documents or any Secured Cash Management Agreement or Secured Hedge Agreement.  All amounts due under such subordinated debts, liabilities, or obligations shall, upon the occurrence and during the continuance of an Event of Default, be collected and, upon request by the Administrative Agent, paid over forthwith to the Administrative Agent for the benefit of the Secured Parties on account of the Guaranteed Liabilities, the Guarantors’ Obligations, or such other obligations, as applicable, and, after such request and pending such payment, shall be held by such Guarantor as agent and bailee of the Secured Parties separate and apart from all other funds, property and accounts of such Guarantor.

 

6.             Suits.  Each Guarantor from time to time shall pay to the Administrative Agent for the benefit of the Secured Parties, on demand, at the Administrative Agent’s Office or such other address as the Administrative Agent shall give notice of to such Guarantor, the Guarantors’ Obligations as they become or are declared due, and in the event such payment is not made forthwith, the Administrative Agent may proceed to suit against any one or more or all of the Guarantors.  At the Administrative Agent’s election, one or more and successive or concurrent suits may be brought hereon by the Administrative Agent against any one or more or all of the Guarantors, whether or not suit has been commenced against any Borrower, any other Guarantor, or any other Person and whether or not the Secured Parties have taken or failed to take any other action to collect all or any portion of the Guaranteed Liabilities or have taken or failed to take any actions against any collateral securing payment or performance of all or any portion of the Guaranteed Liabilities, and irrespective of any event, occurrence, or condition described in Section 3 hereof.

 

7.             Set-Off and Waiver.    Each Guarantor waives any right to assert against any Secured Party as a defense, counterclaim, set-off, recoupment or cross claim in respect of its Guarantor’s Obligations, any defense (legal or equitable) or other claim which such Guarantor may now or at any time hereafter have against any Borrower or any other Loan Party or any or all of the Secured Parties without waiving any additional defenses, set-offs, counterclaims or other claims otherwise available to such Guarantor.  Each Guarantor agrees that each Secured Party shall have a lien for all the Guarantor’s Obligations upon all deposits or deposit accounts, of any kind, or any interest in any deposits or deposit accounts, now or hereafter pledged, mortgaged, transferred or assigned to such Secured Party or otherwise in the possession or control of such Secured Party for any purpose (other than solely for safekeeping) for the account or benefit of such Guarantor, including any balance of any deposit account or of any credit of such Guarantor with the Secured Party, whether now existing or hereafter established, and

 

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hereby authorizes each Secured Party from and after the occurrence and during the continuance of an Event of Default at any time or times with or without prior notice to apply such balances or any part thereof to such of the Guarantor’s Obligations to the Secured Parties then due and in such amounts as provided for in the Credit Agreement or otherwise as they may elect; provided, however, in the event any such action is undertaken by a Secured Party that is a Defaulting Lender, such Defaulting Lender shall be required to comply with the proviso appearing at the end of the first sentence of Section 10.08 of the Credit Agreement.  For the purposes of this Section 7, all remittances and property shall be deemed to be in the possession of a Secured Party as soon as the same may be put in transit to it by mail or carrier or by other bailee.

 

8.             Waiver of Notice; Subrogation.

 

(a)        Each Guarantor hereby waives to the extent permitted by law notice of the following events or occurrences:  (i) acceptance of this Guaranty Agreement; (ii) the Lenders’ heretofore, now or from time to time hereafter making Loans and issuing Letters of Credit and otherwise loaning monies or giving or extending credit to or for the benefit of any Borrower or any other Loan Party, or otherwise entering into arrangements with any Loan Party giving rise to Guaranteed Liabilities, whether pursuant to the Credit Agreement or the Notes or any other Loan Document or Related Agreement or any amendments,  modifications, or supplements thereto, or replacements or extensions thereof; (iii) presentment, demand, default, non-payment, partial payment and protest; and (iv) any other event, condition, or occurrence described in Section 3 hereof.  Each Guarantor agrees that each Secured Party may heretofore, now or at any time hereafter do any or all of the foregoing in such manner, upon such terms and at such times as each Secured Party, in its sole and absolute discretion, deems advisable, without in any way or respect impairing, affecting, reducing or releasing such Guarantor from its Guarantor’s Obligations, and each Guarantor hereby consents to each and all of the foregoing events or occurrences.

 

(b)        Each Guarantor hereby agrees that payment or performance by such Guarantor of its Guarantor’s Obligations under this Guaranty Agreement may be enforced by the Administrative Agent on behalf of the Secured Parties upon demand by the Administrative Agent to such Guarantor without the Administrative Agent being required, such Guarantor expressly waiving to the extent permitted by law any right it may have to require the Administrative Agent, to (i) prosecute collection or seek to enforce or resort to any remedies against any Borrower or any other Guarantor or any other guarantor of the Guaranteed Liabilities, or (ii) seek to enforce or resort to any remedies with respect to any security interests, Liens or encumbrances granted to the Administrative Agent or any Lender or other party to a Related Agreement by any Borrower, any other Guarantor or any other Person on account of the Guaranteed Liabilities or any guaranty thereof, IT BEING EXPRESSLY UNDERSTOOD, ACKNOWLEDGED AND AGREED TO BY SUCH GUARANTOR THAT DEMAND UNDER THIS GUARANTY AGREEMENT MAY BE MADE BY THE ADMINISTRATIVE AGENT, AND THE PROVISIONS HEREOF ENFORCED BY THE ADMINISTRATIVE AGENT, EFFECTIVE AS OF THE FIRST DATE

 

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ANY EVENT OF DEFAULT OCCURS AND IS CONTINUING UNDER THE CREDIT AGREEMENT.

 

(c)         Each Guarantor further agrees that with respect to this Guaranty Agreement, such Guarantor shall not exercise any of its rights of subrogation, reimbursement, contribution, indemnity or recourse to security for the Guaranteed Liabilities until 91 days immediately following the Facility Termination Date shall have elapsed without the filing or commencement, by or against any Loan Party, of any state or federal action, suit, petition or proceeding seeking any reorganization, liquidation or other relief or arrangement in respect of creditors of, or the appointment of a receiver, liquidator, trustee or conservator in respect to, such Loan Party or its assets. If an amount shall be paid to any Guarantor on account of such rights at any time prior to termination of this Guaranty Agreement in accordance with the provisions of Section 21 hereof, such amount shall be held in trust for the benefit of the Secured Parties and shall forthwith be paid to the Administrative Agent, for the benefit of the Secured Parties, to be credited and applied upon the Guarantors’ Obligations, whether matured or unmatured, in accordance with the terms of the Credit Agreement or otherwise as the Secured Parties may elect. The agreements in this subsection shall survive repayment of all of the Guarantors’ Obligations, the termination or expiration of this Guaranty Agreement in any manner, including but not limited to termination in accordance with Section 21 hereof, and occurrence of the Facility Termination Date.

 

9.             Effectiveness; Enforceability. This Guaranty Agreement shall be effective as of the date first above written and shall continue in full force and effect until termination in accordance with Section 21 hereof. Any claim or claims that the Secured Parties may at any time hereafter have against a Guarantor under this Guaranty Agreement may be asserted by the Administrative Agent on behalf of the Secured Parties by written notice directed to such Guarantor in accordance with Section 23 hereof.

 

10.          Representations and Warranties.  Each Guarantor warrants and represents to the Administrative Agent, for the benefit of the Secured Parties, that (a) it is duly authorized to execute and deliver this Guaranty Agreement (or the Guaranty Joinder Agreement to which it is a party, as applicable), and to perform its obligations under this Guaranty Agreement; (b) this Guaranty Agreement (or the Guaranty Joinder Agreement to which it is a party, as applicable) has been duly executed and delivered on behalf of such Guarantor by its duly authorized representatives; (c) this Guaranty Agreement (and any Guaranty Joinder Agreement to which such Guarantor is a party) is legal, valid, binding and enforceable against such Guarantor in accordance with its terms except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles; and (d) such Guarantor’s execution, delivery and performance of this Guaranty Agreement (and any Guaranty Joinder Agreement to which such Guarantor is a party) do not violate or constitute a breach of (i) any of its Organization Documents, (ii) any material agreement or material instrument to which such Guarantor is a party, or (iii) any Law to which it or its properties or operations is subject.

 

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11.          Expenses and Indemnity.   Each Guarantor agrees to be jointly and severally liable for the payment of all reasonable fees and expenses, including Attorneys’ Costs, incurred by any Secured Party in connection with the enforcement of this Guaranty Agreement, whether or not suit be brought.  Without limitation of any other obligations of any Guarantor or remedies of the Administrative Agent or any Secured Party under this Guaranty Agreement, each Guarantor shall, to the fullest extent permitted by Law, indemnify, defend and save and hold harmless the Administrative Agent and each Secured Party from and against, and shall pay on demand, any and all damages, losses, liabilities and expenses (including Attorneys’ Costs) that may be suffered or incurred by the Administrative Agent or such Secured Party in connection with or as a result of any failure of any Guaranteed Liabilities to be the legal, valid and binding obligations of any Borrower or any applicable Loan Party enforceable against such Borrower or such applicable Loan Party in accordance with their terms.  The obligations of each Guarantor under this paragraph shall survive the payment in full of the Guaranteed Liabilities and termination of this Guaranty Agreement.

 

12.          Reinstatement.  Each Guarantor agrees that this Guaranty Agreement shall continue to be effective or be reinstated, as the case may be, at any time payment received by any Secured Party in respect of any Guaranteed Liabilities is rescinded or must be restored for any reason, or is repaid by any Secured Party in whole or in part in good faith settlement of any pending or threatened avoidance claim.

 

13.          [Reserved.]

 

14.          Reliance. Each Guarantor represents and warrants to the Administrative Agent, for the benefit of the Secured Parties, that: (a) such Guarantor has adequate means to obtain on a continuing basis (i) from the Borrowers, information concerning the Loan Parties and the Loan Parties’ financial condition and affairs and (ii) from other reliable sources, such other information as it deems material in deciding to provide this Guaranty Agreement and any Guaranty Joinder Agreement (“Other Information”), and has full and complete access to the Loan Parties’ books and records and to such Other Information; (b) such Guarantor is not relying on any Secured Party or its or their employees, directors, agents or other representatives or Affiliates, to provide any such information, now or in the future; (c) such Guarantor has been furnished with and reviewed the terms of the Credit Agreement and such other Loan Documents and Related Agreements as it has requested, is executing this Guaranty Agreement (or the Guaranty Joinder Agreement to which it is a party, as applicable) freely and deliberately, and understands the obligations and financial risk undertaken by providing this Guaranty Agreement (and any Guaranty Joinder Agreement); (d) such Guarantor has relied solely on the Guarantor’s own independent investigation, appraisal and analysis of the Borrowers and the other Loan Parties, such Persons’ financial condition and affairs, the Other Information, and such other matters as it deems material in deciding to provide this Guaranty Agreement (and any Guaranty Joinder Agreement) and is fully aware of the same; and (e) such Guarantor has not depended or relied on any Secured Party or its or their employees, directors, agents or other representatives or Affiliates, for any information whatsoever concerning any Borrower or any Borrower’s financial condition and affairs or any other matters material to such Guarantor’s decision to provide this Guaranty Agreement (and any Guaranty Joinder Agreement), or for any counseling, guidance, or special consideration or any promise therefor with respect to such decision.  Each Guarantor

 

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agrees that no Secured Party has any duty or responsibility whatsoever, now or in the future, to provide to such Guarantor any information concerning any Borrower or any other Loan Party or such Persons’ financial condition and affairs, or any Other Information, other than as expressly provided herein, and that, if such Guarantor receives any such information from any Secured Party or its or their employees, directors, agents or other representatives or Affiliates, such Guarantor will independently verify the information and will not rely on any Secured Party or its or their employees, directors, agents or other representatives or Affiliates, with respect to such information.

 

15.          Rules of Interpretation.  The rules of interpretation contained in Section 1.02 of the Credit Agreement shall be applicable to this Guaranty Agreement and each Guaranty Joinder Agreement and are hereby incorporated by reference.   All representations and warranties contained herein shall survive the delivery of documents and any extension of credit referred to herein or guaranteed hereby.

 

16.          Entire Agreement.  This Guaranty Agreement and each Guaranty Joinder Agreement, together with the Credit Agreement and other Loan Documents, constitutes and expresses the entire understanding between the parties hereto with respect to the subject matter hereof, and supersedes all prior negotiations, agreements, understandings, inducements, commitments or conditions, express or implied, oral or written, except as herein contained. The express terms hereof control and supersede any course of performance or usage of the trade inconsistent with any of the terms hereof.  Except as provided in Section 21, neither this Guaranty Agreement nor any Guaranty Joinder Agreement nor any portion or provision hereof or thereof may be changed, altered, modified, supplemented, discharged, canceled, terminated, or amended orally or in any manner other than as provided in the Credit Agreement.

 

17.          Binding Agreement; Assignment.  This Guaranty Agreement, each Guaranty Joinder Agreement and the terms, covenants and conditions hereof and thereof, shall be binding upon and inure to the benefit of the parties hereto and thereto, and to their respective heirs, legal representatives, successors and assigns; provided, however, that no Guarantor shall be permitted to assign any of its rights, powers, duties or obligations under this Guaranty Agreement, any Guaranty Joinder Agreement or any other interest herein or therein except as expressly permitted herein or in the Credit Agreement.  Without limiting the generality of the foregoing sentence of this Section 17, any Lender may assign to one or more Persons, or grant to one or more Persons participations in or to, all or any part of its rights and obligations under the Credit Agreement (to the extent permitted by the Credit Agreement); and to the extent of any such assignment or participation such other Person shall, to the fullest extent permitted by law, thereupon become vested with all the benefits in respect thereof granted to such Lender herein or otherwise, subject however, to the provisions of the Credit Agreement, including Article IX thereof (concerning the Administrative Agent) and Section 10.06 thereof concerning assignments and participations.  All references herein to the Administrative Agent shall include any successor thereof.

 

18.          Secured Cash Management Agreements and Secured Hedging Agreements. No Secured Party (other than the Administrative Agent) that obtains the benefit of this Guaranty Agreement shall have any right to notice of any action or to consent to, direct or object to any action hereunder (including the release, impairment or modification of any Guarantors’

 

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Obligations or security therefor) other than in its capacity as a Lender and, in such case, only to the extent expressly provided in the Loan Documents. Notwithstanding any other provision of this Guaranty Agreement to the contrary, the Administrative Agent shall only be required to verify the payment of, or that other satisfactory arrangement have been made with respect to, the Secured Obligations arising under Secured Cash Management Agreements and Secured Hedge Agreements to the extent the Administrative Agent has received written notice of such Obligations, together with such supporting documentation as it may request, from the applicable Cash Management Bank or Hedge Bank, as the case may be. Each Secured Party not a party to the Credit Agreement that obtains the benefit of this Guaranty Agreement shall be deemed to have acknowledged and accepted the appointment of the Administrative Agent pursuant to the terms of the Credit Agreement, and that with respect to the actions and omissions of the Administrative Agent hereunder or otherwise relating hereto that do or may affect such Secured Party, the Administrative Agent and each of its Related Parties shall be entitled to all the rights, benefits and immunities conferred under Article IX of the Credit Agreement.

 

19.          Severability.  If any provision of this Guaranty Agreement is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Guaranty Agreement shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions.  The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

20.          Counterparts.  This Guaranty Agreement may be executed in any number of counterparts each of which when so executed and delivered shall be deemed an original, and it shall not be necessary in making proof of this Guaranty Agreement to produce or account for more than one such counterpart executed by the Guarantors against whom enforcement is sought. Without limiting the foregoing provisions of this Section 20, the provisions of Section 10.10 of the Credit Agreement shall be applicable to this Guaranty Agreement.

 

21.          Termination. Subject to reinstatement pursuant to Section 12 hereof, this Guaranty Agreement and each Guaranty Joinder Agreement, and all of the Guarantors’ Obligations hereunder (excluding those Guarantors’  obligations relating to Guaranteed Liabilities that expressly survive such termination) shall terminate on the Facility Termination Date.

 

22.          Remedies Cumulative; Late Payments.  All remedies hereunder are cumulative and are not exclusive of any other rights and remedies of the Administrative Agent or any other Secured Party provided by law or under the Credit Agreement, the other Loan Documents or other applicable agreements or instruments.  The making of the Loans and other credit extensions pursuant to the Credit Agreement and other Related Agreements shall be conclusively presumed to have been made or extended, respectively, in reliance upon each Guarantor’s guaranty of the Guaranteed Liabilities pursuant to the terms hereof. Any amounts not paid when due under this Guaranty Agreement shall bear interest at the Default Rate.

 

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23.          Notices.  Any notice required or permitted hereunder or under any GuarantyJoinder Agreement shall be given, (a) with respect to each Guarantor, at the address of the Company indicated in Schedule 10.02 of the Credit Agreement and (b) with respect to the Administrative Agent or any other Secured Party, at the Administrative Agent’s address indicated in Schedule 10.02 of the Credit Agreement. All such addresses may be modified, and all such notices shall be given and shall be effective, as provided in Section 10.02 of the Credit Agreement for the giving and effectiveness of notices and modifications of addresses thereunder.

 

24.          Joinder.  Each Person that shall at any time execute and deliver to the Administrative Agent a Guaranty Joinder Agreement substantially in the form attached as Exhibit A hereto shall thereupon irrevocably, absolutely and unconditionally become a party hereto and obligated hereunder as a Guarantor, and all references herein and in the other Loan Documents to the Guarantors or to the parties to this Guaranty Agreement shall be deemed to include such Person as a Guarantor hereunder.

 

25.                               Governing Law; Jurisdiction; Etc.

 

(a)           THIS GUARANTY AGREEMENT AND EACH GUARANTY JOINDER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

(b)           EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY AGREEMENT OR ANY GUARANTY JOINDER AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS GUARANTY AGREEMENT OR ANY GUARANTY JOINDER AGREEMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT OR ANY SECURED PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS GUARANTY AGREEMENT OR ANY GUARANTY JOINDER AGREEMENT AGAINST ANY GUARANTOR OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

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(c)           EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY AGREEMENT OR ANY GUARANTY JOINDER AGREEMENT IN ANY COURT REFERRED TO IN PARAGRAPH (b) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(d)           EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 23. NOTHING IN THIS GUARANTY AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

26.          Waiver of Jury Trial.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS GUARANTY AGREEMENT OR ANY GUARANTY JOINDER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS GUARANTY AGREEMENT OR ANY GUARANTY JOINDER AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

27.          Amendment and Restatement.  Notwithstanding this amendment and restatement of the Existing Guaranty Agreement, (i) all of the indebtedness, liabilities and obligations owing by the Guarantors or any other Person under the Existing Guaranty Agreement shall continue as obligations hereunder, and shall be and remain secured by this Guaranty Agreement, (ii) the Existing Guaranty shall continue as a security interest hereunder, and (iii) this Guaranty Agreement is given as a substitution of, and not as a payment of the indebtedness, liabilities and obligations of the Guarantors under, the Existing Guaranty Agreement and neither the execution and delivery of this Guaranty Agreement nor the consummation of any other transaction contemplated hereunder is intended to constitute a novation of the Existing Guaranty Agreement or the Existing Guaranty created thereunder.

 

[Signature pages follow.]

 

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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Guaranty Agreement as of the day and year first written above.

 

	
 
    	
GUARANTORS:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
POWER-ONE, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Gary   R. Larsen
    
	
 
    	
Title:
    	
Senior   Vice President-Finance and Chief Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
P-O NEVADA CORP.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Gary   R. Larsen
    
	
 
    	
Title:
    	
Vice   President and Treasurer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
POWER-ONE RENEWABLE ENERGY SOLUTIONS LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Gary   R. Larsen
    
	
 
    	
Title:
    	
Manager
    

 

Guaranty Agreement

Signature Page

 

 

	
 
    	
ADMINISTRATIVE AGENT:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
BANK OF AMERICA, N.A., as Administrative Agent
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

Guaranty Agreement

Signature Page

 

 

EXHIBIT A

 

Form of Guaranty Joinder Agreement

 

GUARANTY JOINDER AGREEMENT

 

THIS GUARANTY JOINDER AGREEMENT dated as of                , 20   (this “Guaranty Joinder Agreement”), is made by                              , a               (the “Joining Guarantor”), in favor of (1) BANK OF AMERICA, N.A., in its capacity as Administrative Agent (the “Administrative Agent”) and (2) the other Secured Parties (as defined in the Guaranty Agreement referenced below; all capitalized terms used but not defined herein shall have the meanings provided therefor in such Guaranty Agreement).

 

RECITALS:

 

A             Power-One, Inc., a Delaware corporation (the “Company”), certain of its Subsidiaries from time to time party thereto, the lenders party thereto and the Administrative Agent are party to a Credit Agreement dated as of January 30, 2013 (as in effect on the date hereof, the “Credit Agreement”).

 

B.            The Company and certain Subsidiaries of the Company are party to an Amended and Restated Guaranty Agreement dated as of January 30, 2013 (as in effect on the date hereof, the “Guaranty Agreement”).

 

C.            The Joining Guarantor is a Subsidiary of the Company and is required by the terms of the Credit Agreement to be joined as a party to the Guaranty Agreement as a Guarantor (as defined in the Guaranty Agreement).

 

D.            The Joining Guarantor will materially benefit directly and indirectly from the making and maintenance of the extensions of credit made from time to time under the Credit Agreement, Secured Cash Management Agreements and Secured Hedge Agreements.

 

In order to induce the Secured Parties to from time to time make and maintain extensions of credit under the Credit Agreement, Secured Cash Management Agreements and Secured Hedge Agreements, the Joining Guarantor hereby agrees as follows:

 

1.             Joinder. The Joining Guarantor hereby irrevocably, absolutely and unconditionally becomes a party to the Guaranty Agreement as a Guarantor and bound by all the terms, conditions, obligations, liabilities and undertakings of each Guarantor or to which each Guarantor is subject thereunder, including without limitation the joint and several, unconditional, absolute, continuing and irrevocable guarantee to the Administrative Agent and the other Secured Parties of the payment and performance in full of the Guaranteed Liabilities (as defined in the Guaranty Agreement) whether now existing or hereafter arising, all with the same force and effect as if the Joining Guarantor were an original signatory to the Guaranty Agreement.

 

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2.             Affirmations.  The Joining Guarantor hereby acknowledges and reaffirms as of the date hereof with respect to itself, its properties and its affairs each of the waivers, representations, warranties, acknowledgements and certifications applicable to any Guarantor contained in the Guaranty Agreement.

 

3.             Severability.  If any provision of this Guaranty Joinder Agreement is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Guaranty Joinder Agreement shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

4.             Counterparts.  This Guaranty Joinder Agreement may be executed in any number of counterparts each of which when so executed and delivered shall be deemed an original, and it shall not be necessary in making proof of this Guaranty Joinder Agreement to produce or account for more than one such counterpart executed by the Joining Guarantor. Without limiting the foregoing provisions of this Section 4, the provisions of Section 10.10 of the Credit Agreement shall be applicable to this Guaranty Joinder Agreement.

 

5.             Delivery.  The Joining Guarantor hereby irrevocably waives notice of acceptance of this Guaranty Joinder Agreement and acknowledges that the Guaranteed Liabilities are and shall be deemed to be incurred, and credit extensions under the Loan Documents, Secured Cash Management Agreements and Secured Hedge Agreements made and maintained, in reliance on this Guaranty Joinder Agreement and the Joining Guarantor’s joinder as a party to the Guaranty Agreement as herein provided.

 

6.             Governing Law; Jurisdiction; Waiver of Jury Trial; Etc.  The provisions of Sections 25 and 26 of the Guaranty Agreement are hereby incorporated by reference as if fully set forth herein.

 

[Signature page follows.]

 

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IN WITNESS WHEREOF, the Joining Guarantor has duly executed and delivered this Guaranty Joinder Agreement as of the day and year first written above.

 

	
 
    	
JOINING   GUARANTOR:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

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EXHIBIT G

 

FORM OF SECURITY AGREEMENT

 

G-1

 

Execution Version

 

AMENDED AND RESTATED SECURITY AGREEMENT

 

THIS AMENDED AND RESTATED SECURITY AGREEMENT dated as of January 30, 2013 (this “Security Agreement”) is being entered into among POWER-ONE, INC., a Delaware corporation (the “Company”), EACH OF THE UNDERSIGNED U.S. SUBSIDIARIES OF THE COMPANY AND EACH OTHER PERSON WHO SHALL BECOME A PARTY HERETO BY EXECUTION OF A SECURITY JOINDER AGREEMENT (each a “Guarantor” and, together with the Company, collectively, the “Grantors”), and BANK OF AMERICA, N.A., as Administrative Agent (in such capacity, the “Administrative Agent”) for each of the Secured Parties (as defined in the Credit Agreement referenced) below.

 

RECITALS:

 

A.                                    The Company, the lenders party thereto, and Bank of America, N.A., as administrative agent, are parties to that certain Credit Agreement dated as of March 29, 2011 (as amended, restated, supplemented, or otherwise modified from time to time prior to the date hereof, the “Existing Credit Agreement”), pursuant to which the then lenders originally agreed to provide the Company with a revolving credit facility, including a swingline subfacility and a letter of credit subfacility.

 

B.                                    In connection with the Existing Credit Agreement, the Company and the other Grantors thereunder (collectively, the “Existing Grantors”) entered into that certain Security Agreement dated as of March 29, 2011 (the “Existing Security Agreement”) pursuant to which the Existing Grantors granted to the Administrative Agent, for the benefit of the Secured Parties, a security interest (the “Existing Security Interest”) in all right, title or interest in or to any and all of certain assets and properties of the Existing Grantors as more particularly set forth therein.

 

C.                                    The Company has requested that the Existing Credit Agreement be amended and restated, which shall be evidenced by that certain Amended and Restated Credit Agreement dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the “Restatement”, the Exiting Credit Agreement as amended and restated by the Restatement, the “Credit Agreement”), among the Company, the Subsidiaries of the Company from time to time party thereto (collectively with the Company, the “Borrowers”, and each a “Borrower”), the Administrative Agent, Bank of America, N.A., as L/C Issuer and Swing Line Lender, and the lenders now or hereafter party thereto (collectively, the “Lenders”).

 

D.                                    Certain additional extensions of credit may be made from time to time for the benefit of the Grantors pursuant to certain Cash Management Agreements and Hedge Agreements (each as defined in the Credit Agreement).

 

E.                                     It is a condition precedent to the Secured Parties’ obligations to amend and restate the Existing Credit Agreement and make and maintain such extensions of credit that the Grantors shall have executed and delivered this Security Agreement to the Administrative Agent.

 

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In order to induce the Secured Parties to from time to time make and maintain extensions of credit under the Credit Agreement and such Cash Management Agreements and Hedge Agreements, the parties hereto agree as follows:

 

1.                                      Certain Definitions.  All capitalized terms used but not otherwise defined herein shall have the meanings assigned thereto in the Credit Agreement.  Terms used in this Security Agreement that are not otherwise expressly defined herein or in the Credit Agreement, and for which meanings are provided in the Uniform Commercial Code of the State of New York (the “UCC”), shall have such meanings unless the context requires otherwise.  In addition, for purposes of this Security Agreement, the following terms have the following definitions:

 

“Excluded Perfection Assets” shall mean any assets (i) constituting a salary, benefits, trust, petty cash or other disbursement account, (ii) any other deposit account or securities account, when taken together with all other deposit accounts and securities accounts that are not otherwise the subject of a Qualifying Control Agreement, where the aggregate balances in all such deposit and securities accounts does not exceed $100,000 at any one time outstanding; (iii) any property or assets that the Administrative Agent and the Company agree in good faith that the cost of perfecting a security interest in respect of which the cost of perfecting a security interest is excessive in relation to the value of the security to be afforded thereby or is not commercially practical; (iv) letter of credit rights not constituting supporting obligations; (v) any property or assets that constitute intellectual property owned by any Loan Party that is registered or issued or the subject of an application for registration or issuance in a jurisdiction other than the United States; (vi) any vehicles subject to certificate of title statutes; and (vii) any other property or assets in which, pursuant to the terms and conditions of any Collateral Document, the security interest of the Collateral Documents need not be perfected.

 

“Qualifying Control Agreement” means (a) with respect to Investment Property credited to any securities account, an agreement executed by the applicable securities intermediary substantially in such form  and substance as may be reasonably consented to by the Administrative Agent; (b) with respect to any Deposit Account, a deposit account control agreement executed by the applicable depositary bank substantially in such form and substance as may be reasonably consented to by the Administrative Agent; and (c) with respect to any Investment Property in the form of uncertificated securities, an agreement of the issuer of such Investment Property in such form and substance as may be reasonably consented to by the Administrative Agent sufficient to confer control (within the meaning of Section 9-106 of the UCC) over such property and containing such other terms and provisions as the Administrative Agent may reasonably request.

 

“Secured Obligations” means (a) as to each Borrower, all of the Obligations, including, the payment and performance of its obligations and liabilities (whether now existing or hereafter arising) (i) under the Credit Agreement and each of the other Loan Documents (including this Security Agreement) to which it is now or hereafter becomes a party, and (ii) any Secured Cash Management Agreements and Secured Hedge Agreements to which any Loan Party is now or hereafter becomes a party, and (b) as to each Guarantor, the payment and performance of its obligations and liabilities (whether now existing or hereafter arising) (i) under the Guaranty and

 

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each of the other Loan Documents (including this Security Agreement) to which it is now or hereafter becomes a party, and (ii) any Secured Cash Management Agreements and Secured Hedge Agreements to which it is now or hereafter becomes a party.

 

Notwithstanding any provision hereof or in any other Loan Document to the contrary, in the event that any Grantor is not an “eligible contract participant” as such term is defined in Section 1(a)(18) of the Commodity Exchange Act, at the time (i) any Secured Hedge Agreement that constitutes a “Swap” under the Commodity Exchange Act is entered into or (ii) such Grantor becomes a Grantor hereunder, the Secured Obligations of such Grantor shall not include (x) in the case of clause (i) above, such Secured Hedge Agreement and (y) in the case of clause (ii) above, any Secured Hedge Agreement that constitutes a “Swap” under the Commodity Exchange Act as of such the date such Grantor becomes a Grantor hereunder; provided, however, that if such Grantor becomes an eligible contract participant as of a date subsequent to the date described in clause (i) or (ii) above, as the case may be, then the Secured Obligations of such Grantor shall include all Secured Hedge Agreements outstanding on such date.

 

2.                                      Grant of Security Interest.  Each Grantor grants as collateral security for the payment, performance and satisfaction of the Secured Obligations, to the Administrative Agent for the benefit of the Secured Parties a continuing first priority security interest in and to, and collaterally assigns to the Administrative Agent for the benefit of the Secured Parties, all of the assets of such Grantor or in which such Grantor has or may have or acquire an interest or the power to transfer rights therein, whether now owned or existing or hereafter created, acquired or arising and wheresoever located, including the following:

 

(a)                                 All accounts, and including accounts receivable, contracts, bills, acceptances, choses in action, and other forms of monetary obligations at any time owing to such Grantor arising out of property sold, leased, licensed, assigned or otherwise disposed of or for services rendered or to be rendered by such Grantor, and all of such Grantor’s rights with respect to any property represented thereby, whether or not delivered, property returned by customers and all rights as an unpaid vendor or lienor, including rights of stoppage in transit and of recovering possession by proceedings including replevin and reclamation (collectively referred to hereinafter as “Accounts”);

 

(b)                                 All inventory, including all goods manufactured or acquired for sale or lease, and any piece goods, raw materials, work in process and finished merchandise, component materials, and all supplies, goods, incidentals, office supplies, packaging materials and any and all items used or consumed in the operation of the business of such Grantor or which may contribute to the finished product or to the sale, promotion and shipment thereof, in which such Grantor now or at any time hereafter may have an interest, whether or not the same is in transit or in the constructive, actual or exclusive occupancy or possession of such Grantor or is held by such Grantor or by others for such Grantor’s account (collectively referred to hereinafter as “Inventory”);

 

(c)                                  All goods, including all machinery, equipment, motor vehicles, parts, supplies, apparatus, appliances, tools, patterns, molds, dies, blueprints, fittings, furniture, furnishings, fixtures and articles of tangible personal property of every description, and

 

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all computer programs embedded in any of the foregoing and all supporting information relating to such computer programs (collectively referred to hereinafter as “Equipment”);

 

(d)                                 All general intangibles, including all rights now or hereafter accruing to such Grantor under contracts, leases, agreements or other instruments, including all contracts or contract rights to perform or receive services, to purchase or sell goods, or to hold or use land or facilities, and to enforce all rights thereunder, all causes of action, corporate or business records, inventions, patents and patent rights, rights in mask works, designs, trade names and trademarks and all goodwill associated therewith, trade secrets, trade processes, copyrights, licenses, permits, franchises, customer lists, computer programs and software, all internet domain names and registration rights thereto, all internet websites and the content thereof, all payment intangibles, all claims under guaranties, tax refund claims, all rights and claims against carriers and shippers, leases, all claims under insurance policies, all interests in general and limited partnerships, limited liability companies, and other Persons not constituting Investment Property (as defined below), all rights to indemnification and all other intangible personal property and intellectual property of every kind and nature (collectively referred to hereinafter as “General Intangibles”);

 

(e)                                  All deposit accounts, including demand, time, savings, passbook, or other similar accounts maintained with any bank by or for the benefit of such Grantor (collectively referred to hereinafter as “Deposit Accounts”);

 

(f)                                   All chattel paper, including tangible chattel paper, electronic chattel paper, or any hybrid thereof (collectively referred to hereinafter as “Chattel Paper”);

 

(g)                                  All investment property, including all securities, security entitlements, securities accounts, commodity contracts and commodity accounts of or maintained for the benefit of such Grantor, but excluding Pledged Interests subject to any Pledge Agreement (collectively referred to hereinafter as “Investment Property”);

 

(h)                                 All instruments, including all promissory notes (collectively referred to hereinafter as “Instruments”);

 

(i)                                     All documents, including warehouse receipts, bills of lading and other documents of title (collectively referred to hereinafter as “Documents”);

 

(j)                                    All rights to payment or performance under letters of credit including rights to proceeds of letters of credit (“Letter-of-Credit Rights”), and all guaranties, endorsements, Liens, other Guarantee obligations or supporting obligations of any Person securing or supporting the payment, performance, value or liquidation of any of the foregoing (collectively, with Letter-of-Credit Rights, referred to hereinafter as “Supporting Obligations”);

 

(k)                                 All books and records relating to any of the forgoing (including customer data, credit files, ledgers, computer programs, printouts, and other computer materials

 

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and records (and all media on which such data, files, programs, materials and records are or may be stored)); and

 

(l)                                     All proceeds, products and replacements of, accessions to, and substitutions for, any of the foregoing, including without limitation proceeds of insurance policies insuring any of the foregoing.

 

All of the property and interests in property described in subsections (a) through (l) are herein collectively referred to as the “Collateral.”

 

The foregoing notwithstanding, in no event shall the term “Collateral” include:

 

(i) any lease, license, contract, property right or agreement to which any Grantor is a party or any of such Grantor’s rights or interests thereunder if and only for so long as the grant of a security interest therein under any Loan Document shall constitute or result in a breach, termination or default or invalidity under such lease, license, contract, property right or agreement (other than to the extent that any such term would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC of any relevant jurisdiction or any other applicable law); provided that such lease, license, contract, property right or agreement shall be excluded hereunder only to the extent and for so long as the consequences specified above shall exist and shall cease to be excluded hereunder and shall become subject to the security interest granted hereunder at such time as such consequences shall no longer exist;

 

(ii) all assets of the Grantors secured by Liens permitted by Section 7.01(i) or (m) of the Credit Agreement, in each case to the extent a negative pledge governs the subject asset;

 

(iii) any trademark applications filed in the United States Patent and Trademark Office on the basis of a Loan Party’s “intent-to-use” such trademark to the extent that granting the security interest in such trademark application prior to such filing would adversely affect the enforceability or validity or result in the voiding of such trademark application, unless and until acceptable evidence of use of the trademark has been filed with and accepted by the United States Patent and Trademark Office pursuant to Section 1(c) or Section 1(d) of the Lanham Act (15 U.S.C. 1051, et seq.), whereupon such trademark application will be deemed automatically included in the Collateral;

 

(iv) any Equity Interests constituting “Collateral” under the Pledge Agreement, together with any assets described therein as being excluded from the “Collateral” thereunder;

 

(v) any Equity Interests to the extent the pledge thereof would violate any applicable requirement of Law; and

 

(v)  any Excluded Collateral (as defined in the Pledge Agreement).

 

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3.                                      Perfection.  As of the date of execution of this Security Agreement or Security Joinder Agreement by each Grantor, as applicable (with respect to each Grantor, its “Applicable Date”), such Grantor shall have:

 

(a)                                 furnished the Administrative Agent with duly authorized financing statements in form, number and substance suitable for filing, sufficient under applicable law, and satisfactory to the Administrative Agent in order that upon the filing of the same the Administrative Agent, for the benefit of the Secured Parties, shall have a duly perfected security interest in all Collateral in which a security interest can be perfected by the filing of financing statements;

 

(b)                                 to the extent expressly required by the terms hereof or of the Credit Agreement, or otherwise as the Administrative Agent may request, furnished the Administrative Agent with properly executed Qualifying Control Agreements and taken appropriate action reasonably acceptable to the Administrative Agent to establish the Administrative Agent’s control of electronic Chattel Paper (and the electronic components of hybrid Chattel Paper), as appropriate, with respect to Collateral in which either (i) a security interest can be perfected only by control, or (ii) a security interest perfected by control shall have priority as against a lien creditor, a purchaser of such Collateral from the applicable Grantor, or a security interest perfected by Persons not having control, in each case in form and substance reasonably acceptable to the Administrative Agent and sufficient under applicable law so that the Administrative Agent, for the benefit of the Secured Parties, shall have a security interest in all such Collateral perfected by control; and

 

(c)                                  to the extent expressly required by the terms hereof or of the Credit Agreement, or otherwise as the Administrative Agent may request, delivered to the Administrative Agent possession of all Collateral with respect to which either a security interest can be perfected only by possession or a security interest perfected by possession shall have priority as against Persons not having possession, and including in the case of Instruments, Documents, and Investment Property in the form of certificated securities, duly executed endorsements or stock powers in blank, as the case may be, affixed thereto in form and substance acceptable to the Administrative Agent and sufficient under applicable law so that the Administrative Agent, for the benefit of the Secured Parties, shall have a security interest in all such Collateral perfected by possession;

 

with the effect that the Liens conferred in favor of the Administrative Agent shall be and remain duly perfected and, with respect to Collateral, of first priority subject only to Permitted Liens that are expressly allowed or required by applicable Law to have priority over Liens in favor of the Administrative Agent.  All financing statements (including all amendments thereto and continuations thereof), control agreements, certificates, acknowledgments, stock powers and other documents, electronic identification, restrictive legends, and instruments furnished in connection with the creation,  enforcement, protection, perfection or priority of the Administrative Agent’s security interest in Collateral, including such items as are described above in this Section 3, are sometimes referred to herein as “Perfection Documents”.  The delivery of possession of items of or evidencing Collateral, causing other Persons to execute and

 

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deliver Perfection Documents as appropriate, the filing or recordation of Perfection Documents, the establishment of control over items of Collateral, and the taking of such other actions as may be necessary or advisable in the determination of the Administrative Agent to create, enforce, protect, perfect, or establish or maintain the priority of, the security interest of the Administrative Agent for the benefit of the Secured Parties in the Collateral is sometimes referred to herein as “Perfection Action”.

 

Anything contained herein to the contrary notwithstanding, the Grantors shall not be required to perfect the Lien of the Administrative Agent hereunder in any Excluded Perfection Asset.

 

4.                                      Maintenance of Security Interest; Further Assurances.

 

(a)                                 Each Grantor will from time to time at its own expense, deliver specific assignments of Collateral or such other Perfection Documents, and take such other or additional Perfection Action, as may be required by the terms of the Loan Documents or as the Administrative Agent may reasonably request in connection with the administration or enforcement of this Security Agreement or related to the Collateral or any part thereof in order to carry out the terms of this Security Agreement, to perfect, protect, maintain the priority of or enforce the Administrative Agent’s security interest in the Collateral, subject only to Permitted Liens, or otherwise to better assure and confirm unto the Administrative Agent its rights, powers and remedies for the benefit of the Secured Parties hereunder. Without limiting the foregoing, each Grantor hereby irrevocably authorizes the Administrative Agent to file (with, or to the extent permitted by applicable law, without the signature of the Grantor appearing thereon) financing statements (including amendments thereto and initial financing statements in lieu of continuation statements) or other Perfection Documents (including copies thereof) showing such Grantor as “debtor” at such time or times and in all filing offices as the Administrative Agent may from time to time determine to be necessary or advisable to perfect or protect the rights of the Administrative Agent and the Secured Parties hereunder, or otherwise to give effect to the transactions herein contemplated, any of which Perfection Documents, at the Administrative Agent’s election, may describe the Collateral as or including all assets of the Grantor.  Each Grantor hereby irrevocably ratifies and acknowledges the Administrative Agent’s authority to have effected filings of Perfection Documents made by the Administrative Agent prior to its Applicable Date.

 

(b)                                 With respect to any and all Collateral, each Grantor agrees to do and cause to be done all things necessary to perfect, maintain the priority of and keep in full force the security interest granted in favor of the Administrative Agent for the benefit of the Secured Parties, including, but not limited to, the prompt payment upon demand therefor by the Administrative Agent of all fees and expenses (including documentary stamp, excise or intangibles taxes) incurred in connection with the preparation, delivery, or filing of any Perfection Document or the taking of any Perfection Action to perfect, protect or enforce a security interest in Collateral in favor of the Administrative Agent for the benefit of the Secured Parties, subject only to Permitted Liens.  All amounts not so paid when due shall constitute additional Secured Obligations and (in addition to other rights

 

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and remedies resulting from such nonpayment) shall bear interest from the date of demand until paid in full at the Default Rate.

 

(c)                                  Each Grantor agrees to maintain among its books and records appropriate notations or evidence of, and to make or cause to be made appropriate disclosure upon its financial statements of, the security interest granted hereunder to the Administrative Agent for the benefit of the Secured Parties.

 

(d)                                 Each Grantor agrees that, in the event any proceeds (other than goods) of Collateral shall be or become commingled with other property not constituting Collateral, then such proceeds may, to the extent permitted by law, be identified by application of the lowest intermediate balance rule to such commingled property.

 

5.                                      Receipt of Payment.  In the event an Event of Default shall occur and be continuing and a Grantor shall receive any proceeds of Collateral, including without limitation monies, checks, notes, drafts or any other items of payment, each Grantor shall hold all such items of payment in trust for the Administrative Agent for the benefit of the Secured Parties, and as the property of the Administrative Agent for the benefit of the Secured Parties, separate from the funds and other property of such Grantor, and no later than the first Business Day following the receipt thereof, at the election of the Administrative Agent, such Grantor shall cause such Collateral to be forwarded to the Administrative Agent for its custody, possession  and disposition on behalf of the Secured Parties in accordance with the terms hereof and of the other Loan Documents.

 

6.                                      Preservation and Protection of Collateral.

 

(a)                                 The Administrative Agent shall be under no duty or liability with respect to the collection, protection or preservation of the Collateral, or otherwise.  Each Grantor shall be responsible for the safekeeping of its Collateral, and in no event shall the Administrative Agent have any responsibility for (i) any loss or damage thereto or destruction thereof occurring or arising in any manner or fashion from any cause, (ii) any diminution in the value thereof, or (iii) any act or default of any carrier, warehouseman, bailee or forwarding agency thereof or other Person in any way dealing with or handling such Collateral.

 

(b)                                 Each Grantor shall keep and maintain its tangible personal property Collateral in good operating condition and repair, ordinary wear and tear excepted.

 

(c)                                  Each Grantor agrees (i) to pay when due all material taxes, charges and assessments against the Collateral in which it has any interest, unless being contested in good faith by appropriate proceedings diligently conducted and against which adequate reserves have been established in accordance with GAAP, and (ii) to cause to be terminated and released all Liens (other than Permitted Liens) on the Collateral.  Upon the failure of any Grantor to so pay or contest such taxes, charges, or assessments, or cause such Liens to be terminated, the Administrative Agent at its option may pay or contest any of them or amounts relating thereto (the Administrative Agent having the sole

 

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right to determine the legality or validity and the amount necessary to discharge such taxes, charges, Liens or assessments) but shall not have any obligation to make any such payment or contest.  All sums so disbursed by the Administrative Agent, including all reasonable fees and expenses of counsel (collectively, “Attorneys’ Costs”), court costs, expenses and other charges related thereto, shall be payable promptly on demand by the applicable Grantor to the Administrative Agent and shall be additional Secured Obligations secured by the Collateral, and any amounts not so paid on demand (in addition to other rights and remedies resulting from such nonpayment) shall bear interest from the date of demand until paid in full at the Default Rate.

 

7.                                      Status of Grantors and Collateral Generally.   Each Grantor represents and warrants to, and covenants with, the Administrative Agent for the benefit of the Secured Parties, with respect to itself and the Collateral as to which it has or acquires any interest, that:

 

(a)                                 It is at its Applicable Date (or as to Collateral acquired after its Applicable Date will be upon the acquisition of the same) and, except as permitted by the Credit Agreement and subsection (b) of this Section 7, will continue to have rights in the Collateral, free and clear of all Liens, other than the security interest hereunder in favor of the Administrative Agent for the benefit of the Secured Parties and Permitted Liens, and that it will at its own cost and expense defend such Collateral and any products and proceeds thereof against all claims and demands of all Persons (other than holders of Permitted Liens) to the extent of their claims permitted under the Credit Agreement at any time claiming the same or any interest therein adverse to the Secured Parties. Upon the failure of any Grantor to so defend, the Administrative Agent may do so at its option but shall not have any obligation to do so.  All sums so disbursed by the Administrative Agent, including reasonable Attorneys’ Costs, court costs, expenses and other charges related thereto, shall be payable promptly on demand by the applicable Grantor to the Administrative Agent and shall be additional Secured Obligations secured by the Collateral, and any amounts not so paid on demand (in addition to other rights and remedies resulting from such nonpayment) shall bear interest from the date of demand until paid in full at the Default Rate.

 

(b)                                 It shall not (i) sell, assign, transfer, lease, license or otherwise dispose of any of, or grant any option with respect to, the Collateral, except for Dispositions permitted under the Credit Agreement, or (ii) create or suffer to exist any Lien upon or with respect to any of the Collateral except for the security interests created by this Security Agreement and Permitted Liens.

 

(c)                                  It has full power, legal right and lawful authority to enter into this Security Agreement (and any Security Joinder Agreement applicable to it) and to perform its terms, including the grant of the security interests in the Collateral herein provided for.

 

(d)                                 No authorization, consent, approval or other action by, and no notice to or filing with, any Governmental Authority or any other Person which has not been given or obtained, as the case may be, is required either (i) for the grant by such Grantor of the security interests granted hereby or for the execution, delivery or performance of this

 

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Security Agreement (or any Security Joinder Agreement) by such Grantor, or (ii) for the perfection of or the exercise by the Administrative Agent, on behalf of the Secured Parties, of its rights and remedies hereunder, except for actions required by the Uniform Commercial Code to perfect and exercise remedies with respect to the security interest conferred hereunder.

 

(e)                                  No effective financing statement or other Perfection Document similar in effect, nor any other Perfection Action, covering all or any part of the Collateral purported to be granted or taken by or on behalf of such Grantor (or by or on behalf of any other Person and which remains effective as against all or any part of the Collateral) has been filed in any recording office, delivered to another Person for filing (whether upon the occurrence of a contingency or otherwise), or otherwise taken, as the case may be, except such as pertain to Permitted Liens and such as may have been filed for the benefit of, delivered to, or taken in favor of, the Administrative Agent for the benefit of the Secured Parties in connection with the security interests conferred hereunder.

 

(f)                                   Schedule 7(f) attached hereto contains true and complete information as to each of the following: (i) the exact legal name of each Grantor as it appears in its Organization Documents as of its Applicable Date, (ii) the jurisdiction of formation and form of organization of each Grantor, and the identification number of such Grantor in its jurisdiction of formation (if any), (iii) each address of the chief executive office of each Grantor as of its Applicable Date, (iv) the address of each location of such Grantor at which any tangible personal property Collateral (including Account Records and Account Documents) is located at its Applicable Date, (v) with respect to each location described in clause (iv) that is not owned beneficially and of record by such Grantor, the name and address of the owner thereof; and (vi) the name of each Person other than such Grantor and the address of such Person at which any tangible personal property Collateral of such Grantor is held under any warehouse, consignment, bailment or other arrangement as of its Applicable Date.  No Grantor shall change its name, change its jurisdiction of formation (whether by reincorporation, merger or otherwise), or change the location of its chief executive office, except in each case upon giving not less than thirty (30) days’ prior written notice to the Administrative Agent and taking or causing to be taken at such Grantor’s expense all such Perfection Actions, including the delivery of such Perfection Documents, as may be reasonably requested by the Administrative Agent to perfect or protect, or maintain the perfection and priority of, the Lien of the Administrative Agent for the benefit of the Secured Parties in Collateral contemplated hereunder.

 

(g)                                  No Grantor shall engage in any consignment transaction in respect of any of the Collateral, whether as consignee or consignor, without giving notice to the Administrative Agent in each instance prior to delivery of the next Borrowing Base Certificate.

 

(h)                                 No Grantor shall cause, suffer or permit any of the tangible personal property Collateral with an aggregate value in excess of $250,000 to be in the possession, custody or control of any warehouseman or other bailee without the prior written consent of the Administrative Agent in each instance, except to the extent that such tangible

 

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personal property Collateral is in the possession, custody or control of any warehouseman or other bailee as set forth on Schedule 7(f) attached hereto.

 

(i)                                     At the reasonable request of the Administrative Agent, each Grantor shall use commercially reasonable efforts to obtain from any lessor of property leased by such Grantor, an acknowledgement of the Lien in favor of the Administrative Agent for the benefit of the Secured Parties conferred hereunder and a waiver of such lessor’s statutory and consensual liens and rights with respect to such Collateral in form and substance reasonably acceptable to the Administrative Agent and delivered in writing to the Administrative Agent.

 

8.                                      Inspection.   The Administrative Agent (by any of its officers, employees and agents), on behalf of the Secured Parties, shall have the right upon prior notice to an executive officer of any Grantor, and at any reasonable times during such Grantor’s usual business hours, to inspect the Collateral, all records related thereto (and to make extracts or copies from such records), and the premises upon which any of the Collateral is located.

 

9.                                      Specific Collateral.

 

(a)                                 Accounts.  With respect to its Accounts whether now existing or hereafter created or acquired and wheresoever located, each Grantor represents, warrants and covenants to the Administrative Agent for the benefit of the Secured Parties that:

 

(i)                                     Each Grantor shall keep accurate records of its Accounts (“Account Records”) and during the continuance of any Event of Default at the request of the Administrative Agent such Grantor shall provide the Administrative Agent with a schedule of Accounts in form and substance acceptable to the Administrative Agent describing all Accounts created or acquired by such Grantor (“Schedule of Accounts”).

 

(ii)                                  All Account Records and Account Documents are and shall at all times be located only at such Grantor’s current chief executive office as set forth on Schedule 7(f) attached hereto, such other locations as are specifically identified on Schedule 7(f) attached hereto as an “Account Documents location,” or as to which the Grantor has complied with Section 7(f) hereof.

 

(iii)                               The Accounts are genuine, are in all respects what they purport to be, are not evidenced by an instrument or document or, if evidenced by an instrument or document, are only evidenced by one original instrument or document.

 

(iv)                              The Accounts cover bona fide sales, leases, licenses or other dispositions of property usually dealt in by such Grantor, or the rendition by such Grantor of services, to an Account Debtor in the ordinary course of business.

 

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(v)                                 Each Account is for a sum certain, maturing as stated in the invoice covering such sale, a copy of which has been furnished or is available to the Administrative Agent on request.

 

(vi)                              The amounts of the face value of any Account shown or reflected on any Schedule of Accounts, invoice statement, or certificate delivered to the Administrative Agent, are actually owing to such Grantor and are not contingent for any reason.

 

(vii)                           No extension, compromise, settlement, modification, credit, deduction or return has been authorized with respect to the Accounts, except those granted in the ordinary course of business.

 

(viii)                        Except for conditions generally applicable to such Grantor’s industry and markets, there are no facts, events, or occurrences known to such Grantor pertaining particularly to any Accounts which are reasonably expected to materially impair in any way the validity, collectibility or enforcement of Accounts that would reasonably be likely, in the aggregate, to be of material economic value, or in the aggregate materially reduce the amount payable thereunder from the amount of the invoice face value shown on any Schedule of Accounts, or on any certificate, contract, invoice or statement delivered to the Administrative Agent with respect thereto, except to the extent otherwise reserved on the books of the relevant Grantor.

 

(ix)                              The property or services giving rise thereto are not, and were not at the time of the sale or performance thereof, subject to any Lien, encumbrance or security interest, except those of the Administrative Agent for the benefit of Secured Parties and Permitted Liens.

 

(x)                                 No purchase order, agreement, document or applicable Law restricts assignment of the Accounts to the Administrative Agent, and such Grantor is the sole payee or remittance party shown on the invoice.

 

(xi)                              To such Grantor’s knowledge, (A) the Account Debtor on any Eligible Account had the capacity to contract when the Account arose, continues to meet such Grantor’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 (B) there are no proceedings or actions threatened or pending against any such Account Debtor that could reasonably be expected to have a material adverse effect on the Account Debtor’s financial condition.

 

(b)                                 Inventory.  With respect to its Inventory whether now existing or hereafter created or acquired and wheresoever located, each Grantor represents, warrants and covenants to the Administrative Agent for the benefit of the Secured Parties that:

 

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(i)                                     Each Grantor shall keep accurate and complete records itemizing and describing the kind, type, location and quantity of Inventory, its cost therefor and the selling price of Inventory held for sale, and the daily withdrawals therefrom and additions thereto, and shall furnish to the Administrative Agent from time to time at reasonable intervals designated by the Administrative Agent, a current schedule of Inventory (“Schedule of Inventory”) based upon its most recent physical inventory and its daily inventory records. Each Grantor shall conduct a physical inventory no less frequently than annually, and shall furnish to the Administrative Agent such other documents and reports thereof as the Administrative Agent shall reasonably request with respect to the Inventory.

 

(ii)                                  All Inventory with an aggregate value in excess of $500,000, is and shall at all times be located only at such Grantor’s locations as set forth on Schedule 7(f) attached hereto or at such other locations as to which such Grantor has complied with Section 7(f) hereof, or is in transit to such a location.  No Grantor shall, other than in the ordinary course of business in connection with its sale, lease, license or other permitted Disposition, remove any Inventory having an aggregate value in excess of that stated in the preceding sentence from such locations.

 

(iii)                               No Grantor 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) the Administrative Agent is promptly notified if the aggregate Value of all Inventory returned in any month solely for the purpose of obtaining cash to be used to satisfy a Grantor’s outstanding payment obligations exceeds $1,000,000; and (C) during a Trigger Period, any payment received by a Grantor for a return is promptly remitted to the Administrative Agent for application to the Obligations.

 

(c)                                  Equipment.  With respect to its Equipment whether now existing or hereafter created or acquired and wheresoever located, each Grantor represents, warrants and covenants to the Administrative Agent for the benefit of the Secured Parties that:

 

(i)                                     The Grantors shall maintain accurate records describing the kind, type, quality, quantity and value of its Equipment and shall furnish the Administrative Agent upon request with a current schedule containing the foregoing information, but, other than during the continuance of an Event of Default, not more often than once per fiscal quarter.

 

(ii)                                         All Equipment, other than Equipment having a value of less than $500,000 in the aggregate for all locations, is and shall at all times be located only at such Grantor’s locations as set forth on Schedule 7(f) attached hereto or at such other locations as to which such Grantor has complied with Section 7(f) hereof. No Grantor shall, other than as expressly permitted under the Credit Agreement, sell, lease, transfer, dispose of or remove any Equipment having an aggregate value in excess of that stated in the preceding sentence from such locations.

 

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(d)                                 Supporting Obligations.  With respect to its Supporting Obligations whether now existing or hereafter created or acquired and wheresoever located, each Grantor represents, warrants and covenants to the Administrative Agent for the benefit of the Secured Parties that each Grantor shall upon the request of the Administrative Agent from time to time following the occurrence and during the continuance of any Default or Event of Default, deliver to the Administrative Agent the originals of all documents evidencing or constituting Supporting Obligations, together with such other documentation (executed as appropriate by the Grantor) and information as may be necessary to enable the Administrative Agent to realize upon the Supporting Obligations in accordance with their respective terms or transfer the Supporting Obligations as may be permitted under the Loan Documents or by applicable law.

 

(e)                                  Investment Property.   With respect to its Investment Property whether now existing or hereafter created or acquired and wheresoever located, each Grantor represents, warrants and covenants to the Administrative Agent for the benefit of the Secured Parties that:

 

(i)                                     Schedule 9(e) attached hereto contains, as of the date hereof, a true and complete description of (x) the name and address of each securities intermediary with which such Grantor maintains a securities account in which Investment Property is or may at any time be credited or maintained, and (y) all other Investment Property of such Grantor other than interests in Subsidiaries in which such Grantor has granted a Lien to the Administrative Agent for the benefit of the Secured Parties pursuant to a Pledge Agreement.

 

(ii)                                  Except with the express prior written consent of the Administrative Agent in each instance, all Investment Property other than interests in Subsidiaries in which such Grantor has granted a Lien to the Administrative Agent for the benefit of the Secured Parties pursuant to a Pledge Agreement shall be maintained at all times in the form of (a) certificated securities, which certificates shall have been delivered to the Administrative Agent together with duly executed undated stock powers endorsed in blank pertaining thereto, or (b) security entitlements credited to one or more securities accounts as to each of which the Administrative Agent has received a Qualifying Control Agreement from the applicable securities intermediary which remains in full force and effect and as to which the Administrative Agent has not received any notice of termination.  Without limiting the generality of the foregoing, no Grantor shall cause, suffer or permit any Investment Property to be credited to or maintained in any securities account not listed on Schedule 9(e) attached hereto except in each case upon giving not less than thirty (30) days’ prior written notice to the Administrative Agent and taking or causing to be taken at such Grantor’s expense all such Perfection Action, including the delivery of such Perfection Documents, as may be reasonably requested by the Administrative Agent to perfect or protect, or maintain the perfection and priority of, the Lien of the Administrative Agent for the benefit of the Secured Parties in Collateral contemplated hereunder. To the

 

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extent any Investment Property constituting Collateral hereunder is a certificated security, physical possession of which is required to be delivered to the Administrative Agent, any requirement herein to deliver physical possession of such certificated securities to the Administrative Agent shall be deemed satisfied if the Grantors deliver each such certificate, together with stock powers endorsed in blank with respect thereto, no later than the later to occur of (i) the Closing Date and (ii)  fifteen (15) days after the date that such Investment Property becomes a certificated security.

 

(iii)                               All dividends and other distributions with respect to any of the Investment Property shall be subject to the security interest conferred hereunder, provided, however, that cash dividends paid to a Grantor as record owner of the Investment Property may be disbursed to and retained by such Grantor so long as no Default or Event of Default shall have occurred and be continuing, free from any Lien hereunder.

 

(iv)                              So long as no Event of Default shall have occurred and be continuing and the subject Grantor shall not have received a written revocation notice from the Administrative Agent, the registration of Investment Property in the name of a Grantor as record and beneficial owner shall not be changed and such Grantor shall be entitled to exercise all voting and other rights and powers pertaining to Investment Property for all purposes not inconsistent with the terms hereof or of any Qualifying Control Agreement relating thereto.

 

(v)                                 Upon the occurrence and during the continuance of any Event of Default and at the option of the Administrative Agent following written notice thereof to the Grantors suspending such rights (the “Trigger Date”), all rights of the Grantors to exercise the voting or consensual rights and powers which it is authorized to exercise pursuant to clause (iv) immediately above shall cease and the Administrative Agent may thereupon (but shall not be obligated to), at its request, cause such Collateral to be registered in the name of the Administrative Agent or its nominee or agent for the benefit of the Secured Parties and/or exercise such voting or consensual rights and powers as appertain to ownership of such Collateral, and to that end each Grantor hereby appoints the Administrative Agent as its proxy, with full power of substitution, to vote and exercise all other rights as a shareholder with respect to such Investment Property upon the occurrence of a Trigger Date, and until the circumstances giving rise thereto have been cured and waived, which proxy is coupled with an interest and is irrevocable until the Facility Termination Date, and each Grantor hereby agrees to provide such further proxies as the Administrative Agent may request; provided, however, that the Administrative Agent in its discretion may from time to time refrain from exercising, and shall not be obligated to exercise, any such voting or consensual rights or such proxy.

 

(vi)                              Upon the occurrence of a Trigger Date, and until the circumstances giving rise thereto have been cured and waived, all rights of the Grantors to

 

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receive and retain cash dividends and other distributions upon or in respect to Investment Property pursuant to clause (iii) above shall cease and shall thereupon be vested in the Administrative Agent for the benefit of the Secured Parties, and each Grantor shall, or shall cause, all such cash dividends and other distributions with respect to the Investment Property to be promptly delivered to the Administrative Agent (together, if the Administrative Agent shall request, with any documents related thereto) to be held, released or disposed of by it hereunder or, at the option of the Administrative Agent, to be applied to the Secured Obligations.

 

(f)                                   Deposit Accounts.  With respect to its Deposit Accounts whether now existing or hereafter created or acquired and wheresoever located, each Grantor represents, warrants and covenants to the Administrative Agent for the benefit of the Secured Parties that:

 

(i)                                     Schedule 9(f) attached hereto contains, on the date hereof, a true and complete description of (x)  the name and address of each depositary institution with which such Grantor maintains a Deposit Account in which collected balances or deposits in excess of $100,000 are or may at any time be credited or maintained.

 

(ii)                                  Except with the express prior written consent of the Administrative Agent in each instance, all Deposit Accounts of the Grantors not constituting an Excluded Perfection Asset shall be maintained at all times with depositary institutions as to which the Administrative Agent shall have received a Qualifying Control Agreement, which Qualifying Control Agreement shall be delivered to the Administrative Agent within 30 days (or such longer period as the Administrative Agent in its sole discretion may determine) of the date that any such Deposit Account no longer constitutes an Excluded Perfection Asset.  Prior to opening any Deposit Account not listed on Schedule 9(f) attached hereto in which collected balances or deposits will exceed $100,000, the Grantors shall provide notice to Administrative Agent of the intention to open such Deposit Account.

 

(g)                                  Chattel Paper.  With respect to its Chattel Paper whether now existing or hereafter created or acquired and wheresoever located, each Grantor represents, warrants and covenants to the Administrative Agent for the benefit of the Secured Parties that:

 

(i)                                     Each Grantor shall at all times retain sole physical possession of the originals of all Chattel Paper (other than electronic Chattel Paper and the electronic components of hybrid Chattel Paper); provided,  however, that upon the request of the Administrative Agent upon the occurrence and during the continuance of any Event of Default, such Grantor shall promptly deliver physical possession of such Chattel Paper to the Administrative Agent or its designee.

 

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(ii)                                  All counterparts of all tangible Chattel Paper (and the tangible components of hybrid Chattel Paper) shall, if so requested by the Administrative Agent following the occurrence and during the continuance of an Event of Default, mark all tangible Chattel Paper (and the tangible components of hybrid Chattel Paper) with the following legend: “A FIRST PRIORITY SECURITY INTEREST IN THIS CHATTEL PAPER HAS BEEN GRANTED TO BANK OF AMERICA, N.A., FOR ITSELF AND AS ADMINISTRATIVE AGENT FOR CERTAIN SECURED PARTIES PURSUANT TO AN AMENDED AND RESTATED SECURITY AGREEMENT DATED AS OF JANUARY 30, 2013, AS AMENDED FROM TIME TO TIME.  NO SECURITY INTEREST OR OTHER INTEREST IN FAVOR OF ANY OTHER PERSON MAY BE CREATED BY THE TRANSFER OF PHYSICAL POSSESSION OF THIS CHATTEL PAPER OR OF ANY COUNTERPART HEREOF EXCEPT BY OR WITH THE CONSENT OF THE AFORESAID ADMINISTRATIVE AGENT AS PROVIDED IN SUCH SECURITY AGREEMENT.” In the case of electronic Chattel Paper (including the electronic components of hybrid Chattel Paper), no Grantor shall create or acquire any such Chattel Paper unless, prior to such acquisition or creation, it shall have taken such Perfection Action as the Administrative Agent may require to perfect by control the security interest of the Administrative Agent for the benefit of the Secured Parties in such Collateral.

 

(h)                                 Instruments.   With respect to its Instruments whether now existing or hereafter created or acquired and wheresoever located, each Grantor represents, warrants and covenants to the Administrative Agent for the benefit of the Secured Parties that each Grantor shall upon the request of the Administrative Agent from time to time following the occurrence and during the continuance of any Event of Default, deliver to the Administrative Agent the originals of all such Instruments, together with duly executed undated endorsements in blank affixed thereto and such other documentation and information as may be necessary to enable the Administrative Agent to realize upon the Instruments in accordance with their respective terms or transfer the Instruments as may be permitted under the Loan Documents or by applicable law.

 

10.                               Casualty and Liability Insurance Required.

 

(a)                                 Each Grantor will keep the Collateral continuously insured against such risks as are customarily insured against by businesses of like size and type engaged in the same or similar operations including:

 

(i)                                     casualty insurance on the Inventory and the Equipment;

 

(ii)                                  comprehensive general liability insurance against claims for bodily injury, death or property damage occurring with or about such Collateral;

 

(iii)                               liability insurance with respect to the operation of its facilities under the workers’ compensation laws of the states in which such Collateral is located.

 

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(b)                                 Each insurance policy obtained in satisfaction of the requirements of Section 10(a):

 

(i)                                     may be provided by blanket policies now or hereafter maintained by each or any Grantor or by any Borrower;

 

(ii)                                  shall be issued by such insurer (or insurers) as shall be financially responsible, of recognized standing and reasonably acceptable to the Administrative Agent;

 

(iii)                               shall be in such form and have such provisions (including without limitation the loss payable clause, the waiver of subrogation clause, the deductible amount, if any, and the standard mortgagee endorsement clause) as are generally considered standard provisions for the type of insurance involved;

 

(iv)                              shall prohibit cancellation or substantial modification, termination or lapse in coverage by the insurer without at least thirty (30) days’ prior written notice to the Administrative Agent, except for non-payment of premium, as to which such policies shall provide for at least ten (10) days’ prior written notice to the Administrative Agent;

 

(v)                                 without limiting the generality of the foregoing, all insurance policies of the type described under Section 10(a)(i) carried on the Collateral shall name the Administrative Agent, for the benefit of the Secured Parties, as loss payee thereunder in respect of any claim for payment on terms acceptable to the Administrative Agent.

 

(c)                                  Prior to expiration of any such policy, such Grantor shall furnish the Administrative Agent with evidence satisfactory to the Administrative Agent that the policy or certificate has been renewed or replaced or is no longer required by this Security Agreement.

 

(d)                                 Each Grantor hereby makes, constitutes and appoints the Administrative Agent (and all officers, employees or agents designated by the Administrative Agent), for the benefit of the Secured Parties, as such Grantor’s true and lawful attorney (and agent-in-fact) for the purpose of making, settling and adjusting claims under such policies of insurance, endorsing the name of such Grantor on any check, draft, instrument or other item or payment for the proceeds of such policies of insurance and for making all determinations and decisions with respect to such policies of insurance, which appointment is coupled with an interest and is irrevocable; provided, however, that the powers pursuant to such appointment shall be exercisable only upon the occurrence and during the continuation of an Event of Default.

 

(e)                                  In the event such Grantor shall fail to maintain, or fail to cause to be maintained, the full insurance coverage required hereunder or shall fail to keep any of its

 

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Collateral in good repair and good operating condition, the Administrative Agent may (but shall be under no obligation to), without waiving or releasing any Secured Obligation or Default or Event of Default by such Grantor hereunder, contract for the required policies of insurance and pay the premiums on the same or make any required repairs, renewals and replacements; and all sums so disbursed by Administrative Agent, including reasonable Attorneys’ Costs, court costs, expenses and other charges related thereto, shall be payable on demand by such Grantor to the Administrative Agent, shall be additional Secured Obligations secured by the Collateral, and (in addition to other rights and remedies resulting from such nonpayment) shall bear interest from the date of demand until paid in full at the Default Rate.

 

(f)                                   Each Grantor agrees that to the extent that it shall fail to maintain, or fail to cause to be maintained, the full insurance coverage required by Section 10(a), it shall in the event of any loss or casualty to the extent any Event of Default has occurred and is continuing, pay promptly to the Administrative Agent, for the benefit of the Secured Parties, to be held in a separate account for application in accordance with the provisions of Section 10(h), such amount as would have been received as Net Proceeds (as hereinafter defined) by the Administrative Agent, for the benefit of the Secured Parties, under the provisions of Section 10(h) had such insurance been carried to the extent required.

 

(g)                                  The Net Proceeds of the insurance carried pursuant to the provisions of Sections 10(a)(ii) and 10(a)(iii) shall be applied by such Grantor toward satisfaction of the claim or liability with respect to which such insurance proceeds may be paid.

 

(h)                                 The Net Proceeds of the insurance carried with respect to the Collateral pursuant to the provisions of Section 10(a)(i) hereof shall be paid to such Grantor and held by such Grantor in a separate account and applied, as long as no Event of Default shall have occurred and be continuing, as follows:  after any loss under any such insurance and payment of the proceeds of such insurance, each Grantor shall have a period of 270 days after payment of the insurance proceeds with respect to such loss to elect to either (x) repair or replace the Collateral so damaged, (y) deliver such Net Proceeds to the Administrative Agent, for the benefit of the Secured Parties, as additional Collateral or (z) apply such Net Proceeds to the acquisition of tangible assets constituting Collateral used or useful in the conduct of the business of such Grantor, subject to the provisions of this Security Agreement. If such Grantor elects to repair or replace the Collateral so damaged, such Grantor agrees the Collateral shall be repaired to a condition substantially similar to or of better quality or higher value than its condition prior to damage or replaced with Collateral in a condition substantially similar to or of better quality or higher value than the condition of the Collateral so replaced prior to damage. At all times during which an Event of Default shall have occurred and be continuing, the Administrative Agent shall be entitled to receive direct and immediate payment of the proceeds of such insurance and such Grantor shall take all action as the Administrative Agent may reasonably request to accomplish such payment.  Notwithstanding the foregoing, at all times during which an Event of Default shall have occurred and be continuing, in the event such Grantor shall receive any such proceeds, such Grantor shall

 

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immediately deliver such proceeds to such Administrative Agent for the benefit of the Secured Parties as additional Collateral, and pending such delivery shall hold such proceeds in trust for the benefit of the Secured Parties and keep the same segregated from its other funds.

 

(i)                                     “Net Proceeds” when used with respect to any insurance proceeds shall mean the gross proceeds from such proceeds, award or other amount, less all taxes, fees and expenses (including Attorneys’ Costs) incurred in the realization thereof.

 

(j)                                    In case of any material damage to, destruction or loss of, or claim or proceeding against, all or any material part of the Collateral pledged hereunder by a Grantor, such Grantor shall give prompt notice thereof to the Administrative Agent. Each such notice shall describe generally the nature and extent of such damage, destruction, loss, claim or proceeding.  Subject to Section 10(d), each Grantor is hereby authorized and empowered to adjust or compromise any loss under any such insurance other than losses relating to claims made directly against any Secured Party as to which the insurance described in Section 10(a)(ii) or (iii) is applicable.

 

(k)                                 The provisions contained in this Security Agreement pertaining to insurance shall be cumulative with any additional provisions imposing additional insurance requirements with respect to the Collateral or any other property on which a Lien is conferred under any Collateral Document.

 

11.                               Rights and Remedies Upon Event of Default.  Upon and after the occurrence and during the continuance of an Event of Default, the Administrative Agent shall have the following rights and remedies on behalf of the Secured Parties in addition to any rights and remedies set forth elsewhere in this Security Agreement or the other Loan Documents, all of which may be exercised with or, if allowed by law, without notice to a Grantor:

 

(a)                                 All of the rights and remedies of a secured party under the UCC or under other applicable law, all of which rights and remedies shall be cumulative, and none of which shall be exclusive, to the extent permitted by law, in addition to any other rights and remedies contained in this Security Agreement or any other Loan Document;

 

(b)                                 The right to foreclose the Liens and security interests created under this Security Agreement by any available judicial procedure or without judicial process;

 

(c)                                  The right to (i) enter upon the premises of a Grantor through self-help and without judicial process, without first obtaining a final judgment or giving such Grantor notice or opportunity for a hearing on the validity of the Administrative Agent’s claim and without any obligation to pay rent to such Grantor, or any other place or places where any Collateral is located and kept, and remove the Collateral therefrom to the premises of the Administrative Agent or any agent of the Administrative Agent, for such time as the Administrative Agent may desire, in order effectively to collect or liquidate the Collateral, (ii) require such Grantor or any bailee or other agent of such Grantor to assemble the Collateral and make it available to the Administrative Agent at a place to be

 

20

 

designated by the Administrative Agent that is reasonably convenient to both parties, and (iii) notify any or all Persons party to a Qualifying Control Agreement or who otherwise have possession of or control over any Collateral of the occurrence of an Event of Default and other appropriate circumstances, and exercise control over and take possession or custody of any or all Collateral in the possession, custody or control of such other Persons;

 

(d)                                 The right to (i) exercise all of a Grantor’s rights and remedies with respect to the collection of Accounts, Chattel Paper, Instruments, Supporting Obligations and General Intangibles (collectively, “Payment Collateral”), including the right to demand payment thereof and enforce payment, by legal proceedings or otherwise; (ii) settle, adjust, compromise, extend or renew all or any Payment Collateral or any legal proceedings pertaining thereto; (iii) discharge and release all or any Payment Collateral; (iv) take control, in any manner, of any item of payment or proceeds referred to in Section 5 above; (v) prepare, file and sign a Grantor’s name on any Proof of Claim in bankruptcy, notice of Lien, assignment or satisfaction of Lien or similar document in any action or proceeding adverse to any obligor under any Payment Collateral or otherwise in connection with any Payment Collateral; (vi) endorse the name of a Grantor upon any chattel paper, document, instrument, invoice, freight bill, bill of lading or similar document or agreement relating to any Collateral; (vii) use the information recorded on or contained on a Grantor’s internet website or otherwise in any data processing equipment and computer hardware and software relating to any Collateral to which a Grantor has access; (viii) notify any or all Account Debtors or other obligor on any Payment Collateral that such Payment Collateral has been assigned to the Administrative Agent for the benefit of the Secured Parties and that Administrative Agent has a security interest therein for the benefit of the Secured Parties (provided that the Administrative Agent may at any time give such notice to an Account Debtor that is a department, agency or authority of the United States government); each Grantor hereby agrees that any such notice, in the Administrative Agent’s sole discretion, may (but need not) be sent on such Grantor’s stationery, in which event such Grantor shall co-sign such notice with the Administrative Agent if requested to do so by the Administrative Agent; and (ix) do all acts and things and execute all documents necessary, in Administrative Agent’s sole discretion, to collect the Payment Collateral; and

 

(e)                                  The right to sell all or any Collateral in its then existing condition, or after any further manufacturing or processing thereof, at such time or times, at public or private sale or sales, with such notice as may be required by law, in lots or in bulk, for cash or on credit, with or without representations and warranties, all as the Administrative Agent, in its sole discretion, may deem advisable.  The Administrative Agent shall have the right to conduct such sales on a Grantor’s premises or elsewhere and shall have the right to use a Grantor’s premises without charge for such sales for such time or times as the Administrative Agent may see fit.  The Administrative Agent may, if it deems it reasonable, postpone or adjourn any sale of the Collateral from time to time by an announcement at the time and place of such postponed or adjourned sale, and such sale may, without further notice, be made at the time and place to which it was so adjourned.  Each Grantor agrees that the Administrative Agent has no obligation to

 

21

 

preserve rights to the Collateral against prior parties or to marshal any Collateral for the benefit of any Person.  The Administrative Agent for the benefit of the Secured Parties is hereby granted an irrevocable fully paid license or other right (including each Grantor’s rights under any license or any franchise agreement), each of which shall remain in full force and effect until the Facility Termination Date, to use, without charge, each of the labels, patents, copyrights, names, trade secrets, trade names, trademarks and advertising matter, or any property of a similar nature owned or licensed by any Grantor, as it pertains to the Collateral, in completing production of, advertising for sale and selling any Collateral.  If any of the Collateral shall require repairs, maintenance, preparation or the like, or is in process or other unfinished state, the Administrative Agent shall have the right, but shall not be obligated, to perform such repairs, maintenance, preparation, processing or completion of manufacturing for the purpose of putting the same in such saleable form as the Administrative Agent shall deem appropriate, but the Administrative Agent shall have the right to sell or dispose of the Collateral without such processing and no Grantor shall have any claim against the Administrative Agent for the value that may have been added to such Collateral with such processing.  In addition, each Grantor agrees that in the event notice is necessary under applicable law, written notice mailed to such Grantor in the manner specified herein ten (10) days prior to the date of public sale of any of the Collateral or prior to the date after which any private sale or other disposition of the Collateral will be made shall constitute commercially reasonable notice to such Grantor.  All notice is hereby waived with respect to any of the Collateral which threatens to decline speedily in value or is of a type customarily sold on a recognized market.  The Administrative Agent may purchase all or any part of the Collateral at public or, if permitted by law, private sale, free from any right of redemption which is hereby expressly waived by such Grantor and, in lieu of actual payment of such purchase price, may set off the amount of such price against the Secured Obligations.

 

The net cash proceeds resulting from the collection, liquidation, sale, or other disposition of the Collateral shall be applied first to the expenses (including all Attorneys’ Costs) of retaking, holding, storing, processing and preparing for sale, selling, collecting, liquidating and the like, and then to the satisfaction of all Secured Obligations in accordance with the terms of Section 8.03 of the Credit Agreement.  Each Grantor shall be liable to the Administrative Agent, for the benefit of the Secured Parties, and shall pay to the Administrative Agent, for the benefit of the Secured Parties, on demand any deficiency which may remain after such sale, disposition, collection or liquidation of the Collateral.

 

12.                               Attorney-in-Fact.  Each Grantor hereby appoints the Administrative Agent as the Grantor’s attorney-in-fact for the purposes of carrying out the provisions of this Security Agreement and taking any action and executing any instrument which the Administrative Agent may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable and coupled with an interest; provided, that the Administrative Agent shall have and may exercise rights under this power of attorney only upon the occurrence and during the continuance of an Event of Default.  Without limiting the generality of the foregoing, upon the occurrence and during the continuance of an Event of Default, the Administrative Agent shall have the right and power

 

22

 

(a)                                 to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral;

 

(b)                                 to receive, endorse and collect any drafts or other instruments, documents and chattel paper in connection with clause (a) above;

 

(c)                                  to endorse such Grantor’s name on any checks, notes, drafts or any other payment relating to or constituting proceeds of the Collateral which comes into the Administrative Agent’s possession or the Administrative Agent’s control, and deposit the same to the account of the Administrative Agent, for the benefit of the Secured Parties, on account and for payment of the Secured Obligations;

 

(d)                                 to file any claims or take any action or institute any proceedings that the Administrative Agent may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Administrative Agent, for the benefit of the Secured Parties, with respect to any of the Collateral; and

 

(e)                                  to execute, in connection with any sale or other disposition of Collateral provided for herein, any endorsement, assignments, or other instruments of conveyance or transfer with respect thereto.

 

13.                               Reinstatement.  The granting of a security interest in the Collateral and the other provisions hereof shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Secured Obligations is rescinded or must otherwise be returned by any Secured Party or is repaid by any Secured Party in whole or in part in good faith settlement of a pending or threatened avoidance claim, whether upon the insolvency, bankruptcy or reorganization of any Grantor or any other Loan Party or otherwise, all as though such payment had not been made. The provisions of this Section 13 shall survive repayment of all of the Secured Obligations and the termination or expiration of this Security Agreement in any manner, including but not limited to termination upon occurrence of the Facility Termination Date.

 

14.                               Certain Waivers by the Grantors.  Each Grantor waives to the extent permitted by applicable law (a) any right to require any Secured Party or any other obligee of the Secured Obligations to (x) proceed against any Person or entity, including without limitation any Loan Party, (y) proceed against or exhaust any Collateral or other collateral for the Secured Obligations, or (z) pursue any other remedy in its power; (b) any defense arising by reason of any disability or other defense of any other Person, or by reason of the cessation from any cause whatsoever of the liability of any other Person or entity, (c) any right of subrogation, and (d) any right to enforce any remedy which any Secured Party or any other obligee of the Secured Obligations now has or may hereafter have against any other Person and any benefit of and any right to participate in any collateral or security whatsoever now or hereafter held by the Administrative Agent for the benefit of the Secured Parties.  Each Grantor authorizes each Secured Party and each other obligee of the Secured Obligations without notice (except notice required by applicable law) or demand and without affecting its liability hereunder or under the Loan Documents from time to time to: (i) take and hold security, other than the Collateral herein

 

23

 

described, for the payment of such Secured Obligations or any part thereof, and exchange, enforce, waive and release the Collateral herein described or any part thereof or any such other security; and (ii) apply such Collateral or other security and direct the order or manner of sale thereof as such Secured Party or obligee in its discretion may determine.

 

The Administrative Agent may at any time deliver (without representation, recourse or warranty) the Collateral or any part thereof to a Grantor and the receipt thereof by such Grantor shall be a complete and full acquittance for the Collateral so delivered, and the Administrative Agent shall thereafter be discharged from any liability or responsibility therefor.

 

15.                               Continued Powers.  Until the Facility Termination Date shall have occurred, the power of sale and other rights, powers and remedies granted to the Administrative Agent for the benefit of the Secured Parties hereunder shall continue to exist and may be exercised by the Administrative Agent at any time and from time to time irrespective of the fact that any of the Secured Obligations or any part thereof may have become barred by any statute of limitations or that any part of the liability of any Grantor may have ceased.

 

16.                               Other Rights.  The rights, powers and remedies given to the Administrative Agent for the benefit of the Secured Parties by this Security Agreement shall be in addition to all rights, powers and remedies given to the Administrative Agent or any Secured Party under any other Loan Document or by virtue of any statute or rule of law.  Any forbearance or failure or delay by the Administrative Agent in exercising any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not preclude the further exercise thereof; and every right, power and remedy of the Secured Parties shall continue in full force and effect until such right, power or remedy is specifically waived in accordance with the terms of the Credit Agreement.

 

17.                               Anti-Marshaling Provisions.  The right is hereby given by each Grantor to the Administrative Agent, for the benefit of the Secured Parties, to make releases (whether in whole or in part) of all or any part of the Collateral agreeable to the Administrative Agent without notice to, or the consent, approval or agreement of other parties and interests, including junior lienors, which releases shall not impair in any manner the validity of or priority of the Liens and security interests in the remaining Collateral conferred hereunder, nor release any Grantor from personal liability for the Secured Obligations.  Notwithstanding the existence of any other security interest in the Collateral held by the Administrative Agent, for the benefit of the Secured Parties, the Administrative Agent shall have the right to determine the order in which any or all of the Collateral shall be subjected to the remedies provided in this Security Agreement.  Each Grantor hereby waives any and all right to require the marshaling of assets in connection with the exercise of any of the remedies permitted by applicable law or provided herein or in any other Loan Document.

 

18.                               Entire Agreement.  This Security Agreement and each Security Joinder Agreement, together with the Credit Agreement and other Loan Documents, constitutes and expresses the entire understanding between the parties hereto with respect to the subject matter hereof, and supersedes all prior negotiations, agreements and understandings, inducements,

 

24

 

commitments or conditions, express or implied, oral or written, except as contained in the Loan Documents.  The express terms hereof and of the Security Joinder Agreements control and supersede any course of performance or usage of the trade inconsistent with any of the terms hereof or thereof.  Neither this Security Agreement nor any Security Joinder Agreement nor any portion or provision hereof or thereof may be changed, altered, modified, supplemented, discharged, canceled, terminated, or amended orally or in any manner other than as provided in the Credit Agreement.

 

19.                               Third Party Reliance.  Each Grantor hereby consents and agrees that all issuers of or obligors in respect of any Collateral, and all securities intermediaries, warehousemen, bailees, public officials and other Persons having any interest in, possession of, control over or right, privilege, duty or discretion in respect of, any Collateral shall be entitled to accept the provisions hereof and of the Security Joinder Agreements as conclusive evidence of the right of the Administrative Agent, on behalf of the Secured Parties, to exercise its rights hereunder or thereunder with respect to the Collateral, notwithstanding any other notice or direction to the contrary heretofore or hereafter given by any Grantor or any other Person to any of such Persons.

 

20.                               Binding Agreement; Assignment.  This Security Agreement and each Security Joinder Agreement, and the terms, covenants and conditions hereof and thereof, shall be binding upon and inure to the benefit of the parties hereto, and to their respective successors and assigns, except that no Grantor shall be permitted to assign this Security Agreement, any Security Joinder Agreement or any interest herein or therein or, except as expressly permitted herein or in the Credit Agreement, in the Collateral or any part thereof or interest therein.  Without limiting the generality of the foregoing sentence of this Section 20, any Lender may assign to one or more Persons, or grant to one or more Persons participations in or to, all or any part of its rights and obligations under the Credit Agreement (to the extent permitted by the Credit Agreement); and to the extent of any such assignment or participation such other Person shall, to the fullest extent permitted by law, thereupon become vested with all the benefits in respect thereof granted to such Lender herein or otherwise, subject however, to the provisions of the Credit Agreement, including Article IX thereof (concerning the Administrative Agent) and Section 10.06 thereof (concerning assignments and participations).  All references herein to the Administrative Agent and to the Secured Parties shall include any successor thereof or permitted assignee, and any other obligees from time to time of the Secured Obligations.

 

21.                               Secured Cash Management Agreements and Secured Hedging Agreements. No Secured Party (other than the Administrative Agent) that obtains the benefit of this Security Agreement shall have any right to notice of any action or to consent to, direct or object to any action hereunder or otherwise in respect of the Collateral (including the release or impairment of any Collateral) other than in its capacity as a Lender and, in such case, only to the extent expressly provided in the Loan Documents.  Notwithstanding any other provision of this Security Agreement to the contrary, the Administrative Agent shall only be required to verify the payment of, or  that other satisfactory arrangement have been made with respect to, the Secured Obligations arising under Secured Cash Management Agreements and Secured Hedge Agreements to the extent the Administrative Agent has received written notice of such Obligations, together with such supporting documentation as it may request, from the applicable Cash Management Bank or Hedge Bank, as the case may be.  Each Secured Party not a party to

 

25

 

the Credit Agreement that obtains the benefit of this Security Agreement shall be deemed to have acknowledged and accepted the appointment of the Administrative Agent pursuant to the terms of the Credit Agreement, and that with respect to the actions and omissions of the Administrative Agent hereunder or otherwise relating hereto that do or may affect such Secured Party, the Administrative Agent and each of its Related Parties shall be entitled to all the rights, benefits and immunities conferred under Article IX of the Credit Agreement.

 

22.                               Severability.  The provisions of this Security Agreement are independent of and separable from each other.  If any provision hereof shall for any reason be held invalid or unenforceable, such invalidity or unenforceability shall not affect the validity or enforceability of any other provision hereof, but this Security Agreement shall be construed as if such invalid or unenforceable provision had never been contained herein.

 

23.                               Counterparts.  This Security Agreement may be executed in any number of counterparts each of which when so executed and delivered shall be deemed an original, and it shall not be necessary in making proof of this Security Agreement to produce or account for more than one such counterpart executed by the Grantor against whom enforcement is sought. Without limiting the foregoing provisions of this Section 23, the provisions of Section 10.10 of the Credit Agreement shall be applicable to this Security Agreement.

 

24.                               Termination.  Subject to the provisions of Section 13, this Security Agreement and each Security Joinder Agreement, and all obligations of the Grantors hereunder (excluding those obligations and liabilities that expressly survive such termination) shall terminate without delivery of any instrument or performance of any act by any party on the Facility Termination Date.  Upon such termination of this Security Agreement, the Administrative Agent shall, at the request and sole expense of the Grantors, promptly deliver to the Grantors such termination statements and take such further actions as the Grantors may reasonably request to terminate of record, or otherwise to give appropriate notice of the termination of, any Lien conferred hereunder.

 

25.                               Notices.  Any notice required or permitted hereunder shall be given (a) with respect to any Borrower, at the address for the giving of notice then in effect under the Credit Agreement, (b) with respect to any Grantor, at the address then in effect for the giving of notices to such Grantor under the Guaranty to which it is a party, and (c) with respect to the Administrative Agent or a Lender, at the Administrative Agent’s address indicated in Schedule 10.02 of the Credit Agreement.  All such addresses may be modified, and all such notices shall be given and shall be effective, as provided in Schedule 10.02 of the Credit Agreement for the giving and effectiveness of notices and modifications of addresses thereunder.

 

26.                               Joinder.  Each Person that shall at any time execute and deliver to the Administrative Agent a Security Joinder Agreement substantially in the form attached as Exhibit A hereto shall thereupon irrevocably, absolutely and unconditionally become a party hereto and obligated hereunder as a Grantor and shall have thereupon pursuant to Section 2 hereof granted a security interest in and collaterally assigned to the Administrative Agent for the benefit of the Secured Parties all Collateral in which it has at its Applicable Date or thereafter acquires any interest or the power to transfer, and all references herein and in the other Loan Documents to the

 

26

 

Grantors or to the parties to this Security Agreement shall be deemed to include such Person as a Grantor hereunder.  Each Security Joinder Agreement shall be accompanied by the Supplemental Schedules referred to therein, appropriately completed with information relating to the Grantor executing such Security Joinder Agreement and its property. Each of the applicable Schedules attached hereto shall be deemed amended and supplemented without further action by such information reflected on the Supplemental Schedules.

 

27.                               Rules of Interpretation.  The rules of interpretation contained in Section 1.02 of the Credit Agreement shall be applicable to this Security Agreement and each Security Joinder Agreement and are hereby incorporated by reference.  All representations and warranties contained herein shall survive the delivery of documents and any Credit Extensions referred to herein or secured hereby.

 

28.                               Governing Law; Waivers.

 

(a)                                 THIS SECURITY AGREEMENT AND EACH SECURITY JOINDER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE; PROVIDED THAT (i) WITH RESPECT TO THOSE INSTANCES IN WHICH THE APPLICABLE CHOICE OF LAWS RULES OF SUCH STATE, INCLUDING SECTION 9-301 OF THE UCC, REQUIRE THAT THE MANNER OF CREATION OF A SECURITY INTEREST IN SPECIFIC COLLATERAL OR THE MANNER OR EFFECT OF PERFECTION OR NONPERFECTION OR THE RULES GOVERNING PRIORITY OF SECURITY INTERESTS ARE TO BE GOVERNED BY THE LAWS OF ANOTHER JURISDICTION, THEN THE LAWS OF SUCH OTHER JURISDICTION SHALL GOVERN SUCH MATTERS, (ii) EACH CONTROL AGREEMENT (INCLUDING EACH QUALIFYING CONTROL AGREEMENT) APPLICABLE TO ANY SECURITIES ACCOUNT OR DEPOSIT ACCOUNT SHALL BE GOVERNED BY THE LAWS OF THE JURISDICTION SPECIFIED IN SUCH CONTROL AGREEMENT, OR OTHERWISE BY THE LAWS OF THE JURISDICTION THAT GOVERN THE SECURITIES ACCOUNT OR DEPOSIT ACCOUNT TO WHICH SUCH CONTROL AGREEMENT RELATES, AND (iii) IN THOSE INSTANCES IN WHICH THE LAWS OF THE JURISDICTION IN WHICH COLLATERAL IS LOCATED GOVERN MATTERS PERTAINING TO THE METHODS AND EFFECT OF REALIZING ON COLLATERAL, SUCH LAWS SHALL BE GIVEN EFFECT WITH RESPECT TO SUCH MATTERS.

 

(b)                                 EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR ANY SECURITY JOINDER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN MAY BE INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF NEW YORK STATE OF NEW YORK, UNITED STATES OF AMERICA AND, BY THE

 

27

 

EXECUTION AND DELIVERY OF THIS SECURITY AGREEMENT OR A SECURITY JOINDER AGREEMENT, EXPRESSLY WAIVES ANY OBJECTION THAT IT MAY HAVE NOW OR HEREAFTER TO THE LAYING OF THE VENUE OR TO THE JURISDICTION OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.

 

(c)                                  EACH GRANTOR AGREES THAT SERVICE OF PROCESS MAY BE MADE BY PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF SUCH PARTY PROVIDED IN SECTION 25 OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER THE APPLICABLE LAWS IN EFFECT IN THE STATE OF NEW YORK.

 

(d)                                 NOTHING CONTAINED IN SUBSECTIONS (b) OR (c) HEREOF SHALL PRECLUDE THE ADMINISTRATIVE AGENT FROM BRINGING ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR ANY SECURITY JOINDER AGREEMENT OR THE OTHER LOAN DOCUMENTS IN THE COURTS OF ANY PLACE WHERE ANY OTHER PARTY OR ANY OF SUCH PARTY’S PROPERTY OR ASSETS MAY BE FOUND OR LOCATED.  TO THE EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, EACH GRANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING, THE JURISDICTION OF ANY OTHER COURT OR COURTS WHICH NOW OR HEREAFTER, BY REASON OF ITS PRESENT OR FUTURE DOMICILE, OR OTHERWISE, MAY BE AVAILABLE UNDER APPLICABLE LAW.

 

(e)                                  IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER OR RELATED TO THIS SECURITY AGREEMENT OR ANY SECURITY JOINDER AGREEMENT OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN CONNECTION WITH THE FOREGOING, EACH PARTY HEREBY AGREES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY AND HEREBY EXPRESSLY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PERSON MAY HAVE TO TRIAL BY JURY IN ANY SUCH ACTION, SUIT OR PROCEEDING.

 

(f)                                   EACH GRANTOR HEREBY EXPRESSLY WAIVES ANY OBJECTION IT MAY HAVE THAT ANY COURT TO WHOSE JURISDICTION

 

28

 

IT HAS SUBMITTED PURSUANT TO THE TERMS HEREOF IS AN INCONVENIENT FORUM.

 

29.                               Amendment and Restatement.  Notwithstanding this amendment and restatement of the Existing Security Agreement, (i) all of the indebtedness, liabilities and obligations owing by the Grantors or any other Person under the Existing Security Agreement shall continue as obligations hereunder, as amended hereby, and shall be and remain secured by this Security Agreement, (ii) the Existing Security Interest shall continue as a security interest hereunder, as amended hereby, and (iii) this Agreement is given as a substitution of, and not as a payment of the indebtedness, liabilities and obligations of the Grantors under, the Existing Security Agreement and neither the execution and delivery of this Agreement nor the consummation of any other transaction contemplated hereunder is intended to constitute a novation of the Existing Security Agreement or the Existing Security Interest created thereunder.

 

[Signature pages follow.]

 

29

 

IN WITNESS WHEREOF, the parties have duly executed this Security Agreement on the day and year first written above.

 

	
 
    	
GRANTORS: 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
POWER-ONE, INC.
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Gary   R. Larsen
    
	
 
    	
Title:
    	
Senior   Vice President-Finance and
    
	
 
    	
 
    	
Chief   Financial Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
P-O NEVADA CORP.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   
    	
Gary   R. Larsen
    
	
 
    	
Title:
    	
Vice   President and Treasurer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
POWER-ONE RENEWABLE ENERGY SOLUTIONS LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   
    	
Gary   R. Larsen
    
	
 
    	
Title:
    	
Manager
    
						

 

Power-One, Inc. 
 Security Agreement 
 Signature Page

 

 

	
 
    	
ADMINISTRATIVE AGENT:
    	
 

	
 
    	
 
    	
 

	
 
    	
BANK OF AMERICA, N.A., as Administrative Agent
    	
 

	
 
    	
 
    	
 

	
 
    	
 
    	
 

	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
				

 

Power-One, Inc. 
 Security Agreement 
 Signature Page

 

 

SCHEDULE 7(f)

 

Grantor Information

 

	
I.
    	
 
    	
II.
    	
 
    	
III.
    	
 
    	
IV.
    	
 
    	
V.
    	
 
    	
VI.
    
	
Name
    	
 
    	
Jurisdiction of
    Formation/
   Form of Equity/I.D.
   Number
    	
 
    	
Address of Chief
    Executive Office
    	
 
    	
Collateral
   Locations
   (and Type
    of Collateral)
    	
 
    	
Name and address
   of Owner of
   Collateral Location
    (If other than Grantor)
    	
 
    	
Relationship of
   Persons listed in V
   to
    Grantor (e.g., lessor,
    warehousemen)
    
	
Power-One, Inc.
    	
 
    	
Delaware/
   77-0420182
    	
 
    	
740 Calle Plano
   Camarillo, California 93012
    	
 
    	
740 Calle Plano
   Camarillo, CA 93012
   (office equipment,
   inventory, records)
    	
 
    	
F.W. Rialto   Company
   12100 Wilshire Blvd.
   Suite # 1025
   L.A., CA 90025
    	
 
    	
Lessor
    
	
Power-One, Inc.
    	
 
    	
Delaware/
   77-0420182
    	
 
    	
740 Calle Plano
   Camarillo, California 93012
    	
 
    	
152 N. Third   Street,
   Suite 805 and Suite 810
   San Jose, CA 95112 (office equipment)
    	
 
    	
IPREP II   Portfolio Ventures,
   LLC
   FII-CB2-OFF-02, LLC
   P.O. Box 748374
   Los Angeles, CA 90074-
   8374
    	
 
    	
Lessor
    
	
Power-One, Inc.
    	
 
    	
Delaware/
   77-0420182
    	
 
    	
740 Calle Plano
   Camarillo, California 93012
    	
 
    	
5999 Avenida   Encinas
   Carlsbad, CA 92008
   (prototype engineering
   equipment, office
   equipment)
    	
 
    	
Cognac Pacific   Corporate
   LLC
   4 Embarcadero Ctr, Ste 2700
   San Francisco, CA 9411
    	
 
    	
Lessor
    
	
Power-One, Inc.
    	
 
    	
Delaware/
   77-0420182
    	
 
    	
740 Calle Plano
   Camarillo, California 93012
    	
 
    	
One Riverside   Drive
   Andover, MA
   (office equipment
    	
 
    	
BCIA New England   Holdings LLC 
   One Boston Place Boston, MA 02108
    	
 
    	
Lessor
    
	
Power-One, Inc.
    	
 
    	
Delaware/
   77-0420182
    	
 
    	
740 Calle Plano
   Camarillo, California 93012
    	
 
    	
1301 W.   University Drive,
   Mesa, AZ 85201(computer
   servers)
    	
 
    	
AT&T Mesa IDC
   1301 W. University Drive, Mesa, AZ
    	
 
    	
Disaster Recovery   Location for
   Computer Servers
    
	
Power-One, Inc.
    	
 
    	
Delaware/
   77-0420182
    	
 
    	
740 Calle Plano
   Camarillo, California 93012
    	
 
    	
2500 Exchange   Place, Bessemer, AL 35022 (spare
   parts and tools)
    	
 
    	
CTDI
   2500 Exchange Place,
   Bessemer, AL 35022
    	
 
    	
Third Party power   supply repair
   company
    

 

S-1

 

	
P-O Nevada   Corporation
    	
 
    	
Nevada/
   C 18404-00
    	
 
    	
740 Calle Plano   Camarillo, California 93012
    	
 
    	
N/A
    	
 
    	
 
    	
 
    	
 
    
	
Power-One   Renewable
   Energy Solutions LLC
    	
 
    	
Delaware/
   37-1606781
    	
 
    	
740 Calle Plano
   Camarillo, California 93012
    	
 
    	
152 N. Third   Street,
   Suite 904 San Jose, CA 95112 
   (office equipment)
    	
 
    	
IPREP II   Portfolio Ventures,
   LLC
   FII-CB2-OFF-02, LLC
   P.O. Box 748374
   Los Angeles, CA 90074-
   8374
    	
 
    	
Lessor
    
	
Power-One   Renewable
   Energy Solutions LLC
    	
 
    	
Delaware/
   37-1606781
    	
 
    	
740 Calle Plano
   Camarillo, California 93012
    	
 
    	
3201 East Harbour   Drive Phoenix, AZ 85034 (manufacturing equipment, office equipment,   inventory)
    	
 
    	
DH/FJ Phoenix,   LLC
   4515 N. Santa Fe Avenue
   Oklahoma City, OK 73118
    	
 
    	
Lessor
    
	
Power-One   Renewable
   Energy Solutions LLC
    	
 
    	
Delaware/
   37-1606781
    	
 
    	
740 Calle Plano
   Camarillo, California 93012
    	
 
    	
4804 East   Superior Ave. 
   Bldg A & B 
   Phoenix, AZ 85034 (inventory)
    	
 
    	
Micro Investment LLC 2930 North 7th Street Phoenix, AZ 85014
    	
 
    	
Lessor
    
	
Power-One   Renewable
   Energy Solutions LLC
    	
 
    	
Delaware/
   37-1606781
    	
 
    	
740 Calle Plano
   Camarillo, California 93012
    	
 
    	
2626 South 7th Street
   Suite 1 
   Phoenix, AZ 85034 (inventory)
    	
 
    	
Liberty Property   Trust
   2390 East Camelback Road
   Phoenix, AZ 85016
    	
 
    	
Lessor
    
	
Power-One   Renewable
   Energy Solutions LLC
    	
 
    	
Delaware/
   37-1606781
    	
 
    	
740 Calle Plano
   Camarillo, California 93012
    	
 
    	
1810 Birchmont   Rd. Scarborough, ON M1P 2H7 Canada (manufacturing and test equipment
    	
 
    	
SAE Power Co.
   1810 Birchmont Rd.
   Scarborough, ON M1P 2H7
   Canada
    	
 
    	
Contract
   Manufacturer for
   R.E. Products
    

 

S-2

 

SCHEDULE 9(e)

 

Investment Property

 

	
 
    	
 
    	
Securities Accounts
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Other Investment Property
    
	
Grantor
    	
 
    	
Name and Address of Securities
    Intermediary
    	
 
    	
Account
    Number
    	
 
    	
Name and Type
   of Issuer
    	
 
    	
Quantity of Shares
   or Other Interest
    	
 
    	
Certificate
    Number(s)
    
	
Power-One, Inc.
    	
 
    	
Stephens Inc.
   111 Center Street
   Little Rock, AR 72201
    	
 
    	
460606283
    	
 
    	
 
    	
 
    	
N/A
    	
 
    	
N/A
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
UBS Financial Services Inc.
   One North Wacker Drive
   Chicago, IL 60606
    	
 
    	
CP-12029-DE
    	
 
    	
UBS Select MMF

    	
 
    	
N/A
    	
 
    	
N/A
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
UBS Select Treasury
   Preferred Fund
    	
 
    	
 
    	
 
    	
 
    

 

S-3

 

SCHEDULE 9(f)

 

Deposit Accounts

 

	
Grantor
    	
 
    	
Name and Address of
   Depository Institution
    	
 
    	
Account No.
    	
 
    	
Certificate of Deposit No.
   (If applicable)
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One, Inc.
    	
 
    	
Union Bank, N.A.
    445 S. Figueroa St, 8th Fl
   Los Angeles, CA 90071
    	
 
    	
3030153277
    	
 
    	
N/A
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One   Renewable Energy Solutions LLC
    	
 
    	
Union Bank, N.A.
    445 S. Figueroa St, 8th Fl
   Los Angeles, CA 90071
    	
 
    	
3030181351
    	
 
    	
N/A
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One, Inc.
    	
 
    	
Bank   of America, N.A.
    	
 
    	
1453100736
    	
 
    	
N/A
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One   Renewable Energy Solutions LLC
    	
 
    	
Bank   of America, N.A.
    	
 
    	
1453100731
    	
 
    	
N/A
    

 

S-4

 

EXHIBIT A

 

Form of Security Joinder Agreement

 

SECURITY JOINDER AGREEMENT

 

THIS SECURITY JOINDER AGREEMENT, dated as of                           , 20     (this “Security   Joinder   Agreement”), is made by                                                       , a                            (the “Joining Grantor”), in favor of BANK OF AMERICA, N.A., in its capacity as Administrative Agent (the “Administrative Agent”) for the Secured Parties (as defined in the Security Agreement referenced below; all capitalized terms used but not defined herein shall have the meanings given to such terms in such Security Agreement).

 

RECITALS:

 

A.          Power-One, Inc., a Delaware corporation (the “Company”), certain of its Subsidiaries and the Administrative Agent, are party to an Amended and Restated Security Agreement dated as of January 30, 2013 (as in effect on the date hereof, the “Security  Agreement”).

 

B.                             The Joining Grantor is a Subsidiary of the Company and is required by the terms of the Credit Agreement to become a Guarantor and be joined as a party to the Security Agreement as a Grantor.

 

C.                             The Joining Grantor will materially benefit directly and indirectly from the making and maintenance of the extensions of credit made from time to time under the Credit Agreement, Cash Management Agreements and Hedge Agreements.

 

In order to induce the Secured Parties to from time to time make and maintain extensions of credit under the Credit Agreement, Cash Management Agreements and Hedge Agreements, the Joining Grantor hereby agrees as follows:

 

1.                               Joinder.  The Joining Grantor hereby irrevocably, absolutely and unconditionally becomes a party to the Security Agreement as a Grantor and bound by all the terms, conditions, obligations, liabilities and undertakings of each Grantor or to which each Grantor is subject thereunder, including without limitation the grant pursuant to Section 2 of the Security Agreement of a security interest to the Administrative Agent for the benefit of the Secured Parties in the property and property rights constituting Collateral (as defined in Section 2 of the Security Agreement) of such Grantor or in which such Grantor has or may have or acquire an interest or the power to transfer rights therein, whether now owned or existing or hereafter created, acquired or arising and wheresoever located, as security for the payment and performance of the Secured Obligations (as defined in the Security Agreement), all with the same force and effect as if the Joining Grantor were a signatory to the Security Agreement. Without limiting the foregoing, the Joining Grantor hereby grants to the Administrative Agent for the benefit of the Secured Parties a security interest in the Collateral as security for the payment and performance of the Secured Obligations.

 

1

 

2.                               Affirmations.  The Joining Grantor hereby acknowledges and reaffirms as of the date hereof with respect to itself, its properties and its affairs each of the waivers, representations, warranties, acknowledgements and certifications applicable to any Grantor contained in the Security Agreement.

 

3.                               Supplemental Schedules.  Attached to this Security Joinder Agreement are duly completed schedules (the “Supplemental Schedules”) supplementing as thereon indicated the respective Schedules to the Security Agreement.  The Joining Grantor represents and warrants that the information contained on each of the Supplemental Schedules with respect to such Joining Grantor and its properties and affairs is true, complete and accurate as of the date hereof.

 

4.                               Severability.  The provisions of this Security Joinder Agreement are independent of and separable from each other.  If any provision hereof shall for any reason be held invalid or unenforceable, such invalidity or unenforceability shall not affect the validity or enforceability of any other provision hereof, but this Security Joinder Agreement shall be construed as if such invalid or unenforceable provision had never been contained herein.

 

5.                               Counterparts.  This Security Joinder Agreement may be executed in any number of counterparts each of which when so executed and delivered shall be deemed an original, and it shall not be necessary in making proof of this Security Joinder Agreement to produce or account for more than one such counterpart executed by the Joining Grantor.  Without limiting the foregoing provisions of this Section 5, the provisions of Section 10.10 of the Credit Agreement shall be applicable to this Security Joinder Agreement.

 

6.                               Delivery.  The Joining Grantor hereby irrevocably waives notice of acceptance of this Security Joinder Agreement and acknowledges that the Secured Obligations are and shall be deemed to be incurred, and credit extensions under the Loan Documents, Cash Management Agreements and Hedge Agreements made and maintained, in reliance on this Security Joinder Agreement and the Grantor’s joinder as a party to the Security Agreement as herein provided.

 

7.                               Governing Law; Venue; Waiver of Jury Trial.  The provisions of Section 28 of the Security Agreement are hereby incorporated by reference as if fully set forth herein.

 

[Signature page follows.]

 

2

 

IN WITNESS WHEREOF, the Joining Grantor has duly executed and delivered this Security Joinder Agreement as of the day and year first written above.

 

	
 
    	
JOINING   GRANTOR:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:  
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

3

 

SUPPLEMENTAL
 SCHEDULE 7(f)

 

Grantor Information

 

	
I.
    	
 
    	
II.
    	
 
    	
III.
    	
 
    	
IV.
    	
 
    	
V.
    	
 
    	
VI.
    
	
Name
    	
 
    	
Jurisdiction of
   Formation/
   Form of Equity/I.D.
   Number
    	
 
    	
Address of Chief
   Executive Office
    	
 
    	
Collateral
   Locations
   (and Type
   of Collateral)
    	
 
    	
Name and address
   of Owner of
   Collateral Location
   (If other than Grantor)
    	
 
    	
Relationship of
   Persons listed in V
   to
   Grantor (e.g., lessor,
   warehousemen)
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Delivered pursuant to Security Joinder Agreement of                                 .

Applicable Date:          , 20     

 

1

 

SUPPLEMENTAL
 SCHEDULE 9(e)

 

Investment Property

 

	
 
    	
 
    	
Securities Accounts
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Other Investment Property
    
	
 
    	
 
    	
Name and Address of Securities
    	
 
    	
Account
    	
 
    	
Name and Type
    	
 
    	
Quantity of Shares
    	
 
    	
Certificate
    
	
Grantor
    	
 
    	
Intermediary
    	
 
    	
Number
    	
 
    	
of Issuer
    	
 
    	
or Other Interest
    	
 
    	
Number(s)
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Delivered pursuant to Security Joinder Agreement of                                .

Applicable Date:          , 20      

 

2

 

SUPPLEMENTAL
 SCHEDULE 9(f)

 

Deposit Accounts

 

	
Grantor
    	
 
    	
Name and Address of
   Depository Institution
    	
 
    	
Account No.
    	
 
    	
Certificate of Deposit No.
   (If applicable)
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Delivered pursuant to Security Joinder Agreement of                           .

Applicable Date:            , 20   

 

3

 

EXHIBIT H

 

FORM OF SECURITIES PLEDGE AGREEMENT

 

Form of Pledge Agreement

 

H-1

 

Execution Version

 

AMENDED AND RESTATED

SECURITIES PLEDGE AGREEMENT

 

THIS AMENDED AND RESTATED SECURITIES PLEDGE AGREEMENT dated as of January 30, 2013 (this “Pledge Agreement”), is being entered into among POWER-ONE, INC., a Delaware corporation (the “Company”), EACH OF THE UNDERSIGNED U.S. SUBSIDIARIES OF THE COMPANY AND EACH OTHER PERSON THAT SHALL BECOME A PARTY HERETO BY EXECUTION OF A PLEDGE JOINDER AGREEMENT (each a “Guarantor” and, together with the Company, collectively, the “Pledgors”), and BANK OF AMERICA, N.A., as Administrative Agent (in such capacity, the “Administrative Agent”) for each of the Secured Parties (as defined in the Credit Agreement referenced below).

 

RECITALS:

 

A.                                    The Company, the lenders party thereto, and Bank of America, N.A., as administrative agent, are parties to that certain Credit Agreement dated as of March 29, 2011 (as amended, restated, supplemented, or otherwise modified from time to time prior to the date hereof, the “Existing Credit Agreement”), pursuant to which the then lenders originally agreed to provide the Company with a revolving credit facility, including a swingline subfacility and a letter of credit subfacility.

 

B.                                    In connection with the Existing Credit Agreement, the Company and the other Pledgors thereunder (collectively, the “Existing Pledgors”) entered into that certain Securities Pledge Agreement dated as of March 29, 2011 (the “Existing Pledge Agreement”) pursuant to which the Existing Pledgors pledged to the Administrative Agent, for the benefit of the Secured Parties, a security interest (the “Existing Pledge”) in all right, title or interest in or to any and all of certain assets and properties of the Existing Pledgors as more particularly set forth therein.

 

C.                                    The Company has requested that the Existing Credit Agreement be amended and restated, which shall be evidenced by that certain Amended and Restated Credit Agreement dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the “Restatement”, the Exiting Credit Agreement as amended and restated by the Restatement, the “Credit Agreement”), among the Company, the Subsidiaries of the Company from time to time party thereto (collectively with the Company, the “Borrowers”, and each a “Borrower”), the Administrative Agent, Bank of America, N.A., as L/C Issuer and Swing Line Lender, and the lenders now or hereafter party thereto (collectively, the “Lenders”).

 

D.                                    Certain additional extensions of credit may be made from time to time for the benefit of the Pledgors pursuant to certain Cash Management Agreements and Hedge Agreements (each as defined in the Credit Agreement).

 

1

 

E.                                     It is a condition precedent to the Secured Parties’ obligations to amend and restate the Existing Credit Agreement and make and maintain such extensions of credit that the Pledgors shall have executed and delivered this Pledge Agreement to the Administrative Agent.

 

In order to induce the Secured Parties to from time to time make and maintain extensions of credit under the Credit Agreement and such Cash Management Agreements and Hedge Agreements, the parties hereto agree as follows:

 

1.                                      Certain Definitions. All capitalized terms used but not otherwise defined herein shall have the meanings assigned thereto in the Credit Agreement. Terms used in this Pledge Agreement that are not otherwise expressly defined herein or in the Credit Agreement, and for which meanings are provided in the Uniform Commercial Code of the State of New York (the “UCC”), shall have such meanings unless the context requires otherwise.  In addition, for purposes of this Pledge Agreement, the following terms have the following definitions:

 

“CFC Debt” means any Indebtedness or Accounts owed by any Controlled Foreign Corporation to a Borrower or treated as owed by any Controlled Foreign Corporation to a Borrower for U.S. federal income tax purposes.

 

“Disregarded Entity” means any entity treated as disregarded as an entity separate from its owner under Treasury Regulations Section 301.7701-3.

 

“Excluded Collateral” means (a) Equity Interests constituting more than 65% of the total outstanding voting Equity Interests of any Controlled Foreign Corporation or Foreign Holding Company, (b) Equity Interests constituting more than 65% of the total outstanding Equity Interests of any Disregarded Entity that owns an interest in a Controlled Foreign Corporation, (c) any property or assets of any Controlled Foreign Corporation (whether held directly or indirectly) and (d) CFC Debt (whether pledged directly or indirectly).

 

“Voting Equity Interests” means, with respect to any Person, the Equity Interests entitled to vote for members of the board of directors or equivalent governing body of such Person.

 

2.                                      Pledge of Pledged Interests; Other Collateral.

 

(a)                            Each Borrower hereby grants as collateral security for the payment, performance and satisfaction of all of the Obligations and the obligations and liabilities of any Loan Party now existing or hereafter arising, and each Guarantor hereby grants as collateral security for the payment, performance and satisfaction of all of its Guarantor’s Obligations (as defined in the Guaranty) and the payment and performance of its obligations and liabilities (whether now existing or hereafter arising) hereunder or under any of the other Loan Documents and any Secured Cash Management Agreements and Secured Hedge Agreements to which it is now or hereafter becomes a party (such obligations and liabilities of the Borrowers and the other Pledgors are referred to collectively as the “Secured Obligations”), to the Administrative Agent for the benefit of the Secured Parties a security interest in all of the following items of property in which it

 

2

 

now has or may at any time hereafter acquire an interest or the power to transfer rights therein, and wheresoever located:

 

(i)                              all Equity Interests in all of its Subsidiaries,  whether now existing or hereafter created or acquired, but not including any Excluded Collateral (collectively, the “Pledged Interests”), including without limitation the Pledged Interests more particularly described on Schedule I hereto (such Subsidiaries, together with all other Subsidiaries whose Equity Interests may be required to be subject to this Pledge Agreement from time to time, are referred to collectively as the “Pledged Subsidiaries”);

 

(ii)                           all money, securities, security entitlements and other investment property, dividends, rights, general intangibles and other property at any time and from time to time (x) declared or distributed in respect of or in exchange for or on conversion of any Pledged Interest, or (y) by its or their terms exchangeable or exercisable for or convertible into any Pledged Interest;

 

(iii)                        all other property of whatever character or description, including money, securities, security entitlements and other investment property, and general intangibles hereafter delivered to the Administrative Agent in substitution for or as an addition to any of the foregoing;

 

(iv)                       all securities accounts to which may at any time be credited any or all of the foregoing or any proceeds thereof and all certificates and instruments representing or evidencing any of the foregoing or any proceeds thereof; and

 

(v)                          all proceeds of any of the foregoing.

 

All such Pledged Interests, certificates, instruments, cash, securities, interests, dividends, rights and other property referred to in clauses (i) through (v) of this Section 2 are herein collectively referred to as the “Collateral.”

 

The foregoing notwithstanding, the term “Collateral” shall not include (1) any Equity Interests to the extent the pledge thereof would violate any applicable requirement of Law; (2) the Equity Interests of any Subsidiary that is organized as an unlimited liability company under the laws of any province of Canada; (3) in the case of the Equity Interests of any Person that is not wholly-owned by a Borrower or another Pledgor to the extent that a pledge thereof to secure the Secured Obligations is prohibited by any applicable contractual requirement (other than customary non-assignment provisions which are ineffective under the UCC or other applicable law) or that would give any other party (other than a Loan Party) to any contract, agreement, instrument or indenture governing such equity interests the right to terminate its obligations thereunder; and (4) any Excluded Collateral.

 

Notwithstanding any provision hereof or in any other Loan Document to the contrary, in the event that any Pledgor is not an “eligible contract participant” as such term is defined in Section 1(a)(18) of the Commodity Exchange Act, at the time (i) any Secured Hedge

 

3

 

Agreement that constitutes a “Swap” under the Commodity Exchange Act is entered into or (ii) such Pledgor becomes a Pledgor hereunder, the Secured Obligations of such Pledgor shall not include (x) in the case of clause (i) above, such Secured Hedge Agreement and (y) in the case of clause (ii) above, any Secured Hedge Agreement that constitutes a “Swap” under the Commodity Exchange Act as of such the date such Pledgor becomes a Pledgor hereunder; provided, however, that if such Pledgor becomes an eligible contract participant as of a date subsequent to the date described in clause (i) or (ii) above, as the case may be, then the Secured Obligations of such Pledgor shall include all Secured Hedge Agreements outstanding on such date.

 

(b)                                 Subject to any other provision of this Pledge Agreement, each Pledgor agrees to deliver all certificates, instruments or other documents representing any Collateral to the Administrative Agent at such location as the Administrative Agent shall from time to time designate by written notice pursuant to Section 23 for its custody at all times until termination of this Pledge Agreement, together with such instruments of assignment and transfer as requested by the Administrative Agent.

 

(c)                                  Each Pledgor agrees to execute and deliver, or cause to be executed and delivered by other Persons, at Pledgor’s expense, all share certificates, documents, instruments, agreements, financing statements (and amendments thereto and continuations thereof), assignments, control agreements, or other writings as the Administrative Agent may request from time to time to carry out the terms of this Pledge Agreement or to protect or enforce the Administrative Agent’s Lien and security interest in the Collateral hereunder granted to the Administrative Agent for the benefit of the Secured Parties and further agrees to do and cause to be done upon the Administrative Agent’s request, at Pledgor’s expense, all things determined by the Administrative Agent to be necessary or advisable to perfect and keep in full force and effect the Lien in the Collateral hereunder granted to the Administrative Agent for the benefit of the Secured Parties, including the prompt payment of all out-of-pocket fees and expenses incurred in connection with any filings made to perfect or continue the Lien and security interest in the Collateral hereunder granted in favor of the Administrative Agent for the benefit of the Secured Parties.

 

(d)                                 All filing fees, advances, charges, costs and expenses, including all reasonable fees and expenses of counsel (collectively, “Attorneys’ Costs”), incurred or paid by the Administrative Agent or any Lender in exercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, shall become a part of the Secured Obligations secured hereunder and shall be paid to the Administrative Agent for the benefit of the Secured Parties by the Pledgor in respect of which the same was incurred promptly (but in any event within ten Business Days) upon demand therefor, and any amounts not so paid on demand (in addition to other rights and remedies resulting from such nonpayment) shall bear interest from the date of demand until paid in full at the Default Rate.

 

4

 

(e)                                  Each Pledgor agrees to register and cause to be registered the interest of the Administrative Agent, for the benefit of the Secured Parties, in the Collateral on its own books and records and the registration books of each of the Pledged Subsidiaries.

 

3.                                      Status of Pledged Interests.  Each Pledgor hereby represents, warrants and covenants to the Administrative Agent for the benefit of the Secured Parties, with respect to itself and the Collateral as to which it has or acquires any interest, that:

 

(a)                                 All of the Pledged Interests are, as of the date of execution of this Pledge Agreement or Pledge Joinder Agreement by each Pledgor pledging such Pledged Interests (such date as applicable with respect to each Pledgor, its “Applicable Date”), and shall at all times thereafter be validly issued and outstanding, fully paid and non-assessable and constitute, as of the date of execution of this Pledge Agreement, the percentage of the issued and outstanding Equity Interests constituting Collateral hereunder of all Subsidiaries constituting Pledged Subsidiaries, as accurately described on Schedule I.

 

(b)                                 The Pledgor is as at its Applicable Date and shall at all times thereafter (subject to Dispositions permitted under the Credit Agreement) be the sole registered and record and beneficial owner of (i) the Pledged Interests, free and clear of all Liens, other than Permitted Liens and (ii) the Equity Interests of its U.S. Subsidiaries not constituting Pledged Interests hereunder, free and clear of all Liens, other than Liens described in clauses (a) through (n) of Section 7.01 of the Credit Agreement.  Without limiting the foregoing, the Pledged Interests are not and will not be subject to any voting trust, shareholders agreement, right of first refusal, voting proxy, power of attorney or other similar arrangement (other than (1) the rights hereunder in favor of the Administrative Agent, (2) in the case of Pledged Interests issued by a Foreign Subsidiary, such rights as arise under applicable Law, and (3) in the case of Pledged Interests issued by a Pledged Subsidiary that is not a wholly-owned Subsidiary, such rights, restrictions and limitations as may appear in any joint venture documentation of such Pledged Subsidiary).

 

(c)                                  At no time shall any Pledged Interests of a Pledged Subsidiary constituting a Domestic Subsidiary (i) be held or maintained in the form of a security entitlement or credited to any securities account and (ii) which constitute a “security” (or as to which the related Pledged Subsidiary has elected to have treated as a “security”) under Article 8 of the UCC (including, for the purposes of this Section, the Uniform Commercial Code of any other applicable jurisdiction) to be maintained in the form of uncertificated securities. With respect to Pledged Interests of Domestic Subsidiaries that are “securities” under the UCC, or as to which the issuer has elected at any time to have such interests treated as “securities” under the UCC, or with respect to Pledged Interests that are certificated under locals laws and regulations, such Pledged Interests are, and shall at all times be, represented by the share certificates listed on Schedule I hereto, which share certificates, with stock powers duly executed in blank by the Pledgor, have been delivered to the Administrative Agent or are being delivered to the Administrative Agent simultaneously herewith or, in the case of Additional Interests as defined in Section 22, shall be delivered pursuant to Section 22. In addition, with respect to all Pledged Interests, including Pledged Interests that are not “securities” under the UCC and as to which the applicable

 

5

 

Pledged Subsidiary has not elected to have such interests treated as “securities” under the UCC, the Pledgor has at its Applicable Date delivered to the Administrative Agent (or has previously delivered to the Administrative Agent or, in case of Additional Interests shall deliver pursuant to Section 22) Uniform Commercial Code financing statements (or appropriate amendments thereto) duly authorized by the Pledgor and naming the Administrative Agent for the benefit of the Secured Parties as “secured party,” in form, substance and number sufficient in the reasonable opinion of the Administrative Agent to be filed in all UCC filing offices and in all jurisdictions in which filing is necessary or advisable to perfect in favor of the Administrative Agent for the benefit of the Secured Parties the Lien on such Pledged Interests, together with all required filing fees.

 

(d)                                 It has full corporate power, legal right and lawful authority to execute this Pledge Agreement (and any Pledge Joinder Agreement applicable to it) and to pledge, assign and transfer its Pledged Interests in the manner and form hereof.

 

(e)                                  The pledge, assignment and delivery of its Pledged Interests (along with undated stock powers executed in blank, filed financing statements and other agreements referred to in Section 3(c) hereof) to the Administrative Agent for the benefit of the Secured Parties pursuant to this Pledge Agreement (or any Pledge Joinder Agreement) creates or continues, as applicable, a valid and perfected security interest in such Pledged Interests in favor of the Administrative Agent for the benefit of the Secured Parties, securing the payment of the Secured Obligations, assuming, in the case of the Pledged Interests which constitute certificated “securities” under the UCC (including, for the purposes of this Section, the Uniform Commercial Code of any other applicable jurisdiction), continuous and uninterrupted possession by or on behalf of the Administrative Agent. The Pledgor will at its own cost and expense defend the Secured Parties’ right, title and security interest in and to the Collateral against the claims and demands of all persons whomsoever.

 

(f)                                   Except as otherwise expressly provided herein or pursuant to a Disposition permitted under the Credit Agreement, none of the Pledged Interests (nor any interest therein or thereto) shall be sold, transferred or assigned without the Administrative Agent’s prior written consent, which may be withheld for any reason.

 

(g)                                  It shall at all times cause the Equity Interests of each wholly-owned Domestic Subsidiary of such Pledgor that is otherwise included within the Collateral and constitute “securities” (or as to which the issuer elects to have treated as “securities”) under the UCC to be represented by the certificates now and hereafter delivered to the Administrative Agent in accordance with Sections 2, 3 and 22 hereof and, in the event any Pledged Subsidiary issues any Equity Interests, or securities convertible into, or exchangeable or exercisable for, Equity Interests, at any time during the term of this Pledge Agreement, the Pledgors shall immediately comply with Sections 3 and 22 hereof with respect to any Equity Interests issued to such Pledgors and take such further actions as the Administrative Agent may deem necessary in order to perfect a security interest in such Equity Interests.  Any requirement herein to deliver physical possession of certificated securities to the Administrative Agent shall be deemed satisfied if the Pledgors deliver such certificates, together with stock powers endorsed in blank with

 

6

 

respect thereto, no later than the later to occur of (i) the Closing Date and (ii) fifteen (15) days after the date that such Equity Interests becomes a certificated security.

 

(h)                                 The exact legal name and address, type of Person, jurisdiction of formation, jurisdiction of formation identification number (if any), and location of the chief executive office of such Pledgor are, as of the date hereof, as specified on Schedule II attached hereto. No Pledgor shall change its name, jurisdiction of formation (whether by reincorporation, merger or otherwise), or the location of its chief executive office, except upon giving not less than thirty (30) days’ prior written notice to the Administrative Agent and taking or causing to be taken all such action at such Pledgor’s expense as may be reasonably requested by the Administrative Agent to perfect or maintain the perfection of the Lien of the Administrative Agent in Collateral.

 

4.                                      Preservation and Protection of Collateral.

 

(a)                                 The Administrative Agent shall be under no duty or liability with respect to the collection, protection or preservation of the Collateral, or otherwise, beyond the use of reasonable care in the custody and preservation thereof while in its possession.

 

(b)                                 Each Pledgor agrees to pay when due all obligations to the extent required by the Credit Agreement. Upon the failure of any Pledgor to so pay or contest such obligations, or upon the failure of any Pledgor to pay any amount pursuant to Section 2(c), the Administrative Agent at its option may pay or contest any of them but shall not have any obligation to make any such payment or contest.  All sums so disbursed by the Administrative Agent, including Attorneys’ Costs, court costs, expenses and other charges related thereto, shall be payable promptly, but in any event within ten Business Days, on demand by the applicable Pledgor to the Administrative Agent and shall be additional Secured Obligations secured by the Collateral, and any amounts not so paid on demand (in addition to other rights and remedies resulting from such nonpayment) shall bear interest from the date of demand until paid in full at the Default Rate.

 

(c)                                  Each Pledgor hereby (i) irrevocably authorizes the Administrative Agent to file (with, or to the extent permitted by applicable law, without the signature of the Pledgor appearing thereon) financing statements (including amendments thereto and continuations and copies thereof) showing such Pledgor as “debtor” at such time or times and in all filing offices as the Administrative Agent may from time to time determine to be necessary or advisable to perfect or protect the rights of the Administrative Agent and the Secured Parties hereunder, or otherwise to give effect to the transactions herein contemplated, and (ii) irrevocably ratifies and acknowledges all such actions taken by or on behalf of the Administrative Agent prior to the Applicable Date.

 

5.                                      Default.  Upon the occurrence and during the continuance of any Event of Default, the Administrative Agent is given full power and authority, then or at any time thereafter, to sell, assign, deliver or collect the whole or any part of the Collateral, or any substitute therefor or any addition thereto, in one or more sales, with or without any previous demands or demand of performance or, to the extent permitted by law, notice or advertisement,

 

7

 

in such order as the Administrative Agent may elect; and any such sale may be made either at public or private sale at the Administrative Agent’s place of business or elsewhere, either for cash or upon credit or for future delivery, at such price or prices as the Administrative Agent may reasonably deem fair; and the Administrative Agent or any other Secured Party may be the purchaser of any or all Collateral so sold and hold the same thereafter in its own right free from any claim of any Pledgor or right of redemption. Demands of performance, advertisements and presence of property and sale and notice of sale are hereby waived to the extent permissible by law. Any sale hereunder may be conducted by an auctioneer or any officer or agent of the Administrative Agent. Each Pledgor recognizes that the Administrative Agent may be unable to effect a public sale of the Collateral by reason of certain prohibitions contained in the Securities Act of 1933, as amended (the “Securities Act”), and applicable state law, and may be otherwise delayed or adversely affected in effecting any sale by reason of present or future restrictions thereon imposed by governmental authorities, and that as a consequence of such prohibitions and restrictions the Administrative Agent may be compelled (i) to resort to one or more private sales to a restricted group of purchasers who will be obliged to agree, among other things, to acquire the Collateral for their own account, for investment and not with a view to the distribution or resale thereof, or (ii) to seek regulatory approval of any proposed sale or sales, or (iii) to limit the amount of Collateral sold to any Person or group. Each Pledgor agrees and acknowledges that private sales so made may be at prices and upon terms less favorable to such Pledgor than if such Collateral was sold either at public sales or at private sales not subject to other regulatory restrictions, and that the Administrative Agent has no obligation to delay the sale of any of the Collateral for the period of time necessary to permit the Pledged Subsidiary to register or otherwise qualify the Collateral, even if such Pledged Subsidiary would agree to register or otherwise qualify such Collateral for public sale under the Securities Act or applicable state law. Each Pledgor further agrees, to the extent permitted by applicable law, that the use of private sales made under the foregoing circumstances to dispose of the Collateral shall be deemed to be dispositions in a commercially reasonable manner. Each Pledgor hereby acknowledges that a ready market may not exist for the Pledged Interests if they are not traded on a national securities exchange or quoted on an automated quotation system and agrees and acknowledges that in such event the Pledged Interests may be sold for an amount less than a pro rata share of the fair market value of the Pledged Subsidiary’s assets minus its liabilities. In addition to the foregoing, the Secured Parties may exercise such other rights and remedies as may be available under the Loan Documents, at law (including without limitation the UCC) or in equity.

 

6.                                      Proceeds of Sale.  The net cash proceeds resulting from the collection, liquidation, sale, or other disposition of the Collateral shall be applied first to the expenses (including all Attorneys’ Costs) of retaking, holding, storing, processing and preparing for sale, selling, collecting, liquidating and the like, and then to the satisfaction of all Secured Obligations in accordance with the terms of Section 8.03 of the Credit Agreement. Each Pledgor shall be liable to the Administrative Agent, for the benefit of the Secured Parties, and shall pay to the Administrative Agent, for the benefit of the Secured Parties, on demand any deficiency which may remain after such sale, disposition, collection or liquidation of the Collateral.

 

7.                                      Presentments, Demands and Notices.  The Administrative Agent shall not be under any duty or obligation whatsoever to make or give any presentments, demands for performances, notices of nonperformance, protests, notice of protest or notice of dishonor in

 

8

 

connection with any obligations or evidences of indebtedness held thereby as collateral, or in connection with any obligations or evidences of indebtedness which constitute in whole or in part the Secured Obligations secured hereunder.

 

8.                                      Attorney-in-Fact.  Each Pledgor hereby appoints the Administrative Agent as the Pledgor’s attorney-in-fact for the purposes of carrying out the provisions of this Pledge Agreement and taking any action and executing any instrument which the Administrative Agent may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable and coupled with an interest; provided, that the Administrative Agent shall have and may exercise rights under this power of attorney only upon the occurrence and during the continuance of an Event of Default. Without limiting the generality of the foregoing, upon the occurrence and during the continuance of an Event of Default, the Administrative Agent shall have the right and power to receive, endorse and collect all checks and other orders for the payment of money made payable to any Pledgor representing any dividend, interest payment, principal payment or other distribution payable or distributable in respect to the Collateral or any part thereof and to give full discharge for the same.

 

9.                                      Reinstatement.  The granting of a security interest in the Collateral and the other provisions hereof shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Secured Obligations is rescinded or must otherwise be returned by any Secured Party or is repaid by any Secured Party in whole or in part in good faith settlement of a pending or threatened avoidance claim, whether upon the insolvency, bankruptcy or reorganization of any Pledgor or any other Loan Party or otherwise, all as though such payment had not been made. The provisions of this Section 9 shall survive repayment of all of the Secured Obligations and the termination or expiration of this Pledge Agreement in any manner, including but not limited to termination upon occurrence of the Facility Termination Date.

 

10.                               Waiver by the Pledgors.  Each Pledgor waives to the extent permitted by applicable law (a) any right to require any Secured Party or any other obligee of the Secured Obligations to (i) proceed against any Person or entity, including without limitation any Loan Party, (ii) proceed against or exhaust any Collateral or other collateral for the Secured Obligations, or (iii) pursue any other remedy in its power, (b) any defense arising by reason of any disability or other defense of any other Person, or by reason of the cessation from any cause whatsoever of the liability of any other Person or entity, (c) any right of subrogation (until the Secured Obligations have been paid in full), (d) any right to enforce any remedy which any Secured Party or any other obligee of the Secured Obligations now has or may hereafter have against any other Person and any benefit of and any right to participate in any collateral or security whatsoever now or hereafter held by the Administrative Agent for the benefit of the Secured Parties. Each Pledgor authorizes each Secured Party and each other obligee of the Secured Obligations without notice (except notice required by applicable law) or demand and without affecting its liability hereunder or under the Loan Documents from time to time to take and hold security, other than the Collateral herein described, for the payment of such Secured Obligations or any part thereof, and exchange, enforce, waive and release the Collateral herein described or any part thereof or any such other security.

 

The Administrative Agent may at any time deliver (without representation, recourse or warranty) the Collateral or any part thereof to a Pledgor and the receipt thereof by such Pledgor

 

9

 

shall be a complete and full acquittance for the Collateral so delivered, and the Administrative Agent shall thereafter be discharged from any liability or responsibility therefor.

 

11.          Dividends and Voting Rights.

 

(a)         All dividends and other distributions with respect to any of the Pledged Interests shall be subject to the pledge hereunder, provided, however, that cash dividends paid to a Pledgor as record owner of the Pledged Interests, to the extent permitted by the Credit Agreement to be declared and paid, may be retained by such Pledgor so long as (1) no Event of Default shall have occurred and be continuing, free from any Liens hereunder, and (2) such Pledgor has not received a written revocation notice from the Administrative Agent referencing this Section 11.

 

(b)         So long as no Event of Default shall have occurred and be continuing and the subject Pledgor has not received a written revocation notice from the Administrative Agent referencing this Section 11, the registration of the Collateral in the name of a Pledgor as record and beneficial owner shall not be changed and such Pledgor shall be entitled to exercise all voting and other rights and powers pertaining to the Collateral for all purposes not inconsistent with the terms of the Loan Documents.

 

(c)         Upon the occurrence and during the continuance of any Event of Default and following the receipt of a written revocation notice from the Administrative Agent referencing this Section 11, all rights of the Pledgors to receive and retain cash dividends and other distributions upon the Collateral pursuant to subsection (a) above shall cease and shall thereupon be vested in the Administrative Agent for the benefit of the Secured Parties, and each Pledgor shall promptly deliver, or shall cause to be promptly delivered, all such cash dividends and other distributions with respect to the Pledged Interests to the Administrative Agent (together, if the Administrative Agent shall request, with the documents described in Sections 2(c) and 3(c) hereof or other negotiable documents or instruments so distributed) to be held by it hereunder or, at the option of the Administrative Agent, to be applied to the Secured Obligations. Pending delivery to the Administrative Agent of such property, each Pledgor shall keep such property segregated from its other property and shall be deemed to hold the same in trust for the benefit of the Secured Parties.

 

(d)         Upon the occurrence and during the continuance of any Event of Default and following the receipt of a written revocation notice from the Administrative Agent referencing this Section 11, at the option of the Administrative Agent, all rights of each of the Pledgors to exercise the voting or consensual rights and powers which it is authorized to exercise pursuant to subsection (b) above shall cease and the Administrative Agent may thereupon (but shall not be obligated to), at its request, cause such Collateral to be registered in the name of the Administrative Agent or its nominee or agent for the benefit of the Secured Parties and/or exercise such voting or consensual rights and powers as appertain to ownership of such Collateral, and to that end each Pledgor hereby appoints the Administrative Agent as its proxy, with full power of substitution, to vote and exercise all other rights as a shareholder with respect to such Pledged Interests hereunder upon the occurrence and during the continuance of any Event of Default and

 

10

 

following the receipt of a written revocation notice from the Administrative Agent referencing this Section 11, which proxy is coupled with an interest and is irrevocable until the Facility Termination Date, and each Pledgor hereby agrees to provide such further proxies as the Administrative Agent may request; provided,  however, that the Administrative Agent in its discretion may from time to time refrain from exercising, and shall not be obligated to exercise, any such voting or consensual rights or such proxy.

 

12.        Continued Powers.  Until the Facility Termination Date shall have occurred, the power of sale and other rights, powers and remedies granted to the Administrative Agent for the benefit of the Secured Parties hereunder shall continue to exist and may be exercised by the Administrative Agent at any time and from time to time irrespective of the fact that any of the Secured Obligations or any part thereof may have become barred by any statute of limitations or that any part of the liability of any Pledgor may have ceased.

 

13.        Other Rights.  The rights, powers and remedies given to the Administrative Agent for the benefit of the Secured Parties by this Pledge Agreement shall be in addition to all rights, powers and remedies given to the Administrative Agent or any Secured Party under any Loan Document or by virtue of any statute or rule of law. Any forbearance or failure or delay by the Administrative Agent in exercising any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not preclude the further exercise thereof; and every right, power and remedy of the Secured Parties shall continue in full force and effect until such right, power or remedy is specifically waived in accordance with the terms of the Credit Agreement.

 

14.        Anti-Marshaling Provisions.  The right is hereby given by each Pledgor to the Administrative Agent, for the benefit of the Secured Parties, to make releases (whether in whole or in part) of all or any part of the Collateral agreeable to the Administrative Agent without notice to, or the consent, approval or agreement of other parties and interests, including junior lienors, which releases shall not impair in any manner the validity of or priority of the Liens and security interests in the remaining Collateral conferred hereunder, nor release any Pledgor from personal liability for the Secured Obligations.  Notwithstanding the existence of any other security interest in the Collateral held by the Administrative Agent, for the benefit of the Secured Parties, the Administrative Agent shall have the right to determine the order in which any or all of the Collateral shall be subjected to the remedies provided in this Pledge Agreement.  Each Pledgor hereby waives any and all right to require the marshaling of assets in connection with the exercise of any of the remedies permitted by applicable law or provided herein or in any Loan Document.

 

15.        Entire Agreement.  This Pledge Agreement and each Pledge Joinder Agreement, together with the Credit Agreement and other Loan Documents, constitutes and expresses the entire understanding between the parties hereto with respect to the subject matter hereof, and supersedes all prior negotiations, agreements and understandings, inducements, commitments or conditions, express or implied, oral or written, except as herein contained. The express terms hereof and of the Pledge Joinder Agreements control and supersede any course of performance or usage of the trade inconsistent with any of the terms hereof and thereof. Neither this Pledge Agreement nor any Pledge Joinder Agreement nor any portion or provision hereof or thereof

 

11

 

may be changed, altered, modified, supplemented, discharged, canceled, terminated, or amended orally or in any manner other than as provided in the Credit Agreement.

 

16.        Further Assurances.  Each Pledgor agrees at its own expense to do such further acts and things, and to execute and deliver, and cause to be executed and delivered as may be necessary or advisable to give effect thereto, such additional conveyances, assignments, financing statements, control agreements, documents, certificates, stock powers, agreements and instruments, as the Administrative Agent may at any time reasonably request in connection with the administration or enforcement of this Pledge Agreement or any Pledge Joinder Agreement or related to the Collateral or any part thereof or in order better to assure and confirm unto the Administrative Agent its rights, powers and remedies for the benefit of the Secured Parties hereunder or thereunder. Each Pledgor hereby consents and agrees that the Pledged Subsidiaries and all other Persons, shall be entitled to accept the provisions hereof and of the Pledge Joinder Agreements as conclusive evidence of the right of the Administrative Agent, on behalf of the Secured Parties, to exercise its rights, privileges, and remedies hereunder and thereunder with respect to the Collateral, notwithstanding any other notice or direction to the contrary heretofore or hereafter given by any Pledgor or any other Person to any of such Pledged Subsidiaries or other Persons.

 

17.        Binding Agreement; Assignment.  This Pledge Agreement and each Pledge Joinder Agreement, and the terms, covenants and conditions hereof and thereof, shall be binding upon and inure to the benefit of the parties hereto, and to their respective successors and assigns, except that no Pledgor shall be permitted to assign this Pledge Agreement, any Pledge Joinder Agreement or any interest herein or therein or in the Collateral, or any part thereof or interest therein, or otherwise pledge, encumber or grant any option with respect to the Collateral, or any part thereof, or any cash or property held by the Administrative Agent as Collateral under this Pledge Agreement. Without limiting the generality of the foregoing sentence of this Section 17, any Lender may assign to one or more Persons, or grant to one or more Persons participations in or to, all or any part of its rights and obligations under the Credit Agreement (to the extent permitted by the Credit Agreement); and to the extent of any such assignment or participation such other Person shall, to the fullest extent permitted by law, thereupon become vested with all the benefits in respect thereof granted to such Lender herein or otherwise, subject however, to the provisions of the Credit Agreement, including Article IX thereof (concerning the Administrative Agent) and Section 10.06 thereof (concerning assignments and participations). All references herein to the Administrative Agent and to the Secured Parties shall include any successor thereof or permitted assignee, and any other obligees from time to time of the Secured Obligations.

 

18.        Secured Cash Management Agreements and Secured Hedging Agreements.  No Secured Party (other than the Administrative Agent) that obtains the benefit of this Pledge Agreement shall have any right to notice of any action or to consent to, direct or object to any action hereunder or otherwise in respect of the Collateral (including the release or impairment of any Collateral) other than in its capacity as a Lender and, in such case, only to the extent expressly provided in the Loan Documents. Notwithstanding any other provision of this Pledge Agreement to the contrary, the Administrative Agent shall only be required to verify the payment of, or that other satisfactory arrangement have been made with respect to, the Secured

 

12

 

Obligations arising under Secured Cash Management Agreements and Secured Hedge Agreements to the extent the Administrative Agent has received written notice of such Obligations, together with such supporting documentation as it may request, from the applicable Cash Management Bank or Hedge Bank, as the case may be. Each Secured Party not a party to the Credit Agreement that obtains the benefit of this Pledge Agreement shall be deemed to have acknowledged and accepted the appointment of the Administrative Agent pursuant to the terms of the Credit Agreement, and that with respect to the actions and omissions of the Administrative Agent hereunder or otherwise relating hereto that do or may affect such Secured Party, the Administrative Agent and each of its Related Parties shall be entitled to all the rights, benefits and immunities conferred under Article IX of the Credit Agreement.

 

19.        Severability.  The provisions of this Pledge Agreement are independent of and separable from each other. If any provision hereof shall for any reason be held invalid or unenforceable, such invalidity or unenforceability shall not affect the validity or enforceability of any other provision hereof, but this Pledge Agreement shall be construed as if such invalid or unenforceable provision had never been contained herein.

 

20.        Counterparts.  This Pledge Agreement may be executed in any number of counterparts each of which when so executed and delivered shall be deemed an original, and it shall not be necessary in making proof of this Pledge Agreement to produce or account for more than one such counterpart executed by the Pledgor against whom enforcement is sought. Without limiting the foregoing provisions of this Section 20, the provisions of Section 10.10 of the Credit Agreement shall be applicable to this Pledge Agreement.

 

21.        Termination.  Subject to the provisions of Section 9, this Pledge Agreement and each Pledge Joinder Agreement, and all obligations of the Pledgors hereunder (excluding those obligations and liabilities that expressly survive such termination) shall terminate without delivery of any instrument or performance of any act by any party on the Facility Termination Date. Upon such termination of this Pledge Agreement, the Administrative Agent shall, at the sole expense of the Pledgors, promptly deliver to the Pledgors the certificates evidencing its shares of Pledged Interests (and any other property received as a dividend or distribution or otherwise in respect of such Pledged Interests to the extent then held by the Administrative Agent as additional Collateral hereunder), together with any cash then constituting the Collateral not then sold or otherwise disposed of in accordance with the provisions hereof, and take such further actions at the request of the Pledgors as may be necessary to effect the same.

 

22.        Additional Interests.  If any Pledgor shall at any time acquire or hold any additional Pledged Interests, including any Pledged Interests issued by any Subsidiary not listed on Schedule I hereto which are required to be subject to a Lien pursuant to a Pledge Agreement by the terms hereof or of any provision of the Credit Agreement (any such shares being referred to herein as the “Additional Interests”), such Pledgor shall deliver to the Administrative Agent for the benefit of the Secured Parties (i) a Pledge Agreement Supplement in the form of Exhibit A hereto with respect to such Additional Interests duly completed and executed by such Pledgor and (iii) any other document required in connection with such Additional Interests as described in Section 3(c).  Each Pledgor shall comply with the requirements of this Section 22 within fifteen Business Days of the acquisition of such Additional Interests or, in the case of Additional Interests to which Section 6.12 of the Credit Agreement applies, within the time period specified

 

13

 

in such Section or elsewhere in the Credit Agreement with respect to such Additional Interests; provided,  however, that the failure to comply with the provisions of this Section 22 shall not impair the Lien on Additional Interests conferred hereunder.

 

23.        Notices.  Any notice required or permitted hereunder shall be given (a) with respect to the Company, at the address of the Company indicated in Schedule 10.02 of the Credit Agreement, (b) with respect to each Subsidiary which is a Pledgor hereunder, at the address then in effect for the giving of notices to such Subsidiary under the Guaranty to which it is a party, and (c) with respect to the Administrative Agent or a Lender, at the Administrative Agent’s address indicated in Schedule 10.02 of the Credit Agreement. All such addresses may be modified, and all such notices shall be given and shall be effective, as provided in Section 10.02 of the Credit Agreement for the giving and effectiveness of notices and modifications of addresses thereunder.

 

24.        Joinder.  Each Person who shall at any time execute and deliver to the Administrative Agent a Pledge Joinder Agreement substantially in the form attached as Exhibit B hereto shall thereupon irrevocably, absolutely and unconditionally become a party hereto and obligated hereunder as a Pledgor and shall have thereupon pursuant to Section 2 hereof granted a security interest in and collaterally assigned and pledged to the Administrative Agent for the benefit of the Secured Parties all Pledged Interests which it has at its Applicable Date or thereafter acquires any interest or the power to transfer, and all references herein and in the other Loan Documents to the Pledgors or to the parties to this Pledge Agreement shall be deemed to include such Person as a Pledgor hereunder.  Each Pledge Joinder Agreement shall be accompanied by the Supplemental Schedules referred to therein, appropriately completed with information relating to the Pledgor executing such Pledge Joinder Agreement and its property. Each of the applicable Schedules attached hereto shall be deemed amended and supplemented without further action by such information reflected on the Supplemental Schedules.

 

25.        Rules of Interpretation.  The rules of interpretation contained in Section 1.02 of the Credit Agreement shall be applicable to this Pledge Agreement and each Pledge Joinder Agreement and are hereby incorporated by reference.  All representations and warranties contained herein shall survive the delivery of documents and any Credit Extensions referred to herein or secured hereby.

 

26.          Governing Law; Waivers.

 

(a)        THIS PLEDGE AGREEMENT AND EACH PLEDGE JOINDER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.

 

(b)        EACH PLEDGOR HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS PLEDGE AGREEMENT OR ANY PLEDGE JOINDER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN MAY BE INSTITUTED IN ANY

 

14

 

STATE OR FEDERAL COURT SITTING IN THE COUNTY OF NEW YORK, STATE OF NEW YORK, UNITED STATES OF AMERICA AND, BY THE EXECUTION AND DELIVERY OF THIS PLEDGE AGREEMENT OR A PLEDGE JOINDER AGREEMENT, EXPRESSLY WAIVES ANY OBJECTION THAT IT MAY HAVE NOW OR HEREAFTER TO THE LAYING OF THE VENUE OR TO THE JURISDICTION OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.

 

(c)         EACH PLEDGOR AGREES THAT SERVICE OF PROCESS MAY BE MADE BY PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF SUCH PLEDGOR PROVIDED IN SECTION 23 OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER THE APPLICABLE LAWS IN EFFECT IN THE STATE OF NEW YORK.

 

(d)         NOTHING CONTAINED IN SUBSECTIONS (b) OR (c) HEREOF SHALL PRECLUDE THE ADMINISTRATIVE AGENT FROM BRINGING ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS PLEDGE AGREEMENT OR ANY PLEDGE JOINDER AGREEMENT OR THE OTHER LOAN DOCUMENTS IN THE COURTS OF ANY PLACE WHERE ANY PLEDGOR OR ANY OF SUCH PLEDGOR’S PROPERTY OR ASSETS MAY BE FOUND OR LOCATED.  TO THE EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, EACH PLEDGOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING, OBJECTION TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY BY ANY SUCH OTHER COURT OR COURTS WHICH NOW OR HEREAFTER, BY REASON OF ITS PRESENT OR FUTURE DOMICILE, OR OTHERWISE, MAY BE AVAILABLE UNDER APPLICABLE LAW.

 

(e)         IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER OR RELATED TO THIS PLEDGE AGREEMENT OR ANY PLEDGE JOINDER AGREEMENT OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN CONNECTION WITH THE FOREGOING, EACH PARTY HEREBY AGREES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY AND HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PERSON MAY HAVE TO TRIAL BY JURY IN ANY SUCH ACTION, SUIT OR PROCEEDING.

 

15

 

(f)         EACH PLEDGOR HEREBY EXPRESSLY WAIVES ANY OBJECTION IT MAY HAVE THAT ANY COURT TO WHOSE JURISDICTION IT HAS SUBMITTED PURSUANT TO THE TERMS HEREOF IS AN INCONVENIENT FORUM.

 

27.        Amendment and Restatement.  Notwithstanding this amendment and restatement of the Existing Pledge Agreement, (i) all of the indebtedness, liabilities and obligations owing by the Pledgors or any other Person under the Existing Pledge Agreement shall continue as obligations hereunder and shall be and remain secured by this Pledge Agreement, (ii) the Existing Pledge shall continue as a security interest hereunder, and (iii) this Pledge Agreement is given as a substitution of, and not as a payment of the indebtedness, liabilities and obligations of the Grantor under, the Existing Pledge Agreement and neither the execution and delivery of this Pledge Agreement nor the consummation of any other transaction contemplated hereunder is intended to constitute a novation of the Existing Pledge Agreement or the Existing Pledge created thereunder.

 

[Signature pages follow.]

 

16

 

IN WITNESS WHEREOF, the parties have duly executed this Pledge Agreement on the day and year first written above.

 

 

	
 
    	
PLEDGORS: 
    
	
 
    	
 
    
	
 
    	
POWER-ONE, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   
    	
Gary   R. Larsen
    
	
 
    	
Title:
    	
Senior   Vice President-Finance and
    
	
 
    	
 
    	
Chief   Financial Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
P-O NEVADA CORP.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   
    	
Gary   R. Larsen
    
	
 
    	
Title:
    	
Vice   President and Treasurer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
POWER-ONE RENEWABLE ENERGY SOLUTIONS LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
 
    
	
 
    	
Name:   
    	
 
    
	
 
    	
Title:
    	
 
    

 

Power-One, Inc.

Securities Pledge Agreement

Signature Page

 

 

	
 
    	
ADMINISTRATIVE AGENT:
    
	
 
    	
 
    
	
 
    	
BANK OF AMERICA, N.A., as Administrative
    
	
 
    	
Agent
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

Power-One, Inc. 
 Securities Pledge Agreement 
 Signature Page

 

 

SCHEDULE I

 

	
Name of
    Pledgor
    	
 
    	
Name, Jurisdiction
   of Formation and
   Type of Entity of
   Pledged Subsidiary
    	
 
    	
Class or Type
   of Pledged
   Interest
    	
 
    	
Total Amount of
   Class or Type of
   Pledged Interests
   Authorized
    	
 
    	
Total Amount
   of Class or Type
   Outstanding
    	
 
    	
Total
   Amount
   Pledged
    	
 
    	
Certificate
   Number (if
   applicable)
    	
 
    	
Par Value
   (if
   applicable)
    	
 
    	
Name of
   Transfer
   Agent (if
   any)
    
	
Power-One,   Inc.
    	
 
    	
P-O   Nevada Corp. (Nevada)
    	
 
    	
Common
    	
 
    	
100
    	
 
    	
100%
    	
 
    	
100%
    	
 
    	
#2
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
PAI   Capital LLC (Delaware)
    	
 
    	
Membership   Interest
    	
 
    	
 
    	
 
    	
 
    	
 
    	
65%
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Power-One   Renewable Energy Solutions Asia Pacific LLC (Delaware)
    	
 
    	
Membership   Interest
    	
 
    	
 
    	
 
    	
 
    	
 
    	
65%
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Power-One   Renewable Energy Solutions LLC (Delaware)
    	
 
    	
Membership   Interest
    	
 
    	
 
    	
 
    	
 
    	
 
    	
65%
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Power-One   LLC (Russia)
    	
 
    	
Membership   Interest
    	
 
    	
N/A
    	
 
    	
100%
    	
 
    	
Up   to 65%
    	
 
    	
N/A
    	
 
    	
N/A
    	
 
    	
 
    
	
 
    	
 
    	
Power-One   Co. Ltd. (China)
    	
 
    	
Company   shares
    	
 
    	
 
    	
 
    	
100%
    	
 
    	
Up   to 65%
    	
 
    	
N/A
    	
 
    	
N/A
    	
 
    	
 
    
	
 
    	
 
    	
Power-One   Ltd. (Hong Kong)
    	
 
    	
Company   shares
    	
 
    	
 
    	
 
    	
100%
    	
 
    	
Up   to 65%
    	
 
    	
N/A
    	
 
    	
N/A
    	
 
    	
 
    
	
 
    	
 
    	
Power-One   Pte Ltd. (Singapore)
    	
 
    	
Company   shares
    	
 
    	
 
    	
 
    	
100%
    	
 
    	
Up   to 65%
    	
 
    	
N/A
    	
 
    	
N/A
    	
 
    	
 
    
	
 
    	
 
    	
Power-One   Energy Solutions SDN BHD (Malaysia)
    	
 
    	
Company   shares
    	
 
    	
 
    	
 
    	
100%
    	
 
    	
Up   to 65%
    	
 
    	
N/A
    	
 
    	
N/A
    	
 
    	
 
    
	
 
    	
 
    	
Power-One   Energy Solutions Pty Ltd. (Australia)
    	
 
    	
Company   shares
    	
 
    	
 
    	
 
    	
100%
    	
 
    	
Up   to 65%
    	
 
    	
N/A
    	
 
    	
N/A
    	
 
    	
 
    
	
 
    	
 
    	
Power-One   AG (Switzerland)
    	
 
    	
Company   shares
    	
 
    	
 
    	
 
    	
100%
    	
 
    	
Up   to 65%
    	
 
    	
N/A
    	
 
    	
N/A
    	
 
    	
 
    
	
 
    	
 
    	
Power-One   Ltd.
    	
 
    	
Ordinary
    	
 
    	
24,000
    	
 
    	
60%
    	
 
    	
Up   to
    	
 
    	
#5
    	
 
    	
£1.00   each
    	
 
    	
 
    

 

 

	
 
    	
 
    	
(UK)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
65%
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Power-One   I/S Danish General Partnership (Denmark)
    	
 
    	
Company   partnership interests
    	
 
    	
 
    	
 
    	
25%
    	
 
    	
Up   to 65%
    	
 
    	
 
    	
 
    	
No   par value each
    	
 
    	
 
    
	
P-O   Nevada Corp.
    	
 
    	
Power-One   I/S Danish General Partnership (Denmark)
    	
 
    	
 
    	
 
    	
100
    	
 
    	
75%
    	
 
    	
Up   to 65%
    	
 
    	
 
    	
 
    	
No   par value each
    	
 
    	
 
    
	
Power-One   Renewable Energy Solutions LLC
    	
 
    	
Power-One   Renewable Energy Solutions Canada, Inc.
    	
 
    	
Common
    	
 
    	
 
    	
 
    	
100%
    	
 
    	
Up   to 65%
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

 

SCHEDULE II

 

	
Name and Address of Pledgor
    	
 
    	
Type of Person
    	
 
    	
Jurisdiction of
    Formation
   of Pledgor
    	
 
    	
Jurisdiction of
   Formation
   Identification
   Number
    	
 
    	
Address of Chief
    Executive Office
    
	
Power-One, Inc.
    	
 
    	
Corporation
    	
 
    	
Delaware
    	
 
    	
4799057
    	
 
    	
See below
    
	
P-O Nevada Corp.
    	
 
    	
Corporation
    	
 
    	
Nevada
    	
 
    	
C18401-2000
    	
 
    	
See below
    
	
Power-One Renewable Energy Solutions LLC
    	
 
    	
Limited Liability Company
    	
 
    	
Delaware
    	
 
    	
4839788
    	
 
    	
See below
    

 

Notice Address (and Chief Executive Office) for all Pledgors: 740 Calle Plano, Camarillo, California 93012

 

 

EXHIBIT A

 

PLEDGE AGREEMENT SUPPLEMENT

 

THIS PLEDGE AGREEMENT SUPPLEMENT, dated as of                                 , 20               (this “Pledge Agreement Supplement”), is made by                                                 , a                          (the “Pledgor”), in favor of BANK OF AMERICA, N.A., in its capacity as Administrative Agent (the “Administrative Agent”) for the Secured Parties (as defined in the Pledge Agreement referenced below; all capitalized terms used but not defined herein shall have the meanings given to such terms in such Pledge Agreement).

 

RECITALS:

 

A.            The Pledgor is party to that certain Amended and Restated Securities Pledge Agreement dated as of January 30, 2013 (as in effect on the date hereof, the “Pledge  Agreement”), among Power-One, Inc., a Delaware corporation (the “Company”), certain of its Subsidiaries and the Administrative Agent.

 

B.            The Pledgor has acquired rights in the Pledged Interests listed on Annex A to this Pledge Agreement Supplement (the “Additional Interests”) and desires to pledge, and evidence its prior pledge, to the Administrative Agent for the benefit of the Secured Parties all of the Additional Interests in accordance with the terms of the Credit Agreement and the Pledge Agreement.

 

In order to induce the Secured Parties to from time to time make and maintain extensions of credit under the Credit Agreement, Cash Management Agreements and Hedge Agreements, the Pledgor hereby agrees as follows:

 

1.             Affirmations. The Pledgor hereby reaffirms and acknowledges the pledge and collateral assignment to, and the grant of security interest in, the Additional Interests contained in the Pledge Agreement and pledges and collaterally assigns to the Administrative Agent for the benefit of the Secured Parties, and grants to the Administrative Agent for the benefit of the Secured Parties a first priority lien and security interest in, the Additional Interests and all of the following:

 

(a)           all money, securities, security entitlements and other investment property, dividends, rights, general intangibles and other property at any time and from time to time (x) declared or distributed in respect of or in exchange for or on conversion of any or all of the Additional Interests or (y) by its or their terms exchangeable or exercisable for or convertible into any Additional Interest or other Pledged Interest;

 

(b)           all other property of whatever character or description, including money, securities, security entitlements and other investment property, and general intangibles hereafter delivered to the Administrative Agent in substitution for or as an addition to any of the foregoing;

 

 

(c)           all securities accounts to which may at any time be credited any or all of the foregoing or any proceeds thereof and all certificates and instruments representing or evidencing any of the foregoing or any proceeds thereof; and

 

(d)           all proceeds of any of the foregoing.

 

The Pledgor hereby acknowledges, agrees and confirms by its execution of this Pledge Agreement Supplement that the Additional Interests constitute “Pledged Interests” under and are subject to the Pledge Agreement, and the items of property referred to in clauses (a) through (d) above (the “Additional Collateral”) shall collectively constitute “Collateral” under and are subject to the Pledge Agreement. Each of the representations and warranties with respect to Pledged Interests and Collateral contained in the Pledge Agreement is hereby made by the Pledgor with respect to the Additional Interests and the Additional Collateral, respectively. The Pledgor further represents and warrants that Annex A attached to this Pledge Agreement Supplement contains a true, correct and complete description of the Additional Interests, and that all other documents required to be furnished to the Administrative Agent pursuant to Section 3(c) of the Pledge Agreement in connection with the Additional Collateral have been delivered or are being delivered simultaneously herewith to the Administrative Agent. The Pledgor further acknowledges that Schedule I to the Pledge Agreement shall be deemed, as to it, to be supplemented as of the date hereof to include the Additional Interests as described on Annex A to this Pledge Agreement Supplement.

 

2.             Counterparts.  This Pledge Agreement Supplement may be executed in any number of counterparts each of which when so executed and delivered shall be deemed an original, and it shall not be necessary in making proof of this Pledge Agreement Supplement to produce or account for more than one such counterpart executed by the Pledgor. Without limiting the foregoing provisions of this Section 2, the provisions of Section 10.10 of the Credit Agreement shall be applicable to this Pledge Agreement Supplement.

 

3.             Governing Law; Venue; Waiver of Jury Trial.  The provisions of Section 26 of the Pledge Agreement are hereby incorporated by reference as if fully set forth herein.

 

[Signature page follows.]

 

 

IN WITNESS WHEREOF, the Pledgor has caused this Pledge Agreement Supplement to be duly executed by it’s authorized officer as of the day and year first above written.

 

	
 
    	
PLEDGOR:
    
	
 
    	
 
    
	
 
    	
   
    
	
 
    	
 
    
	
 
    	
By:   
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

ANNEX A

(to Pledge Agreement Supplement of               dated               )

 

Additional Interests

 

	
Name of
    Pledgor
    	
 
    	
Name,
   Jurisdiction of
   Formation
    and Type of
    Entity of
   Pledged
   Subsidiary
    	
 
    	
Class or Type
   of Additional
   Interest
    	
 
    	
Total Amount
   of Class or
   Type of
    Additional
    Interests
    Authorized
    	
 
    	
Total Amount
   of Class or
   Type
   Outstanding
    	
 
    	
Total Amount
   Pledged
    	
 
    	
Certificate
   Number (if
   applicable)
    	
 
    	
Par Value (if
   applicable)
    	
 
    	
Name of
   Transfer
   Agent (if any)
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

 

EXHIBIT B

 

PLEDGE JOINDER AGREEMENT

 

THIS PLEDGE JOINDER AGREEMENT, dated as of                                , 20        (this “Pledge Joinder Agreement”), is made by                                                    , a                                    (the “Joining Pledgor”), in favor of BANK OF AMERICA, N.A., in its capacity as Administrative Agent (the “Administrative Agent”) for the Secured Parties (as defined in the Pledge Agreement referenced below; all capitalized terms used but not defined herein shall have the meanings given to such terms in such Pledge Agreement).

 

RECITALS:

 

A.            Power-One, Inc., a Delaware corporation (the “Company”), certain of its Subsidiaries and the Administrative Agent, are party to an Amended and Restated Securities Pledge Agreement dated as of January 30, 2013 (as in effect on the date hereof, the “Pledge Agreement”).

 

B.            The Joining Pledgor is a Subsidiary of the Company and is required by the terms of the Credit Agreement to become a Guarantor and be joined as a party to the Pledge Agreement as a Pledgor.

 

C.            The Joining Pledgor will materially benefit directly and indirectly from the making and maintenance of the extensions of credit made from time to time under the Credit Agreement, Cash Management Agreements and Hedge Agreements.

 

In order to induce the Secured Parties to from time to time make and maintain extensions of credit under the Credit Agreement, Cash Management Agreements and Hedge Agreements, the Joining Pledgor hereby agrees as follows:

 

1.             Joinder.  The Joining Pledgor hereby irrevocably, absolutely and unconditionally becomes a party to the Pledge Agreement as a Pledgor and bound by all the terms, conditions, obligations, liabilities and undertakings of each Pledgor or to which each Pledgor is subject thereunder, including without limitation the grant pursuant to Section 2 of the Pledge Agreement of a security interest to the Administrative Agent for the benefit of the Secured Parties in, and collateral assignment and pledge to the Administrative Agent of, the Pledged Interests and other property constituting Collateral of such Pledgor or in which such Pledgor has or may have or acquire an interest or the power to transfer rights therein, whether now owned or existing or hereafter created, acquired or arising and wheresoever located, as security for the payment and performance of the Secured Obligations, all with the same force and effect as if the Joining Pledgor were a signatory to the Pledge Agreement. Without limiting the foregoing, the Joining Pledgor hereby grants a security interest to the Administrative Agent for the benefit of the Secured Parties in the Collateral as security for the payment and performance of the Secured Obligations.

 

 

2.             Affirmations.  The Joining Pledgor hereby acknowledges and affirms as of the date hereof with respect to itself, its properties and its  affairs each of the waivers, representations, warranties, acknowledgements and certifications applicable to any Pledgor contained in the Pledge Agreement.

 

3.             Supplemental Schedules.  Attached to this Pledge Joinder Agreement are duly completed schedules (the “Supplemental Schedules”) supplementing as thereon indicated the respective Schedules to the Pledge Agreement. The Joining Pledgor represents and warrants that the information contained on each of the Supplemental Schedules with respect to such Joining Pledgor and its properties and affairs is true, complete and accurate as of its Applicable Date.

 

4.             Severability.  The provisions of this Pledge Joinder Agreement are independent of and separable from each other. If any provision hereof shall for any reason be held invalid or unenforceable, such invalidity or unenforceability shall not affect the validity or enforceability of any other provision hereof, but this Pledge Joinder Agreement shall be construed as if such invalid or unenforceable provision had never been contained herein.

 

5.             Counterparts.  This Pledge Joinder Agreement may be executed in any number of counterparts each of which when so executed and delivered shall be deemed an original, and it shall not be necessary in making proof of this Pledge Joinder Agreement to produce or account for more than one such counterpart executed by the Joining Pledgor. Delivery of an executed counterpart of a signature page of this Pledge Joinder Agreement by facsimile or electronic transmission (including .pdf file) shall be effective as delivery of a manually executed counterpart hereof. Without limiting the foregoing provisions of this Section 5, the provisions of Section 10.10 of the Credit Agreement shall be applicable to this Pledge Joinder Agreement.

 

6.             Delivery.  The Joining Pledgor hereby irrevocably waives notice of acceptance of this Pledge Joinder Agreement and acknowledges that the Secured Obligations are and shall be deemed to be incurred, and credit extensions under the Loan Documents, Cash Management Agreements and Hedge Agreements made and maintained, in reliance on this Pledge Joinder Agreement and the Pledgor’s joinder as a party to the Pledge Agreement as herein provided.

 

7.             Governing Law; Venue; Waiver of Jury Trial.  The provisions of Section 26 of the Pledge Agreement are hereby incorporated by reference as if fully set forth herein.

 

[Signature page follows.]

 

 

IN WITNESS WHEREOF, the Joining Pledgor has duly executed and delivered this Pledge Joinder Agreement as of the day and year first written above.

 

	
 
    	
JOINING   PLEDGOR:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

SUPPLEMENTAL 
 SCHEDULE I

 

	
Name of
    Pledgor
    	
 
    	
Name,
   Jurisdiction of
   Formation
    and Type of
    Entity of
   Pledged
   Subsidiary
    	
 
    	
Class or Type
   of Pledged
   Interest
    	
 
    	
Total Amount
   of Class or
   Type of
    Pledged
    Interests
    Authorized
    	
 
    	
Total Amount
   of Class or
   Type
   Outstanding
    	
 
    	
Total Amount
   Pledged
    	
 
    	
Certificate
   Number (if
   applicable)
    	
 
    	
Par Value (if
   applicable)
    	
 
    	
Name of
   Transfer
   Agent (if any)
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

	
Delivered Pursuant to Pledge   Joinder Agreement of:
    
	
Applicable   Date:                    ,   20
    

 

 

SUPPLEMENTAL 
 SCHEDULE II

 

	
Name and Address of
    Pledgor
    	
 
    	
Type of Person
    	
 
    	
Jurisdiction of Formation
   of Pledgor
    	
 
    	
Jurisdiction of Formation
   Identification Number
    	
 
    	
Address of Chief
    Executive Office
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

	
Delivered Pursuant to Pledge   Joinder Agreement of:
    
	
Applicable   Date:                          ,   20
    

 

 

EXHIBIT I

 

OPINION

 

See attached.

 

I-1

 

	

    	
Gibson, Dunn & Crutcher LLP
    
	
 
    	
2029 Century Park East
    
	
 
    	
Los Angeles, CA 90067-3026
    
	
 
    	
Tel 310.552.8500
    
	
 
    	
www.gibsondunn.com
    
	
 
    	
 
    
	
 
    	
Client: 73639-00006
    

 

January 30, 2013

 

The Lenders listed on Schedule I hereto
 and the Agent party to the

Credit Agreement referred to below
 (collectively, the “Lender Parties”)

c/o Bank of America, N.A.,

as Agent

 

Re: Power-One, Inc. — Amended and Restated Credit Agreement dated as January 30, 2013

 

Ladies and Gentlemen:

 

We have acted as counsel to Power-One, Inc., a Delaware corporation (the “Company”), in connection with the Amended and Restated Credit Agreement dated as of January 30, 2013 (the “Credit Agreement”) among the Company, the subsidiaries of the Company party thereto as “Designated Borrowers,” the lenders party thereto (the “Lenders”), and Bank of America, N.A., as agent (in such capacity, or in its capacity as collateral agent, as appropriate, the “Agent”). Terms defined in the Credit Agreement and not otherwise defined herein are used herein as therein defined.

 

In rendering this opinion, we have examined the originals, or copies, certified or otherwise identified to our satisfaction as being true copies, of the following documents and instruments:

 

(i)         the Credit Agreement, including the Exhibits and Schedules thereto;

 

(ii)        the Notes dated as of January 30, 2013 (the “Notes”) made by the Borrowers payable to the order of the Lenders;

 

(iii)       the Amended and Restated Guaranty Agreement dated as of January 30, 2013 (the “Guaranty”) among the Company, P-O Nevada Corp., a Nevada corporation (“PON”), Power-One Renewable Energy Solutions LLC, a Delaware limited liability company (“POES”, and together with the Company and PON, the “Guarantors”), and the Agent;

 

(iv)       the Amended and Restated Security Agreement dated as of January 30, 2013 (the “Security Agreement”) among the Company, the other Guarantors and the Agent;

 

Brussels · Contury City · Dallas · Denver · Dubai · Hong Kong · London · Los Angolos · Munich · New York
 Orange County · Palo Alto · Paris  · San Francisco · Säo Paulo · Singapore · Washington, D.C.

 

 

(v)        the Amended and Restated Securities Pledge Agreement dated as of January 30, 2013 (the “Pledge Agreement”) among the Company, the other Guarantors and the Agent;

 

(vi)       the Patent Security Agreement dated as of January 30, 2013 (the “Patent Security Agreement”) between the Company and the Agent;

 

(vii)      the financing statements on Form UCCI naming the Company and each Guarantor, as debtors, and the Agent, as secured party, filed in the governmental offices listed on Schedule II hereto (each, a “Financing Statement”); and

 

(viii)     the UCC search reports indicating that the Financing Statements have been filed in the respective offices and in the respective states listed on Schedule II hereto, which reports state that they reflect filings in such offices through the “as of” dates listed on Schedule II hereto (the “Search Reports”).

 

The Security Agreement, the Pledge Agreement, and the Patent Security Agreement are referred to herein collectively as the “Collateral Documents.” The Credit Agreement, the Notes, the Guaranty and the Collateral Documents are referred to herein collectively as the “Financing Documents.” The Company and the Guarantors are referred to herein collectively as the “Obligors.” The Obligors, other than PON, are referred to herein collectively as the “Specified Obligors.” Each Obligor’s right, title and interest in the personal property collateral described in the Collateral Documents is referred to herein collectively as its “UCC Collateral.” The Uniform Commercial Code as enacted and in effect in the States of Nevada, .New York and Delaware are referred to herein, respectively, as the “Nevada UCC”, the “New York UCC” and the “Delaware UCC.” The States of Nevada, New York and Delaware are referred to herein as the “Perfection States,” and the Nevada UCC, the New York UCC and the Delaware UCC are each referred to herein as a “UCC.” All references to sections or other subparts of the New York UCC include references to the equivalent provisions of the Nevada UCC and the Delaware UCC, unless the context otherwise requires. All terms defined in the New York UCC are used herein as defined therein.

 

We have assumed without independent investigation that:

 

(a)        The signatures on all documents examined by us are genuine, all individuals executing such documents had all requisite legal capacity and competency and (except in the case of documents signed on behalf of the Specified Obligors) were duly authorized to do so; the documents submitted to us as originals are authentic and the documents submitted to us as certified or reproduction copies conform to the originals;

 

2

 

(b)        PON is a validly existing corporation in good standing under the laws of the State of Nevada and has all requisite power to execute and deliver each of the Financing Documents to which it is a party and to perform its obligations thereunder; the execution and delivery of such Financing Documents by PON and the performance of its obligations thereunder have been duly authorized by all necessary corporate or other action; each such Financing Document has been duly executed and delivered by PON; and, except as specifically addressed in our opinions in Paragraphs 4(i)(B) and 5 below, the execution and delivery of such Financing Documents by PON, and the performance of its obligations thereunder, do not violate any law, regulation, order, judgment or decree applicable to PON;

 

(c)        There are no agreements or understandings between or among any of the parties to the Financing Documents or third parties that would expand, modify or otherwise affect the terms of the Financing Documents or the respective rights or obligations of the parties thereunder or that would modify, release, terminate, subordinate or delay the attachment of the security interest and liens granted thereunder;

 

(d)        To the extent that the ability of the Agent to enforce remedies under the Financing Documents in respect of UCC Collateral comprised of inventory may be affected thereby, each Obligor is in compliance with the Fair Labor Standards Act (see  Citicorp Industrial Credit, Inc. v. Brock, 483 U.S. 27, 107 S.Ct. 2694 (1987));

 

(e)        Each Obligor has, and will have at all times relevant to this opinion, rights in the UCC Collateral within the meaning of Section 9-203(b)(2) of the New York UCC; and

 

(f)         The Financing Statements have been filed effectively in the respective filing offices and in the respective states listed on Schedule II hereto, as indicated in the Search Reports that we have reviewed in connection with the preparation of this opinion; and the Financing Statements have not been terminated or amended since the respective “as of” dates listed on Schedule II.

 

In rendering this opinion, we have made such inquiries and examined, among other things, originals or copies, certified or otherwise identified to our satisfaction, of such records, agreements, certificates, instruments and other documents as we have considered necessary or appropriate for purposes of this opinion. As to certain factual matters, we have relied to the extent we deemed appropriate and without independent investigation upon the representations and warranties of the Obligors in the Financing Documents, certificates of officers of the Obligors, copies of which are attached hereto (collectively, the “Officers’ Certificate”) or certificates obtained from public officials and others.

 

3

 

Based upon the foregoing and in reliance thereon, and subject to the qualifications, exceptions, assumptions and limitations herein contained, we are of the opinion that:

 

1.          Each Specified Obligor is a validly existing corporation or limited liability company in good standing under the laws of the State of Delaware and has all requisite corporate or limited liability company power, as the case may be, to execute and deliver the Financing Documents to which it is a party and to perform its obligations thereunder.

 

2.          The execution and delivery by each Specified Obligor of the Financing Documents to which it is a party, and the performance of its obligations thereunder, have been duly authorized by all necessary corporate or limited liability company action, as the case may be. Each Financing Document has been duly executed and delivered by each Specified Obligor party thereto.

 

3.          Each Financing Document constitutes a legal, valid and binding obligation of each Obligor party thereto, enforceable against it in accordance with its terms.

 

4.          The execution and delivery by each Obligor of the Financing Documents to which it is a party, and the performance of its obligations thereunder, do not and will not (i) violate (A) the certificate of incorporation or bylaws or certificate of formation or limited liability company agreement, as the case may be, of any Specified Obligor, or (B) based solely upon review of the orders, judgments or decrees identified to us in the Officers’ Certificate as constituting all orders, judgments or decrees binding on such Obligor that could reasonably be expected to restrict the ability of the Obligors to consummate the transactions contemplated by the Financing Documents, which are listed on Schedule III hereto (each, a “Governmental Order”), any Governmental Order, or (ii) based solely upon review of the documents filed as exhibits to the Company’s periodic reports under the Securities Exchange Act of 1934, as amended (the “1934 Act”) (each, a “Material Contract”) result in a material breach of or default under any Material Contract.

 

5.          The execution and delivery by each Obligor of the Financing Documents to which it is a party, and the performance of its obligations thereunder, do not and will not (i) violate, or require any filing with or approval of any governmental authority or regulatory body of the State of New York or the United States of America under, any law or regulation of the State of New York or the United States of America applicable to such Obligor that, in our experience, is generally applicable to transactions in the nature of those contemplated by the Financing Documents or (ii) violate, or require any filing with or approval of any governmental authority or regulatory body of the State of Delaware under, the Delaware General Corporation Law or the Delaware Limited Liability Company Act, except in each case for filings required for the perfection of Liens.

 

4

 

6.          No Obligor is required to register as an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

7.          Each Obligor has granted a valid security interest (the “Security Interest”) in favor of the Agent, for the benefit of the secured parties, in its UCC Collateral described in the Collateral Documents to which such Obligor is a party, securing the performance of the obligations purported to be secured thereby, to the extent a security interest can be created therein under Article 9 of the New York UCC. The Security Interest in the UCC Collateral of each Obligor listed on Schedule II is perfected to the extent security interests therein can be perfected by the filing of UCC1 financing statements under Article 9 of the UCC of the relevant Perfection States.

 

8.          Upon delivery to the Agent in the State of New York of the certificates described on Schedule IV hereto in accordance with the provisions of the Pledge Agreement (the “Pledged Shares”), the Security Interest of the Agent in the Pledged Shares will be perfected and will be prior in right to all other security interests therein created under Article 9 of the New York UCC.

 

9.          The execution and delivery by each Obligor of the Financing Documents to which it is a party, and the performance of its obligations thereunder, do not result in a breach or violation of Regulation U or X of the Board of Governors of the Federal Reserve System. Regulation T of the Board of Governors of the Federal Reserve System (“Regulation T”) does not apply to any Lender that is not a “creditor” (as defined in Regulation T). Regulation T defines “creditor” as any broker or dealer (as defined in sections 3(a)(4) and 3(a)(5) of the 1934 Act), any member of a national securities exchange, or any person associated with a broker or dealer (as defined in section 3(a)(18) of the 1934 Act), except for business entities controlling or under common control with the creditor.

 

The opinions expressed above are subject to the following additional exceptions, qualifications, limitations and assumptions:

 

A.         We render no opinion herein as to matters involving the laws of any jurisdiction other than (i) the State of New York, (ii) the United States of America, (iii) for purposes of Paragraphs 1, 2, 4(i)(A), and 5(ii) above, the Delaware General Corporation Law and the Delaware Limited Liability Company Act, (iv) for purposes of our perfection opinion in Paragraph 7, the Delaware UCC and (v) to the limited extent set forth below, the Nevada UCC. We are not engaged in practice in the State of Delaware; however, we are generally familiar with the Delaware General Corporation Law, the Delaware Limited Liability Company Act and the Delaware UCC as currently in effect and have made such inquiries as we consider necessary to render the opinions contained in Paragraphs 1, 2, 4(i)(A) and 5(ii).

 

5

 

We have assumed without independent investigation that the limited liability company agreement of each Specified Obligor that is a Delaware limited liability company constitutes a legal, valid and binding obligation of each party thereto, enforceable against it in accordance with its terms, and to the extent our opinions in Paragraphs 1, 2 and 4(i)(A) above are dependent on the interpretation of such agreement, they are based on the plain meaning of the provisions thereof in light of the Delaware Limited Liability Company Act (and, in that regard, we are of the opinion that nothing contained in the Delaware Limited Liability Company Act would render any such agreement unenforceable in accordance with its terms, such opinion being based on the plain meaning of the provisions of such agreements (and without any express or implied interpretation of Delaware contract law)). Without limitation, we do not express any opinion regarding any Delaware contract law. Furthermore, we are not engaged in practice in the State of Nevada and have not obtained an opinion of counsel admitted in the State of Nevada with respect to the perfection of the security interest in the UCC Collateral. We have, however, examined the applicable provisions of the Nevada UCC as currently in effect, as those provisions appear in the Uniform Commercial Code Reporting Service, State UCC Variations Binder 2012-1, published by West Group (the “UCC Reporting Service”), and our opinions in Paragraph 7 above, to the extent such opinions involve conclusions as to the perfection of such security interest under the laws of the State of Nevada, are based solely on such review. This opinion is limited to the effect of the current state (or, to the extent relating to the Nevada UCC, the state of such laws as reflected in the UCC Reporting Service) of the laws of the State of New York, the United States of America and, to the limited extent set forth above, the laws of the States of Delaware and Nevada and the facts as they currently exist. We assume no obligation to revise or supplement this opinion in the event of future changes in such laws (or reflected in updates of the UCC Reporting Service or the interpretations thereof or such facts. Except as expressly set forth in Paragraphs 6 and 9 above, we express no opinion regarding the Securities Act of 1933, as amended (the “1933 Act”), or any other federal or state securities laws or regulations.

 

B.         Our opinions are subject to (i) the effect of any bankruptcy, insolvency, reorganization, moratorium, arrangement or similar laws affecting the rights and remedies of creditors generally (including, without limitation, the effect of statutory or other laws regarding fraudulent transfers or preferential transfers or distributions by corporations to stockholders) and (ii) general principles of equity, including without limitation concepts of materiality, reasonableness, good faith and fair dealing and the possible unavailability of specific performance, injunctive relief or other equitable remedies regardless of whether enforceability is considered in a proceeding in equity or at law.

 

C.         We express no opinion regarding (a) the effectiveness of (i) any waiver (whether or not stated as such) under the Financing Documents of, or any consent thereunder

 

6

 

relating to, unknown future rights or the rights of any party thereto existing, or duties owing to it, as a matter of law; (ii) any waiver (whether or not stated as such) contained in the Financing Documents of rights of any party, or duties owing to it, that is broadly or vaguely stated or does not describe the right or duty purportedly waived with reasonable specificity; (iii) provisions relating to indemnification, exculpation or contribution, to the extent such provisions may be held unenforceable as contrary to public policy or federal or state securities laws or due to the negligence or willful misconduct of the indemnified party; (iv) any provision in any Financing Document waiving the right to object to venue in any court; (v) any agreement to submit to the jurisdiction of any Federal Court; (vi) any waiver of the right to jury trial; (vii) any provision purporting to establish evidentiary standards; (viii) any provision to the effect that every right or remedy is cumulative and may be exercised in addition to any other right or remedy or that the election of some particular remedy does not preclude recourse to one or more others; (ix) (A) any provision that would require payment of any unamortized original issue discount (including any original issue discount effectively created by payment of a fee), or (B) the closing fees payable under the Fee Letter, to the extent they are considered to be fees for the “brokerage, soliciting, driving or procuring of a loan” and exceed 0,50% of the amount thereof in violation of New York General Obligations Law Section 5-531; (x) any fraudulent transfer “savings” provision; (xi) any right of setoff to the extent asserted by a participant in the rights of a Lender under the Financing Documents; or (b) (i) the effect on the enforceability of the Guaranty or other Financing Documents against, or on the ability of a secured party to realize upon collateral security pledged or granted by, any Obligor or any other “surety” (which could include a co- borrower jointly liable for loans extended to another co-borrower, a hypothecator of property to secure obligations owed by another person or a common creditor that has subordinated obligations owing to it), of any facts or circumstances that would constitute a defense to the obligation of a surety, unless such defense has been waived effectively by such Obligor or other surety or (ii) the availability of damages or other remedies not specified in the Financing Documents in respect of breach of any covenants (other than covenants relating to the payment of principal, interest, indemnities and expenses). In addition, we advise you that some of the provisions of the Financing Documents may not be enforceable by a Lender acting individually (as opposed to the Lenders acting through the Agent).

 

D.         We express no opinion as to (i) any waivers or variations of rights of a debtor, including a guarantor, or duties of a secured party under provisions referred to in Section 9-602 of the New York UCC or (ii) any provision in the Collateral Documents (A) that may be deemed to permit the Agent or any other person to sell or otherwise foreclose upon any UCC Collateral, or to apply the proceeds thereof, except in compliance with the New York UCC, applicable laws of the United States and other applicable state and local laws, or (B) that may be deemed to impose on the Agent standards for the care of the UCC Collateral in the possession or control of the Agent that would violate Section 9-207 or

 

7

 

9-208 of the New York UCC or to render such standards inapplicable. Without limitation of clause (ii)(A), we express no opinion with respect to any provision to the extent that it authorizes the Agent or the Lenders to purchase UCC Collateral at a private sale, if such Collateral is neither customarily sold in a recognized market nor the subject of widely distributed standard price quotations. We call to your attention that Sections 9-611, 9-612 and 9-613 of the New York UCC include requirements for notice in connection with a private sale or other disposition of UCC Collateral as well as a public sale, unless the UCC Collateral is perishable or threatens to decline speedily in value or is a type customarily sold in a recognized market. We further express no opinion as to any license contained in the Financing Documents to use patents, trademarks or copyrights in connection with an exercise of remedies against UCC Collateral.

 

E.         Our opinion is subject to the effect of Section 552 of the United States Bankruptcy Code (limiting security interests in property acquired after the commencement of a case under the United States Bankruptcy Code). We call to your attention that under the provisions of the New York UCC certain third parties, such as buyers and lessees of goods in the ordinary course of business, licensees of general intangibles (including software) in the ordinary course of business, holders in due course of negotiable instruments, protected purchasers of securities or certain purchasers of security entitlements or financial assets, could acquire an interest in the UCC Collateral free of the security interests of the Agent and the Lenders, even though such security interests are perfected.

 

F.          We express no opinion with respect to (i) the existence, non-existence or value of any UCC Collateral, (ii) any part of the UCC Collateral that is or may be such that a security interest therein is not covered by Article 9 of the New York UCC by virtue of Section 9-109, (iii) except as expressly set forth in Paragraph 8, the perfection of the Security Interests in any portion of the UCC Collateral, including deposit accounts, goods covered by a certificate of title (such as automobiles), patents, trademarks, copyrights, letter-of-credit rights and money, to the extent that filing of a financing statement is not or may not be sufficient to perfect a security interest therein (whether as a result of requirements for control or possession of such collateral, the applicability of preemptive United States laws or of certificate of title statutes or otherwise) and (iv) the law governing perfection of security interests by filing under Section 9-301 of the UCC. Without limitation of clause (ii) or (iii) above, we express no opinion with respect to the perfection of any Security Interest in accounts that are obligations of the Federal government, any agency, instrumentality or department thereof or any state or local government or any agency or political subdivision thereof, to the extent that any applicable laws (such as the Federal Assignment of Claims Act) require any actions in addition to the filing of financing statements under the UCC of the relevant Perfection States. In addition, certain remedies otherwise available under the New York UCC in regard to accounts included in the UCC Collateral may not be available

 

8

 

with respect to accounts owing by the Federal Government, or a department, agency or instrumentality thereof, or any state or local government or any agency or political subdivision thereof, as to which the procedures specified in such laws have not been completed.

 

G.         We express no opinion with respect to (i) the sufficiency of the descriptions of the UCC Collateral contained in the Collateral Documents, in the Financing Statements or in any document prepared in connection therewith, except for the legal adequacy of descriptions of UCC Collateral (A) to the extent that such descriptions consist of the collateral types defined in the New York UCC (other than commercial tort claims) and (B) contained in Financing Statements to the extent such descriptions consist of “all assets” or “all personal property,” (ii) the enforceability or perfection of any security interest in the proceeds of any UCC Collateral other than pursuant to Section 9-315 of the New York UCC or the UCC of the relevant Perfection State, (iii) any security interest in consumer goods or commercial tort claims or (iv) perfection (or the law governing perfection) of any security interest in timber to be cut or as-extracted collateral (including oil, gas and other minerals).

 

H.         We express no opinion with respect to the priority (and therefore no opinion as to the respective rights of any creditor, encumbrancer or other third party as against the rights of the Agent and the Lenders) of any security interest in the UCC Collateral, except as expressly set forth in Paragraph 8.

 

I.          Perfection of the Security Interests generally will be terminated under the circumstances described in Sections 9-316, 9-507, 9-508 and 9-515 of the New York UCC, unless appropriate action is taken as provided therein. Without limitation, (i) all the financing statements filed must be continued at prescribed intervals by the timely filing of continuation statements and (ii) a new or amended financing statement may be required to be filed to retain any perfected Security Interest in the event any Obligor changes its name, identity or location (as determined under the New York UCC).

 

J.          We call to your attention that the Material Contracts as well as other general intangibles (including contracts, permits, licenses or certain limited liability company or limited partnership interests) of the Obligors included in the UCC Collateral (such general intangibles, the “Assigned Contracts”) may contain provisions that prohibit or limit the assignment of such Assigned Contracts or applicable state and federal laws, rules or regulations may prohibit the assignment of permits, licenses and other Assigned Contracts. Section 9-408 of the NYUCC renders ineffective prohibitions on the attachment of a security interest in the general intangibles of the Obligors under each Assigned Contract; we believe, therefore, that the grant of a security interest in the Obligors’ respective interests in the Assigned Contracts would not be prevented by such provisions of the Assigned Contracts or

 

9

 

constitute an actionable breach of any such Assigned Contract, to the extent the NYUCC is applicable thereto. We note, however, that Section 9-408 of the NYUCC may not apply to the Assigned Contract and the UCCs of other states may not have similar provisions. Also, Section 9-408 of the NYUCC does not override applicable state or federal laws, rules or regulations that prohibit the assignment of permits, licenses and other Assigned Contracts. We further call to your attention (i) that certain default remedies may not be available to the Lender Parties, and (ii) that restrictions upon the transfer of the Assigned Contracts in connection with the exercise of default remedies by the Agent or the Lenders would not be rendered ineffective pursuant to Section 9-408 of the NYUCC, and therefore any such transfer may constitute a breach of or default under such Assigned Contract or be unenforceable against any counterparty thereto.

 

K.         Our opinions set forth in Paragraphs 3, 7 and 8 are subject to the following qualifications: (i) the Agent may not be entitled to vote the equity interests included in the UCC Collateral (the “Pledged Equity Interests”) or to receive dividends or other distributions directly from the issuer thereof prior to becoming the record holder of the Pledged Equity Interests; (ii) none of the Pledged Equity Interests or any interest therein may be sold or further transferred by the Agent without registration under the 1933 Act, except pursuant to an exemption from registration contained in such Act, and qualification or exemption from qualification under any applicable State securities or Blue Sky laws; and (iii) compliance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976 may be required prior to the exercise of any remedies under the Collateral Documents with respect to the Pledged Equity Interests.

 

L.         With reference to our opinion in Paragraph 8 above, we have assumed without independent investigation that (i) the certificates representing the Pledged Shares are indorsed to the Agent or in blank by an effective indorsement (as such term is defined in the New York UCC), and (ii) the Agent will at all times hereafter maintain possession of the certificates representing the Pledged Shares in the State of New York.

 

M.        In connection with our opinions expressed in Paragraphs 7 and 8 above, we call to your attention that the UCC Collateral and the Pledged Shares includes equity interests of entities (the “Foreign Equity Interests”) organized under the laws of jurisdictions other than the United States of America or a political subdivision thereof (each, a “Foreign Issuer Jurisdiction”) and that the laws of the Foreign Issuer Jurisdictions may prescribe actions that must be taken to effect a valid and perfected pledge of such Foreign Equity Interests. While the filing of a financing statement is sufficient under the UCC of the relevant Perfection States to perfect a security interest under the relevant UCC in an Obligor’s interests in the relevant Foreign Equity Interests (to the extent the UCC of the relevant Perfection State is applicable), certain remedies may not be available to the Agent

 

10

 

and the Lenders, and such security interests may otherwise be adversely affected, unless the Agent and the Lenders undertake the actions required under the laws of the Foreign Issuer Jurisdictions. In addition, to the extent the Foreign Equity Interests constitute Pledged Shares covered by our opinion in Paragraph 8, we have assumed without independent investigation that such Foreign Equity Interests constitute “certificated securities” within the meaning of Section 8-102 of the New York UCC.

 

N.         In rendering our opinions expressed in Paragraph 4 insofar as they require interpretation of Material Contracts, we express no opinion with respect to the compliance by any Obligor with any covenants included in any Material Contract to the extent compliance depends on financial calculations or data. In connection therewith, we call to your attention that the Senior Convertible Notes Documents are included among the Material Contracts and that the indenture included among the Senior Convertible Notes Documents contains restrictions on the incurrence of Indebtedness (as therein defined) that would be implicated by the incurrence of the incremental indebtedness contemplated by the Credit Agreement, and that we express no opinion with respect to any current or future compliance by the Company with any covenants included in the indenture to the extent compliance depends on financial calculations or data. In addition to the foregoing, we call to your attention that the indenture included among the Senior Convertible Notes Documents also includes a definition “Permitted Liens” that includes a section cross-reference that incorrectly references the covenant restricting the existence of Liens rather than the covenant restricting the incurrence of Indebtedness (as therein defined). For purposes of our opinion in Paragraph 4, we have, with your concurrence, assumed that this incorrect cross-reference was a scrivener’s error and that the granting of Liens pursuant to the Collateral Documents would not result in an actionable default under the Senior Convertible Notes Documents.

 

O.         For purposes of our opinion in Paragraph 9, we have assumed without independent investigation that: (i) the representation and warranty of the Company set forth in Section 5.14 of the Credit Agreement is and will be true and correct at all relevant times and (ii) no more than an insignificant part of the UCC Collateral consists or will consist of “margin stock” within the meaning of Regulations U or X of the Board of Governors of the Federal Reserve System at all relevant times. Our opinion in Paragraph 9 is subject to (and we express no opinion in respect of) any requirement applicable to the Agent or any Lender to obtain in good faith a Form FR U-1 or FR G-3 signed by the Obligors. Except as expressly set forth in Paragraph 9, we express no opinion with respect to Regulation T of the Board of Governors of the Federal Reserve System.

 

This opinion is rendered as of the date hereof to the Lender Parties in connection with the Financing Documents and may not be relied upon by any person other than the Lender Parties or by the Lender Parties in any other context. The Lender Parties may not furnish this

 

11

 

opinion or copies hereof to any other person except (i) to bank examiners and other regulatory authorities should they so request in connection with their normal examinations, (ii) to the independent auditors and attorneys of the Lender Parties, (iii) pursuant to order or legal process of any court or governmental agency, (iv) in connection with any legal action to which any Lender Party is a party arising out of the transactions contemplated by the Financing Documents, or (v) any potential permitted assignee of or participant in the interest of any Lender Party under the Financing Documents for its information. Notwithstanding the foregoing, parties referred to in clause (v) of the immediately preceding sentence who become Lenders after the date hereof may rely on this opinion as if it were addressed to them (provided that such delivery shall not constitute a re-issue or reaffirmation of this opinion as of any date after the date hereof). This opinion may not be quoted without the prior written consent of this Firm.

 

Very truly yours,

 

Gibson, Dunn & Crutcher LLP

 

12

 

SCHEDULE I — LENDER PARTIES

Bank of America, N.A.

 

I-1

 

SCHEDULE II - FINANCING STATEMENTS

 

	
Obligor
    	
 
    	
Perfection State
    	
 
    	
Filing Office
    	
 
    	
Search Report as of
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One, Inc.
    	
 
    	
Delaware
    	
 
    	
Delaware Secretary of State
    	
 
    	
January 8, 2013
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
P-O Nevada Corp.,
    	
 
    	
Nevada
    	
 
    	
Nevada Secretary of State 
    	
 
    	
January 3, 2013 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Power-One Renewable Energy   Solutions LLC
    	
 
    	
Delaware
    	
 
    	
Delaware Secretary of State
    	
 
    	
January 8, 2013
    

 

II-1

 

SCHEDULE III — GOVERNMENTAL ORDERS

 

None

 

III-1

 

SCHEDULE IV — PLEDGED SHARES

 

1.     Share Certificate #2 representing 100 shares of common stock, no par value, of P-O Nevada Corp. issued to Power-One Inc.

 

2.     Share Certificate #5  representing 15,840 ordinary shares of Power-One Limited (UK) issued to Power-One Inc.

 

IV-1

 

OFFICER’S CERTIFICATE

 

[See Attached]

 

 

POWER-ONE, INC.

 

OFFICERS’ CERTIFICATE

 

The undersigned, Gary R. Larsen and Tina D. McKnight, do hereby certify to Gibson, Dunn & Crutcher LLP (“Gibson, Dunn & Crutcher”), in their capacities as officers of Power-One, Inc., a Delaware corporation (the “Company”), and on behalf of each of the subsidiaries of the Company identified on Schedule A (collectively, the “Company Subsidiaries”), in connection with the Amended and Restated Credit Agreement dated as January 30, 2013 (the “Credit Agreement;” terms defined in the Credit Agreement and not otherwise defined herein are used herein as therein defined) among the Company, certain of the Company Subsidiaries party thereto, the lenders party thereto (the “Lenders”), and Bank of America, NA., as Agent (the “Agent”), as follows:

 

1.     We are the duly elected and incumbent Senior Vice President-Finance (and Chief Financial Officer) and General Counsel, respectively, of the Company and are authorized to execute this Certificate on behalf of the Company and the Company Subsidiaries.

 

2.     We recognize and acknowledge that this Certificate is being furnished to Gibson, Dunn & Crutcher in connection with their delivery of their legal opinion of even date herewith pursuant to the Credit Agreement (the “GDC Opinion”). We further understand that Gibson, Dunn & Crutcher is relying to a material degree on this Certificate in rendering that opinion. On behalf of the Company and the Company Subsidiaries, we hereby authorize such reliance.

 

3.     We have asked such questions regarding the meaning of any of the provisions of this Certificate as we have considered necessary.

 

4.     Attached hereto as Exhibit B are true and correct copies of the certificate of incorporation or other constituent documents of the Company and each Company Subsidiary as in effect on the date hereof.

 

5.     Attached hereto as Exhibit C are true and correct copies of the bylaws or operating agreement, as the case may be, of the Company and each Company Subsidiaries as in effect on the date hereof.

 

6.     Attached hereto as Exhibit D are resolutions of the Board of Directors, Managers, or Members, as the case may be, of the Company and each Company Subsidiary adopted on January 30, 2013, in each case, in respect of the transactions contemplated by the Credit Agreement. Such resolutions have not been amended or repealed and remain in full force and effect.

 

7.     (1) Except as reflected on Exhibit E, there are no actions or proceedings against the Company or any Company Subsidiary, pending or threatened, before any court, governmental agency or arbitrator that seeks to affect the enforceability of the Credit Agreement or related documents or the existence of the Company or any Company Subsidiary.

 

(2) No judicial proceeding as been filed or is pending for the dissolution of any Company Subsidiary that is a limited liability company, and no circumstances have occurred or exist that

 

 

have triggered or will trigger a dissolution of such person under the constituent documents of any such person or under any relevant law.

 

8.     To the best of our knowledge, each of the Company and the Guarantors is engaged, directly or through a wholly-owned subsidiary or subsidiaries, in the business of designing and manufacturing energy-efficient power conversion and power management solutions for renewable/alternative energy, routers, data storage, servers and data centers, wireless communications, optical networking, semiconductor test equipment, industrial markets and custom applications (the “Principal Business”) and does not hold itself out as being engaged in any other business. All subsidiaries of the Company or any Guarantor that are not wholly-owned are immaterial, and neither the Company nor any Guarantor owns any significant amount of securities or other financial assets, other than demand deposits, U.S. money market funds and stock of wholly-owned subsidiaries engaged in the Principal Business. As used in the preceding sentence, a “wholly-owned subsidiary” of the Company or a Guarantor is a company of which at least 95% of the securities entitled to vote in the election of directors are held by the Company or such Guarantor or by a wholly-owned subsidiary of the Company or such Guarantor or if such company does not have a board of directors, the sole power to otherwise direct or cause the direction of the management and policies of such company is possessed by the Company or such Guarantor or a wholly-owned subsidiary of the Company or such Guarantor.

 

9.     To the best of our knowledge, each and all of the representations and warranties as to factual matters relating to the Company and the Company Subsidiaries contained in the Financing Documents are true and correct in all material respects as of the date of such agreement and as of the date hereof.

 

10.  To the best of our knowledge, no more than an insubstantial part of the UCC Collateral consists or will consist of “margin stock” within the meaning of Regulations U or X of the Board of Governors of the Federal Reserve System at all relevant times. None of the proceeds of the loans and other extensions of credit made under the Credit Agreement will be used, directly or indirectly, to make loans to any person that will be secured by margin stock or will have the benefit of any arrangement restricting the disposition or pledge of margin stock.

 

11.  To the best of our knowledge, there are no agreements or understandings between or among the Agent, the Lender, the Company, the Company Subsidiaries or third parties that would expand, modify or otherwise affect the terms of the Financing Documents referred to in the GDC Opinion or the respective rights or obligations of the parties thereunder or that would modify, release, terminate or delay the attachment of the security interest and liens granted to the Agent.

 

This Certificate may be executed in two or more counterparts. A copy of this Certificate executed and delivered by facsimile transmission shall be valid for all purposes.

 

****

 

 

IN WITNESS WHEREOF, the undersigned have executed this Certificate as of January   , 2013.

 

 

	
 
    	
 
    
	
 
    	
Name: Gary R. Larsen
    
	
 
    	
Title: Senior Vice President-Finance and Chief Financial Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Name: Tina D. McKnight
    
	
 
    	
Title: General Counsel
    

 

 

EXHIBIT A

(COMPANY SUBSIDIARIES)

P-O Nevada Corp., a Nevada corporation

Power-One Renewable Energy Solutions LLC, a Delaware limited liability company

 

 

EXHIBIT B

(CERTIFICATES OF INCORPORATION\CONSTITUENT DOCUMENTS)

 

 

EXHIBIT C

(BYLAWS\OPERATING AGREEMENT)

 

 

EXHIBIT D

(AUTHORIZING RESOLUTIONS)

 

 

EXHIBIT E

(ORDERS)

None

 

 

EXHIBIT J

 

FORM OF PATENT SECURITY AGREEMENT

 

J-1

 

PATENT SECURITY AGREEMENT

 

THIS PATENT SECURITY AGREEMENT dated as of January 30, 2013 (this “Patent Security Agreement”) is being entered into among POWER-ONE, INC., a Delaware corporation (the “Company”), EACH OF THE UNDERSIGNED U.S. SUBSIDIARIES OF THE COMPANY AND EACH OTHER PERSON WHO SHALL BECOME A PARTY HERETO BY EXECUTION OF A SECURITY JOINDER AGREEMENT (each a “Guarantor” and, together with the Company, collectively, the “Grantors”), and BANK OF AMERICA, N.A., as Administrative Agent (in such capacity, the “Administrative Agent”) for each of the Secured Parties (as defined in the Credit Agreement referenced) below.

 

RECITALS:

 

A.         Pursuant to a Credit Agreement dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among the Company, certain Subsidiaries of the Company from time to time party thereto (collectively with the Company, the “Borrowers”, and each a “Borrower”), the Administrative Agent, Bank of America, N.A., as L/C Issuer, and Swing Line Lender and the lenders now or hereafter party thereto (the “Lenders”), the Lenders have agreed to provide to the Borrowers a revolving credit facility with a letter of credit sublimit and swing line facility.

 

B.         Certain additional extensions of credit may be made from time to time for the benefit of the Grantors pursuant to certain Cash Management Agreements and Hedge Agreements (each as defined in the Credit Agreement).

 

C.         Pursuant to the Security Agreement dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the “Security Agreement”), among the Grantors and the Administrative Agent, the Grantors have granted to the Administrative Agent, for the benefit of Secured Parties, a security interest in the Collateral, including all right, title and interest of Grantors in, to and under all patents, applications for patent, inventions and reissues, continuations, divisions and continuations-in-part in any of the foregoing owned by Grantors (the “Patents”), whether now owned or hereafter acquired.

 

D.         It is a condition precedent to the Secured Parties’ obligations to make and maintain such extensions of credit that the Grantors shall have executed and delivered this Patent Security Agreement to the Administrative Agent.

 

In order to induce the Secured Parties to from time to time make and maintain extensions of credit under the Credit Agreement and such Cash Management Agreements and Hedge Agreements, the parties hereto agree as follows:

 

SECTION 1.       Defined Terms. Unless the context otherwise requires, all capitalized terms used-but not defined herein shall have the meanings set forth in the Credit Agreement.

 

 

SECTION 2.       Incorporation of the Security Agreement. The Security Agreement and the terms and conditions thereof are hereby incorporated hereby in their entirety by this reference.

 

SECTION 3.       Security Interest in Patents. As security for the payment and performance in full when due, of such Grantor’s Obligations, each Grantor hereby grants to the Administrative Agent, and its permitted successors and assigns, for the ratable benefit of the Secured Parties, a security interest in all of such Grantor’s right, title and interest in, to and under the Patents, whether now owned or hereafter acquired, including, without limitation: (i) the patents and patent applications set forth on Schedule A attached hereto, and (ii) all income, royalties and payments accrued, due or payable now or thereafter, including, without limitation, all claims for damages by reason of past, present or future infringement thereof, with the right to sue for, and collect the same.

 

SECTION 4.       Counterparts. This Patent Security Agreement may be executed in any number of counterparts each of which when so executed and delivered shall be deemed an original, and it shall not be necessary in making proof of this Patent Security Agreement to produce or account for more than one such counterpart executed by the Grantor against whom enforcement is sought. Without limiting the foregoing provisions of this Section 4, the provisions of Section 10.10 of the Credit Agreement shall be applicable to this Patent Security Agreement.

 

SECTION 5.       Governing Law. This Patent Security Agreement shall be construed in accordance with and governed by the laws of the State of New York.

 

[Remainder of page intentionally left blank.]

 

2

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Patent Security Agreement as of the day and year first above written.

 

	
 
    	
GRANTORS: 
    
	
 
    	
 
    
	
 
    	
POWER-ONE, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Gary   R. Larsen
    
	
 
    	
Title:
    	
Senior   Vice President-Finance and 
   Chief Financial Officer
    

 

Power-One, Inc.

Patent Security Agreement

Signature Page

 

 

	
 
    	
ADMINISTRATIVE AGENT:
    
	
 
    	
 
    
	
 
    	
BANK OF AMERICA, N.A., as Administrative
    
	
 
    	
Agent
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

Power-One, Inc.

Patent Security Agreement

Signature Page

 

 

SCHEDULE A

 

PATENT AND PATENT APPLICATIONS

 

	
Title
    	
 
    	
Matter
    Code
    	
 
    	
Appl
    Type
    	
 
    	
Country
    	
 
    	
App Serial No.
    	
 
    	
Status
    	
 
    	
Patent
    No.
    	
 
    	
Date
    Issued
    
	
Method   for Transmission of Information Between Nodes of a Network and Network Using   Said Method
    	
 
    	
V0435
    	
 
    	
UTL
    	
 
    	
US
    	
 
    	
11/910,828
    	
 
    	
ISSUED
    	
 
    	
8,249,050
    	
 
    	
8/21/2012
    
	
Method   and System for Detecting Messages in the Presence of Noise
    	
 
    	
V0472
    	
 
    	
 
    	
 
    	
US
    	
 
    	
11/911,358
    	
 
    	
ISSUED
    	
 
    	
8,015,316
    	
 
    	
9/6/2011
    
	
Method   and System for Controlling an Array of Point-of-Load Regulators and Auxiliary   Devices (OMM File)
    	
 
    	
005454
    	
 
    	
UTL
    	
 
    	
US
    	
 
    	
11/760,660
    	
 
    	
ISSUED
    	
 
    	
8,086,874
    	
 
    	
12/27/2011
    
	
Electricity   Distribution Network with Stray Voltage Monitoring and Method of Transmission   of Information on Said Network
    	
 
    	
V0433
    	
 
    	
UTL
    	
 
    	
US
    	
 
    	
11/868,269
    	
 
    	
ISSUED
    	
 
    	
8,027,364
    	
 
    	
9/27/2011
    
	
Improving   Performance Metrics in Renewable Energy Systems
    	
 
    	
004732
    	
 
    	
UTL
    	
 
    	
US
    	
 
    	
11/919,043
    	
 
    	
ISSUED
    	
 
    	
7,966,100
    	
 
    	
6/21/2011
    
	
Computer   Implemented Systems and Methods for Start-up, Calibration and Troubleshooting   of an Installed Renewable Energy System
    	
 
    	
004733
    	
 
    	
UTL
    	
 
    	
US
    	
 
    	
11/919,042
    	
 
    	
ISSUED
    	
 
    	
7,962,247
    	
 
    	
6/14/2011
    
	
Computer   Implemented Systems and Methods for Enhancing Renewable Energy Educational Activities
    	
 
    	
004734
    	
 
    	
UTL
    	
 
    	
US
    	
 
    	
11/918,970
    	
 
    	
ISSUED
    	
 
    	
8,029,288
    	
 
    	
10/4/2011
    
	
Method   and Apparatus for Providing an Initial Bias and Enable Signal for a Power   Converter
    	
 
    	
003663
    	
 
    	
UTL
    	
 
    	
US
    	
 
    	
12/056,796
    	
 
    	
ISSUED
    	
 
    	
8,031,494
    	
 
    	
10/4/2011
    
	
Apparatus   and Method of Optimizing Power System Efficiency Using a Power Loss Model   (OMM File)
    	
 
    	
005455
    	
 
    	
UTL
    	
 
    	
US
    	
 
    	
12/127,726
    	
 
    	
ISSUED
    	
 
    	
8,179,705
    	
 
    	
5/15/2012
    
	
A   System for Producing Electric Power from Renewable Sources and a Control   Method Thereof
    	
 
    	
000823
    	
 
    	
UTL
    	
 
    	
US
    	
 
    	
12/158,723
    	
 
    	
ISSUED
    	
 
    	
7,952,897
    	
 
    	
5/31/2011
    
	
A   Lighting Unit, A System Comprising IT and a Control Method Thereof
    	
 
    	
001265
    	
 
    	
UTL
    	
 
    	
US
    	
 
    	
12/251,885
    	
 
    	
ISSUED
    	
 
    	
7,952,302
    	
 
    	
5/13/2011
    
	
HID-Lamp   Control Method and Circuit
    	
 
    	
002820
    	
 
    	
UTL
    	
 
    	
US
    	
 
    	
12/623,211
    	
 
    	
ISSUED
    	
 
    	
8,288,962
    	
 
    	
10/16/2012
    
	
Method   for Determining the Phases in a Multi-Phase Electrical System and
    	
 
    	
003864
    	
 
    	
UTL
    	
 
    	
US
    	
 
    	
12/740,650
    	
 
    	
ISSUED
    	
 
    	
8,217,640
    	
 
    	
7/10/2012
    

 

A-1

 

	
Title
    	
 
    	
Matter
    Code
    	
 
    	
Appl
    Type
    	
 
    	
Country
    	
 
    	
App Serial No.
    	
 
    	
Status
    	
 
    	
Patent
    No.
    	
 
    	
Date
    Issued
    
	
Device   for the Implementation Thereof
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Method   and System for Extracting Electric Power from a Renewable Energy Source
    	
 
    	
006216
    	
 
    	
UTL
    	
 
    	
US
    	
 
    	
13/143,627
    	
 
    	
PENDING
    	
 
    	
 
    	
 
    	
 
    
	
MULTI-PHASE   RESONANT CONVERTER WITH TRIMMABLE INDUCTOR AND PHASE CURRENT BALANCING METHOD
    	
 
    	
006672
    	
 
    	
UTL
    	
 
    	
US
    	
 
    	
13/227,302
    	
 
    	
PENDING
    	
 
    	
 
    	
 
    	
 
    
	
Anti-Vibration   Fan Control System and Method for Modular Power Supplies
    	
 
    	
005325
    	
 
    	
UTL
    	
 
    	
US
    	
 
    	
13/237,459
    	
 
    	
PENDING
    	
 
    	
 
    	
 
    	
 
    
	
INTERSECTED   TRANSFORMER
    	
 
    	
006029
    	
 
    	
PRV
    	
 
    	
US
    	
 
    	
61/555,361
    	
 
    	
PENDING
    	
 
    	
 
    	
 
    	
 
    
	
MULTILEVEL   TOPOLOGY FOR A HIGH POWER SWITCHING CONVERTER
    	
 
    	
004953
    	
 
    	
UTL
    	
 
    	
US
    	
 
    	
13/289,148
    	
 
    	
PENDING
    	
 
    	
 
    	
 
    	
 
    
	
Active   Filtering in Synchronized PWM-Based Energy Conversion Devices Interfaced to   an AC Grid
    	
 
    	
006489
    	
 
    	
PRV
    	
 
    	
US
    	
 
    	
61/564,955
    	
 
    	
PENDING
    	
 
    	
 
    	
 
    	
 
    
	
Secure   Method and System for Remote Field Upgrade of Power Device Firmware
    	
 
    	
006484
    	
 
    	
PRV
    	
 
    	
US
    	
 
    	
61/580,381
    	
 
    	
PENDING
    	
 
    	
 
    	
 
    	
 
    
	
Gain   Enhancement Technique in Resonant Converter
    	
 
    	
007177
    	
 
    	
PRV
    	
 
    	
US
    	
 
    	
61/586,541
    	
 
    	
PENDING
    	
 
    	
 
    	
 
    	
 
    
	
Input   Current Shaping Method for Transition and Discontinuous Mode Power Converter
    	
 
    	
007220
    	
 
    	
UTL
    	
 
    	
US
    	
 
    	
13/370,417
    	
 
    	
PUBLISHED
    	
 
    	
 
    	
 
    	
 
    
	
Digital   Phase Adjustment Method for Multi-Phase Power Converters
    	
 
    	
007403
    	
 
    	
UTL
    	
 
    	
US
    	
 
    	
13/370,564
    	
 
    	
PUBLISHED
    	
 
    	
 
    	
 
    	
 
    
	
Earth   Leakage Current Control for Multi-Level Grounded Inverters
    	
 
    	
006492
    	
 
    	
UTL
    	
 
    	
US
    	
 
    	
13/414,441
    	
 
    	
PENDING
    	
 
    	
 
    	
 
    	
 
    
	
Integrated   Magnetics with Isolated Drive Circuit
    	
 
    	
006190
    	
 
    	
UTL
    	
 
    	
US
    	
 
    	
13/427,384
    	
 
    	
PUBLISHED
    	
 
    	
 
    	
 
    	
 
    
	
Adaptive   Interleaving Technique for Reducing Parasitic Currents in Independent Energy   Conversion Devices
    	
 
    	
006490
    	
 
    	
UTL
    	
 
    	
US
    	
 
    	
13/440,221
    	
 
    	
PENDING
    	
 
    	
 
    	
 
    	
 
    
	
Active   Filtering in Synchronized PWM-Based Energy Conversion Devices Interfaced to   an AC Grid
    	
 
    	
006489UTL
    	
 
    	
UTL
    	
 
    	
US
    	
 
    	
13/441,354
    	
 
    	
PENDING
    	
 
    	
 
    	
 
    	
 
    

 

A-2

 

	
Title
    	
 
    	
Matter
    Code
    	
 
    	
Appl
    Type
    	
 
    	
Country
    	
 
    	
App Serial No.
    	
 
    	
Status
    	
 
    	
Patent
    No.
    	
 
    	
Date
    Issued
    
	
Gain   Enhancement Circuit for LLC Resonant Converter
    	
 
    	
007786
    	
 
    	
PRV
    	
 
    	
us
    	
 
    	
61/622,862
    	
 
    	
PENDING
    	
 
    	
 
    	
 
    	
 
    
	
Circuit   and Method for Providing Hold-Up Time in a DC-DC Converter
    	
 
    	
008060
    	
 
    	
PRV
    	
 
    	
US
    	
 
    	
61/670,440
    	
 
    	
PENDING
    	
 
    	
 
    	
 
    	
 
    
	
Method   for Transmission of Information Between Nodes of a Network and Network Using   Said Method
    	
 
    	
007680
    	
 
    	
UTL
    	
 
    	
US
    	
 
    	
13/551,046
    	
 
    	
PUBLISHED
    	
 
    	
 
    	
 
    	
 
    
	
Multi-level   DC/AC converter
    	
 
    	
008648
    	
 
    	
UTL
    	
 
    	
US
    	
 
    	
13/642,456
    	
 
    	
PENDING
    	
 
    	
 
    	
 
    	
 
    
	
Slotted   Bobbin Magnetic Component Devices and Methods
    	
 
    	
006029NP
    	
 
    	
UTL
    	
 
    	
US
    	
 
    	
13/669,060
    	
 
    	
PENDING
    	
 
    	
 
    	
 
    	
 
    
	
Circuit   and Method for Providing Hold-Up Time in a DC-DC Converter
    	
 
    	
008216
    	
 
    	
UTL
    	
 
    	
US
    	
 
    	
13/705,672
    	
 
    	
PENDING
    	
 
    	
 
    	
 
    	
 
    
	
Secure   Method and System for Remote Field Upgrade of Power Device Firmware
    	
 
    	
006484NP
    	
 
    	
UTL
    	
 
    	
US
    	
 
    	
13/724,232
    	
 
    	
PENDING
    	
 
    	
 
    	
 
    	
 
    
	
RESONANT   CONVERTER WITH AUXILIARY RESONANT COMPONENTS AND HOLDUP TIME CONTROL   CIRCUITRY
    	
 
    	
008229
    	
 
    	
UTL
    	
 
    	
US
    	
 
    	
13/739,862
    	
 
    	
PENDING
    	
 
    	
 
    	
 
    	
 
    
	
RESONANT   CONVERTER WITH AUXILIARY RESONANT COMPONENTS AND HOLDUP TIME CONTROL   CIRCUITRY
    	
 
    	
008593
    	
 
    	
UTL
    	
 
    	
US
    	
 
    	
PCT/US2012/021207
    	
 
    	
PENDING
    	
 
    	
 
    	
 
    	
 
    

 

A-3

 

EXHIBIT K

 

FORM OF

DESIGNATED BORROWER REQUEST AND ASSUMPTION AGREEMENT

 

Date:             ,        

 

To:          Bank of America, N.A., as Administrative Agent

 

Ladies and Gentlemen:

 

This Designated Borrower Request and Assumption Agreement is made and delivered pursuant to Section 2.17 of that certain Amended and Restated Credit Agreement, dated as of January 30, 2013 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement”), among Power-One, Inc., a Delaware corporation (the “Company”), the Designated Borrowers from time to time party thereto (together with the Company, the “Borrowers”), the Lenders from time to time party thereto and Bank of America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer, and reference is made thereto for full particulars of the matters described therein.  All capitalized terms used in this Designated Borrower Request and Assumption Agreement and not otherwise defined herein shall have the meanings assigned to them in the Agreement.

 

Each of                                (the “Designated Borrower”) and the Company hereby confirms, represents and warrants to the Administrative Agent and the Lenders that the Designated Borrower is a U.S. Subsidiary of the Company.

 

The documents required to be delivered to the Administrative Agent under Section 2.17 of the Agreement will be furnished to the Administrative Agent in accordance with the requirements of the Agreement.

 

The true and correct U.S. taxpayer identification number of the Designated Borrower is                         .

 

The parties hereto hereby confirm that with effect from the date of the Designated Borrower Notice for the Designated Borrower, the Designated Borrower shall have obligations, duties and liabilities toward each of the other parties to the Agreement identical to those which the Designated Borrower would have had if the Designated Borrower had been an original party to the Agreement as a Borrower.  Effective as of the date of the Designated Borrower Notice for the Designated Borrower, the Designated Borrower confirms its acceptance of, and consents to, all representations and warranties, covenants, and other terms and provisions of the Agreement.

 

The parties hereto hereby request that the Designated Borrower be entitled to receive Revolving Credit Loans under the Agreement.

 

K-1

 

This Designated Borrower Request and Assumption Agreement shall constitute a Loan Document under the Agreement.

 

THIS DESIGNATED BORROWER REQUEST AND ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

K-2

 

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

 

	
 
    	
[DESIGNATED   BORROWER]
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
POWER-ONE, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

K-3

 

EXHIBIT L

 

FORM OF DESIGNATED BORROWER NOTICE

 

Date:          , 20    

 

	
To:
    	
 
    	
Power-One, Inc.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The   Lenders party to the Agreement referred to below
    

 

Ladies and Gentlemen:

 

This Designated Borrower Notice is made and delivered pursuant to Section 2.17 of that certain Amended and Restated Credit Agreement, dated as of January 30, 2013 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement”), among Power-One, Inc., (the “Company”), the Designated Borrowers from time to time party thereto (together with the Company, the “Borrowers”), the Lenders from time to time party thereto and Bank of America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer, and reference is made thereto for full particulars of the matters described therein.  All capitalized terms used in this Designated Borrower Notice and not otherwise defined herein shall have the meanings assigned to them in the Agreement.

 

The Administrative Agent hereby notifies the Company and the Lenders that effective as of             , 20     each of                 ,                           and                        shall be a Designated Borrower and may receive Revolving Credit Loans for its account on the terms and conditions set forth in the Agreement.

 

This Designated Borrower Notice shall constitute a Loan Document under the Agreement.

 

	
 
    	
BANK   OF AMERICA, N.A., as Administrative Agent
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

L-1

 

EXHIBIT M-1

 

FORM OF

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

 

Reference is hereby made to the Amended and Restated Credit Agreement dated as of January 30, 2013 (as amended, restated, extended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Power-One, Inc., (the “Company”), the Designated Borrowers from time to time party thereto (together with the Company, the “Borrowers”), the lenders from time to time party thereto and Bank of America, N.A., as Administrative Agent, an L/C Issuer and Swing Line Lender.

 

Pursuant to the provisions of Section 3.01(e) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) it is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a “10 percent shareholder” of any of the Borrowers within the meaning of Section 881(c)(3)(B) of the Code and (iv) it is not a “controlled foreign corporation” related to any of the Borrowers as described in Section 881(c)(3)(C) of the Code.

 

The undersigned has furnished the Administrative Agent and the Company with a certificate of its non-U.S. Person status on IRS Form W-8BEN.  By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Company and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Company and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

 

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

	
[NAME   OF LENDER]
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Date:                   , 20[  ]
    	
 
    

 

M-1-1

 

EXHIBIT M-2

 

FORM OF

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

 

Reference is hereby made to the Amended and Restated Credit Agreement dated as of January 30, 2013 (as amended, restated, extended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Power-One, Inc., (the “Company”), the Designated Borrowers from time to time party thereto (together with the Company, the “Borrowers”), the lenders from time to time party thereto and Bank of America, N.A., as Administrative Agent, an L/C Issuer and Swing Line Lender.

 

Pursuant to the provisions of Section 3.01(e) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a “10 percent shareholder” of any of the Borrowers within the meaning of Section 881(c)(3)(B) of the Code, and (iv) it is not a “controlled foreign corporation” related to any of the Borrowers as described in Section 881(c)(3)(C) of the Code.

 

The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN.  By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

 

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

	
[NAME   OF PARTICIPANT]
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    	
 
    
	
 
    	
 
    
	
Date:                      , 20[  ]
    	
 
    

 

M-2-1

 

EXHIBIT M-3

 

FORM OF

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

 

Reference is hereby made to the Amended and Restated Credit Agreement dated as of January 30, 2013 (as amended, restated, extended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Power-One, Inc., (the “Company”), the Designated Borrowers from time to time party thereto (together with the Company, the “Borrowers”), the lenders from time to time party thereto and Bank of America, N.A., as Administrative Agent, an L/C Issuer and Swing Line Lender.

 

Pursuant to the provisions of Section 3.01(e) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such participation, (iii) with respect such participation, neither the undersigned nor any of its direct or indirect partners/members is a “bank” extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a “10 percent shareholder” of any of the Borrowers within the meaning of Section 881(c)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a “controlled foreign corporation” related to any of the Borrowers as described in Section 881(c)(3)(C) of the Code.

 

The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption.  By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

 

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

[Remainder of page intentionally left blank. Signature page follows.]

 

M-3-1

 

	
[NAME   OF PARTICIPANT]
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    	
 
    
	
 
    	
 
    
	
Date:                  ,   20[  ]
    	
 
    

 

M-3-2

 

EXHIBIT M-4

 

FORM OF

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

 

Reference is hereby made to the Amended and Restated Credit Agreement dated as of January 30, 2013 (as amended, restated, extended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Power-One, Inc., (the “Company”), the Designated Borrowers from time to time party thereto (together with the Company, the “Borrowers”), the lenders from time to time party thereto and Bank of America, N.A., as Administrative Agent, an L/C Issuer and Swing Line Lender.

 

Pursuant to the provisions of Section 3.01(e) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)), (iii) with respect to the extension of credit pursuant to this Credit Agreement or any other Loan Document, neither the undersigned nor any of its direct or indirect partners/members is a “bank” extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a “10 percent shareholder” of any of the Borrowers within the meaning of Section 881(c)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a “controlled foreign corporation” related to any of the Borrowers as described in Section 881(c)(3)(C) of the Code.

 

The undersigned has furnished the Administrative Agent and the Company with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption.  By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Company and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Company and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

 

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

M-4-1

 

	
[NAME   OF LENDER]
    	
 
    
	
 
    	
 
    
	
By:  
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    	
 
    
	
 
    	
 
    
	
Date:                     , 20[  ]
    	
 
    

 

M-4-2

 

EXHIBIT N

 

FORM OF BORROWING BASE CERTIFICATE

 

N-1

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