Document:

Exhibit 10.2

 

EXECUTION VERSION

	
 
    

 

GUARANTEE AND COLLATERAL AGREEMENT

 

made by

 

WESCO AIRCRAFT HOLDINGS, INC.

 

and

 

WESCO AIRCRAFT HARDWARE CORP.,
 as Borrower,

 

and the Subsidiary Guarantors party hereto

 

in favor of

 

BARCLAYS BANK PLC,
 as Collateral Agent

 

Dated as of December 7, 2012

	
 
    

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
SECTION 1.
    	
DEFINED TERMS
    	
1
    
	
 
    	
1.1
    	
Definitions
    	
1
    
	
 
    	
1.2
    	
Other Definitional Provisions
    	
5
    
	
 
    	
 
    	
 
    
	
SECTION 2.
    	
GUARANTEE
    	
5
    
	
 
    	
2.1
    	
Guarantee
    	
5
    
	
 
    	
2.2
    	
Right of Contribution
    	
6
    
	
 
    	
2.3
    	
No Subrogation
    	
6
    
	
 
    	
2.4
    	
Amendments, etc. with respect to the Borrower   Obligations
    	
7
    
	
 
    	
2.5
    	
Guarantee Absolute and Unconditional
    	
7
    
	
 
    	
2.6
    	
Reinstatement
    	
8
    
	
 
    	
2.7
    	
Payments
    	
8
    
	
 
    	
 
    	
 
    
	
SECTION 3.
    	
GRANT OF SECURITY INTEREST
    	
8
    
	
 
    	
3.1
    	
Grant of First Priority Security Interests
    	
8
    
	
 
    	
 
    	
 
    
	
SECTION 4.
    	
REPRESENTATIONS AND WARRANTIES
    	
10
    
	
 
    	
4.1
    	
Representations in Credit Agreement
    	
10
    
	
 
    	
4.2
    	
Title; No Other Liens
    	
10
    
	
 
    	
4.3
    	
Names; Jurisdiction of Organization; Chief Executive Office
    	
10
    
	
 
    	
4.4
    	
Pledged Securities
    	
10
    
	
 
    	
4.5
    	
Intellectual Property
    	
11
    
	
 
    	
 
    	
 
    
	
SECTION 5.
    	
COVENANTS
    	
11
    
	
 
    	
5.1
    	
Covenants in Credit Agreement
    	
11
    
	
 
    	
5.2
    	
Investment Property
    	
11
    
	
 
    	
 
    	
 
    
	
SECTION 6.
    	
REMEDIAL PROVISIONS
    	
11
    
	
 
    	
6.1
    	
Certain Matters Relating to Receivables
    	
11
    
	
 
    	
6.2
    	
Communications with Grantors; Grantors Remain Liable
    	
12
    
	
 
    	
6.3
    	
Pledged Securities
    	
12
    
	
 
    	
6.4
    	
Intellectual Property
    	
13
    
	
 
    	
6.5
    	
Proceeds to be Turned Over To Collateral Agent
    	
13
    
	
 
    	
6.6
    	
Application of Proceeds
    	
14
    
	
 
    	
6.7
    	
Code and Other Remedies
    	
14
    
	
 
    	
6.8
    	
Private Sales
    	
15
    
	
 
    	
6.9
    	
Deficiency
    	
15
    
	
 
    	
 
    	
 
    
	
SECTION 7.
    	
THE COLLATERAL AGENT
    	
15
    
	
 
    	
7.1
    	
Collateral Agent’s Appointment as Attorney-in-Fact, etc.
    	
15
    
	
 
    	
7.2
    	
Duty of Collateral Agent
    	
17
    
	
 
    	
7.3
    	
Execution of Financing Statements
    	
17
    
	
 
    	
7.4
    	
Authority of Collateral Agent
    	
17
    
	
 
    	
 
    	
 
    
	
SECTION 8.
    	
MISCELLANEOUS
    	
17
    
	
 
    	
8.1
    	
Amendments in Writing
    	
17
    
	
 
    	
8.2
    	
Notices
    	
17
    

 

i

 

	
 
    	
8.3
    	
No Waiver by Course of Conduct; Cumulative Remedies
    	
18
    
	
 
    	
8.4
    	
Enforcement Expenses; Indemnification
    	
18
    
	
 
    	
8.5
    	
Successors and Assigns
    	
18
    
	
 
    	
8.6
    	
Set-Off
    	
18
    
	
 
    	
8.7
    	
Counterparts
    	
18
    
	
 
    	
8.8
    	
Severability
    	
19
    
	
 
    	
8.9
    	
Section Headings
    	
19
    
	
 
    	
8.10
    	
Integration
    	
19
    
	
 
    	
8.11
    	
GOVERNING LAW
    	
19
    
	
 
    	
8.12
    	
Submission To Jurisdiction; Waivers
    	
19
    
	
 
    	
8.13
    	
Acknowledgements
    	
19
    
	
 
    	
8.14
    	
Additional Grantors
    	
20
    
	
 
    	
8.15
    	
Releases
    	
20
    
	
 
    	
8.16
    	
WAIVER OF JURY TRIAL
    	
20
    

 

	
SCHEDULES
    	
 
    
	
 
    	
 
    
	
Schedule   1
    	
Notice   Addresses
    
	
Schedule   2
    	
Investment   Property
    
	
Schedule   3
    	
Legal   Name, Jurisdictions of Organization and Chief Executive Offices
    
	
Schedule   4
    	
Intellectual   Property
    
	
 
    	
 
    
	
ANNEXES
    	
 
    
	
 
    	
 
    
	
Annex   I
    	
Assumption   Agreement
    

 

ii

 

GUARANTEE AND COLLATERAL AGREEMENT

 

GUARANTEE AND COLLATERAL AGREEMENT, dated as of December 7, 2012, made by each of the signatories hereto, in favor of BARCLAYS BANK PLC, as Collateral Agent (in such capacity, the “Collateral Agent”) for the banks and other financial institutions or entities (the “Lenders”) from time to time parties to the Credit Agreement, dated as of December 7, 2012 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Wesco Aircraft Holdings, Inc., a Delaware corporation (“Holdings”), Wesco Aircraft Hardware Corp., a California corporation (the “Borrower”), the Lenders party thereto, Barclays Bank PLC, as Administrative Agent (in such capacity, the “Administrative Agent”) the Collateral Agent, and the other agents and financial institutions party thereto.

 

W  I  T  N  E  S  S  E  T  H:

 

WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to make extensions of credit to the Borrower upon the terms and subject to the conditions set forth therein;

 

WHEREAS, the Borrower is a member of an affiliated group of companies that includes each other Grantor (as defined below);

 

WHEREAS, the proceeds of the extensions of credit under the Credit Agreement will be used in part to enable the Borrower to make valuable transfers to one or more of the other Grantors in connection with the operation of their respective businesses;

 

WHEREAS, the Borrower and the other Grantors are engaged in related businesses, and each Grantor will derive substantial direct and indirect benefit from the making of the extensions of credit under the Credit Agreement; and

 

WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective extensions of credit to the Borrower under the Credit Agreement that the Grantors shall have executed and delivered this Agreement to the Collateral Agent for the ratable benefit of the Administrative Agent, the Collateral Agent and the other Secured Parties;

 

NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent, the Collateral Agent and the other Secured Parties to enter into the Credit Agreement and to induce the Lenders to make their respective extensions of credit to the Borrower thereunder, each Grantor hereby agrees with the Collateral Agent, for the ratable benefit of the Lenders, as follows:

 

SECTION 1.         DEFINED TERMS

 

1.1          Definitions.  (a) Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement, and the following terms are used herein as defined in the New York UCC: “Accession”, “Account”, “As-Extracted Collateral”, “Chattel Paper”, “Commercial Tort Claim”, “Document”, “Equipment”, “Farm Products”, “Fixture”, “General Intangible”, “Goods”, “Instrument”, “Inventory”, “Letter-of-Credit Right”, “Securities Account” and “Supporting Obligations”.

 

(b)   The following terms shall have the following meanings:

 

 

“Agreement”:  this Guarantee and Collateral Agreement, as the same may be amended, supplemented or otherwise modified from time to time.

 

“Borrower”:  Wesco Aircraft Hardware Corp.

 

“Borrower Credit Agreement Obligations”:  the collective reference to the unpaid principal of and interest on the Loans, the Reimbursement Obligations and all other obligations and liabilities of the Borrower (including, without limitation, interest accruing at the then applicable rate provided in the Credit Agreement after the maturity of the Loans and Reimbursement Obligations and interest accruing at the then applicable rate provided in the Credit Agreement after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) to the Administrative Agent, the Collateral Agent or any other Secured Party, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, the Credit Agreement, this Agreement, the other Loan Documents, any Letter of Credit or any other document made, delivered or given in connection therewith, in each case whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Administrative Agent, to the Collateral Agent or to the other Secured Parties that are required to be paid by the Borrower pursuant to the terms of any of the foregoing agreements).

 

“Borrower Hedge Agreement Obligations”:  the collective reference to all obligations and liabilities of the Borrower and its Subsidiaries (including, without limitation, interest accruing at the then applicable rate provided in any Specified Hedge Agreement after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) to any Lender or any Affiliate of any Lender (or any Lender or any Affiliate thereof at the time such Specified Hedge Agreement was entered into), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, any Specified Hedge Agreement or any other document made, delivered or given in connection therewith, in each case whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the relevant Lender or Affiliate thereof that are required to be paid by the Borrower and/or its Subsidiaries, as the case may be, pursuant to the terms of any Specified Hedge Agreement).

 

“Borrower Obligations”:  the collective reference to (i) the Borrower Credit Agreement Obligations, (ii) the Borrower Hedge Agreement Obligations and (iii) the Cash Management Obligations, but, as to clauses (ii) and (iii) hereof, only to the extent that, and only so long as, the Borrower Credit Agreement Obligations are secured and guaranteed pursuant hereto.

 

“Collateral”:  as defined in Section 3.1.

 

“Collateral Account”:  any collateral account established by the Collateral Agent as provided in Section 6.1 or 6.5.

 

“Copyright Licenses”:  all written agreements naming any Grantor as licensor or licensee (including, without limitation, those listed in Schedule 4), granting any right under any Copyright, including, without limitation, the grant of rights to manufacture, distribute, exploit and sell materials derived from any Copyright.

 

2

 

“Copyrights”:  (i) all copyrights arising under the laws of the United States, whether registered or unregistered and whether published or unpublished (including, without limitation, those listed in Schedule 4), all registrations and recordings thereof, and all applications in connection therewith, including, without limitation, all registrations, recordings and applications in the United States Copyright Office, and (ii) the right to obtain all renewals thereof.

 

“Deposit Account”:  as defined in the Uniform Commercial Code of any applicable jurisdiction and, in any event, including, without limitation, any demand, time, savings, passbook or like account maintained with a depositary institution.

 

“Excluded Capital Stock”:  (a) any Capital Stock with respect to which, in the reasonable judgment of the Administrative Agent (confirmed by notice to the Borrower), (i) the cost of pledging such Capital Stock in favor of the Secured Parties under the Security Documents shall be excessive in view of the benefits to be obtained by the Lenders therefrom or (ii) would result in adverse tax consequences, (b) solely in the case of any pledge of Capital Stock of any Foreign Subsidiary or any Foreign Subsidiary Holding Company to secure the Obligations, any Capital Stock of any class of such Foreign Subsidiary or such Foreign Subsidiary Holding Company in excess of 65% of the outstanding Capital Stock of such class (such percentage to be adjusted by mutual agreement (not to be unreasonably withheld) upon any change in law as may be required to avoid adverse U.S. federal income tax consequences to Holdings or any Subsidiary), (c) the Capital Stock of any Domestic Subsidiary that is a direct or indirect Subsidiary of a Foreign Subsidiary or a Foreign Subsidiary Holding Company, (d) any Capital Stock to the extent the pledge thereof would violate any applicable Requirement of Law, (e) the Capital Stock of any Special Purpose Entity, any Immaterial Subsidiary (for so long as such Subsidiary remains an Immaterial Subsidiary) or any Unrestricted Subsidiary, (f) in the case of any Capital Stock of any Subsidiary that is subject of a Lien permitted under Section 7.3(g) of the Credit Agreement securing Indebtedness permitted under Section 7.2(t) or (u) of the Credit Agreement any Capital Stock of each such Subsidiary to the extent that (i) a pledge thereof to secure the Obligations is prohibited by any applicable Contractual Obligations (other than customary non-assignment provisions which are ineffective under the Uniform Commercial Code) or (ii) any Contractual Obligation prohibits such a pledge without the consent of the other party; provided that this clause (ii) shall not apply if (A) such other party is a Loan Party or a wholly-owned Subsidiary or (B) consent has been obtained to consummate such pledge and for so long as such Contractual Obligation or replacement or renewal thereof is in effect or (iii) a pledge thereof to secure the Obligations would give any other party to a Contractual Obligation the right to terminate its obligations thereunder (other than customary non-assignment provisions which are ineffective under the Uniform Commercial Code or other applicable law); provided that this clause (iii) shall not apply if such other party is a Loan Party or a wholly-owned Subsidiary and (g) the Capital Stock of any non-wholly owned Subsidiary that would otherwise not be required to become a Guarantor pursuant to the requirements of Section 6.8(c) of the Credit Agreement.

 

“Foreign Subsidiary Voting Stock”:  the voting Capital Stock of (i) any Foreign Subsidiary that is a Restricted Subsidiary or (ii) any Domestic Subsidiary, substantially all of the assets of which consist of the Capital Stock of one or more Foreign Subsidiaries.

 

“Grantors”:  the collective reference to each signatory hereto (other than the Collateral Agent) together with any other entity that may become a party hereto as provided herein.

 

“Guarantor Obligations”:  with respect to any Guarantor, all obligations and liabilities of such Guarantor which may arise under or in connection with this Agreement (including, without limitation, Section 2) or any other Loan Document to which such Guarantor is a party, in each case whether on account of guarantee obligations, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the

 

3

 

Administrative Agent, to the Collateral Agent or to the other Secured Parties that are required to be paid by such Guarantor pursuant to the terms of this Agreement or any other Loan Document).

 

“Guarantors”: the collective reference to Holdings and the Subsidiary Guarantors that may become a party hereto as provided herein.

 

“Intellectual Property”:  the collective reference to all rights, priorities and privileges relating to intellectual property, arising under United States, including, without limitation, the Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks and the Trademark Licenses, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.

 

“Intercompany Note”:  any promissory note evidencing loans made by any Grantor to Holdings or any of its Subsidiaries.

 

“Investment Property”:  the collective reference to (i) all “investment property” as such term is defined in Section 9-102(a)(49) of the New York UCC (other than any Excluded Capital Stock excluded from the definition of “Pledged Stock”) and (ii) whether or not constituting “investment property” as so defined, all Pledged Securities.

 

“Issuers”:  the collective reference to each issuer of a Pledged Security.

 

“Liens”:  as defined in Section 3.1.

 

“New York UCC”:  the Uniform Commercial Code from time to time in effect in the State of New York.

 

“Obligations”:  (i) in the case of the Borrower, the Borrower Obligations and (ii) in the case of each Guarantor, its Guarantor Obligations.

 

“Patent License”:  all written agreements providing for the grant by or to any Grantor of any right to manufacture, use or sell any invention covered in whole or in part by a Patent, including, without limitation, any of the foregoing referred to in Schedule 4.

 

“Patents”:  (i) all letters patent of the United States, all reissues and extensions thereof, and all goodwill associated therewith, including, without limitation, any of the foregoing referred to in Schedule 4, (ii) all applications for letters patent of the United States and all continuations and continuations in part thereof, including, without limitation, any of the foregoing referred to in Schedule 4, and (iii) all rights to obtain any reissues or extensions of the foregoing.

 

“Pledged Notes”:  all promissory notes listed on Schedule 2, all Intercompany Notes at any time issued to any Grantor in excess of $5,000,000 (or Intercompany Notes which, in the aggregate, are in excess of $5,000,000) and all other promissory notes issued to or held by any Grantor in excess of $5,000,000 (other than promissory notes issued in connection with extensions of trade credit by any Grantor in the ordinary course of business).

 

“Pledged Securities”:  the collective reference to the Pledged Notes and the Pledged Stock.

 

“Pledged Stock”:  the collective reference to (i) the shares of Capital Stock listed on Schedule 2 and (ii) any other shares, stock certificates, options, interests or rights of any nature

 

4

 

whatsoever in respect of the Capital Stock of any Person that may be issued or granted to, or held by, any Grantor while this Agreement is in effect other than Excluded Capital Stock; provided that in no event shall more than 65% of the total outstanding Foreign Subsidiary Voting Stock be required to be pledged hereunder.

 

“Proceeds”:  all “proceeds” as such term is defined in Section 9-102(a)(64) of the New York UCC and, in any event, shall include, without limitation, all dividends or other income from the Investment Property, collections thereon or distributions or payments with respect thereto.

 

“Receivable”:  any right to payment for goods sold or leased or for services rendered, whether or not such right is evidenced by an Instrument or Chattel Paper and whether or not it has been earned by performance (including, without limitation, any Account).

 

“Securities Act”:  the Securities Act of 1933, as amended.

 

“Trademark License”:  all written agreements providing for the grant by or to any Grantor of any right to use any Trademark, including, without limitation, any of the foregoing referred to in Schedule 4.

 

“Trademarks”:  (i) all trademarks, trade names, corporate names, company names, business names, domain names, fictitious business names, trade styles, service marks, logos and other source or business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith (except for “intent to use” applications for trademark or service mark registrations), whether in the United States Patent and Trademark Office or in any similar office or agency of the United States or any State thereof, and all United States common-law rights related thereto, including, without limitation, any of the foregoing referred to in Schedule 4, and (ii) the right to obtain all renewals thereof.

 

“Vehicles”:  all aircrafts, cars, trucks, trailers, construction and earth moving equipment and other vehicles covered, in each case, by a certificate of title law of any state.

 

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

 

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

 

(c)   Where the context requires, terms relating to the Collateral or any part thereof, when used in relation to a Grantor, shall refer to such Grantor’s Collateral or the relevant part thereof.

 

SECTION 2.         GUARANTEE

 

2.1          Guarantee.  (a)    Each of the Guarantors hereby, jointly and severally, unconditionally and irrevocably, guarantees to the Collateral Agent for the ratable benefit of the Administrative Agent, the Collateral Agent, the other Secured Parties and their respective permitted successors, indorsees, transferees and assigns, the prompt and complete payment and performance by the Borrower when due (whether at the stated maturity, by acceleration or otherwise) of the Borrower Obligations.

 

5

 

(b)   Anything herein or in any other Loan Document to the contrary notwithstanding, the maximum liability of each Guarantor hereunder and under the other Loan Documents shall in no event exceed the amount which can be guaranteed by such Guarantor under applicable federal and state laws relating to the insolvency of debtors (after giving effect to the right of contribution established in Section 2.2).

 

(c)   Each Guarantor agrees that the Borrower Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor hereunder without impairing the guarantee contained in this Section 2 or affecting the rights and remedies of the Administrative Agent, the Collateral Agent or any other Secured Party hereunder.

 

(d)   The guarantee contained in this Section 2 shall remain in full force and effect until all the Borrower Obligations and the obligations of each Guarantor under the guarantee contained in this Section 2 shall have been satisfied by payment in full (other than contingent or indemnification obligations not then due), no Letter of Credit (that is not cash collateralized or backstopped to the reasonable satisfaction of the Issuing Lender or purchasing Lender, as applicable, in respect thereof) shall be outstanding and the Commitments shall have been terminated, notwithstanding that from time to time during the term of the Credit Agreement the Borrower may be free from any Borrower Obligations, provided that any Guarantor shall be released from its guarantee contained in this Section 2 as provided in Section 8.15.

 

(e)   No payment (other than payment in full) made by the Borrower, any of the Guarantors, any other guarantor or any other Person or received or collected by the Administrative Agent, the Collateral Agent or any other Secured Party from the Borrower, any of the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Borrower Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which shall, notwithstanding any such payment (other than any payment made by such Guarantor in respect of the Borrower Obligations or any payment received or collected from such Guarantor in respect of the Borrower Obligations), remain liable for the Borrower Obligations up to the maximum liability of such Guarantor hereunder until the Borrower Obligations shall have been paid in full (other than contingent or indemnification obligations not then due), no Letter of Credit (that is not cash collateralized or backstopped to the reasonable satisfaction of the Issuing Lender or purchasing Lender, as applicable, in respect thereof) shall be outstanding and the Commitments shall have been terminated, provided that that any Guarantor shall be released from its guarantee contained in this Section 2 as provided in Section 8.15.

 

2.2          Right of Contribution.  Each Guarantor hereby agrees that to the extent that a Guarantor shall have paid more than its proportionate share of any payment made hereunder, such Guarantor shall be entitled to seek and receive contribution from and against any other Guarantor hereunder which has not paid its proportionate share of such payment.  Each Guarantor’s right of contribution shall be subject to the terms and conditions of Section 2.3.  The provisions of this Section 2.2 shall in no respect limit the obligations and liabilities of any Guarantor to the Administrative Agent, the Collateral Agent and the other Secured Parties, and each Guarantor shall remain liable to the Administrative Agent, the Collateral Agent and the other Secured Parties for the full amount guaranteed by such Guarantor hereunder.

 

2.3          No Subrogation.  Notwithstanding any payment made by any Guarantor hereunder or any set-off or application of funds of any Guarantor by the Administrative Agent, the Collateral Agent or any other Secured Party, no Guarantor shall be entitled to be subrogated to any of the rights of the Administrative Agent, the Collateral Agent or any other Secured Party against the Borrower or any other Guarantor or any collateral security or guarantee or right of offset held by the Administrative Agent, the Collateral Agent or any other Secured Party for the payment of the Borrower Obligations, nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from the Borrower or any other

 

6

 

Guarantor in respect of payments made by such Guarantor hereunder, until all amounts owing to the Administrative Agent, the Collateral Agent and the other Secured Parties by the Borrower on account of the Borrower Obligations shall have been paid in full (other than contingent or indemnification obligations not then due), no Letter of Credit (that is not cash collateralized or backstopped to the reasonable satisfaction of the Issuing Lender or purchasing Lender, as applicable, in respect thereof) shall be outstanding and the Commitments shall have been terminated.  If any amount shall be paid to any Guarantor on account of such subrogation rights at any time when all of such Borrower Obligations shall not have been paid in full, such amount shall be held by such Guarantor in trust for the Administrative Agent, the Collateral Agent and the other Secured Parties, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Collateral Agent in the exact form received by such Guarantor (duly indorsed by such Guarantor to the Collateral Agent, if required), to be applied against the Borrower Obligations, whether matured or unmatured, in such order as the Collateral Agent may determine.

 

2.4          Amendments, etc. with respect to the Borrower Obligations.  Each Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against any Guarantor and without notice to or further assent by any Guarantor, any demand for payment of any of the Borrower Obligations made by the Administrative Agent, the Collateral Agent or any other Secured Party may be rescinded by the Administrative Agent, the Collateral Agent or such other Secured Party and any of the Borrower Obligations continued, and the Borrower Obligations, or the liability of any  other Person upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Administrative Agent, the Collateral Agent or any other Secured Party, and the Credit Agreement and the other Loan Documents and any other documents executed and delivered in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, as the Administrative Agent (or the Required Lenders or, if so specified in the Credit Agreement, all Lenders or the Majority Facility Lenders in respect of any Facility) may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by the Administrative Agent, the Collateral Agent or any other Secured Party for the payment of the Borrower Obligations may be sold, exchanged, waived, surrendered or released.  Neither the Administrative Agent, the Collateral Agent nor any other Secured Party shall have any obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Borrower Obligations or for the guarantee contained in this Section 2 or any property subject thereto.

 

2.5          Guarantee Absolute and Unconditional.  Each Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Borrower Obligations and notice of or proof of reliance by the Administrative Agent, the Collateral Agent or any other Secured Party upon the guarantee contained in this Section 2 or acceptance of the guarantee contained in this Section 2; the Borrower Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contained in this Section 2; and all dealings between the Borrower and any of the Guarantors, on the one hand, with respect to the Loan Documents and the Administrative Agent, the Collateral Agent and the other Secured Parties, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon the guarantee contained in this Section 2.  Each Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Borrower or any of the Guarantors with respect to the Borrower Obligations.  Each Guarantor understands and agrees that, to the fullest extent permitted by applicable law, the guarantee of such Guarantor contained in this Section 2 shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (a) the validity or enforceability of the Credit Agreement or any other Loan Document, any of the Borrower Obligations or any other collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by the Administrative Agent or any Lender, (b) any defense, set-off or

 

7

 

counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by the Borrower or any other Person against the Administrative Agent, the Collateral Agent or any other Secured Party, or (c) any other circumstance whatsoever (other than a defense of payment or performance) (with or without notice to or knowledge of the Borrower or any Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of the Borrower from the Borrower Obligations, or of such Guarantor under the guarantee of such Guarantor contained in this Section 2, in bankruptcy or in any other instance.  When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against any Guarantor, the Administrative Agent, the Collateral Agent or any other Secured Party may, but shall be under no obligation to, make a similar demand on or otherwise pursue such rights and remedies as it may have against the Borrower, any other Guarantor or any other Person or against any collateral security or guarantee for the Borrower Obligations or any right of offset with respect thereto, and any failure by the Administrative Agent, the Collateral Agent or any other Secured Party to make any such demand, to pursue such other rights or remedies or to collect any payments from the Borrower, any other Guarantor or any other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Borrower, any other Guarantor or any other Person or any such collateral security, guarantee or right of offset, shall not relieve any Guarantor of any obligation or liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Administrative Agent, the Collateral Agent or any other Secured Party against any Guarantor.  For the purposes hereof “demand” shall include the commencement and continuance of any legal proceedings.

 

2.6          Reinstatement.  The guarantee contained in this Section 2 shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Borrower Obligations is rescinded or must otherwise be restored or returned by the Administrative Agent, the Collateral Agent or any other Secured Party upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Borrower or any Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made.

 

2.7          Payments.  Each Guarantor hereby guarantees that payments hereunder will be paid to the Administrative Agent without set-off or counterclaim in Dollars at the Funding Office.

 

SECTION 3.         GRANT OF SECURITY INTEREST

 

3.1          Grant of First Priority Security Interests.  Each Grantor hereby grants to the Collateral Agent, for the ratable benefit of the Secured Parties, a security interest (“Liens”) in all of the following property now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest (collectively, the “Collateral”), as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of such Grantor’s Obligations:

 

(a)   all Accounts;

 

(b)   all Chattel Paper;

 

(c)   all Deposit Accounts;

 

(d)   all Documents;

 

(e)   all Equipment;

 

8

 

(f)   all Fixtures;

 

(g)   all General Intangibles;

 

(h)   all Goods not covered by the other clauses of this Section 3;

 

(i)   all Instruments, including the Pledged Notes;

 

(j)   all Intellectual Property;

 

(k)   all Inventory;

 

(l)   all Investment Property;

 

(m)   all other tangible and intangible personal property not otherwise described above;

 

(n)   all books and records pertaining to the Collateral; and

 

(o)   to the extent not otherwise included, all Proceeds, Supporting Obligations and products of any of the Collateral and products of any and all of the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing;

 

provided, however, that notwithstanding any of the other provisions set forth in this Section 3.1, this Agreement shall not constitute a grant of a security interest in (i) any leasehold interest in real property (and any Fixtures relating thereto) and any Fixtures relating to any owned real property to the extent that the Collateral Agent is not entitled to a security interest with respect to such owned real property under the terms of the Credit Agreement, (ii) any Vehicles and all Proceeds thereof, (iii) any property to the extent that such grant of a security interest is prohibited by any Requirements of Law of a Governmental Authority, requires a consent not obtained of any Governmental Authority pursuant to such Requirement of Law or is prohibited by, or constitutes a breach or default under or results in the termination of or requires any consent not obtained under, any contract, license, agreement, instrument (including any permitted liens, leases and licenses) or other document evidencing or giving rise to such property or, in the case of any Investment Property, any Pledged Security, any applicable shareholder or similar agreement, except to the extent that such Requirement of Law or the term in such contract, license, agreement, instrument or other document or shareholder or similar agreement providing for such prohibition, breach, default or termination or requiring such consent is ineffective under applicable law, (iv) any Collateral that constitutes Equipment subject to a certificate of title statute, Farm Products, Accessions, Letter of Credit Rights, Commercial Tort Claims and As-Extracted Collateral, (v) any Collateral to the extent the granting of such security interest would result in adverse tax consequences as reasonably determined by the Administrative Agent, or as to which the Administrative Agent reasonably determines that the burden or cost of obtaining a security interest or perfection thereof is excessive when compared to the benefit to the Secured Parties of the security afforded thereby (in each case as confirmed by written notice to the Borrower) and (vi) Excluded Capital Stock.  It is hereby understood and agreed that any Property described in the preceding proviso, and any Property that is otherwise expressly excluded from clauses (a) through (o) above, shall be excluded from the definition of “Collateral”.

 

Notwithstanding anything to the contrary contained in the foregoing or otherwise in this Agreement, no Grantor shall be required to (x) enter into control agreements with respect to, or otherwise perfect any security interest by “control” over, securities accounts, deposit accounts, other bank accounts, cash and cash equivalents and accounts related to the clearing, payment processing and similar operations of Holdings and its Restricted Subsidiaries, or (y) take any action in any jurisdiction (other than in the

 

9

 

United States of America, any state thereof and the District of Columbia) to perfect any security interest in Capital Stock of Foreign Subsidiaries.

 

SECTION 4.         REPRESENTATIONS AND WARRANTIES

 

To induce the Administrative Agent, the Collateral Agent and the Secured Parties to enter into the Credit Agreement and to induce the Lenders to make their respective extensions of credit to the Borrower, each Guarantor and each Grantor hereby represents and warrants to each of the Administrative Agent, the Collateral Agent and each other Secured Party that:

 

4.1          Representations in Credit Agreement.  In the case of each Guarantor, the representations and warranties set forth in Section 4 of the Credit Agreement as they relate to such Guarantor or to the Loan Documents to which such Guarantor is a party, each of which is hereby incorporated herein by reference, are true and correct in all material respects, and each of the Administrative Agent, the Collateral Agent and each other Secured Party shall be entitled to rely on each of them as if they were fully set forth herein; provided that each reference in each such representation and warranty to Holdings’ or the Borrower’s knowledge shall, for the purposes of this Section 4.1, be deemed to be a reference to such Guarantor’s knowledge.

 

4.2          Title; No Other Liens.  Except as otherwise permitted under Section 7.3 of the Credit Agreement, such Grantor owns or has rights in each item of the Collateral free and clear of any and all Liens or claims of others.  Except as otherwise permitted under Section 7.3 of the Credit Agreement, no financing statement or other public notice with respect to all or any part of the Collateral is on file or of record in any public office except financing statements that have been filed without the consent of the Grantor.  For the avoidance of doubt, it is understood and agreed that any Grantor may, as part of its business, grant licenses to third parties to use Intellectual Property owned, licensed or developed by a Grantor.  For purposes of this Agreement and the other Loan Documents, such licensing activity shall not constitute a “Lien” on such Intellectual Property.  Each of the Administrative Agent, the Collateral Agent and each Lender understands that any such licenses may be exclusive to the applicable licensees, and such exclusivity provisions may limit the ability of the Administrative Agent to utilize, sell, lease, license or transfer the related Intellectual Property or otherwise realize value from such Intellectual Property  pursuant hereto.

 

4.3          Names; Jurisdiction of Organization; Chief Executive Office.  On the date hereof, such Grantor’s full and correct legal name, jurisdiction of organization, identification number from the jurisdiction of organization (if any), the location of such Grantor’s chief executive office specified on Schedule 3.

 

4.4          Pledged Securities.  On the date hereof, the shares of Pledged Stock pledged by such Grantor hereunder:

 

(a)    with respect to the shares of Pledged Stock issued by the Borrower and any other Restricted Subsidiary, have been duly authorized, validly issued and are fully paid and non-assessable, to the extent such concepts are applicable; and

 

(b)   constitute all the issued and outstanding shares of all classes of the Capital Stock of each Issuer owned by such Grantor or, in the case of Foreign Subsidiary Voting Stock, 65% of the outstanding Foreign Subsidiary Voting Stock of each relevant Issuer.

 

10

 

4.5          Intellectual Property.

 

(a)   Schedule 4 lists all material Intellectual Property owned by such Grantor in its own name on the date hereof.

 

(b)   Except as set forth in Schedule 4, on the date hereof, none of the material Intellectual Property is the subject of any licensing or franchise agreement pursuant to which such Grantor is the licensor or franchisor.

 

SECTION 5.         COVENANTS

 

Each Guarantor and each Grantor covenants and agrees with the Administrative Agent, the Collateral Agent and the other Secured Parties that, from and after the date of this Agreement until the Obligations shall have been paid in full (other than contingent and indemnification obligations not yet due and owing), no Letter of Credit (that is not cash collateralized or backstopped to the reasonable satisfaction of the Issuing Lender or purchasing Lender, as applicable, in respect thereof) shall be outstanding and the Commitments shall have been terminated:

 

5.1          Covenants in Credit Agreement.  In the case of each Guarantor, such Guarantor shall take, or shall refrain from taking, as the case may be, each action that is necessary to be taken or not taken, as the case may be, so that no Default or Event of Default is caused by the failure to take such action or to refrain from taking such action by such Guarantor or any of its Subsidiaries.

 

5.2          Investment Property.  In the case of each Grantor which is an Issuer, such Issuer agrees that (a) it will be bound by the terms of this Agreement relating to the Pledged Securities issued by it and will comply with such terms insofar as such terms are applicable to it and (b) the terms of Sections 6.3(c) and 6.8 shall apply to it, mutatis mutandis, with respect to all actions that may be required of it pursuant to Section 6.3(c) or 6.8 with respect to the Pledged Securities issued by it.

 

SECTION 6.         REMEDIAL PROVISIONS

 

6.1          Certain Matters Relating to Receivables.

 

(a)   At any time during the continuance of an Event of Default, upon the Collateral Agent’s reasonable request at the expense of the relevant Grantor, such Grantor shall cause independent public accountants or others reasonably satisfactory to the Collateral Agent to furnish to the Collateral Agent reports showing reconciliations, aging and test verifications of, and trial balances for, the Receivables.

 

(b)   If required by the Collateral Agent at any time after the occurrence and during the continuance of an Event of Default under Section 8(a) or 8(f) of the Credit Agreement, any payments of Receivables, when collected by any Grantor, (i) shall be forthwith (and, in any event, within two Business Days) deposited by such Grantor in the exact form received, duly indorsed by such Grantor to the Collateral Agent if required, in a Collateral Account maintained under the sole dominion and control of the Collateral Agent, subject to withdrawal by the Collateral Agent for the account of the Administrative Agent, the Collateral Agent and the other Secured Parties only as provided in Section 6.6, and (ii) until so turned over, shall be held by such Grantor in trust for the Administrative Agent, the Collateral Agent and the other Secured Parties, segregated from other funds of such Grantor.  Each such deposit of Proceeds of Receivables shall be accompanied by a report identifying in reasonable detail the nature and source of the payments included in the deposit.

 

11

 

(c)   If an Event of Default has occurred and is continuing and at the Collateral Agent’s request, each Grantor shall deliver to the Collateral Agent all documents evidencing, and relating to, the agreements and transactions which gave rise to the Receivables, including, without limitation, all orders, invoices and shipping receipts.

 

6.2          Communications with Grantors; Grantors Remain Liable.

 

(a)   Upon the request of the Collateral Agent at any time after the occurrence and during the continuance of an Event of Default under Section 8(a) or 8(f) of the Credit Agreement, each Grantor shall notify obligors on the Receivables that the Receivables have been assigned to the Collateral Agent for the ratable benefit of the Administrative Agent, the Collateral Agent and the other Secured Parties and that payments in respect thereof shall be made directly to the Collateral Agent.

 

(b)   Anything herein to the contrary notwithstanding, each Grantor shall remain liable under the Receivables to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise thereto.  Neither the Administrative Agent, the Collateral Agent nor any other Secured Party shall have any obligation or liability under any Receivable (or any agreement giving rise thereto) by reason of or arising out of this Agreement or the receipt by the Administrative Agent, the Collateral Agent or any other Secured Party of any payment relating thereto, nor shall the Administrative Agent, the Collateral Agent or any other Secured Party be obligated in any manner to perform any of the obligations of any Grantor under or pursuant to any Receivable (or any agreement giving rise thereto), to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party thereunder, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times.

 

6.3          Pledged Securities.  (a)    Unless an Event of Default shall have occurred and be continuing and the Collateral Agent shall have given notice to the relevant Grantor of the Collateral Agent’s intent to exercise its corresponding rights pursuant to Section 6.3(b), each Grantor shall be permitted to receive all cash dividends and other distributions paid in respect of the Pledged Stock and all payments made in respect of the Pledged Notes to the extent permitted in the Credit Agreement, and to exercise all voting and corporate rights with respect to the Pledged Securities.

 

(b)   If an Event of Default shall occur and be continuing and the Collateral Agent shall give notice of its intent to exercise such rights to the relevant Grantor or Grantors, (i) unless otherwise provided in the Credit Agreement, the Collateral Agent shall have the right to receive any and all cash dividends, payments or other Proceeds paid in respect of the Pledged Securities and make application thereof to the Obligations in the order set forth in Section 6.6, and (ii) any or all of the Pledged Securities shall be registered in the name of the Collateral Agent or its nominee, and the Collateral Agent or its nominee may thereafter exercise (x) all voting, corporate and other rights pertaining to such Pledged Securities at any meeting of shareholders of the relevant Issuer or Issuers or otherwise and (y) any and all rights of conversion, exchange and subscription and any other rights, privileges or options pertaining to such Pledged Securities as if it were the absolute owner thereof (including, without limitation, the right to exchange at its discretion any and all of the Pledged Securities upon the merger, consolidation, reorganization, recapitalization or other fundamental change in the corporate structure of any Issuer, or upon the exercise by any Grantor or the Collateral Agent of any right, privilege or option pertaining to such Pledged Securities, and in connection therewith, the right to deposit and deliver any and all of the Pledged Securities with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as the Collateral Agent may reasonably determine), all without liability (except liabilities resulting from gross negligence or willful misconduct of the Collateral Agent) except to

 

12

 

account for property actually received by it, but the Collateral Agent shall have no duty to any Grantor to exercise any such right, privilege or option and shall not be responsible for any failure to do so or delay in so doing unless the Collateral Agent has given notice of its intent to exercise as set forth above.

 

(c)   Each Grantor hereby authorizes and instructs each Issuer of any Pledged Securities pledged by such Grantor hereunder to comply with any instruction received by it from the Administrative Agent in writing that (x) states that an Event of Default has occurred and is continuing and (y) is otherwise in accordance with the terms of this Agreement, without any other or further instructions from such Grantor, and each Grantor agrees that each Issuer shall be fully protected in so complying.

 

6.4          Intellectual Property.

 

(a)           For the purpose of enabling the Collateral Agent to exercise rights and remedies under Section 6 at such time as the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, and for no other purpose, each Grantor hereby grants to the Collateral Agent, to the extent assignable, an irrevocable, non-exclusive license (exercisable without payment of royalty or other compensation to such Grantor), subject in the case of Trademarks, to sufficient rights to quality control and inspection in favor of such Grantor to avoid the risk of invalidation of said Trademarks, to use, assign, license or sublicense any of the Intellectual Property constituting Collateral now owned or hereafter acquired by such Grantor, wherever the same may be located.

 

(b)           Notwithstanding anything contained herein to the contrary, but subject to the provisions of Section 7.5 of the Credit Agreement that limit the rights of the Grantors to dispose of their property, notwithstanding the foregoing but subject to the Collateral Agent’s exercise of its rights and remedies under Section 6, the Grantors will be permitted to exploit, use, enjoy, protect, license, sublicense, assign, sell, dispose of or take other actions with respect to the Intellectual Property in the ordinary course of the business of the Grantors.  In furtherance of the foregoing, so long as no Event of Default shall have occurred and be continuing, the Collateral Agent shall from time to time, upon the request of the respective Grantor (through the Borrower), execute and deliver any instruments, certificates or other documents, in the form so requested, that such Grantor (through the Borrower) shall have certified are appropriate in its judgment to allow it to take any action permitted above (including relinquishment of the license provided pursuant to clause (a) immediately above as to any specific Intellectual Property).  Further, upon the payment in full in cash of all of the Obligations (other than contingent or indemnification obligations not then due) and cancellation or termination of all Commitments and Letters of Credit (that are not cash collateralized or backstopped  to the reasonable satisfaction of the Issuing Lender or purchasing Lender, as applicable, in respect thereof) or earlier expiration of this Agreement or release of the Collateral, the Collateral Agent shall grant back to the Grantors the license granted pursuant to clause (a) immediately above.  The exercise of rights and remedies under Section 6 by the Collateral Agent shall not terminate the rights of the holders of any licenses or sublicenses theretofore granted by the Grantors in accordance with the first sentence of this clause (b).

 

6.5          Proceeds to be Turned Over To Collateral Agent.  If an Event of Default shall occur and be continuing and the Loans shall have been accelerated pursuant to Section 8 of the Credit Agreement, all Proceeds received by any Grantor consisting of cash, checks and other near-cash items shall be held by such Grantor in trust for the Administrative Agent, the Collateral Agent and the other Secured Parties, segregated from other funds of such Grantor, and shall, promptly upon receipt by such Grantor, be turned over to the Collateral Agent in the exact form received by such Grantor (duly indorsed by such Grantor to the Collateral Agent, if required).  All Proceeds received by the Collateral Agent hereunder shall be held by the Collateral Agent in a Collateral Account maintained under its sole dominion and control.  All

 

13

 

Proceeds while held by the Collateral Agent in a Collateral Account (or by such Grantor in trust for the Administrative Agent, the Collateral Agent and the other Secured Parties) shall continue to be held as collateral security for all of the Obligations and shall not constitute payment thereof until applied as provided in Section 6.6.

 

6.6          Application of Proceeds.  If an Event of Default shall have occurred and be continuing and the Loans shall have been accelerated pursuant to Section 8 of the Credit Agreement, at any time at the Collateral Agent’s election, the Collateral Agent may apply all or any part of Proceeds constituting Collateral and any proceeds of the guarantee set forth in Section 2, in payment of the Obligations, and shall make any such application in the following order:

 

First, to pay incurred and unpaid reasonable, out-of-pocket fees and expenses of the Agents under the Loan Documents;

 

Second, to the Collateral Agent, for application by it towards payment of amounts then due and owing and remaining unpaid in respect of the Obligations, pro  rata among the Administrative Agent, the Collateral Agent and the other Secured Parties (and any affiliates thereof which are party to any Specified Hedge Agreement or Cash Management Obligations) according to the amounts of the Obligations then due and owing and remaining unpaid to each of them; and

 

Third, any balance of such Proceeds remaining after the Obligations shall have been paid in full (other than contingent or indemnification obligations not then due), no Letter of Credit (that is not cash collateralized or backstopped to the reasonable satisfaction of the Issuing Lender or purchasing Lender, as applicable, in respect thereof) shall be outstanding and the Commitments shall have been terminated, shall be paid over to the Borrower or to whomever shall be lawfully entitled to receive the same.

 

6.7          Code and Other Remedies.  If an Event of Default shall occur and be continuing, the Collateral Agent, on behalf of itself, the Administrative Agent and the other Secured Parties, may exercise, in addition to all other rights and remedies granted to them in this Agreement and in any other instrument or agreement securing, evidencing or relating to the Obligations, all rights and remedies of a secured party under the New York UCC or any other applicable law.  Without limiting the generality of the foregoing, the Collateral Agent, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below or notices otherwise provided in the Loan Documents) to or upon any Grantor or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived unless otherwise provided in the Loan Documents), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith, subject to pre-existing rights and licenses, sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker’s board or office of the Administrative Agent, the Collateral Agent or any other Secured Party or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk.  The Administrative Agent, the Collateral Agent or any other Secured Party shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in any Grantor, which right or equity is hereby waived and released.  Each Grantor further agrees, at the Collateral Agent’s request, to assemble the Collateral and make it available to the Collateral Agent at places which the Collateral Agent shall reasonably select, whether at such Grantor’s premises or elsewhere.  The Collateral Agent shall apply the net proceeds of any action taken by it pursuant to Section

 

14

 

6.6, after deducting all reasonable costs and expenses of every kind actually incurred in connection therewith or incidental to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Administrative Agent, the Collateral Agent and the other Secured Parties hereunder, including, without limitation, reasonable attorneys’ fees and disbursements, to the payment in whole or in part of the Obligations, in such order as the Collateral Agent may elect, and only after such application and after the payment by the Collateral Agent of any other amount required by any provision of law, including, without limitation, Section 9-615(a)(3) of the New York UCC, need the Collateral Agent account for the surplus, if any, to any Grantor.  If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least 10 days before such sale or other disposition.

 

6.8          Private Sales.

 

Each Grantor recognizes that the Collateral Agent may be unable to effect a public sale of any or all the Pledged Stock, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws or otherwise, and may be compelled to resort to one or more private sales thereof to a restricted group of purchasers which will be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof.  Each Grantor acknowledges and agrees that any such private sale may result in prices and other terms less favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner.  The Collateral Agent shall be under no obligation to delay a sale of any of the Pledged Stock for the period of time necessary to permit the Issuer thereof to register such securities for public sale under the Securities Act, or under applicable state securities laws, even if such Issuer would agree to do so.

 

6.9          Deficiency.  Each Grantor shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay its Obligations and the reasonable fees and disbursements of any attorneys employed by the Collateral Agent to collect such deficiency.

 

SECTION 7.         THE COLLATERAL AGENT

 

7.1          Collateral Agent’s Appointment as Attorney-in-Fact, etc.

 

(a)   Each Grantor hereby irrevocably constitutes and appoints the Collateral Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Grantor and in the name of such Grantor or in its own name, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Agreement, and, without limiting the generality of the foregoing, each Grantor hereby gives the Collateral Agent the power and right, on behalf of such Grantor, without notice to or assent by such Grantor, to do any or all of the following (provided, that anything in this Section 7.1(a)  to the contrary notwithstanding, the Collateral Agent agrees that it will not exercise any rights under the power of attorney provided for in this Section 7.1(a) unless an Event of Default shall have occurred and be continuing):

 

(i)            in the name of such Grantor or its own name, or otherwise, take possession of and indorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due under any Receivable or with respect to any other Collateral and file any claim or take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by the Collateral Agent for the purpose of collecting any and all such moneys due under any Receivable or with respect to any other Collateral whenever payable;

 

15

 

(ii)           in the case of any Intellectual Property, execute and deliver, and have recorded, any and all agreements, instruments, documents and papers as the Collateral Agent may reasonably request to evidence the Administrative Agent’s, the Collateral Agent’s and the other Secured Parties’ security interest in such Intellectual Property and the goodwill and general intangibles of such Grantor relating thereto or represented thereby;

 

(iii)          pay or discharge taxes and Liens levied or placed on or threatened against the Collateral, effect any repairs or any insurance called for by the terms of this Agreement and pay all or any part of the premiums therefor and the costs thereof;

 

(iv)          execute, in connection with any sale provided for in Section 6.7 or 6.8, any indorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral; and

 

(v)           (1)  direct any party liable for any payment under any of the Collateral to make payment of any and all moneys due or to become due thereunder directly to the Collateral Agent or as the Collateral Agent shall direct;  (2) ask or demand for, collect, and receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral;  (3) sign and indorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications, notices and other documents in connection with any of the Collateral;  (4) commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any portion thereof and to enforce any other right in respect of any Collateral; (5) defend any suit, action or proceeding brought against such Grantor with respect to any Collateral; (6) settle, compromise or adjust any such suit, action or proceeding and, in connection therewith, give such discharges or releases as the Collateral Agent may deem appropriate; (7) subject to pre-existing rights and licenses, assign any Copyright, Patent or Trademark (along with the goodwill of the business to which any such Copyright, Patent or Trademark pertains), for such term or terms, on such conditions, and in such manner, as the Collateral Agent shall in its reasonable discretion determine; and (8) subject to pre-existing rights and licenses, generally, sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Collateral Agent were the absolute owner thereof for all purposes, and do, at the Collateral Agent’s option and such Grantor’s expense, at any time, or from time to time, all acts and things which the Collateral Agent deems necessary to protect, preserve or realize upon the Collateral and the Administrative Agent’s, the Collateral Agent’s and the other Secured Parties’ security interests therein and to effect the intent of this Agreement, all as fully and effectively as such Grantor might do.

 

(b)   If any Grantor fails to perform or comply with any of its agreements contained herein, the Collateral Agent, at its option, but without any obligation so to do, may give such Grantor written notice of such failure to perform or comply and if such Grantor fails to perform or comply within three (3) Business Days of receiving such notice (or if the Collateral Agent reasonably determines that irreparable harm to the Collateral or to the security interest of the Collateral Agent hereunder could result prior to the end of such three-Business Day period), then the Collateral Agent may perform or comply, or otherwise cause performance or compliance, with such agreement.

 

(c)   Each Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof.  All powers, authorizations and agencies contained in this Agreement are coupled with an interest and are irrevocable until this Agreement is terminated and the security interests created hereby are released.

 

16

 

7.2          Duty of Collateral Agent.  To the extent permitted by law, the Collateral Agent’s sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the New York UCC or otherwise, shall be to deal with it in the same manner as the Collateral Agent deals with similar property for its own account.  None of the Administrative Agent, the Collateral Agent, any other Secured Party or any of their respective officers, directors, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof.  The powers conferred on the Administrative Agent, the Collateral Agent and the other Secured Parties hereunder are solely to protect the Administrative Agent’s, the Collateral Agent’s and the other Secured Parties’ interests in the Collateral and shall not impose any duty upon the Administrative Agent, the Collateral Agent or any other Secured Party to exercise any such powers.  The Administrative Agent, the Collateral Agent and the other Secured Parties shall be accountable only for amounts that they actually receive as a result of the exercise of such powers, and neither they nor any of their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence or willful misconduct or that of their directors, officers, employees or agents.

 

7.3          Execution of Financing Statements.  Pursuant to any applicable law, each Grantor authorizes the Collateral Agent to file or record financing statements and other filing or recording documents or instruments with respect to the Collateral without the signature of such Grantor in such form and in such offices as the Collateral Agent reasonably determines appropriate to perfect the security interests of the Collateral Agent under this Agreement.  Each Grantor authorizes the Collateral Agent to use the collateral description “all personal property”, “all assets” or any similar phrase in any such financing statements.  Notwithstanding anything herein or in any other Loan Document to the contrary, the delivery of control agreements with respect to any Deposit Accounts, Securities Accounts and Commodities Accounts shall not be required.

 

7.4          Authority of Collateral Agent.  Each Grantor acknowledges that the rights and responsibilities of the Collateral Agent under this Agreement with respect to any action taken by the Collateral Agent or the exercise or non-exercise by the Collateral Agent of any option, voting right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Agreement shall, as among the Administrative Agent, the Collateral Agent and the other Secured Parties, be governed by the Credit Agreement and by such other agreements with respect thereto as may exist from time to time among them, but, as between the Collateral Agent and the Grantors, the Collateral Agent shall be conclusively presumed to be acting as agent for the Administrative Agent, the Collateral Agent and the other Secured Parties with full and valid authority so to act or refrain from acting, and no Grantor shall be under any obligation, or entitlement, to make any inquiry respecting such authority.

 

SECTION 8.         MISCELLANEOUS

 

8.1          Amendments in Writing.  None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except in accordance with Section 10.1 of the Credit Agreement.

 

8.2          Notices.  All notices, requests and demands to or upon the Collateral Agent or any Grantor hereunder shall be effected in the manner provided for in Section 10.2 of the Credit Agreement; provided that any such notice, request or demand to or upon any Guarantor shall be addressed to such Guarantor at its notice address set forth on Schedule 1.

 

17

 

8.3                               No Waiver by Course of Conduct; Cumulative Remedies.  Neither the Administrative Agent, the Collateral Agent nor any other Secured Party shall by any act (except by a written instrument pursuant to Section 8.1), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default.  No failure to exercise, nor any delay in exercising, on the part of the Administrative Agent, the Collateral Agent or any other Secured Party, any right, power or privilege hereunder shall operate as a waiver thereof.  No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  A waiver by the Administrative Agent, the Collateral Agent or any other Secured Party of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Administrative Agent, the Collateral Agent or such other Secured Party would otherwise have on any future occasion.  The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law.

 

8.4                               Enforcement Expenses; Indemnification.  Each Guarantor agrees to pay, and to save the Administrative Agent, the Collateral Agent and the other Secured Parties harmless from, any and all out-of-pocket liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement to the extent the Borrower would be required to do so pursuant to Section 10.5 of the Credit Agreement.  The agreements in this Section 8.4 shall survive repayment of the Obligations and all other amounts payable under the Credit Agreement and the other Loan Documents.

 

8.5                               Successors and Assigns.  This Agreement shall be binding upon the successors and assigns of each Grantor and shall inure to the benefit of the Administrative Agent, the Collateral Agent and the other Secured Parties and their successors and assigns; provided, that no Grantor may assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Collateral Agent (it being understood that Dispositions permitted under the Credit Agreement shall not be subject to this proviso).

 

8.6                               Set-Off.  Each Grantor hereby irrevocably authorizes the Administrative Agent, the Collateral Agent and each other Secured Party at any time and from time to time while an Event of Default shall have occurred and be continuing, without notice to such Grantor or any other Grantor, any such notice being expressly waived by each Grantor, to the extent permitted by applicable law, upon any amount becoming due and payable by each Grantor (whether at the stated maturity, by acceleration or otherwise after the expiration of any applicable grace periods) to set-off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final but excluding trust accounts), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Administrative Agent, the Collateral Agent or such other Secured Party to or for the credit or the account of such Grantor.  Each of the Administrative Agent, the Collateral Agent and each other Secured Party shall notify such Grantor promptly of any such set-off made by it and the application made by it of the proceeds thereof, provided that the failure to give such notice shall not affect the validity of such set-off and application.

 

8.7                               Counterparts.  This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by telecopy or electronic (i.e., “pdf”) transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

 

18

 

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

 

8.9                               Section Headings.  The Section headings used in this Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.

 

8.10                        Integration.  This Agreement and the other Loan Documents represent the agreement of the Grantors, the Administrative Agent, the Collateral Agent and the other Secured Parties with respect to the subject matter hereof and thereof.

 

8.11                        GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

8.12                        Submission To Jurisdiction; Waivers.  Each party hereto hereby irrevocably and unconditionally:

 

(a)   submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the Courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof;

 

(b)   consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;

 

(c)   agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such Grantor at its address referred to in Section 8.2 or at such other address of which the Collateral Agent shall have been notified pursuant thereto;

 

(d)   agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and

 

(e)   waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section any special, exemplary, punitive or consequential damages.

 

8.13                        Acknowledgements.  Each Grantor hereby acknowledges that:

 

(a)   it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents to which it is a party;

 

(b)   neither the Administrative Agent, the Collateral Agent nor any other Secured Party has any fiduciary relationship with or duty to any Grantor arising out of or in connection with this Agreement or

 

19

 

any of the other Loan Documents, and the relationship between the Grantors, on the one hand, and the Administrative Agent, the Collateral Agent and the other Secured Parties, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and

 

(c)   no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Administrative Agent, the Collateral Agent and the other Secured Parties or among the Grantors and the Administrative Agent, the Collateral Agent and the other Secured Parties.

 

8.14                        Additional Grantors.  Each Restricted Subsidiary of Holdings that is required to become a party to this Agreement pursuant to Section 6.8 of the Credit Agreement shall become a Guarantor and a Grantor for all purposes of this Agreement upon execution and delivery by such Restricted Subsidiary of an Assumption Agreement in the form of Annex I hereto.

 

8.15                        Releases.

 

(a)   At such time as the Loans, the Reimbursement Obligations and the other Obligations (other than Borrower Hedge Agreement Obligations, Cash Management Obligations and contingent or indemnification obligations not then due) shall have been paid in full in cash, the Commitments shall have been terminated and no Letter of Credit (that is not cash collateralized or backstopped to the reasonable satisfaction of the Issuing Lender or purchasing Lender, as applicable, in respect thereof) shall be outstanding, the Collateral shall be automatically released from the Liens created hereby, and this Agreement and all obligations (other than those expressly stated to survive such termination) of the Collateral Agent and each Grantor hereunder shall automatically terminate, all without delivery of any instrument or performance of any act by any party, and all rights to the Collateral shall revert to the Grantors.  At the request and sole expense of any Grantor following any such termination, the Collateral Agent shall deliver to such Grantor any Collateral held by the Collateral Agent hereunder, and execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence such termination.

 

(b)   If any of the Collateral shall be sold, transferred or otherwise disposed of by any Grantor in a transaction permitted by the Credit Agreement, then the Lien granted under this Agreement on such Collateral shall be automatically released, and the Collateral Agent, at the request and sole expense of such Grantor, shall execute and deliver to such Grantor all releases or other documents reasonably necessary or desirable to evidence the release of the Liens created hereby on such Collateral.  A Guarantor shall be automatically released from its obligations hereunder in the event that all the Capital Stock of such Guarantor shall be sold, transferred or otherwise disposed of in a transaction permitted by the Credit Agreement, or upon the designation of such Guarantor as an Unrestricted Subsidiary as permitted under the Credit Agreement, and the Collateral Agent, at the request and sole expense of the Borrower, shall execute and deliver to the Borrower all releases or other documents reasonably necessary or desirable to evidence the release of such obligations.

 

(c)   Liens on Collateral created hereunder shall be released and obligations of Guarantors and Grantors hereunder shall terminate as set forth in Section 10.16  of the Credit Agreement.

 

8.16                        WAIVER OF JURY TRIAL.  EACH GRANTOR AND, BY ACCEPTANCE OF THE BENEFITS HEREOF, EACH OF THE ADMINISTRATIVE AGENT, THE COLLATERAL AGENT AND EACH LENDER, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

20

 

IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee and Collateral Agreement to be duly executed and delivered as of the date first above written.

 

	
 
    	
BARCLAYS   BANK PLC, as Collateral Agent
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Craig Malloy
    
	
 
    	
Name:
    	
Craig   Malloy
    
	
 
    	
Title:
    	
Director
    

 

Wesco - Guarantee and Collateral Agreement

 

 

	
 
    	
WESCO   AIRCRAFT HARDWARE CORP.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Gregory A. Hann
    
	
 
    	
Name:
    	
Gregory   A. Hann
    
	
 
    	
Title:
    	
Chief   Financial Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WESCO   AIRCRAFT HOLDINGS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Gregory A. Hann
    
	
 
    	
Name:
    	
Gregory   A. Hann
    
	
 
    	
Title:
    	
Chief   Financial Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
INTERFAST   USA HOLDINGS INCORPORATED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Hal Weinstein
    
	
 
    	
Name:
    	
Hal   Weinstein
    
	
 
    	
Title:
    	
President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
INTERFAST   USA INCORPORATED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Hal Weinstein
    
	
 
    	
Name:
    	
Hal   Weinstein
    
	
 
    	
Title:
    	
President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WESCO   AIRCRAFT AH, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Hal Weinstein
    
	
 
    	
Name:
    	
Hal   Weinstein
    
	
 
    	
Title:
    	
President
    

 

Wesco - Guarantee and Collateral Agreement

 

 

Schedule 1

 

NOTICE ADDRESSES OF GUARANTORS

 

 

Schedule 2

 

DESCRIPTION OF INVESTMENT PROPERTY

 

Pledged Stock:

 

	
Issuer
    	
 
    	
Class of   Stock
    	
 
    	
Stock   Certificate No.
    	
 
    	
No. of   Shares
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Pledged Notes:

 

	
Issuer
    	
 
    	
 
    	
Payee
    	
 
    	
Principal   Amount
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

 

 

Schedule 3

 

LEGAL NAME, LOCATION OF JURISDICTION OF ORGANIZATION AND CHIEF EXECUTIVE OFFICE

 

	
Grantor 
    	
 
    	
Jurisdiction of
   Organization
    	
 
    	
Location of Chief
   Executive Office
    	
 
    	
Location of
   Jurisdiction where
   any Financing
   Statement naming
   such Grantor is on
   File
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

 

Schedule 4

 

COPYRIGHTS AND COPYRIGHT LICENSES

 

PATENTS AND PATENT LICENSES

 

TRADEMARKS AND TRADEMARK LICENSES

 

 

Annex I to
 Guarantee and Collateral Agreement

 

ASSUMPTION AGREEMENT, dated as of                          , 200  , made by                                                              (the “Additional Grantor”), in favor of Barclays Bank PLC, as collateral agent (in such capacity, the “Collateral Agent”) for the banks and other financial institutions or entities (the “Lenders”) parties to the Credit Agreement referred to below.  All capitalized terms not defined herein shall have the meaning ascribed to them in such Credit Agreement.

 

W  I  T  N  E  S  S  E  T  H :

 

WHEREAS, Wesco Aircraft Holdings, Inc. (“Holdings), Wesco Aircraft Hardware Corp., (the “Borrower”), the Lenders, Barclays Bank PLC, as Administrative Agent and Collateral Agent (in such capacity, the “Collateral Agent”), have entered into that certain Credit Agreement, dated as of December 7, 2012 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”);

 

WHEREAS, in connection with the Credit Agreement, the Borrower and certain of its Affiliates (other than the Additional Grantor) have entered into the Guarantee and Collateral Agreement, dated as of December 7, 2012 (as amended, supplemented or otherwise modified from time to time, the “Guarantee and Collateral Agreement”) in favor of the Collateral Agent for the benefit of the Administrative Agent, the Collateral Agent and the Lenders;

 

WHEREAS, the Credit Agreement requires the Additional Grantor to become a party to the Guarantee and Collateral Agreement; and

 

WHEREAS, the Additional Grantor has agreed to execute and deliver this Assumption Agreement in order to become a party to the Guarantee and Collateral Agreement;

 

NOW, THEREFORE, IT IS AGREED:

 

1.  Guarantee and Collateral Agreement.  By executing and delivering this Assumption Agreement, the Additional Grantor, as provided in Section 8.14 of the Guarantee and Collateral Agreement, hereby becomes a party to the Guarantee and Collateral Agreement as a Guarantor and a Grantor thereunder with the same force and effect as if originally named therein as a Guarantor and a Grantor and, without limiting the generality of the foregoing, hereby expressly assumes all obligations and liabilities of a Guarantor and a Grantor thereunder.  The information set forth in Annex 1-A hereto is hereby added to the information set forth in the Schedules to the Guarantee and Collateral Agreement.  The Additional Grantor hereby represents and warrants, to the extent applicable, that each of the representations and warranties contained in Section 4 of the Guarantee and Collateral Agreement is true and correct on and as of the date hereof (after giving effect to this Assumption Agreement) as if made on and as of such date, except to the extent that such representations and warranties relate to an earlier date, in which case such representations and warranties are true and correct in all material respects as of such earlier date.

 

2.  GOVERNING LAW.  THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

 

IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be duly executed and delivered as of the date first above written.

 

	
 
    	
ADDITIONAL   GRANTOR
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

2

 

Annex I-A to
 Assumption Agreement

 

Supplement to Schedule 1

 

Supplement to Schedule 2

 

Supplement to Schedule 3

 

Supplement to Schedule 4ex10_1.htm

Exhibit 10.1

 

 

November 12, 2012

ShoreTel, Inc.

960 Stewart Drive

Sunnyvale, CA 94085

Attn:  Michael Healy, CFO

 

	
Re:

	
(i) Credit Agreement, dated as of March 15, 2012, among ShoreTel, Inc., a Delaware corporation (the “Borrower”), the “Lenders” party thereto (each a “Lender” and, collectively, the “Lenders”), and Silicon Valley Bank, a California corporation, as administrative agent and collateral agent for the Lenders (in such capacity, the “Administrative Agent”) (the “Credit Agreement” the terms defined therein and not otherwise defined herein being used herein as therein defined), (ii) the consent and waiver letter agreement, dated as of April 13, 2012, among the Borrower, the sole Lender and the Administrative Agent (the “First Waiver”), (iii) the consent and waiver letter agreement, dated as of May 15, 2012, among the Borrower, the sole Lender and the Administrative Agent (the “Second Waiver”), (iii) the consent and waiver letter agreement, dated as of June 15, 2012, among the Borrower, the sole Lender and the Administrative Agent (the “Third Waiver”), and (iv) the consent and waiver letter agreement, dated as of July 31, 2012, among the Borrower, the sole Lender and the Administrative Agent (the “Fourth Waiver”).

Dear Mr. Healy:

The Borrower has informed the Administrative Agent that certain of the documents, agreements, certificates and other items required to be delivered by or on behalf of the Borrower and/or the Acquired Business on a post-closing basis pursuant to Section 4.3 of the Credit Agreement will not be delivered on or prior to the respective delivery due dates specified therefor in such Section 4.3 of the Credit Agreement (as modified by the terms of the First Waiver, the Second Waiver, the Third Waiver and the Fourth Waiver).  In addition, the Borrower has proposed to the Administrative Agent and the Lenders that certain provisions of the Credit Agreement be amended as contemplated herein and the Borrower and the Acquired Business have proposed that certain provisions of the Guarantee and Collateral Agreement be amended as contemplated herein.  As a result of the foregoing, (a) the Borrower has requested that the Administrative Agent and the Required Lenders (i) extend the respective dates by which such post-closing deliverables are required to be delivered under such Section 4.3 of the Credit Agreement (as modified by the terms of the First Waiver, the Second Waiver, the Third Waiver and the Fourth Waiver), and (ii) waive any Defaults and Events of Default that may otherwise have arisen under the Credit Agreement solely as a result of the failure by the Borrower and/or the Acquired Business, as applicable, to have delivered such post-closing deliverables by the respective dates specified therefor in Section 4.3 of the Credit Agreement (as modified by the terms of the First Waiver, the Second Waiver, the Third Waiver and the Fourth Waiver), and (b) the Borrower and the Acquired Business have requested that the Administrative Agent and the Required Lenders agree to amend the Credit Agreement and the Guarantee and Collateral Agreement as contemplated herein.  The Administrative Agent and the Required Lenders have agreed to grant such consents and waivers and to make such amendments to the Credit Agreement and the Guarantee and Collateral Agreement, in each case subject to the terms and conditions hereof.

 

  

1

  

1.             Consents.  Notwithstanding anything to the contrary set forth in the Credit Agreement or the other Loan Documents (including the First Waiver, the Second Waiver, the Third Waiver, the Fourth Waiver and Sections 4.3 and 5.11 of the Credit Agreement), and subject to the satisfaction of the conditions to effectiveness specified in Section 6 hereof, each of the Administrative Agent and each of the Required Lenders named in the signature pages hereto hereby consents to:

 

(a)           subject to Section 5.7 of the Guaranty and Collateral Agreement (after giving effect to the amendment of such Section contemplated herein), the disposition of the requirement set forth in Sections 4.3 and 5.11 of the Credit Agreement and Sections 3.3(e), 5.3(a) and 5.7 of the Guarantee and Collateral Agreement that the Borrower and the Acquired Business cause the delivery to the Administrative Agent of Deposit Account Control Agreements and/or Securities Account Control Agreements, as applicable, in respect of the Deposit Accounts and Securities Accounts of the Acquired Business listed in Schedule 1 hereto;

 

(b)           the delivery by or on behalf of the Borrower to the Administrative Agent of the stock certificates and stock powers evidencing the Pledged Stock in (i) ShoreTel Australia Pty Ltd, (ii) 8058644 Canada Inc., and (iii) ShoreTel Singapore PTE Ltd, in each case, by no later than November 30, 2012; and

 

(c)           the delivery by or on behalf of the Acquired Business (in its capacity as a Guarantor) to the Administrative Agent of any landlord access agreements required to be delivered pursuant to Sections 4.3 and 5.11 of the Credit Agreement or pursuant to the terms of the Guarantee and Collateral Agreement, in each case by no later than November 30, 2012.

 

2.             Waivers.  The Administrative Agent and the Required Lenders hereby waive any Default or Event of Default that may have arisen under Sections 7.1(c) or (d) of the Credit Agreement solely as a result of the failure by the Borrower and/or the Acquired Business, as applicable, to have delivered any of the any of the post-closing deliverables  specified in Section 1 hereof by the respective due dates specified therefor in Section 4.3 of the Credit Agreement (as modified by the terms of the First Waiver, the Second Waiver, the Third Waiver and the Fourth Waiver).

 

3.             Amendments to the Credit Agreement.  With effect from and after the Effective Date, the Credit Agreement shall be amended as follows:

(a)           Section 6.1(b) of the Credit Agreement shall be amended and restated to read in its entirety as follows:

(b)           Minimum Liquidity.  Permit Liquidity, measured as of the last day of any month, to be less than the sum of (i) $30,000,000, and (ii) up to $20,000,000 of the difference, if any, between the aggregate principal amount of Revolving Loans outstanding on such day and $30,000,000.

(b)           Section 6.1(c) of the Credit Agreement shall be amended and restated to read in its entirety as follows:

(c)           Minimum Consolidated EBITDA.  Permit Consolidated EBITDA, measured as of the last day of each fiscal quarter of the Borrower specified below and with reference to the four consecutive fiscal quarter period then ended, to be less than the amount indicated below for such period:

  

2

  

	
Four Fiscal Quarter Period Ending

	 	
Minimum Consolidated EBITDA

	 
	
March 31, 2012

	 	$	1	 
	
June 30, 2012

	 	$	1,000,000	 
	
September 30, 2012

	 	$	(1,500,000	)
	
December 31, 2012

	 	$	(1,500,000	)
	
March 31, 2013

	 	$	(1,000,000	)
	
June 30, 2013

	 	$	1	 
	
September 30, 2013

	 	$	1	 
	
December 31, 2013

	 	$	1,000,000	 
	
March 31, 2014

	 	$	1,500,000	 
	
June 30, 2014 and thereafter

	 	$	2,000,000	 

(c)           Exhibit B to the Credit Agreement (Form of Compliance Certificate) shall be amended and restated to read in its entirety as set forth in Exhibit B hereto.

4.             Amendment to the Guarantee and Collateral Agreement.  With effect from and after the Effective Date, Section 5.7 of the Guarantee and Collateral Agreement shall be amended by adding the following as new subsection (d) to the end of such Section 5.7:

(d)           Notwithstanding anything to the contrary set forth in any Loan Document (including Sections 4.3 and 5.11 of the Credit Agreement and Sections 3.3(e), 5.3(a) and 5.7(a) through (c) hereof), the Acquired Business shall not be required to cause the execution and delivery to the Administrative Agent of any Deposit Account Control Agreements or Securities Account Control Agreements, as applicable, with respect to any of the following Deposit Accounts and Securities Account of the Acquired Business:  (i) Square 1 Bank Deposit Account No. 103125, (ii) Sovereign Bank Deposit Account No. 7581014991, (iii) Square 1 Bank Money Market Account No. 237065, (iv) Square 1 Bank Money Market Account No. 100083, (v) Square 1 Bank Money Market Collateral Account No. 65794, (vi) Sovereign Bank Money Market Account No. 5460, and (vii) Sovereign Bank Money Market Account No. 300; provided that the aggregate amount of all cash and Investment Property maintained at any time in all such Deposit Accounts and Securities Accounts which are not subject to Control Agreements in favor of the Administrative Agent shall not exceed $2,000,000 at such time.

5.             Representations and Warranties.  In order to induce the Administrative Agent and the Required Lenders to provide the consents and waivers specified in Sections 1 and 2 hereof and the amendments specified in Sections 3 and 4 hereof, each of the Borrower and the Acquired Business represents and warrants to the Administrative Agent and the Required Lenders that:

(a)           no Event of Default exists immediately before and that no Default or Event of Default exists immediately after giving effect to the waivers contemplated in Section 2 above and to the amendments contemplated by Sections 3 and 4 hereof;

(b)           the execution, delivery and performance by such Person of this letter agreement have been duly authorized by all necessary corporate, limited liability company or other action on the part of such Person and do not and will not require any registration with, consent or approval of, or notice to or action by, any Person (including any Governmental Authority) in order to be effective and enforceable;

  

3

  

 

(c)           this letter agreement and the other Loan Documents to which such Person is party constitute the legal, valid and binding obligations of such Person, and are enforceable against such Person in accordance with their respective terms, without defense, counterclaim or offset; and

(d)           each of the representations and warranties made by such Person in or pursuant to any Loan Document (i) that is qualified by materiality shall be true and correct, and (ii) that is not qualified by materiality, shall be true and correct in all material respects, in each case, on and as of the date hereof, as if made on and as of such date, except to the extent any such representation and warranty expressly relates to an earlier date, in which case such representation and warranty shall have been true and correct in all material respects as of such earlier date.

6.             Conditions to Effectiveness.  This letter agreement shall become effective as of the date upon which each of the following conditions precedent is satisfied (such date, the “Effective Date”):

(a)           the Administrative Agent shall have received from each of the Borrower and the Acquired Business a duly executed original (or, if elected by the Administrative Agent, an executed facsimile or PDF followed promptly by an executed original) counterpart of this letter agreement;

(b)           the Administrative Agent shall have received from the Acquired Business (in its capacity as a Guarantor) a duly executed original (or, if elected by the Administrative Agent, an executed facsimile or PDF followed promptly by an executed original) signature page to the Guarantor Acknowledgment and Consent attached hereto as Exhibit A;

(c)           the Administrative Agent shall have received from the Borrower an amendment fee in the amount of $5,000; and

(d)           the Borrower shall have paid, in accordance with Section 9.5 of the Credit Agreement, all costs and expenses of counsel to the Administrative Agent to the extent invoiced to the Borrower prior to the Effective Date.

7.             Reservation.  Each of the Borrower and the Acquired Business acknowledges and agrees that neither the execution nor the delivery by the Administrative Agent and the Required Lenders of this letter agreement shall (a) be deemed to create a course of dealing or otherwise obligate the Administrative Agent or such Required Lenders to grant similar consents, waivers or amendments under the same or similar circumstances in the future, or (b) be deemed to create an implied waiver of any right or remedy of the Administrative Agent or such Required Lenders with respect to any term or provision of any Loan Document (including any term or provision relating to the occurrence of a Material Adverse Effect).

8.             Governing Law.  THIS LETTER AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS LETTER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA.  This letter agreement is subject to the provisions of Section 9.14 of the Credit Agreement relating to submission to jurisdiction, jury trial waiver and judicial reference, which provisions are by this reference incorporated herein, mutatis mutandis, as if set forth herein in full.

9.             Successors and Assigns.  This letter agreement shall be binding upon and inure to the benefit of the parties hereto and to the benefit of their respective successors and assigns.  No third party beneficiaries are intended in connection with this letter agreement.

  

4

  

 

10.           Entire Agreement; Amendments.  This letter agreement, together with the Credit Agreement and the other Loan Documents, contains the entire and exclusive agreement of the parties hereto with reference to the matters discussed herein and therein.  This letter agreement supersedes all prior drafts and communications with respect hereto and may not be amended except in accordance with the provisions of Section 9.1 of the Credit Agreement.

11.           Severability.  If any term or provision of this letter agreement shall be deemed prohibited by or invalid under any applicable law, such provision shall be invalidated without affecting the remaining provisions of this letter agreement, respectively.

12.           Reimbursement of Costs and Expenses.  The Borrower covenants to pay or reimburse the Administrative Agent, upon demand, for all reasonable and documented costs and expenses (including the allocated costs of in-house counsel) incurred by the Administrative Agent in connection with the development, preparation, negotiation, execution and delivery of this letter agreement.

13.           Counterparts.  This letter agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all such counterparts together shall constitute but one agreement.

14.           Loan Document.  This letter agreement shall constitute a Loan Document.

Please indicate your acknowledgement of and agreement with the terms and provisions set forth in this letter agreement by countersigning and returning four originally-executed counterpart signature pages hereto, and four originally-executed signature pages to the Guarantor Acknowledgment and Consent attached hereto as Exhibit A, to the attention of Lance Peterson at the following address:

 

	Lance Peterson
	Morrison & Foerster LLP
	425 Market Street, 32nd Floor
	San Francisco, CA 94105

 

	Very truly yours,	 	 	 	 
	 	 	 	 	 
	SILICON VALLEY BANK,	 	 	 	 
	as Administrative Agent	 	 	 	 
	 	 	 	 	 	 
	By:	 	 	 	 	 
	Name:	 	 	 	 	 
	Title: 	 	 	 	 	 

 

	SILICON VALLEY BANK,	 	 	 	 
	
as a Lender

	 	 	 	 
	 	 	 	 	 	 
	By:	 	 	 	 	 
	Name:	 	 	 	 	 
	Title: 	 	 	 	 	 

  

5

  

	
ACKNOWLEDGED AND AGREED:

	 	 	 	 
	 	 	 	 	 
	
SHORETEL, INC.,

	 	 	 	 
	
as the Borrower

	 	 	 	 
	 	 	 	 	 	 
	By:	 	 	 	 	 
	Name:	Mike Healy	 	 	 	 
	Title: 	Senior VP of Finance & CFO	 	 	 	 

	
M5 NETWORKS, LLC,

	 	 	 	 
	
as the Acquired Business

	 	 	 	 
	 	 	 	 	 	 
	By:	 	 	 	 	 
	Name:	Mike Healy	  	 	 	 
	Title: 	Senior VP of Finance & CFO	 	 	 	 

  

6

 

SCHEDULE 1

SPECIFIED DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS OF

THE ACQUIRED BUSINESS

 

DEPOSIT ACCOUNTS:

Square 1 Bank Deposit Account No. 103125

Sovereign Bank Deposit Account No. 7581014991

SECURITIES ACCOUNTS:

Square 1 Bank Money Market Account No. 237065

Square 1 Bank Money Market Account No. 100083

Square 1 Bank Money Market Collateral Account No. 65794

Sovereign Bank Money Market Account No. 5460

Sovereign Bank Money Market Account No. 300

 

  

Schedule 1

  

 

EXHIBIT A

GUARANTOR ACKNOWLEDGEMENT AND CONSENT

The undersigned, a Guarantor with respect to the Obligations of the Borrower to the Administrative Agent and the Lenders under the terms of the Loan Documents, hereby:

(a)           acknowledges and consents to the execution, delivery and performance by the Borrower of the foregoing letter agreement (the “Consent, Waiver and Amendment Letter”);

(b)           represents and warrants that (i) no default exists under the Guarantee and Collateral Agreement or any other Loan Document to which the undersigned is a party, and (ii) the execution and delivery by it of this Guarantor Acknowledgement and Consent (A) are within its limited liability company power, (B) have been duly authorized by all necessary limited liability company action, and (C) do not require the consent, approval or authorization of any Person which has not been previously obtained; and

(c)           reaffirms and agrees that the Guarantee and Collateral Agreement as to which the undersigned is party, and all other Loan Documents and agreements executed and delivered by the undersigned to the Administrative Agent and/or the Lenders in connection with the Guarantee and Collateral Agreement, are in full force and effect without defense, offset or counterclaim and will so continue.

All capitalized terms used but not otherwise defined herein shall have the respective meanings assigned to such terms in the Credit Agreement (as defined in the Consent, Waiver and Amendment Letter).

This Guarantor Acknowledgement and Consent shall constitute a Loan Document under the Credit Agreement.

	 	
M5 NETWORKS, LLC

	 
	 	 	 	 
	 	
By: 

	 	 
	 	Name: 	Mike Healy  	 
	 	Title:  	Senior VP of Finance & CFO	 

 

  

Exhibit A 

  

 

EXHIBIT B

AMENDED AND RESTATED EXHIBIT B TO CREDIT AGREEMENT

(FORM OF COMPLIANCE CERTIFICATE)

EXHIBIT B

 

FORM OF COMPLIANCE CERTIFICATE

 

SHORETEL, INC.

Date:   November 12, 2012 for Period Ending September 30, 2012

This Compliance Certificate is delivered pursuant to Section [5.2(b)(ii)][5.2(g)(ii)(F)] of that certain Credit Agreement, dated as of March 15, 2012, among ShoreTel, Inc., a Delaware corporation (the “Borrower”), the Lenders party thereto, and Silicon Valley Bank, as Administrative Agent (as amended, restated, amended and restated, supplemented, restructured or otherwise modified from time to time, the “Credit Agreement”).  Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

1.      I am the duly elected, qualified and acting [Insert title of applicable Responsible Officer] of the Borrower.

 

2.      I have reviewed and am familiar with the contents of this Compliance Certificate.

 

3.      I have reviewed the terms of the Credit Agreement and the other Loan Documents and have made, or caused to be made under my supervision, a review in reasonable detail of the transactions and condition of the Borrower and its Subsidiaries during the accounting period covered by the financial statements attached hereto as Attachment 1 (the “Financial Statements”).  Such review did not disclose the existence during or at the end of the accounting period covered by the Financial Statements, and I have no knowledge of the existence as of the date of this Compliance Certificate, of any condition or event which constitutes a Default or an Event of Default.

 

4.      [Attached hereto as Attachment 2 are the computations showing compliance with the covenants set forth in Section 6.1 of the Credit Agreement.]. See Excel file “Borrowing Base Certificate Testing – 9.30.12.xlsx” that was electronically transmitted to Silicon Valley Bank at 6:02pm on November 8, 2012.

 

5.      [To the extent not previously disclosed to the Administrative Agent, a description of any change in the jurisdiction of organization of any Loan Party.] No change reported.

 

6.      [To the extent not previously disclosed to the Administrative Agent, a list of any material patents, registered trademarks or registered copyrights issued to or acquired by any Loan Party since [the Closing Date][the date of the most recent report delivered].]

 

[Remainder of page intentionally left blank; signature page follows]

 

  

Exhibit B

  

 

IN WITNESS WHEREOF, I have executed this Compliance Certificate as of the date first written above.

 

	 	
SHORETEL, INC.

	 
	 	 	 	 
	 	
By: 

	 	 
	 	Name:	Mike Healy	 
	 	Title:	Senior VP of Finance & CFO	 

 

  

Exhibit B

  

Attachment 1

to Compliance Certificate

 

[Attach Financial Statements]

 

  

Exhibit B

  

 

Attachment 2

to Compliance Certificate

 

The information described herein is as of September 30, 2012 (the “Statement Date”), and pertains to the four consecutive fiscal quarter period of the Borrower ended on the Statement Date (the “Subject Period”).

	I.	 	 	
Section 6.1(a) — Minimum Liquidity Ratio

	 	  
	 	 	 	 	 	  	 	  
	 	 	 	 	A.	 	
Liquidity as of the Statement Date (Line II.C):

	 	
$___________

	 	 	 	 	B.	 	
Aggregate amount of Eligible Accounts as of the Statement Date (as determined by the Administrative Agent with reference to the most recent Borrowing Base Certificate delivered to the Administrative Agent pursuant to the terms of the Credit Agreement):

	 	
$___________

	 	 	 	 	C.	 	
Aggregate amount of all Indebtedness of the Borrower and its consolidated Subsidiaries as of the Statement Date:

	 	
$___________

	 	 	 	 	D.	 	
Liquidity Ratio as of the Statement Date ((Line I.A plus Line I.B) to Line I.C):

	 	
[__] to 1.00

	 	 	 	 	 	 	
Minimum ratio required:

	 	
1.50 to 1.00

	 	 	 	 	 	 	Covenant compliance:	Yes  o	
No  o

	 	 	 

 

	
II.

	 	 	
Section 6.1(b) — Minimum Liquidity

	 	  
	  	 	 	 	 	  	 	  
	  	 	 	 	A.	 	
Aggregate amount of all unrestricted cash of the Borrower and its Domestic Subsidiaries subject as of the Statement Date to a perfected Lien of the Administrative Agent (held for the ratable benefit of the Lenders):

	 	
$___________

	  	 	 	 	B.	 	
Aggregate amount of Cash Equivalents of the Borrower and its Domestic Subsidiaries subject as of the Statement Date to a perfected Lien of the Administrative Agent (held for the ratable benefit of the Lenders):

	 	
$___________

	  	 	 	 	C.	 	
Liquidity as of the Statement Date (Lines II.A plus Line II.B):

	 	
$___________

	  	 	 	 	 	 	
Minimum liquidity required:

	 	  
	  	 	 	 	 	 	
The sum of (i) $30,000,000, and (ii) up to $20,000,000 of the difference, if any, between the aggregate amount of Revolving Loans outstanding on the Statement Date and $30,000,000

	 	
$___________

	  	 	 	 	 	 	  	 	  
	  	 	 	 	 	 	Covenant compliance:	
Yes  o

	
No  o

	 	 	 

 

See Excel file “Borrowing Base Certificate Testing – 9.30.12.xlsx” for analysis.

 

  

Exhibit B

  

	
III.

	 	 	
Section 6.1(c) — Minimum Consolidated EBITDA

	 	  
	  	 	 	 	 	 	 	 	  
	  	 	 	 	A.	 	 	
Consolidated EBITDA for the Subject Period:

	 	  
	  	 	 	 	 	 	 	 	 	  
	  	 	 	 	 	 	 	1.	 	
Consolidated Net Income for the Subject Period:

	 	
$___________

	  	 	 	 	 	 	 	 	 	  
	  	 	 	 	 	 	 	2.	 	
Consolidated Interest Expense for the Subject Period:

	 	
$___________

	  	 	 	 	 	 	 	 	 	  
	  	 	 	 	 	 	 	3.	 	
provision for income taxes (as reported in accordance with GAAP) for the Subject Period:

	 	
$___________

	  	 	 	 	 	 	 	 	 	  
	  	 	 	 	 	 	 	4.	 	
depreciation expenses for the Subject Period:

	 	
$___________

	  	 	 	 	 	 	 	 	 	  
	  	 	 	 	 	 	 	5.	 	
amortization expenses for the Subject Period:

	 	
$___________

	  	 	 	 	 	 	 	 	 	  
	  	 	 	 	 	 	 	6.	 	
integration expenses (other than restructuring charges) and transaction expenses for the Subject Period related to the Initial Acquisition and Permitted Acquisitions:

	 	
$___________

	  	 	 	 	 	 	 	 	 	  
	  	 	 	 	 	 	 	7.	 	
Earn-Out Liabilities and any other earn-out liabilities arising in connection with Permitted Acquisitions and paid during the Subject Period:

	 	
$___________

	  	 	 	 	 	 	 	 	 	  
	  	 	 	 	 	 	 	8.	 	
non-recurring one-time charges for the Subject Period in respect of settlements, litigation and casualty events in an amount not exceeding $500,000 for all such charges taken together during the term of this Agreement:

	 	
$___________

	  	 	 	 	 	 	 	 	 	  
	  	 	 	 	 	 	 	9.	 	
restructuring charges incurred in connection with the Initial Acquisition or any Permitted Acquisition in an amount not exceeding $2,500,000:

	 	
$___________

	  	 	 	 	 	 	 	 	 	  
	  	 	 	 	 	 	 	10.	 	
charges taken during the Subject Period related to equity compensation and impairment of intangible assets and other non-cash items reducing Consolidated Net Income (excluding any such non-cash item to the extent that it represents an accrual or reserve for potential cash items in any future period or amortization of a prepaid cash item that was paid in a prior period) approved by the Administrative Agent in writing as an ‘add back’ to Consolidated EBITDA:

	 	
$___________

	  	 	 	 	 	 	 	 	 	  
	  	 	 	 	 	 	 	11.	 	
other non-cash items during the Subject Period increasing Consolidated Net Income for such period (excluding any such non-cash item to the extent it represents the reversal of an accrual or reserve for potential cash item in any prior period):

	 	
$___________

	  	 	 	 	 	 	 	 	 	  
	  	 	 	 	 	 	 	12.	 	
interest income during the Subject Period:

	 	
$___________

	  	 	 	 	 	 	 	 	 	  
	  	 	 	 	 	 	 	13.	 	
Consolidated EBITDA for the Subject Period

(Lines III.A.1+III.A.2+III.A.3+III.A.4+III.A.5+III.A.6 +III.A.7 +III.A.8 +III.A.9 +III.A.10 minus III.A.11 minus III.A.12):

	 	
$___________

	  	 	 	 	 	 	 	 	 	  

 

Exhibit B

  

  

 

	  	
Minimum Consolidated EBITDA required:

	  
	 	 	 
	  	
Subject Period Ending

	
Minimum Consolidated EBITDA

	  
	  	
March 31, 2012

	
$1

	  
	  	
June 30, 2012

	
$1,000,000

	  
	  	
September 30, 2012

	
$(1,500,000)

	  
	  	
December 31, 2012

	
$(1,500,000)

	  
	  	
March 31, 2013

	
$(1,000,000)

	  
	  	
June 30, 2013

	
$1

	  
	  	
September 30, 2013

	
$1

	  
	  	
December 31, 2013

	
$1,000,000

	  
	  	
March 31, 2014

	
$1,500,000

	  
	  	
June 30, 2014 and thereafter

	
$2,000,000

	
$___________

	  	
Covenant compliance:

	
Yes o

	
No o

 

See Excel file “Borrowing Base Certificate Testing – 9.30.12.xlsx” for analysis.

 

 

 Exhibit B

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00212-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00212-of-00352.parquet"}]]