Document:

Unassociated Document

EXECUTION VERSION

	 
	  
	
$100,000,000

 

CREDIT AGREEMENT

 

among

 

UNITEK GLOBAL SERVICES, INC.,

as Borrower,

 

The Several Lenders from Time to Time Parties Hereto,

 

FBR CAPITAL MARKETS LT, INC.,

as Documentation Agent and Syndication Agent,

 

and

 

FBR CAPITAL MARKETS LT, INC.,

as Administrative Agent

 

	
Dated as of April 15, 2011

	  

FBR CAPITAL MARKETS & CO., as Lead Arranger and Bookrunner

  

  

  

TABLE OF CONTENTS

 

	  	 	  	
Page

	  	 	  	  
	
ARTICLE 1. DEFINITIONS

	
1

	
1.1.

	 	
Defined Terms

	
1

	
1.2.

	 	
Other Definitional Provisions

	
23

	
1.3.

	 	
Pro Forma Basis

	
24

	  	  
	
ARTICLE 2. AMOUNT AND TERMS OF COMMITMENTS

	
25

	
2.1.

	 	
Tranche B Term Commitments

	
25

	
2.2.

	 	
Procedure for Tranche B Term Loan Borrowing

	
25

	
2.3.

	 	
Repayment of Term Loans

	
25

	
2.4.

	 	
Fees, etc.

	
26

	
2.5.

	 	
Optional Prepayments

	
26

	
2.6.

	 	
Mandatory Prepayments and Commitment Reductions

	
27

	
2.7.

	 	
Conversion and Continuation Options

	
27

	
2.8.

	 	
Limitations on Eurodollar Tranches

	
28

	
2.9.

	 	
Interest Rates and Payment Dates

	
28

	
2.10.

	 	
Computation of Interest and Fees

	
29

	
2.11.

	 	
Inability to Determine Interest Rate

	
29

	
2.12.

	 	
Pro Rata Treatment and Payments

	
29

	
2.13.

	 	
Requirements of Law

	
31

	
2.14.

	 	
Taxes

	
32

	
2.15.

	 	
Indemnity

	
35

	
2.16.

	 	
Change of Lending Office

	
35

	
2.17.

	 	
Replacement of Lenders

	
35

	
2.18.

	 	
Incremental Facilities

	
36

	  	  
	
ARTICLE 3. REPRESENTATIONS AND WARRANTIES

	
37

	
3.1.

	 	
Financial Condition

	
37

	
3.2.

	 	
No Change

	
38

	
3.3.

	 	
Existence; Compliance with Law

	
38

	
3.4.

	 	
Power; Authorization; Enforceable Obligations

	
38

	
3.5.

	 	
No Legal Bar

	
38

	
3.6.

	 	
Litigation

	
38

	
3.7.

	 	
No Default

	
38

	
3.8.

	 	
Ownership of Property; Liens

	
39

	
3.9.

	 	
Intellectual Property

	
39

	
3.10.

	 	
Taxes

	
39

	
3.11.

	 	
Federal Regulations

	
39

	
3.12.

	 	
Labor Matters

	
39

	
3.13.

	 	
ERISA

	
39

	
3.14.

	 	
Investment Company Act; Other Regulations

	
40

	
3.15.

	 	
Subsidiaries

	
40

	
3.16.

	 	
Use of Proceeds

	
40

	
3.17.

	 	
Environmental Matters

	
40

	
3.18.

	 	
Accuracy of Information, etc.

	
41

	
3.19.

	 	
Security Documents

	
41

	
3.20.

	 	
Solvency

	
42

	
3.21.

	 	
Regulation H

	
42

  

  

  

	
3.22.

	 	
Certain Documents

	
42

	
3.23.

	 	
Anti-Terrorism Laws.

	
42

	
3.24.

	 	
Trading with the Enemy

	
43

	  	  
	
ARTICLE 4. CONDITIONS PRECEDENT

	
43

	  	  
	
ARTICLE 5. AFFIRMATIVE COVENANTS

	
45

	
5.1.

	 	
Financial Statements

	
45

	
5.2.

	 	
Certificates; Other Information

	
46

	
5.3.

	 	
Payment of Obligations

	
47

	
5.4.

	 	
Maintenance of Existence; Compliance

	
47

	
5.5.

	 	
Maintenance of Property; Insurance

	
48

	
5.6.

	 	
Inspection of Property; Books and Records; Discussions

	
48

	
5.7.

	 	
Notices

	
48

	
5.8.

	 	
Environmental Laws

	
48

	
5.9.

	 	
Interest Rate Protection

	
49

	
5.10.

	 	
Additional Collateral, etc.

	
49

	
5.11.

	 	
Ratings

	
50

	
5.12.

	 	
Post-Closing Obligations

	
50

	  	 	  	  
	
ARTICLE 6. NEGATIVE COVENANTS

	
51

	
6.1.

	 	
Financial Condition Covenants

	
51

	
6.2.

	 	
Indebtedness

	
52

	
6.3.

	 	
Liens

	
54

	
6.4.

	 	
Fundamental Changes

	
56

	
6.5.

	 	
Disposition of Property

	
56

	
6.6.

	 	
Restricted Payments

	
57

	
6.7.

	 	
Investments

	
57

	
6.8.

	 	
Optional Payments and Modifications of Certain Debt Instruments

	
59

	
6.9.

	 	
Transactions with Affiliates

	
59

	
6.10.

	 	
Sales and Leasebacks

	
59

	
6.11.

	 	
Swap Agreements

	
60

	
6.12.

	 	
Changes in Fiscal Periods

	
60

	
6.13.

	 	
Negative Pledge Clauses

	
60

	
6.14.

	 	
Clauses Restricting Subsidiary Distributions

	
60

	
6.15.

	 	
Lines of Business

	
61

	
6.16.

	 	
Compliance with ABL Incorporated Provisions

	
61

	
6.17.

	 	
Amendments to ABL Documents

	
61

	  	 	  	  
	
ARTICLE 7. EVENTS OF DEFAULT

	
62

	  	  
	
ARTICLE 8. THE AGENTS

	
64

	
8.1.

	 	
Appointment

	
64

	
8.2.

	 	
Delegation of Duties

	
64

	
8.3.

	 	
Exculpatory Provisions

	
65

	
8.4.

	 	
Reliance by Administrative Agent

	
65

	
8.5.

	 	
Notice of Default

	
65

	
8.6.

	 	
Non-Reliance on Agents and Other Lenders

	
66

	
8.7.

	 	
Indemnification

	
66

	
8.8.

	 	
Agent in Its Individual Capacity

	
66

	
8.9.

	 	
Successor Administrative Agent

	
66

  

  

  

	
8.10.

	 	
Documentation Agent and Syndication Agent

	
67

	
8.11.

	 	
Intercreditor Agreement

	
67

	  	 	  	  
	
ARTICLE 9. MISCELLANEOUS

	
68

	
9.1.

	 	
Amendments and Waivers

	
68

	
9.2.

	 	
Notices

	
69

	
9.3.

	 	
No Waiver; Cumulative Remedies

	
69

	
9.4.

	 	
Survival of Representations and Warranties

	
70

	
9.5.

	 	
Payment of Expenses and Taxes

	
70

	
9.6.

	 	
Successors and Assigns; Participations and Assignments

	
71

	
9.7.

	 	
Adjustments; Set-off

	
74

	
9.8.

	 	
Counterparts

	
74

	
9.9.

	 	
Severability

	
74

	
9.10.

	 	
Integration

	
74

	
9.11.

	 	
GOVERNING LAW

	
74

	
9.12.

	 	
Submission To Jurisdiction; Waivers

	
75

	
9.13.

	 	
Acknowledgements

	
75

	
9.14.

	 	
Releases of Guarantees and Liens

	
75

	
9.15.

	 	
Confidentiality

	
76

	
9.16.

	 	
WAIVERS OF JURY TRIAL

	
76

	
9.17.

	 	
USA Patriot Act

	
76

  

  

  

SCHEDULES:

 

	
1.1A

	
Commitments

	
1.1B

	
Mortgaged Property

	
3.4

	
Consents, Authorizations, Filings and Notices

	
3.10

	
Taxes

	
3.15

	
Subsidiaries

	
3.19(a)

	
UCC Filing Jurisdictions

	
3.19(b)

	
Mortgage Filing Jurisdictions

	
6.2(d)

	
Existing Indebtedness

	
6.3(f)

	
Existing Liens

	
6.7(m)

	
Existing Investments

EXHIBITS:

 

	
A

	
Form of Guarantee and Collateral Agreement

	
B

	
Form of Compliance Certificate

	
C

	
Form of Closing Certificate

	
D

	
Form of Assignment and Assumption

	
E

	
Form of Legal Opinion of Morgan, Lewis & Bockius LLP

	
F

	
Form of U.S. Tax Certificate

	
G-1

	
Form of Increased Facility Activation Notice

	
G-2

	
Form of New Lender Supplement

	
H

	
Form of Intercreditor Agreement

  

  

  

CREDIT AGREEMENT (this “Agreement”), dated as of April 15, 2011, among UNITEK GLOBAL SERVICES, INC., a Delaware corporation (the “Borrower”), the several banks and other financial institutions or entities from time to time parties to this Agreement (the “Lenders”), FBR CAPITAL MARKETS LT, INC., as documentation agent (in such capacity, the “Documentation Agent”), as syndication agent (in such capacity, the “Syndication Agent”), and as administrative agent.

 

The parties hereto hereby agree as follows:

 

ARTICLE 1. DEFINITIONS

 

1.1.           Defined Terms. As used in this Agreement, the terms listed in this Section 1.1 shall have the respective meanings set forth in this Section 1.1.

 

“ABL Agent”:  PNC Bank, National Association, in its capacity as the “Agent” under the ABL Documents, together with its successors and assigns in such capacity including any and all successor “Agent(s)” appointed in accordance with the ABL Credit Agreement; provided that, upon and after any permitted refinancing of the ABL Indebtedness with Permitted Refinancing Indebtedness, the term “ABL Agent” shall mean, collectively (if applicable), the administrative and collateral agent(s) and/or lender representative(s) under such Permitted Refinancing Indebtedness (together with their successors and assigns in such capacity).

 

“ABL Credit Agreement”:  the ABL Credit and Security Agreement among Borrower and Loan Parties, ABL Agent and ABL Lenders, as it may be amended, modified, supplemented, restated or replaced from time to time in accordance with this Agreement; provided that upon and after any permitted refinancing of the ABL Indebtedness with Permitted Refinancing Indebtedness, the term “ABL Credit Agreement” shall mean the credit agreement for such Permitted Refinancing Indebtedness (as it may be amended, modified, supplemented, restated or replaced from time to time in accordance with this Agreement).

 

“ABL Credit Agreement”:  the Credit Agreement, dated as of April 15, 2011 among the Borrower, the lenders from time to time parties thereto and PNC Bank, National Association, as administrative agent, as amended, restated or refinanced (as Permitted Refinancing Indebtedness) from time to time in accordance with this Agreement.

 

“ABL Creditors”:  collectively, the ABL Agent and the ABL Lenders.

 

“ABL Debt Obligations Payment Date”:  as defined in the Intercreditor Agreement.

 

 “ABL Documents”:  collectively, the ABL Credit Agreement and all other material instruments, agreements and documents executed in connection therewith, as each such document may be amended, modified, supplemented, restated or replaced from time to time, but excluding any fee letters, engagement letters and similar agreements; provided that, upon and after any permitted refinancing of the ABL Indebtedness with the Permitted Refinancing Indebtedness, the term “ABL Documents” shall mean the credit agreement for such refinancing and all such other material instruments, agreements and documents executed in connection therewith (as each such document may be amended, modified, supplemented, restated or replaced from time to time in accordance with this Agreement).

 

“ABL Indebtedness”: the Indebtedness and other obligations and liabilities of any Loan Party (including guaranty Indebtedness and guarantee obligations, reimbursement obligations, fees, costs, indemnification obligations and post-petition amounts, whether or not allowed) evidenced by and/or arising under the ABL Documents; provided that, upon and after any permitted refinancing of such Indebtedness and other obligations and liabilities with Permitted Refinancing Indebtedness, the term “ABL Indebtedness” shall mean such Indebtedness and other obligations and liabilities as so refinanced.

  

  

  

 

“ABL Lenders”:  collectively, each financial institution or other Person that is a “Lender” under the ABL Documents and each other Person to whom any “Obligation” (as defined in the ABL Credit Agreement) is owed, together with the successors and assigns of each of them; provided that, upon and after any permitted refinancing of the ABL Indebtedness with Permitted Refinancing Indebtedness, the term “ABL Lenders” shall mean, collectively, the lenders providing such Permitted Refinancing Indebtedness (together with their successors and assigns in such capacity).

 

“ABL Loans”:  loans outstanding under the ABL Credit Agreement.

 

“ABL Obligations Payment Date”:  as defined in the Intercreditor Agreement.

 

“ABL Priority Collateral”:  as defined in the Intercreditor Agreement.

 

“ABL Representative”:  as defined in the Intercreditor Agreement.

 

“ABR”:  for any day, a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 1⁄2 of 1% and (c) the Eurodollar Rate that would be calculated as of such day (or, if such day is not a Business Day, as of the next preceding Business Day) in respect of a proposed Eurodollar Loan with a one-month Interest Period plus 1.0%; provided that the ABR shall in no event at any time be less than 0.50%.  Any change in the ABR due to a change in the Prime Rate, the Federal Funds Effective Rate or such Eurodollar Rate shall be effective as of the opening of business on the day of such change in the Prime Rate, the Federal Funds Effective Rate or such Eurodollar Rate, respectively.

 

“ABR Loans”:  Loans the rate of interest applicable to which is based upon the ABR.

 

“Administrative Agent”:  FBR Capital Markets LT, Inc., together with its affiliates, as the arranger of the Commitments and as the administrative agent for the Lenders under this Agreement and the other Loan Documents, together with any of its successors.

 

“Affiliate”:  as to any Person, any other Person that, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person.  For purposes of this definition, “control” of a Person means the power, directly or indirectly, either to (a) vote 10% or more of the securities having ordinary voting power for the election of directors (or persons performing similar functions) of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.

 

“Agent Indemnitee”:  as defined in Section 8.7.

 

“Agents”:  the collective reference to the Syndication Agent, the Documentation Agent and the Administrative Agent.

 

“Aggregate Exposure”:  with respect to any Lender at any time, an amount equal to (a) until the Closing Date, the aggregate amount of such Lender’s Commitments at such time and (b) thereafter, the aggregate then unpaid principal amount of such Lender’s Term Loans.

  

2

  

 

“Aggregate Exposure Percentage”:  with respect to any Lender at any time, the ratio (expressed as a percentage) of such Lender’s Aggregate Exposure at such time to the Aggregate Exposure of all Lenders at such time.

 

“Agreement”:  as defined in the preamble hereto.

 

“Anti-Terrorism Laws”:  any applicable Requirement of Law relating to terrorism or money laundering, including Executive Order No. 13224, the USA PATRIOT Act, the Requirements of Law comprising or implementing the Bank Secrecy Act, and the Requirements of Law administered by the United States Treasury Department’s Office of Foreign Asset Control (as any of the foregoing Requirements of Law may from time to time be amended, renewed, extended, or replaced).

 

“Applicable Margin”:  (a) for each Type of Loan other than Incremental Term Loans, the rate per annum set forth under the relevant column heading below:

 

	  	 	
ABR Loans

	 	 	
Eurodollar Loans

	 
	
Tranche B Term Loans

	 	 	6.50	%	 	 	7.50	%

 

(b)  for Incremental Term Loans, such per annum rates as shall be agreed to by the Borrower and the applicable Incremental Term Lenders as shown in the applicable Increased Facility Activation Notice.

 

“Approved Fund”:  as defined in Section 9.6(b).

 

“Asset Sale”:  any Disposition of property or series of related Dispositions of property pursuant to clause (i) or (n) of Section 6.5 that yields gross proceeds to any Group Member (valued at the initial principal amount thereof in the case of non-cash proceeds consisting of notes or other debt securities and valued at fair market value in the case of other non-cash proceeds) in excess of $100,000.

 

“Assignee”:  as defined in Section 9.6(b).

 

“Assignment and Assumption”:  an Assignment and Assumption, substantially in the form of Exhibit D.

 

“Benefitted Lender”:  as defined in Section 9.7(a).

 

“Blocked Person”:  as defined in Section 3.23(b).

 

“Board”:  the Board of Governors of the Federal Reserve System of the United States (or any successor).

 

“Borrower”:  as defined in the preamble hereto.

 

“Borrowing Date”:  any Business Day specified by the Borrower as a date on which the Borrower requests the relevant Lenders to make Loans hereunder.

 

“Business”:  as defined in Section 3.17(b).

  

3

  

“Business Day”:  a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close, provided that with respect to notices and determinations in connection with, and payments of principal and interest on, Eurodollar Loans, such day is also a day for trading by and between banks in Dollar deposits in the interbank eurodollar market.

 

“Capital Expenditures”:  for any period, with respect to any Person, the aggregate of all expenditures by such Person and its Subsidiaries for the acquisition or leasing (pursuant to a capital lease) of fixed or capital assets or additions to equipment (including replacements, capitalized repairs and improvements during such period) that should be capitalized under GAAP on a consolidated balance sheet of such Person and its Subsidiaries.

 

“Capital Lease Obligations”:  as to any Person, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP and, for the purposes of this Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP.

 

“Capital Stock”:  any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing.

 

“Cash Equivalents”:  (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition; (b) certificates of deposit, time deposits, eurodollar time deposits or overnight bank deposits having maturities of six months or less from the date of acquisition issued by any Lender or by any commercial bank organized under the laws of the United States or any state thereof having combined capital and surplus of not less than $500,000,000; (c) commercial paper of an issuer rated at least A-1 by Standard & Poor’s Financial Services LLC (“S&P”) or P-1 by Moody’s Investors Service, Inc. (“Moody’s”), or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and maturing within six months from the date of acquisition; (d) repurchase obligations of any Lender or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than 30 days, with respect to securities issued or fully guaranteed or insured by the United States government; (e) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P or A by Moody’s; (f) securities with maturities of six months or less from the date of acquisition backed by standby letters of credit issued by any Lender or any commercial bank satisfying the requirements of clause (b) of this definition; (g) money market mutual or similar funds that invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition; or (h) money market funds that (i) comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940, as amended, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least $5,000,000,000.

 

“Closing Date”:  the date on which the conditions precedent set forth in Article 4 shall have been satisfied, which date is April 15, 2011.

 

“Code”:  the Internal Revenue Code of 1986, as amended from time to time.

  

4

  

 

“Collateral”:  all property of the Loan Parties, now owned or hereafter acquired, upon which a Lien is purported to be created by any Security Document.

 

“Commitment”:  as to any Lender, the Tranche B Term Commitment of such Lender.

 

“Compliance Certificate”:  a certificate duly executed by a Responsible Officer substantially in the form of Exhibit B.

 

“Conduit Lender”:  any special purpose corporation organized and administered by any Lender for the purpose of making Loans otherwise required to be made by such Lender and designated by such Lender in a written instrument; provided that the designation by any Lender of a Conduit Lender shall not relieve the designating Lender of any of its obligations to fund a Loan under this Agreement if, for any reason, its Conduit Lender fails to fund any such Loan, and the designating Lender (and not the Conduit Lender) shall have the sole right and responsibility to deliver all consents and waivers required or requested under this Agreement with respect to its Conduit Lender, and provided, further, that no Conduit Lender shall (a) be entitled to receive any greater amount pursuant to Section 2.13, 2.14, 2.15 or 9.5 than the designating Lender would have been entitled to receive in respect of the extensions of credit made by such Conduit Lender or (b) be deemed to have any Commitment.

 

“Confidential Information Memorandum”:  the Confidential Information Memorandum dated February 2011 and furnished to certain Lenders.

 

“Consolidated Current Assets”:  at any date, all amounts (other than cash and Cash Equivalents) that would, in conformity with GAAP, be set forth opposite the caption “total current assets” (or any like caption) on a consolidated balance sheet of the Borrower and its Subsidiaries at such date.

 

“Consolidated Current Liabilities”:  at any date, all amounts that would, in conformity with GAAP, be set forth opposite the caption “total current liabilities” (or any like caption) on a consolidated balance sheet of the Borrower and its Subsidiaries at such date, but excluding (a) the current portion of any Funded Debt of the Borrower and its Subsidiaries and (b) without duplication of clause (a) above, all Indebtedness consisting of ABL Loans to the extent otherwise included therein.

 

“Consolidated EBITDA”:  for any period, Consolidated Net Income for such period plus, without duplication and to the extent reflected as a charge in the statement of such Consolidated Net Income for such period, the sum of (a) income tax expense, (b) interest expense, amortization or writeoff of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Indebtedness (including the Loans), (c) depreciation and amortization expense, (d) amortization of intangibles (including, but not limited to, goodwill) and organization costs, (e) non-cash stock compensation expense, (f) one-time transaction costs associated with Permitted Acquisitions (whether or not consummated) and (g) any extraordinary or non-recurring cash expenses or losses not to exceed $2,000,000 of Consolidated EBITDA for such consecutive twelve month period without the consent of the Required Lenders and (h) any extraordinary or non-recurring non-cash expenses or losses (including, whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, non-cash losses on sales of assets outside of the ordinary course of business), and minus, (a) to the extent included in the statement of such Consolidated Net Income for such period, the sum of (i) interest income, (ii) any extraordinary, unusual or non-recurring income or gains (including, whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, gains on the sales of assets outside of the ordinary course of business), (iii) income tax credits (to the extent not netted from income tax expense) and (iv) any other non-cash income and (b) any cash payments made during such period in respect of items described in clause (e) above subsequent to the fiscal quarter in which the relevant non-cash expenses or losses were reflected as a charge in the statement of Consolidated Net Income, all as determined on a consolidated basis.  For the purposes of calculating Consolidated EBITDA for any period of four consecutive fiscal quarters (each, a “Reference Period”) pursuant to any determination of the Consolidated Leverage Ratio and Consolidated Fixed Charge Coverage Ratio, (i) if at any time during such Reference Period the Borrower or any Subsidiary shall have made any Material Disposition, the Consolidated EBITDA for such Reference Period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the property that is the subject of such Material Disposition for such Reference Period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such Reference Period and (ii) if during such Reference Period the Borrower or any Subsidiary shall have made a Material Acquisition, Consolidated EBITDA for such Reference Period shall be calculated after giving pro forma effect thereto as if such Material Acquisition occurred on the first day of such Reference Period.  As used in this definition, “Material Acquisition” means any acquisition of property or series of related acquisitions of property that (a) constitutes assets comprising all or substantially all of an operating unit of a business or constitutes all or substantially all of the common stock of a Person and (b) involves the payment of consideration by the Borrower and its Subsidiaries in excess of $1,000,000; and “Material Disposition” means any Disposition of property or series of related Dispositions of property that yields gross proceeds to the Borrower or any of its Subsidiaries in excess of $1,000,000.

  

5

  

 

“Consolidated Fixed Charge Coverage Ratio”:  for any period, the ratio of (a) Consolidated EBITDA for such period less the aggregate amount actually paid by the Borrower and its Subsidiaries during such period on account of Capital Expenditures (excluding the principal amount of Indebtedness (other than any ABL Loans) incurred in connection with such expenditures) to (b) Consolidated Fixed Charges for such period.

 

“Consolidated Fixed Charges”:  for any period, the sum (without duplication) of (a) Consolidated Interest Expense for such period, (b) Consolidated Lease Expense for such period (other than amounts constituting Consolidated Lease Expense which are included for such period pursuant to clause (a) or (d)), (c) taxes on income payable in cash, as determined for the Borrower and its Subsidiaries on a consolidated basis, and (d) scheduled payments made during such period on account of principal of Indebtedness of the Borrower or any of its Subsidiaries (including scheduled principal payments in respect of the Term Loans and payments of ABL Loans accompanying scheduled reductions of the commitments under the ABL Credit Agreement).

 

“Consolidated Interest Expense”:  for any period, total cash interest expense (including that attributable to Capital Lease Obligations) of the Borrower and its Subsidiaries for such period with respect to all outstanding Indebtedness of the Borrower and its Subsidiaries (including all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing and net costs under Swap Agreements in respect of interest rates to the extent such net costs are allocable to such period in accordance with GAAP).

 

“Consolidated Lease Expense”:  for any period, the aggregate amount of fixed and contingent rentals payable by the Borrower and its Subsidiaries for such period with respect to leases of real and personal property, determined on a consolidated basis in accordance with GAAP.

 

“Consolidated Leverage Ratio”:  as at the last day of any period, the ratio of (a) Consolidated Total Debt on such day to (b) Consolidated EBITDA for such period.

 

“Consolidated Net Income”:  for any period, the consolidated net income (or loss) of the Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded (a) the income (or deficit) of any Person accrued prior to the date it becomes a Subsidiary of the Borrower or is merged into or consolidated with the Borrower or any of its Subsidiaries, (b) the income (or deficit) of any Person (other than a Wholly-Owned Subsidiary of the Borrower) in which the Borrower or any of its Subsidiaries has an ownership interest, except to the extent that any such income is actually received by the Borrower or such Subsidiary in the form of dividends or similar distributions and (c) the undistributed earnings of any Subsidiary of the Borrower to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any Contractual Obligation (other than under any Loan Document) or Requirement of Law applicable to such Subsidiary.

  

6

  

“Consolidated Total Debt”:  at any date, the aggregate principal amount of all Indebtedness of the Borrower and its Subsidiaries at such date, determined on a consolidated basis in accordance with GAAP.

 

“Consolidated Working Capital”:  at any date, the excess of Consolidated Current Assets on such date over Consolidated Current Liabilities on such date.

 

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

 

“Credit Party”:  the Administrative Agent or any Lender.

 

“Default”:  any of the events specified in Article 7, whether or not any requirement for the giving of notice, the lapse of time, or both, has been satisfied, including, in any event, a “Default” under and as defined in the ABL Credit Agreement.

 

“DIRECTV/DirectSat Contract”: the DIRECTV, Inc. 2009 Home Services Provider Agreement dated as of July 1, 2009 between DIRECTV, Inc. and DirectSat USA LLC, including all exhibits and schedules thereto, as such agreement may have been or hereafter may be amended, modified, supplemented, restated or replaced from time to time.

 

“DIRECTV Inventory”: all Inventory purchased by any Loan Party pursuant to and in connection with the DIRECTV/DirectSat Contract that is subject to a Lien in favor of DIRECTV, Inc. created under the DIRECTV/DirectSat Contract and in which, pursuant to the terms and conditions of the DIRECTV/DirectSat Contract, no Liens may be created in favor of any Person other than DIRECTV, Inc.

 

“Disqualified Capital Stock”:  with respect to any Person, any Capital Stock of such Person which, by its terms, or by the terms of any security into which it is convertible or for which it is putable or exchangeable, or upon the happening of any event, matures or is mandatorily redeemable (other than solely for Capital Stock which is not Disqualified Capital Stock) pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof (other than solely as a result of a change of control or asset sale), in whole or in part, in each case prior to the date 91 days after the Tranche B Maturity Date; provided, however, that if such Capital Stock is issued to any plan for the benefit of employees of the Borrower or its Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Capital Stock solely because it may be required to be repurchased in order to satisfy applicable statutory or regulatory obligations.

 

“Disposition”:  with respect to any property, any sale, lease, sale and leaseback, assignment, conveyance, transfer or other disposition thereof.  The terms “Dispose” and “Disposed of” shall have correlative meanings.

 

“Documentation Agent”:  as defined in the preamble hereto.

  

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“Dollars” and “$”:  dollars in lawful currency of the United States.

 

“Domestic Subsidiary”:  any Subsidiary of the Borrower organized under the laws of any jurisdiction within the United States.

 

“Earn-Out Obligations”:  as defined in Section 6.7(o).

 

“ECF Percentage”:  50%; provided that, with respect to each fiscal year of the Borrower ending on or after December 31, 2011, the ECF Percentage shall be reduced to 25% if the Consolidated Leverage Ratio as of the last day of such fiscal year is not greater than 2.50 to 1.0.

 

“Environmental Laws”:  any and all foreign, Federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental Authority or other Requirements of Law (including common law) regulating, relating to or imposing liability or standards of conduct concerning protection of human health or the environment, as now or may at any time hereafter be in effect.

 

“ERISA”:  the Employee Retirement Income Security Act of 1974, as amended from time to time.

 

“ERISA Affiliate”:  any trade or business (whether or not incorporated) that, together with any Group Member, is treated as a single employer under Section 414 of the Code.

 

“ERISA Event”:  (a) the failure of any Plan to comply with any material provisions of ERISA and/or the Code (and applicable regulations under either) or with the material terms of such Plan; (b) the existence with respect to any Plan of a non-exempt Prohibited Transaction; (c) any Reportable Event; (d) the failure of any Group Member or ERISA Affiliate to make by its due date a required installment under Section 430(j) of the Code with respect to any Pension Plan or any failure by any Pension Plan to satisfy the minimum funding standards (within the meaning of Section 412 of the Code or Section 302 of ERISA) applicable to such Pension Plan, whether or not waived; (e) a determination that any Pension Plan is, or is expected to be, in “at risk” status (within the meaning of Section 430 of the Code or Section 303 of ERISA); (f) the filing pursuant to Section 412 of the Code or Section 302 of ERISA of an application for a waiver of the minimum funding standard with respect to any Pension Plan; (g) the occurrence of any event or condition which might constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or the incurrence by any Group Member or any  ERISA Affiliate of any liability under Title IV of ERISA with respect to the termination of any Pension Plan, including but not limited to the imposition of any Lien in favor of the PBGC or any Pension Plan; (h) the receipt by any Group Member or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Pension Plan or to appoint a trustee to administer any Pension Plan under Section 4042 of ERISA; (i) the failure by any Group Member or any of its ERISA Affiliates to make any required contribution to a Multiemployer Plan pursuant to Sections 431 or 432 of the Code; (j) the incurrence by any Group Member or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal from any Pension Plan or Multiemployer Plan; (k) the receipt by any Group Member or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from a Group Member or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, Insolvent, in Reorganization, in “endangered” or “critical” status (within the meaning of Section 432 of the Code or Section 305 of ERISA), or terminated (within the meaning of Section 4041A of ERISA); or (l) the failure by any Group Member or any of its ERISA Affiliates to pay when due (after expiration of any applicable grace period) any installment payment with respect to Withdrawal Liability under Section 4201 of ERISA.

  

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“Eurocurrency Reserve Requirements”:  for any day as applied to a Eurodollar Loan, the aggregate (without duplication) of the maximum rates (expressed as a decimal) of reserve requirements in effect on such day (including basic, supplemental, marginal and emergency reserves) under any regulations of the Board or other Governmental Authority having jurisdiction with respect thereto dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board) maintained by a member bank of the Federal Reserve System.

 

“Eurodollar Base Rate”:  with respect to each day during each Interest Period pertaining to a Eurodollar Loan, the rate per annum determined on the basis of the rate for deposits in Dollars for a period equal to such Interest Period commencing on the first day of such Interest Period appearing on the Reuters Screen LIBOR01 Page as of 11:00 A.M., London time, two Business Days prior to the beginning of such Interest Period; provided that the Eurodollar Base Rate shall in no event at any time be less than 1.50% per annum.  In the event that such rate does not appear on such page (or otherwise on such screen), the “Eurodollar Base Rate” shall be determined by reference to such other comparable publicly available service for displaying eurodollar rates as may be selected by the Administrative Agent or, in the absence of such availability, by reference to the rate at which the Administrative Agent is offered Dollar deposits at or about 11:00 A.M., New York City time, two Business Days prior to the beginning of such Interest Period in the interbank eurodollar market where its eurodollar and foreign currency and exchange operations are then being conducted for delivery on the first day of such Interest Period for the number of days comprised therein.

 

“Eurodollar Loans”:  Loans the rate of interest applicable to which is based upon the Eurodollar Rate.

 

“Eurodollar Rate”:  with respect to each day during each Interest Period pertaining to a Eurodollar Loan, a rate per annum determined for such day in accordance with the following formula:

 

	
Eurodollar Base Rate

	
1.00 - Eurocurrency Reserve Requirements

 

“Eurodollar Tranche”:  the collective reference to Eurodollar Loans under a particular Facility the then current Interest Periods with respect to all of which begin on the same date and end on the same later date (whether or not such Loans shall originally have been made on the same day).

 

“Event of Default”:  any of the events specified in Article 7, provided that any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

 

“Excess Cash Flow”:  for any fiscal year of the Borrower, the excess, if any, of (a) the sum, without duplication, of (i) Consolidated Net Income for such fiscal year, (ii) the amount of all non-cash charges (including depreciation and amortization) deducted in arriving at such Consolidated Net Income, (iii) decreases in Consolidated Working Capital for such fiscal year, and (iv) the aggregate net amount of non-cash loss on the Disposition of property by the Borrower and its Subsidiaries during such fiscal year (other than sales of inventory in the ordinary course of business), to the extent deducted in arriving at such Consolidated Net Income over (b) the sum, without duplication, of (i) the amount of all non-cash credits included in arriving at such Consolidated Net Income, (ii) the aggregate amount actually paid by the Borrower and its Subsidiaries in cash during such fiscal year on account of Capital Expenditures (excluding the principal amount of Indebtedness incurred in connection with such expenditures and any such expenditures financed with the proceeds of any Reinvestment Deferred Amount), (iii) the aggregate amount of all prepayments of ABL Loans during such fiscal year to the extent accompanying permanent optional reductions of the revolving commitments under the ABL Credit Agreement and all optional prepayments of the Term Loans during such fiscal year, (iv) the aggregate amount of all regularly scheduled principal payments of Funded Debt (including the Term Loans) of the Borrower and its Subsidiaries made during such fiscal year (other than in respect of any revolving credit facility to the extent there is not an equivalent permanent reduction in commitments thereunder), (v) increases in Consolidated Working Capital for such fiscal year, (vi) the aggregate amount actually paid by the Borrower and its Subsidiaries during such fiscal year on account of Permitted Acquisitions (other than amounts financed with proceeds of Indebtedness or proceeds of Capital Stock issued by the Borrower) and (vii) the aggregate net amount of non-cash gain on the Disposition of property by the Borrower and its Subsidiaries during such fiscal year (other than sales of inventory in the ordinary course of business), to the extent included in arriving at such Consolidated Net Income.

  

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“Excess Cash Flow Application Date”:  as defined in Section 2.6(c).

 

“Exchange Act”:  as defined in Section 7(k).

 

“Excluded Foreign Subsidiary”:  any Foreign Subsidiary in respect of which either (a) the pledge of all of the Capital Stock of such Subsidiary as Collateral or (b) the guaranteeing by such Subsidiary of the Obligations, would, in the good faith judgment of the Borrower, result in adverse tax consequences to the Borrower.

 

“Excluded Taxes”:  with respect to any payment made by any Loan Party under any Loan Document, any of the following Taxes imposed on or with respect to a Credit Party: (a) income or franchise Taxes imposed on (or measured by) net income by the United States, or by the jurisdiction under the laws of which such Credit Party is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits Taxes imposed by the United States or any similar Taxes imposed by any other jurisdiction in which the Borrower is located and (c) in the case of a Non-U.S. Lender (other than an assignee pursuant to a request by the Borrower under Section 2.17), any U.S. Federal withholding Taxes resulting from any Requirement of Law in effect (including FATCA) on  the date such Non-U.S. Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Non-U.S. Lender’s failure to comply with Section 2.14(f), except to the extent that such Non-U.S. Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding Taxes pursuant to Section 2.14(a).

 

“Existing Subsidiary Debt”:  outstanding indebtedness existing as of the Closing Date under (a) the First Lien Credit Agreement, dated as of September 27, 2007, by and among UniTek Acquisition, Inc., UniTek Midco, Inc., certain subsidiaries of UniTek Acquisition, Inc., the lenders from time to time party thereto and Royal Bank of Canada, as administrative agent and collateral agent, and (b) the Second Lien Credit Agreement, dated as of September 27, 2007, by and among UniTek Acquisition, Inc., UniTek Midco, Inc., certain subsidiaries of UniTek Acquisition, Inc., the lenders from time to time party thereto and Royal Bank of Canada, as administrative agent and collateral agent.

 

“Facility”:  each of (a) the Tranche B Term Commitments and the Tranche B Term Loans made thereunder (the “Tranche B Term Facility”) and (b) the Incremental Term Loans (the “Incremental Term Facility”).

 

“FATCA”:  Sections 1471 through 1474 of the Code, as of the date of this Agreement and any regulations or official interpretations thereof.

  

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“Federal Funds Effective Rate”:  for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day of such transactions received by FBR Capital Markets LT, Inc. from three federal funds brokers of recognized standing selected by it.

 

“Foreign Subsidiary”:  any Subsidiary of the Borrower that is not a Domestic Subsidiary.

 

“Foreign Benefit Arrangement”:  any employee benefit arrangement mandated by non-US law that is maintained or contributed to by any Group Member or any ERISA Affiliate.

 

“Foreign Plan”:  each employee benefit plan (within the meaning of Section 3(3) of ERISA, whether or not subject to ERISA) that is not subject to US law and is maintained or contributed to by any Group Member or any ERISA Affiliate.

 

“Foreign Plan Event”:  with respect to any Foreign Benefit Arrangement or Foreign Plan, (a) the failure to make or, if applicable, accrue in accordance with normal accounting practices, any employer or employee contributions required by applicable law or by the terms of such Foreign Benefit Arrangement or Foreign Plan; (b) the failure to register or loss of good standing with applicable regulatory authorities of any such Foreign Benefit Arrangement or Foreign Plan required to be registered; or (c) the failure of any Foreign Benefit Arrangement or Foreign Plan to comply with any material provisions of applicable law and regulations or with the material terms of such Foreign Benefit Arrangement or Foreign Plan.

 

“Funded Debt”:  as to any Person, all Indebtedness of such Person that matures more than one year from the date of its creation or matures within one year from such date but is renewable or extendible, at the option of such Person, to a date more than one year from such date or arises under a revolving credit or similar agreement that obligates the lender or lenders to extend credit during a period of more than one year from such date, including all current maturities and current sinking fund payments in respect of such Indebtedness whether or not required to be paid within one year from the date of its creation and, in the case of the Borrower, Indebtedness in respect of the Loans.

 

“Funding Office”:  the office of the Administrative Agent specified in Section 9.2 or such other office as may be specified from time to time by the Administrative Agent as its funding office by written notice to the Borrower and the Lenders.

 

“GAAP”:  generally accepted accounting principles in the United States as in effect from time to time, except that for purposes of Section 6.1, GAAP shall be determined on the basis of such principles in effect on the date hereof and consistent with those used in the preparation of the most recent audited financial statements referred to in Section 3.1(b).  In the event that any “Accounting Change” (as defined below) shall occur and such change results in a change in the method of calculation of financial covenants, negative covenants, standards or terms in this Agreement, then the Borrower and the Administrative Agent agree to enter into negotiations in order to amend such provisions of this Agreement so as to reflect equitably such Accounting Changes with the desired result that the criteria for evaluating the Borrower’s financial condition shall be the same after such Accounting Changes as if such Accounting Changes had not been made.  Until such time as such an amendment shall have been executed and delivered by the Borrower, the Administrative Agent and the Required Lenders, all financial covenants, negative covenants, standards and terms in this Agreement shall continue to be calculated or construed as if such Accounting Changes had not occurred.  “Accounting Changes” refers to changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants or, if applicable, the SEC.

  

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“Governmental Authority”:  any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any self-regulatory organization (including the National Association of Insurance Commissioners).

 

“Group Members”:  the collective reference to the Borrower and its Subsidiaries.

 

“Guarantee and Collateral Agreement”:  the Guarantee and Collateral Agreement to be executed and delivered by the Borrower and each Subsidiary Guarantor, substantially in the form of Exhibit A.

 

“Guarantee Obligation”:  as to any Person (the “guaranteeing person”), any obligation, including a reimbursement, counterindemnity or similar obligation, of the guaranteeing Person that guarantees or in effect guarantees, or which is given to induce the creation of a separate obligation by another Person (including any bank under any letter of credit) that guarantees or in effect guarantees, any Indebtedness, leases, dividends or other obligations (the “primary obligations”) of any other third Person (the “primary obligor”) in any manner, whether directly or indirectly, including any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business.  The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof as determined by the Borrower in good faith.

 

“Guarantors”:  the Subsidiary Guarantors.

 

“Increased Facility Activation Date”:  any Business Day on which any Lender shall execute and deliver to the Administrative Agent an Increased Facility Activation Notice pursuant to Section 2.18(a).

 

“Increased Facility Activation Notice”:  a notice substantially in the form of Exhibit G-1.

 

“Increased Facility Closing Date”:  any Business Day designated as such in an Increased Facility Activation Notice.

 

“Incremental Term Facility”:  as defined in the definition of “Facility”.

 

“Incremental Term Lenders”:  (a) on any Increased Facility Activation Date relating to Incremental Term Loans, the Lenders signatory to the relevant Increased Facility Activation Notice and (b) thereafter, each Lender that is a holder of an Incremental Term Loan.

  

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“Incremental Term Loans”:  as defined in Section 2.18(a).

 

“Incremental Term Maturity Date”:  with respect to the Incremental Term Loans to be made pursuant to any Increased Facility Activation Notice, the maturity date specified in such Increased Facility Activation Notice.

 

“Indebtedness”:  of any Person at any date, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services earned but not paid (other than to the extent payable in common stock of the Borrower and other than current trade payables incurred in the ordinary course of such Person’s business), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Capital Lease Obligations of such Person, (f) all obligations of such Person, contingent or otherwise, as an account party or applicant under or in respect of acceptances, letters of credit (to the extent issued and drawn), surety bonds or similar arrangements, (g) all obligations of such Person in respect of Disqualified Capital Stock, (h) all obligations of such Person for “earnouts”, purchase price adjustments, profit sharing arrangements, deferred purchase money amounts and similar payment obligations or continuing obligations of any nature of such Person payable in cash arising out of purchase and sale contracts, which are earned and payable in cash (“Earn-Out Indebtedness”), (i) all Guarantee Obligations of such Person in respect of obligations of the kind referred to in clauses (a) through (h) above, (j) all obligations of the kind referred to in clauses (a) through (h) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation, and (k) for the purposes of Section 7(e) only, all obligations of such Person in respect of Swap Agreements.  The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness expressly provide that such Person is not liable therefor.

 

“Indemnified Liabilities”:  as defined in Section 9.5(d).

 

“Indemnified Taxes”:  (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by any Loan Party under any Loan Document and (b) Other Taxes.

 

“Indemnitee”:  as defined in Section 9.5(d).

 

“Insolvent”:  with respect to any Multiemployer Plan, the condition that such plan is insolvent within the meaning of Section 4245 of ERISA.

 

“Intellectual Property”:  the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including copyrights, copyright licenses, patents, patent licenses, trademarks, trademark licenses, technology, know-how and processes, 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.

  

13

  

“Intercreditor Agreement”:  the Intercreditor Agreement to be executed and delivered by PNC Bank, National Association, as administrative agent for the ABL secured parties, and the Administrative Agent, substantially in the form of Exhibit H and, as the same may be amended, restated, supplemented or otherwise modified from time to time.

 

“Interest Payment Date”:  (a) as to any ABR Loan, the last Business Day of each March, June, September and December (or, if an Event of Default is in existence, the last Business Day of each calendar month) to occur while such Loan is outstanding and the final maturity date of such Loan, (b) as to any Eurodollar Loan having an Interest Period of three months or less, the last day of such Interest Period, (c) as to any Eurodollar Loan having an Interest Period longer than three months, each day that is three months, or a whole multiple thereof, after the first day of such Interest Period and the last day of such Interest Period, and (d) as to any Loan, the date of any repayment or prepayment made in respect thereof.

 

“Interest Period”:  as to any Eurodollar Loan, (a) initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such Eurodollar Loan and ending one, two, three or six months thereafter, as selected by the Borrower in its notice of borrowing or notice of conversion, as the case may be, given with respect thereto; and (b) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Eurodollar Loan and ending one, two, three or six months thereafter, as selected by the Borrower by irrevocable notice to the Administrative Agent not later than 11:00 A.M., New York City time, on the date that is three Business Days prior to the last day of the then current Interest Period with respect thereto; provided that, all of the foregoing provisions relating to Interest Periods are subject to the following:

 

(i)           if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day;

(ii)          the Borrower may not select an Interest Period under a particular Facility that would extend beyond the date final payment is due on the relevant Term Loans;

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

(iv)         the Borrower shall select Interest Periods so as not to require a payment or prepayment of any Eurodollar Loan during an Interest Period for such Loan.

“Investments”:  as defined in Section 6.7.

 

“IRS”:  the United States Internal Revenue Service.

 

“Lenders”:  as defined in the preamble hereto; provided that unless the context otherwise requires, each reference herein to the Lenders shall be deemed to include any Conduit Lender.

 

“Lien”:  any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement and any capital lease having substantially the same economic effect as any of the foregoing).

 

“Loan”:  any loan made by any Lender pursuant to this Agreement.

  

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“Loan Documents”:  this Agreement, the Security Documents, the Intercreditor Agreement and any amendment, waiver, supplement or other modification to any of the foregoing.

 

“Loan Parties”:  each Group Member that is a party to a Loan Document.

 

“Majority Facility Lenders”:  with respect to any Facility, the holders of more than 50% of the aggregate unpaid principal amount of the Term Loans outstanding under such Facility.

 

“Material Adverse Effect”:  a material adverse effect on (a) the business, property, operations or condition (financial or otherwise) of the Borrower and its Subsidiaries taken as a whole or (b) the validity or enforceability of this Agreement or any of the other Loan Documents or the rights or remedies of the Administrative Agent or the Lenders hereunder or thereunder.

 

“Material Debt”:  indebtedness (other than Indebtedness constituting Obligations) of any one or more of the Borrower or any Subsidiary in an aggregate principal amount exceeding $3,500,000.

 

“Materials of Environmental Concern”:  any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products or any hazardous or toxic substances, materials or wastes, defined or regulated as such in or under any Environmental Law, including asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.

 

“Moody’s”:  as defined in the definition of “Cash Equivalents”.

 

“Mortgaged Properties”:  the real properties listed on Schedule 1.1B, as to which the Administrative Agent for the benefit of the Lenders shall be granted a Lien pursuant to the Mortgages.

 

“Mortgages”:  each of the mortgages and deeds of trust made by any Loan Party in favor of, or for the benefit of, the Administrative Agent for the benefit of the Lenders, in form and substance satisfactory to the Administrative Agent (with such changes thereto as shall be advisable under the law of the jurisdiction in which such mortgage or deed of trust is to be recorded).

 

“Multiemployer Plan”:  a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

 

“Net Cash Proceeds”:  (a) in connection with any Asset Sale or any Recovery Event, the proceeds thereof in the form of cash and Cash Equivalents (including any such proceeds received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but only as and when received), net of attorneys’ fees, accountants’ fees, investment banking fees, amounts required to be applied to the repayment of Indebtedness secured by a Lien expressly permitted hereunder on any asset that is the subject of such Asset Sale or Recovery Event (other than any Lien pursuant to a Security Document) and other customary fees and expenses actually incurred in connection therewith and net of taxes paid or reasonably estimated to be payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements) and (b) in connection with any issuance or sale of Capital Stock or any incurrence of Indebtedness, the cash proceeds received from such issuance or incurrence, net of attorneys’ fees, investment banking fees, accountants’ fees, underwriting discounts and commissions and other customary fees and expenses actually incurred in connection therewith.  Notwithstanding the foregoing, Net Cash Proceeds shall include the proceeds of any Disposition of any Term Debt Priority Collateral to the extent such proceeds would otherwise be required to repay, prepay or cash collateralize any obligations under the ABL Credit Agreement or reduce commitments thereunder (it being understood for the avoidance of doubt the proceeds of any Disposition of Term Debt Priority Collateral are not to be applied to the ABL Credit Agreement).

  

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“New Lender”:  as defined in Section 2.18(b).

 

“New Lender Supplement”:  as defined in Section 2.18(b).

 

“Non-U.S. Lender”:  any Lender that is not a U.S. Person.

 

“Notes”:  the collective reference to any promissory note evidencing Loans.

 

“Obligations”:  the unpaid principal of and interest on (including interest accruing after the maturity of the Loans and interest accruing 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) the Loans and all other obligations and liabilities of the Borrower to the Administrative Agent or to any Lender, 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, this Agreement, any other Loan Document or any other document made, delivered or given in connection herewith or therewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including all fees, charges and disbursements of counsel to the Administrative Agent or to any Lender that are required to be paid by the Borrower pursuant hereto) or otherwise.

 

“OID”:  as defined in Section 2.18(a).

 

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

 

“Other Taxes”:  any present or future stamp, court, documentary, intangible, recording, filing or similar excise or property Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, or from the registration, receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment under Section 2.17).

 

“Participant”:  as defined in Section 9.6(c).

 

“Participant Register”:  as defined in Section 9.6(c).

 

“Patriot Act”:  as defined in Section 9.17.

 

“PBGC”:  the Pension Benefit Guaranty Corporation established pursuant to ERISA and any successor entity performing similar functions.

 

“Pension Plan”:  any Plan subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA.

 

“Permitted Acquisition”: any acquisition, whether by purchase, merger or otherwise, of all or substantially all of the assets of, all of the Capital Stock of, or a business line or unit or a division of, any Person; provided,

  

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(a)           immediately prior to, and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing or would result therefrom;

 

(b)           all transactions in connection therewith shall be consummated, in all material respects, in accordance with all applicable laws and in conformity with all applicable governmental authorizations;

 

(c)           (i) in the case of the acquisition of Capital Stock, (1) all of the Capital Stock (except for any such Capital Stock in the nature of directors’ qualifying shares required pursuant to applicable law) acquired or otherwise issued by such Person or any newly formed Subsidiary of the Borrower in connection with such acquisition shall be owned 100% (or 51% or more subject to the following proviso clause) by the Borrower or a Subsidiary Guarantor (other than directors qualifying shares) thereof  and (2) the EBITDA (the components of which shall be calculated in accordance with GAAP) of such Person or any newly formed Subsidiary of the Borrower in connection with such acquisition (or in the case of an asset acquisition, attributable to the acquired assets) for the period of four fiscal quarters ending with the fiscal quarter most recently ended prior to such acquisition, calculated on a pro forma basis to give effect to such acquisition, shall be greater than zero and (ii) in the case of an acquisition of assets other than Capital Stock, such assets shall be acquired by the Borrower or a Subsidiary Guarantor; provided that (x) the Borrower and its Subsidiaries may make acquisitions that do not comply with the preceding clauses (i)(1) and (ii) as long as the aggregate consideration for all such acquisitions (other than consideration consisting of Capital Stock of the Borrower issued within 60 days of such acquisition or the proceeds thereof) does not exceed $15,000,000 and (y) in each case, the Borrower shall take, or cause to be taken each of the actions set forth in Section 5.10;

 

(d)           the Borrower and its Subsidiaries shall be in compliance with the financial covenants set forth in Section 6.1 on a pro forma basis after giving effect to such acquisition as if such acquisition had occurred on the first day of the most recent period of four consecutive fiscal quarters in respect of which the Consolidated Leverage Ratio has been tested in accordance with Section 6.1(a) and immediately before and immediately after giving effect to such acquisition no Default or Event of Default shall have occurred and be continuing; and the Consolidated Leverage Ratio (calculated on a pro forma basis as described in the preceding clause) shall be less than the Required Permitted Acquisition Consolidated Leverage Ratio;

 

(e)           the Borrower shall have delivered to the Administrative Agent at least five Business Days prior to such proposed acquisition, a Compliance Certificate (i) evidencing compliance with Section 6.1 and the Required Permitted Acquisition Consolidated Leverage Ratio as required under clause (d) above, together with all relevant financial information with respect to such acquired assets, including, without limitation, the aggregate consideration for such acquisition, any other information reasonably required to demonstrate compliance with Section 6.1 and the Required Permitted Acquisition Consolidated Leverage Ratio and (ii) certifying that all of the requirements set forth in clauses (a), (b), (c), (f), (g) and (h) of this definition have been or will be satisfied on or prior to the consummation of such proposed acquisition;

 

(f)           any Person or assets or division as acquired in accordance herewith shall be in substantially the same business or lines of business in which the Borrower and/or its Subsidiaries are engaged, or are permitted to be engaged as provided herein, as of the time of such acquisition;

  

17

  

 

(g)           the assets acquired in such acquisition will be owned by the Borrower or a Wholly Owned Subsidiary of the Borrower; and

 

(h)           immediately prior and after giving effect thereto, the Borrower and its Subsidiaries shall have minimum liquidity (consisting of amounts then available to be borrowed under the ABL Credit Agreement plus the aggregate amount of Unrestricted Cash) of no less than $15,000,000.

 

 “Permitted Earn-Out Obligations”:  as defined in Section 6.7(o).

 

“Permitted Refinancing Indebtedness:”  with respect to any Indebtedness of the Borrower or any of its Subsidiaries, any Indebtedness issued in exchange for, or the proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Borrower or any of its Subsidiaries (“Refinanced Indebtedness”); provided that:

 

(a)           the principal amount (or accreted value, if applicable) of such Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Refinanced Indebtedness (plus the amount of all fees, expenses and premiums incurred in connection therewith and, in the case of a revolving facility, unutilized commitments in respect thereof);

 

(b)           such Indebtedness has a final maturity date equal to or later than, and a weighted average life to maturity equal to or greater than the weighted average life to maturity of, the Refinanced Indebtedness;

 

(c)           in the case of Indebtedness issued in exchange for, or the proceeds of which are used to extend, refinance, renew, replace, defease or refund any Indebtedness which is subordinated in right of payment or Lien priority to the Obligations (or Liens securing the Obligations), such Indebtedness is subordinated in right of payment or Lien priority to the Obligations (or Liens securing the Obligations) on terms at least as favorable to the Lenders as those contained in the Refinanced Indebtedness;

 

(d)           such Indebtedness is incurred by Group Member(s) that are the original obligor(s) on the Refinanced Indebtedness;

 

(e)           such Indebtedness shall not be secured by any assets other than the assets securing the Refinanced Indebtedness and any secured Indebtedness which refinances the ABL Credit Agreement shall be subject to the Intercreditor Agreement; and

 

(f)           such Indebtedness does not contain terms and conditions (including, if applicable, as to collateral) which in the aggregate are less favorable to the Loan Parties and the Lenders than the Refinanced Indebtedness.

“Person”:  an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.

 

“Plan”:  any employee benefit plan as defined in Section 3(3) of ERISA, including any employee welfare benefit plan (as defined in Section 3(1) of ERISA), any employee pension benefit plan (as defined in Section 3(2) of ERISA but excluding any Multiemployer Plan), and any plan which is both an employee welfare benefit plan and an employee pension benefit plan, and in respect of which any Group Member or any ERISA Affiliate is (or, if such Plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in section 3(5) of ERISA.

  

18

  

 

“Prime Rate”:  (a) for any day that is a Business Day, the “prime rate” as quoted in the print edition of The Wall Street Journal in the “Money Rates” section for such day (currently defined as the base rate on corporate loans posted by at least 75% of the nation’s thirty (30) largest banks), and (b) for any day other than a Business Day, the “prime rate” as quoted in the print edition of The Wall Street Journal in the “Money Rates” section for the immediately preceding Business Day.  In the event that the “prime rate” ceases to be quoted in The Wall Street Journal, the “Prime Rate” for the purposes of this definition shall be determined by reference to such other comparable publicly available service for displaying such prime interest rate that is selected by Administrative Agent.  The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer.  Any Agent or any other Lender may make commercial loans or other loans at rates of interest at, above or below the Prime Rate. 

 

“Pro Forma Balance Sheet”:  as defined in Section 3.1(a).

 

“Prohibited Transaction”:  as defined in Section 406 of ERISA and Section 4975(f)(3) of the Code.

 

“Projections”:  as defined in Section 5.2(c).

 

“Properties”:  as defined in Section 3.17(a).

 

“Recovery Event”:  any settlement of or payment in respect of any property or casualty insurance claim or any condemnation proceeding relating to any asset of any Group Member.

 

“Reference Period”:  as defined in the definition of “Consolidated EBITDA”.

 

“Refinanced Indebtedness”:  as defined in the definition of “Permitted Refinancing Indebtedness”.

 

“Refinanced Loans”:  as defined in Section 2.5(b).

 

“Register”:  as defined in Section 9.6(b).

 

“Regulation U”:  Regulation U of the Board as in effect from time to time.

 

“Reinvestment Deferred Amount”:  with respect to any Reinvestment Event, the aggregate Net Cash Proceeds received by any Group Member in connection therewith that are not applied to prepay the Term Loans as a result of the delivery of a Reinvestment Notice.

 

“Reinvestment Event”:  any Asset Sale or Recovery Event in respect of which the Borrower has delivered a Reinvestment Notice.

 

“Reinvestment Notice”:  a written notice executed by a Responsible Officer stating that no Event of Default has occurred and is continuing and that the Borrower (directly or indirectly through a Subsidiary) intends and expects to use all or a specified portion of the Net Cash Proceeds of an Asset Sale or Recovery Event to acquire or repair assets useful in its business.

  

19

  

 

“Reinvestment Prepayment Amount”:  with respect to any Reinvestment Event, the Reinvestment Deferred Amount relating thereto less any amount expended prior to the relevant Reinvestment Prepayment Date to acquire or repair assets useful in the Borrower’s business.

 

“Reinvestment Prepayment Date”:  with respect to any Reinvestment Event, the earlier of (a) the date occurring six months after such Reinvestment Event and (b) the date on which the Borrower shall have determined not to, or shall have otherwise ceased to, acquire or repair assets useful in the Borrower’s business with all or any portion of the relevant Reinvestment Deferred Amount.

 

“Reorganization”:  with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA.

 

“Replaced Term Loans”:  as defined in Section 9.1.

 

“Replacement Term Loans”:  as defined in Section 9.1.

 

“Reportable Event”:  any of the events set forth in Section 4043(c) of ERISA or the regulations issued thereunder, with respect to a Pension Plan, other than those events as to which notice is waived pursuant to DOL Reg. Section 4043 as in effect on the date hereof  (no matter how such notice requirement may be changed in the future).

 

“Required Lenders”:  at any time, the holders of more than 50% of (a) until the Closing Date, the Commitments then in effect and (b) thereafter, the sum of the aggregate unpaid principal amount of the Term Loans then outstanding.

 

“Required Permitted Acquisition Consolidated Leverage Ratio” shall mean:

 

	
Fiscal Quarter

	  	
Required Permitted Acquisition

Consolidated Leverage Ratio

	
June 30, 2011

	  	
4.50:1.00

	
September 30, 2011

	  	
4.25:1.00

	
December 31, 2011

	  	
4.00:1.00

	
March 31, 2012

	  	
3.75:1.00

	
June 30, 2012

	  	
3.50:1.00

	
September 30, 2012

	  	
3.25:1.00

	
December 31, 2012

	  	
3.25:1.00

	
March 31, 2013

	  	
3.25:1.00

	
June 30, 2013

	  	
3.00:1.00

	
September 30, 2013

	  	
3.00:1.00

	
December 31, 2013

	  	
3.00:1.00

	
March 31, 2014

	  	
3.00:1.00

	
June 30, 2014

	  	
3.00:1.00

	
September 30, 2014

	  	
3.00:1.00

	
December 31, 2014

	  	
3.00:1.00

	
March 31, 2015

	  	
3.00:1.00

	
June 30, 2015

	  	
3.00:1.00

	
September 30, 2015

	  	
3.00:1.00

	
December 31, 2015

	  	
3.00:1.00

	
March 31, 2016

	  	
2.75:1.00

	
June 30, 2016

	  	
2.75:1.00

	
September 30, 2016

	  	
2.75:1.00

	
December 31, 2016

	  	
2.75:1.00

	
March 31, 2017

	  	
2.75:1.00

	
June 30, 2017

	  	
2.75:1.00

	
September 30, 2017

	  	
2.75:1.00

	
December 31, 2017

	  	
2.75:1.00

	
March 31, 2018

	
  

	
2.75:1.00

  

20

  

 

“Requirement of Law”:  as to any Person, the certificate of incorporation and by-laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

 

“Responsible Officer”:  the chief executive officer, president or chief financial officer of the Borrower, but in any event, with respect to financial matters, the chief financial officer or corporate controller of the Borrower.

 

“Restricted Payments”:  as defined in Section 6.6.

 

“S&P”:  as defined in the definition of “Cash Equivalents”.

 

“SEC”:  the Securities and Exchange Commission, any successor thereto and any analogous Governmental Authority.

 

“Security Documents”:  the collective reference to the Guarantee and Collateral Agreement, the Intercreditor Agreement, the Mortgages and all other security documents hereafter delivered to the Administrative Agent granting a Lien on any property of any Person to secure the obligations and liabilities of any Loan Party under any Loan Document.

 

“Solvent”:  when used with respect to any Person, means that, as of any date of determination, (a) the amount of the “present fair saleable value” of the assets of such Person will, as of such date, exceed the amount of all “liabilities of such Person, contingent or otherwise”, as of such date, as such quoted terms are determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, (b) the present fair saleable value of the assets of such Person will, as of such date, be greater than the amount that will be required to pay the liability of such Person on its debts as such debts become absolute and matured, (c) such Person will not have, as of such date, an unreasonably small amount of capital with which to conduct its business, and (d) such Person will be able to pay its debts as they mature.  For purposes of this definition, (i) “debt” means liability on a “claim”, and (ii) “claim” means any (x) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured.

 

“Specified Change of Control”:  a “Change of Control” (or any other defined term having a similar purpose) as defined in any agreement creating any Material Debt.

 

“Subordinated Debt”: collectively, any and all unsecured Indebtedness for borrowed money incurred by one or more Loan Parties that is subordinated in favor of the payment in full of all Obligations (as defined in the Guarantee and Collateral Agreement) on terms and conditions (including without limitation subordination terms (including any terms regarding the cash payment of interest) and provisions regarding enforcement standstills) acceptable to the Administrative Agent in its discretion pursuant to a subordination agreement executed and delivered by the holders of such Indebtedness that is satisfactory in both form and substance to the Administrative Agent in its discretion.

  

21

  

 

“Subsidiary”:  as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person.  Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.

 

“Subsidiary Guarantor”:  each Subsidiary of the Borrower other than (i) any Excluded Foreign Subsidiary or (ii) any Subsidiary that does not have active operations and holds less than $100,000 in assets; provided that any Subsidiary which guarantees or provides credit support for the ABL Credit Agreement shall be a Subsidiary Guarantor.

 

“Swap Agreement”:  any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Borrower or any of its Subsidiaries shall be a “Swap Agreement”.

 

“Syndication Agent”:  as defined in the preamble hereto.

 

“Taxes”:  any present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

 

“Term Debt Priority Collateral”: as defined in the Intercreditor Agreement.

 

“Term Lenders”:  the collective reference to the Tranche B Term Lenders and the Incremental Term Lenders.

 

“Term Loans”:  the collective reference to the Tranche B Term Loans and the Incremental Term Loans.

 

“Title Insurance Company”:  as defined in Section 5.12(b).

 

“Trading with the Enemy Act”:  the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any enabling legislation or executive order relating thereto.

 

“Tranche B Maturity Date”:  April 15, 2018.

  

22

  

“Tranche B Term Commitment”:  as to any Lender, the obligation of such Lender, if any, to make a Tranche B Term Loan to the Borrower in a principal amount not to exceed the amount set forth under the heading “Tranche B Term Commitment” opposite such Lender’s name on Schedule 1.1A.  The original aggregate amount of the Tranche B Term Commitments is $100,000,000.

 

“Tranche B Term Facility”:  as defined in the definition of “Facility”.

 

“Tranche B Term Lender”:  each Lender that has a Tranche B Term Commitment or that holds a Tranche B Term Loan.

 

“Tranche B Term Loan”:  as defined in Section 2.1.

 

“Tranche B Term Percentage”:  as to any Tranche B Term Lender at any time, the percentage which such Lender’s Tranche B Term Commitment then constitutes of the aggregate Tranche B Term Commitments (or, at any time after the Closing Date, the percentage which the aggregate principal amount of such Lender’s Tranche B Term Loans then outstanding constitutes of the aggregate principal amount of the Tranche B Term Loans then outstanding).

 

“Transferee”:  any Assignee or Participant.

 

“Type”:  as to any Loan, its nature as an ABR Loan or a Eurodollar Loan.

 

“United States”:  the United States of America.

 

“Unrestricted Cash”:  cash or Cash Equivalents of the Borrower or any of its Subsidiaries that are not subject to any contractual restrictions on the application thereof and not subject to any Lien (other than Liens permitted by Section 6.3(h), (i) or (o)).

 

“U.S. Person”:  a “United States person” within the meaning of Section 7701(a)(30) of the Code.

 

“U.S. Tax Certificate”:  as defined in Section 2.14(f).

 

“Wholly Owned Subsidiary”:  as to any Person, any other Person all of the Capital Stock of which (other than directors’ qualifying shares required by law) is owned by such Person directly and/or through other Wholly Owned Subsidiaries.

 

“Wholly Owned Subsidiary Guarantor”:  any Subsidiary Guarantor that is a Wholly Owned Subsidiary of the Borrower.

 

“Withdrawal Liability”: any liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Title IV of ERISA.

 

“Withholding Agent”:  the relevant Loan Party and the Administrative Agent.

 

1.2.           Other Definitional Provisions.  (a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the other Loan Documents or any certificate or other document made or delivered pursuant hereto or thereto.

  

23

  

(b)            As used herein and in the other Loan Documents, and any certificate or other document made or delivered pursuant hereto or thereto, (i) accounting terms relating to any Group Member not defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP (provided that, notwithstanding anything to the contrary herein, all accounting or financial terms used herein shall be construed, and all financial computations pursuant hereto shall be made, without giving effect to any election under Statement of Financial Accounting Standards 159 (or any other Financial Accounting Standard having a similar effect) to value any Indebtedness or other liabilities of any Group Member at “fair value”, as defined therein), (ii) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”, (iii) the word “incur” shall be construed to mean incur, create, issue, assume, become liable in respect of or suffer to exist (and the words “incurred” and “incurrence” shall have correlative meanings), (iv) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, Capital Stock, securities, revenues, accounts, leasehold interests and contract rights, and (v) references to agreements or other Contractual Obligations shall, unless otherwise specified, be deemed to refer to such agreements or Contractual Obligations as amended, supplemented, restated or otherwise modified from time to time.

 

(c)            The words “hereof”, “herein” 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, Schedule and Exhibit references are to this Agreement unless otherwise specified.

 

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

 

1.3.           Pro Forma Basis.  As of any date of determination, for purposes of determining any test, covenant or ratio (and any financial calculations required to be made or included within such ratios), or required for purposes of preparing any certificate to be delivered pursuant to the definition of “Permitted Acquisition”, the calculation of such tests, covenants, ratios and other financial calculations shall include or exclude, as the case may be, the effect of any assets or businesses that have been acquired or any Subsidiary, line of business or facility Disposed of by the Borrower or any of its Subsidiaries pursuant to the terms hereof (including through mergers or consolidations) as of such date of determination, as determined by the Borrower on a pro forma basis (to be limited to (a) pro forma adjustments arising out of events which are directly attributable to any such Permitted Acquisition, Disposition or incurrence of Indebtedness, are factually supportable and are expected to have a continuing impact, in each case as determined on a basis consistent with Article 11 of Regulation S-X of the Securities Act, as interpreted by the Staff of the Securities and Exchange Commission or (b) pro forma adjustments reasonably acceptable to the Administrative Agent and evidenced by a “quality of earnings” or similar report prepared by the Borrower’s auditors arising out of operating expense reductions attributable to such transaction being given pro forma effect that (i) have been realized or (ii) will be implemented following such transaction and are supportable and quantifiable and, in each case, including, but not limited to, (1) reduction in personnel expenses, (2) reduction of costs related to administrative functions, (3) reductions of costs related to leased or owned properties and (4) reductions from the consolidation of operations and streamlining of corporate overhead) using, for purposes of determining such compliance, the historical financial statements of all entities or assets so acquired or sold and the consolidated financial statements of the Borrower and its Subsidiaries, which shall be reformulated as if such Permitted Acquisition or Disposition, and all other Permitted Acquisitions or Dispositions that have been consummated during the period, and any Indebtedness or other liabilities repaid in connection therewith had been consummated and incurred or repaid at the beginning of such period (and assuming that such Indebtedness to be incurred bears interest during any portion of the applicable measurement period prior to the relevant acquisition at the interest rate which is or would be in effect with respect to such Indebtedness as at the relevant date of determination); provided that any increase in Consolidated EBITDA as a result of such adjustments shall not exceed 25% of total Consolidated EBITDA.  Notwithstanding the foregoing, no pro forma adjustment shall be made pursuant to this Section 1.3 for events occurring after the last day of a fiscal quarter for purposes of determining compliance by the Borrower with Section 6.1 for such fiscal quarter.

  

24

  

ARTICLE 2. AMOUNT AND TERMS OF COMMITMENTS

 

2.1.           Tranche B Term Commitments.  Subject to the terms and conditions hereof, each Tranche B Term Lender severally agrees to make a term loan (a “Tranche B Term Loan”) to the Borrower on the Closing Date in an amount not to exceed the amount of the Tranche B Term Commitment of such Lender.  The Term Loans may from time to time be Eurodollar Loans or ABR Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.2 and 2.7.

 

2.2.           Procedure for Tranche B Term Loan Borrowing.  The Borrower shall give the Administrative Agent irrevocable notice (which notice must be received by the Administrative Agent prior to 10:00 A.M., New York City time, one Business Day prior to the anticipated Closing Date) requesting that the Tranche B Term Lenders make the Tranche B Term Loans on the Closing Date and specifying the amount to be borrowed.  The Tranche B Term Loans made on the Closing Date shall initially be ABR Loans and, unless otherwise agreed by the Administrative Agent in its sole discretion, no Tranche B Term Loan may be converted into or continued as a Eurodollar Loan having an Interest Period in excess of one month prior to the date that is 90 days after the Closing Date.  Upon receipt of such notice the Administrative Agent shall promptly notify each Tranche B Term Lender thereof.  Not later than 12:00 Noon, New York City time, on the Closing Date each Tranche B Term Lender shall make available to the Administrative Agent at the Funding Office an amount in immediately available funds equal to the Tranche B Term Loan or Tranche B Term Loans to be made by such Lender.  The Administrative Agent will make such Tranche B Term Loans available to the Borrower by promptly crediting the amounts that it receives, in like funds, by the close of business on such proposed date by effecting a wire transfer of such amounts to an account designated by the Borrower to the Administrative Agent.

 

2.3.           Repayment of Term Loans.  (a) The Tranche B Term Loan of each Tranche B Lender shall mature in 28 consecutive quarterly installments, each of which shall be in an amount equal to such Lender’s Tranche B Term Percentage multiplied by the amount set forth below opposite such installment:

 

	
Installment

	 	
Principal Amount

	 
	
June 30, 2011

	 	$	250,000	 
	
September 30, 2011

	 	$	250,000	 
	
December 31, 2011

	 	$	250,000	 
	
March 31, 2012

	 	$	250,000	 
	
June 30, 2012

	 	$	250,000	 
	
September 30, 2012

	 	$	250,000	 
	
December 31, 2012

	 	$	250,000	 
	
March 31, 2013

	 	$	250,000	 
	
June 30, 2013

	 	$	250,000	 
	
September 30, 2013

	 	$	250,000	 
	
December 31, 2013

	 	$	250,000	 
	
March 31, 2014

	 	$	250,000	 
	
June 30, 2014

	 	$	250,000	 
	
September 30, 2014

	 	$	250,000	 
	
December 31, 2014

	 	$	250,000	 
	
March 31, 2015

	 	$	250,000	 
	
June 30, 2015

	 	$	250,000	 

  

25

  

	
September 30, 2015

	 	$	250,000	 
	
December 31, 2015

	 	$	250,000	 
	
March 31, 2016

	 	$	250,000	 
	
June 30, 2016

	 	$	250,000	 
	
September 30, 2016

	 	$	250,000	 
	
December 31, 2016

	 	$	250,000	 
	
March 31, 2017

	 	$	250,000	 
	
June 30, 2017

	 	$	250,000	 
	
September 30, 2017

	 	$	250,000	 
	
December 31, 2017

	 	$	250,000	 
	
March 31, 2018

	 	$	250,000	 
	
Tranche B Maturity Date

	 	
All remaining unpaid principal of the Tranche B Loans

	 

 

(b)           The Incremental Term Loans of each Incremental Term Lender shall mature in consecutive installments (which shall be no more frequent than quarterly) as specified in the Increased Facility Activation Notice pursuant to which such Incremental Term Loans were made.

 

2.4.           Fees, etc.  The Borrower agrees to pay to the Administrative Agent the fees in the amounts and on the dates as set forth in any fee agreements with the Administrative Agent and to perform any other obligations contained therein.

 

2.5.           Optional Prepayments.  (a) The Borrower may at any time and from time to time prepay the Loans, in whole or in part, subject to the requirements of this Section, upon irrevocable notice delivered to the Administrative Agent no later than 11:00 A.M., New York City time, three Business Days prior thereto, in the case of Eurodollar Loans, and no later than 11:00 A.M., New York City time, one Business Day prior thereto, in the case of ABR Loans, which notice shall specify the date and amount of prepayment and whether the prepayment is of Eurodollar Loans or ABR Loans; provided that if a Eurodollar Loan is prepaid on any day other than the last day of the Interest Period applicable thereto, the Borrower shall also pay any amounts owing pursuant to Section 2.15.  Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof.  If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein, together with accrued interest to such date on the amount prepaid.  Partial prepayments of Term Loans shall be in an aggregate principal amount of $1,000,000 or a whole multiple thereof.

 

(b)           If all or any portion of the Tranche B Term Loans are (i) repaid or (ii) repriced (or effectively refinanced) through any amendment of this Agreement (collectively, “Refinanced Loans”) (x) prior to the first anniversary of the Closing Date, the Borrower shall pay to the Tranche B Term Lenders holding such Refinanced Loans a prepayment premium equal to 2.00% of the aggregate principal amount so repaid or repriced (or, in the case of clause (ii) above, of the aggregate amount of Tranche B Term Loans outstanding immediately prior to such amendment), and (y) on or following the first anniversary of the Closing Date through the second anniversary of the Closing Date, the Borrower shall pay to the Tranche B Term Lenders holding such Refinanced Loans a prepayment premium equal to 1.00% of the aggregate principal amount so repaid or repriced (or, in the case of clause (ii) above, of the aggregate amount of Tranche B Term Loans outstanding immediately prior to such amendment).

  

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2.6.           Mandatory Prepayments and Commitment Reductions.  (a)  If any Capital Stock or Indebtedness shall be issued or incurred by any Group Member (excluding any Capital Stock issued by the Borrower used to finance a Permitted Acquisition) and any Indebtedness incurred in accordance with Section 6.2), an amount equal to 100% of the Net Cash Proceeds thereof shall be applied on the date of such issuance or incurrence toward the prepayment of the Term Loans.

 

(b)            If on any date any Group Member shall receive Net Cash Proceeds from any Asset Sale or Recovery Event then, unless a Reinvestment Notice shall be delivered in respect thereof, such Net Cash Proceeds shall be applied on such date toward the prepayment of the Term Loans; provided that, notwithstanding the foregoing, (i) the aggregate Net Cash Proceeds of Asset Sales and Recovery Events that may be excluded from the foregoing requirement pursuant to a Reinvestment Notice shall not exceed $250,000 in any fiscal year of the Borrower and (ii) on each Reinvestment Prepayment Date, an amount equal to the Reinvestment Prepayment Amount with respect to the relevant Reinvestment Event shall be applied toward the prepayment of the Term Loans.  Notwithstanding anything to the contrary provided for in the foregoing, prior to the ABL Obligations Payment Date, Borrower shall not be required to make any prepayment of the Term Loans under this paragraph (b) with the Net Cash Proceeds of any such Asset Sale with respect to any Collateral that is ABL Priority Collateral that is permitted under the ABL Documents as in effect on the date hereof; but further provided that, in the event that the Borrower shall be required under the provisions of the ABL Documents to use some or all of such Net Cash Proceeds either (x) to make a mandatory prepayment of the ABL Indebtedness or (y) as a reinvestment to acquire or repair assets useful in the Borrower’s business, any failure of the Borrower to make such required prepayment of the ABL Indebtedness and/or such a reinvestment, in either such case in accordance with such terms and conditions of the ABL Documents, shall be deemed to be an Event of Default.

 

(c)            If, for any fiscal year of the Borrower commencing with the fiscal year ending December 31, 2011 there shall be Excess Cash Flow, the Borrower shall, on the relevant Excess Cash Flow Application Date, apply the ECF Percentage of such Excess Cash Flow toward the prepayment of the Term Loans.  Each such prepayment and commitment reduction shall be made on a date (an “Excess Cash Flow Application Date”) no later than five days after the earlier of (i) the date on which the financial statements of the Borrower referred to in Section 5.1(a), for the fiscal year with respect to which such prepayment is made, are required to be delivered to the Lenders and (ii) the date such financial statements are actually delivered. Notwithstanding the foregoing, in the event that, after giving effect to any mandatory prepayment of the Loans from on any Excess Cash Flow Application Date the Borrower would have Undrawn Availability (as defined in the ABL Credit Agreement as in effect on the date hereof) and five day average Undrawn Availability of less than $5,000,000, then the maximum amount of the prepayment of the Loans which the Borrower shall be permitted to make on such Excess Cash Flow Application Date shall not exceed the maximum amount which, if paid by Borrower, would leave Borrower with an Undrawn Availability of at least $5,000,000.

 

(d)            Amounts to be applied in connection with prepayments made pursuant to Section 2.6 shall be applied to the prepayment of the Term Loans in accordance with Section 2.12(b).  The application of any prepayment pursuant to Section 2.6 shall be made, first, to ABR Loans and, second, to Eurodollar Loans.  Each prepayment of the Loans under Section 2.6 shall be accompanied by accrued interest to the date of such prepayment on the amount prepaid.

 

2.7.           Conversion and Continuation Options.  (a) The Borrower may elect from time to time to convert Eurodollar Loans to ABR Loans by giving the Administrative Agent prior irrevocable notice of such election no later than 11:00 A.M., New York City time, on the Business Day preceding the proposed conversion date, provided that any such conversion of Eurodollar Loans may only be made on the last day of an Interest Period with respect thereto.  The Borrower may elect from time to time to convert ABR Loans to Eurodollar Loans by giving the Administrative Agent prior irrevocable notice of such election no later than 11:00 A.M., New York City time, on the third Business Day preceding the proposed conversion date (which notice shall specify the length of the initial Interest Period therefor), provided that no ABR Loan under a particular Facility may be converted into a Eurodollar Loan when any Event of Default has occurred and is continuing and the Administrative Agent or the Majority Facility Lenders in respect of such Facility have determined in its or their sole discretion not to permit such conversions.  Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof.

  

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(b)           Any Eurodollar Loan may be continued as such upon the expiration of the then current Interest Period with respect thereto by the Borrower giving irrevocable notice to the Administrative Agent, in accordance with the applicable provisions of the term “Interest Period” set forth in Section 1.1, of the length of the next Interest Period to be applicable to such Loans, provided that no Eurodollar Loan under a particular Facility may be continued as such when any Event of Default has occurred and is continuing and the Administrative Agent has or the Majority Facility Lenders in respect of such Facility have determined in its or their sole discretion not to permit such continuations, and provided, further, that if the Borrower shall fail to give any required notice as described above in this paragraph or if such continuation is not permitted pursuant to the preceding proviso such Loans shall be automatically converted to ABR Loans on the last day of such then expiring Interest Period.  Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof.

 

2.8.           Limitations on Eurodollar Tranches.  Notwithstanding anything to the contrary in this Agreement, all borrowings, conversions and continuations of Eurodollar Loans and all selections of Interest Periods shall be in such amounts and be made pursuant to such elections so that, (a) after giving effect thereto, the aggregate principal amount of the Eurodollar Loans comprising each Eurodollar Tranche shall be equal to $5,000,000 or a whole multiple of $1,000,000 in excess thereof and (b) no more than five Eurodollar Tranches shall be outstanding at any one time.

 

2.9.           Interest Rates and Payment Dates.  (a) Each Eurodollar Loan shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the Eurodollar Rate determined for such day plus the Applicable Margin.

 

(b)            Each ABR Loan shall bear interest at a rate per annum equal to the ABR plus the Applicable Margin.

 

(c)            (i) If all or a portion of the principal amount of any Loan shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum equal to the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this Section plus 2%, and (ii) if all or a portion of any interest payable on any Loan or any fee or other amount payable hereunder shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum equal to the rate then applicable to ABR Loans under the relevant Facility plus 2% (or, in the case of any such other amounts that do not relate to a particular Facility, the rate then applicable to ABR Loans under the Tranche B Term Facility plus 2%), in each case, with respect to clauses (i) and (ii) above, from the date of such non-payment until such amount is paid in full (as well after as before judgment).  In addition, upon and after the occurrence of an Event of Default, and during the continuation thereof, at the option of the Administrative Agent or at the direction of Required Lenders and with written notice from the Administrative Agent to the Borrower of the exercise of such option or direction (or, in the case of any Event of Default under Section 7(f), immediately and automatically upon the occurrence of any such Event of Default without the requirement of any affirmative action by any party), the Obligations shall bear interest at a rate per annum equal to the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this Section plus two (2.00%) percent per annum.

  

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(d)           Interest shall be payable in arrears on each Interest Payment Date; provided that interest accruing pursuant to paragraph (c) of this Section shall be payable from time to time on demand.

 

2.10.        Computation of Interest and Fees.  (a) Interest and fees payable pursuant hereto shall be calculated on the basis of a 360-day year for the actual days elapsed, except that, with respect to ABR Loans the rate of interest on which is calculated on the basis of the Prime Rate, the interest thereon shall be calculated on the basis of a 365- (or 366-, as the case may be) day year for the actual days elapsed.  The Administrative Agent shall as soon as practicable notify the Borrower and the relevant Lenders of each determination of a Eurodollar Rate.  Any change in the interest rate on a Loan resulting from a change in the ABR or the Eurocurrency Reserve Requirements shall become effective as of the opening of business on the day on which such change becomes effective.  The Administrative Agent shall as soon as practicable notify the Borrower and the relevant Lenders of the effective date and the amount of each such change in interest rate.

 

(b)           Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the absence of manifest error.  The Administrative Agent shall, at the request of the Borrower, deliver to the Borrower a statement showing the quotations used by the Administrative Agent in determining any interest rate pursuant to Section 2.9(a).

 

2.11.        Inability to Determine Interest Rate.  If prior to the first day of any Interest Period:

 

(a)            the Administrative Agent shall have determined (which determination shall be conclusive and binding upon the Borrower) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest Period, or

 

(b)            the Administrative Agent shall have received notice from the Majority Facility Lenders in respect of the relevant Facility that the Eurodollar Rate determined or to be determined for such Interest Period will not adequately and fairly reflect the cost to such Lenders (as conclusively certified by such Lenders) of making or maintaining their affected Loans during such Interest Period,

 

the Administrative Agent shall give telecopy or telephonic notice thereof to the Borrower and the relevant Lenders as soon as practicable thereafter.  If such notice is given (x) any Eurodollar Loans under the relevant Facility requested to be made on the first day of such Interest Period shall be made as ABR Loans, (y) any Loans under the relevant Facility that were to have been converted on the first day of such Interest Period to Eurodollar Loans shall be continued as ABR Loans and (z) any outstanding Eurodollar Loans under the relevant Facility shall be converted, on the last day of the then-current Interest Period, to ABR Loans.  Until such notice has been withdrawn by the Administrative Agent, no further Eurodollar Loans under the relevant Facility shall be made or continued as such, nor shall the Borrower have the right to convert Loans under the relevant Facility to Eurodollar Loans.

 

2.12.        Pro Rata Treatment and Payments.  (a) Each borrowing by the Borrower from the Lenders hereunder shall be made pro rata according to the respective Tranche B Term Percentages of the relevant Lenders.

 

(b)           Each payment (including each prepayment) by the Borrower on account of principal of and interest on the Term Loans shall be made pro rata according to the respective outstanding principal amounts of the Term Loans then held by the Term Lenders.  The amount of each principal prepayment of the Term Loans shall be applied first to scheduled installments thereof occurring within the next 12 months in direct order of maturity, and, second, to reduce the then remaining installments of the Tranche B Term Loans and Incremental Term Loans, as the case may be, pro rata based upon the respective then remaining principal amounts thereof.  Amounts prepaid on account of the Term Loans may not be reborrowed.

  

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(c)           All payments (including prepayments) to be made by the Borrower hereunder, whether on account of principal, interest, fees or otherwise, shall be made without setoff or counterclaim and shall be made prior to 12:00 Noon, New York City time, on the due date thereof to the Administrative Agent, for the account of the Lenders, at the Funding Office, in Dollars and in immediately available funds.  The Administrative Agent shall distribute such payments to each relevant Lender promptly upon receipt in like funds as received, net of any amounts owing by such Lender pursuant to Section 8.7.  If any payment hereunder (other than payments on the Eurodollar Loans) becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day.  If any payment on a Eurodollar Loan becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Business Day.  In the case of any extension of any payment of principal pursuant to the preceding two sentences, interest thereon shall be payable at the then applicable rate during such extension.

 

(d)           Unless the Administrative Agent shall have been notified in writing by any Lender prior to a borrowing that such Lender will not make the amount that would constitute its share of such borrowing available to the Administrative Agent, the Administrative Agent may assume that such Lender is making such amount available to the Administrative Agent, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower a corresponding amount.  If such amount is not made available to the Administrative Agent by the required time on the Borrowing Date therefor, such Lender shall pay to the Administrative Agent, on demand, such amount with interest thereon, at a rate equal to the greater of (i) the Federal Funds Effective Rate and (ii) a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, for the period until such Lender makes such amount immediately available to the Administrative Agent.  A certificate of the Administrative Agent submitted to any Lender with respect to any amounts owing under this paragraph shall be conclusive in the absence of manifest error.  If such Lender’s share of such borrowing is not made available to the Administrative Agent by such Lender within three Business Days after such Borrowing Date, the Administrative Agent shall also be entitled to recover such amount with interest thereon at the rate per annum applicable to ABR Loans under the relevant Facility, on demand, from the Borrower.

 

(e)           Unless the Administrative Agent shall have been notified in writing by the Borrower prior to the date of any payment due to be made by the Borrower hereunder that the Borrower will not make such payment to the Administrative Agent, the Administrative Agent may assume that the Borrower is making such payment, and the Administrative Agent may, but shall not be required to, in reliance upon such assumption, make available to the Lenders their respective pro rata shares of a corresponding amount.  If such payment is not made to the Administrative Agent by the Borrower within three Business Days after such due date, the Administrative Agent shall be entitled to recover, on demand, from each Lender to which any amount which was made available pursuant to the preceding sentence, such amount with interest thereon at the rate per annum equal to the daily average Federal Funds Effective Rate.  Nothing herein shall be deemed to limit the rights of the Administrative Agent or any Lender against the Borrower.

  

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(f)            If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.12(d), 2.12(e) or 8.7, then the Administrative Agent may, in its discretion and notwithstanding any contrary provision hereof, (i) apply any amounts thereafter received by the Administrative Agent for the account of such Lender for the benefit of the Administrative Agent to satisfy such Lender’s obligations to it under such Section until all such unsatisfied obligations are fully paid, and/or (ii) hold any such amounts in a segregated account as cash collateral for, and application to, any future funding obligations of such Lender under any such Section, in the case of each of clauses (i) and (ii) above, in any order as determined by the Administrative Agent in its discretion.

 

2.13.        Requirements of Law.  (a) If the adoption of or any change in any Requirement of Law or in the interpretation or application thereof or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof:

 

(i)            shall subject any Credit Party to any Taxes (other than (A) Indemnified Taxes and (B) Other Connection Taxes on gross or net income, profits or revenue (including value-added or similar Taxes)) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto;

 

(ii)           shall impose, modify or hold applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit (or participations therein) by, or any other acquisition of funds by, any office of such Lender that is not otherwise included in the determination of the Eurodollar Rate; or

 

(iii)           shall impose on such Lender any other condition;

 

and the result of any of the foregoing is to increase the cost to such Lender or such other Credit Party, by an amount that such Lender or other Credit Party deems to be material, of making, converting into, continuing or maintaining Loans, or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower shall promptly pay such Lender or such other Credit Party, upon its demand, any additional amounts necessary to compensate such Lender or such other Credit Party for such increased cost or reduced amount receivable.  If any Lender or such other Credit Party becomes entitled to claim any additional amounts pursuant to this paragraph, it shall promptly notify the Borrower (with a copy to the Administrative Agent) of the event by reason of which it has become so entitled.

 

(b)           If any Lender shall have determined that the adoption of or any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Lender or any corporation controlling such Lender with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof shall have the effect of reducing the rate of return on such Lender’s or such corporation’s capital as a consequence of its obligations hereunder to a level below that which such Lender or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Lender’s or such corporation’s policies with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time, after submission by such Lender to the Borrower (with a copy to the Administrative Agent) of a written request therefor, the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or such corporation for such reduction.

 

(c)           Notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith shall be deemed to be a change in law, regardless of the date enacted, adopted or issued and (ii) all requests, rules, guidelines or directives promulgated by the Bank of International Settlements, the Basel Committee on Banking Regulations and Supervisory Practices (or any successor or similar authority) or the United States financial regulatory authorities with respect to capital adequacy shall be deemed to be a change in law, regardless of the date enacted, adopted or issued.

  

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(d)           A certificate as to any additional amounts payable pursuant to this Section submitted by any Lender to the Borrower (with a copy to the Administrative Agent) shall be conclusive in the absence of manifest error.  Notwithstanding anything to the contrary in this Section, the Borrower shall not be required to compensate a Lender pursuant to this Section for any amounts incurred more than nine months prior to the date that such Lender notifies the Borrower of such Lender’s intention to claim compensation therefor; provided that, if the circumstances giving rise to such claim have a retroactive effect, then such nine-month period shall be extended to include the period of such retroactive effect.  The obligations of the Borrower pursuant to this Section shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

 

2.14.        Taxes.  (a) Each payment by any Loan Party under any Loan Document shall be made without withholding for any Taxes, unless such withholding is required by any law.  If any Withholding Agent determines, in its sole discretion exercised in good faith, that it is so required to withhold Taxes, then such Withholding Agent may so withhold and shall timely pay the full amount of withheld Taxes to the relevant Governmental Authority in accordance with applicable law.  If such Taxes are Indemnified Taxes, then the amount payable by such Loan Party shall be increased as necessary so that, net of such withholding (including such withholding applicable to additional amounts payable under this Section), the applicable Credit Party receives the amount it would have received had no such withholding been made.

 

(b)           The Borrower shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

 

(c)           As soon as practicable after any payment of Indemnified Taxes by any Loan Party to a Governmental Authority, such Loan Party shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

 

(d)           The Loan Parties shall jointly and severally indemnify each Credit Party for any Indemnified Taxes that are paid or payable by such Credit Party in connection with any Loan Document (including amounts paid or payable under this Section 2.14(d)) and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  The indemnity under this Section 2.14(d) shall be paid within 10 days after the Credit Party delivers to the Borrower a certificate stating the amount of any Indemnified Taxes so paid or payable by such Credit Party and describing the basis for the indemnification claim.  Such certificate shall be conclusive of the amount so paid or payable absent manifest error.  Such Credit Party shall deliver a copy of such certificate to the Administrative Agent.

 

(e)           Each Lender shall severally indemnify the Administrative Agent for any Taxes (but, in the case of any Indemnified Taxes, only to the extent that the Loan Parties have not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Loan Parties to do so) attributable to such Lender that are paid or payable by the Administrative Agent in connection with any Loan Document and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  The indemnity under this Section 2.14(e) shall be paid within 10 days after the Administrative Agent delivers to the applicable Lender a certificate stating the amount of Taxes so paid or payable by the Administrative Agent.  Such certificate shall be conclusive of the amount so paid or payable absent manifest error.

  

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(f)         (i) Any Lender that is entitled to an exemption from, or reduction of, any applicable withholding Tax with respect to any payments under any Loan Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without, or at a reduced rate of, withholding.  In addition, any Lender, if requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to any withholding (including backup withholding) or information reporting requirements.  Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Sections 2.14(f)(ii)(A) through (E) below) shall not be required if in the Lender’s judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense (or, in the case of a Change in Law, any incremental material unreimbursed cost or expense) or would materially prejudice the legal or commercial position of such Lender.  Upon the reasonable request of such Borrower or the Administrative Agent, any Lender shall update any form or certification previously delivered pursuant to this Section 2.14(f).  If any form or certification previously delivered pursuant to this Section expires or becomes obsolete or inaccurate in any respect with respect to a Lender, such Lender shall promptly (and in any event within 10 days after such expiration, obsolescence or inaccuracy) notify such Borrower and the Administrative Agent in writing of such expiration, obsolescence or inaccuracy and update the form or certification if it is legally eligible to do so.

 

(ii)         Without limiting the generality of the foregoing, if the Borrower is a U.S. Person, any Lender with respect to such Borrower shall, if it is legally eligible to do so, deliver to such Borrower and the Administrative Agent (in such number of copies reasonably requested by such Borrower and the Administrative Agent) on or prior to the date on which such Lender becomes a party hereto, duly completed and executed copies of whichever of the following is applicable:

 

(A)           in the case of a Lender that is a U.S. Person, IRS Form W-9 certifying that such Lender is exempt from U.S. Federal backup withholding tax;

 

(B)           in the case of a Non-U.S. Lender claiming the benefits of an income tax treaty to which the United States is a party (1) with respect to payments of interest under any Loan Document, IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. Federal withholding Tax pursuant to the “interest” article of such tax treaty and (2) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. Federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

 

(C)           in the case of a Non-U.S. Lender for whom payments under any Loan Document constitute income that is effectively connected with such Lender’s conduct of a trade or business in the United States, IRS Form W-8ECI;

 

(D)           in the case of a Non-U.S. Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code both (1) IRS Form W-8BEN and (2) a certificate substantially in the form of Exhibit F (a “U.S. Tax Certificate”) to the effect that such Lender is not (a) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (b) a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, (c) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code and (d) conducting a trade or business in the United States with which the relevant interest payments are effectively connected;

  

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(E)           in the case of a Non-U.S. Lender that is not the beneficial owner of payments made under any Loan Document (including a partnership or a participating Lender) (1) an IRS Form W-8IMY on behalf of itself and (2) the relevant forms prescribed in clauses (A), (B), (C), (D) and (F) of this paragraph (f)(ii) that would be required of each such beneficial owner or partner of such partnership if such beneficial owner or partner were a Lender; provided, however, that if the Lender is a partnership and one or more of its partners are claiming the exemption for portfolio interest under Section 881(c) of the Code, such Lender may provide a U.S. Tax Certificate on behalf of such partners; or

 

(F)           any other form prescribed by law as a basis for claiming exemption from, or a reduction of, U.S. Federal withholding Tax together with such supplementary documentation necessary to enable the Borrower or the Administrative Agent to determine the amount of Tax (if any) required by law to be withheld.

 

(iii)         If a payment made to a Lender under any Loan Document would be subject to U.S. Federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Withholding Agent, at the time or times prescribed by law and at such time or times reasonably requested by the Withholding Agent, such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Withholding Agent as may be necessary for the Withholding Agent to comply with its obligations under FATCA, to determine that such Lender has or has not complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment.  Solely for purposes of this Section 2.14(f)(iii), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

 

(g)         If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.14 (including additional amounts paid pursuant to this Section 2.14), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including any Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund).  Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid to such indemnified party pursuant to the previous sentence (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event such indemnified party is required to repay such refund to such Governmental Authority.  Notwithstanding anything to the contrary in this Section 2.14(g), in no event will any indemnified party be required to pay any amount to any indemnifying party pursuant to this Section 2.14(g) if such payment would place such indemnified party in a less favorable position (on a net after-Tax basis) than such indemnified party would have been in if the indemnification payments or additional amounts giving rise to such refund had never been paid.  This Section 2.14(g) shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes which it deems confidential) to the indemnifying party or any other Person.

  

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(h)           Each party’s obligations under this Section 2.14 shall survive any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all other obligations under the Loan Documents.

 

2.15.        Indemnity.  The Borrower agrees to indemnify each Lender for, and to hold each Lender harmless from, any loss or expense that such Lender may sustain or incur as a consequence of (a) default by the Borrower in making a borrowing of, conversion into or continuation of Eurodollar Loans after the Borrower has given a notice requesting the same in accordance with the provisions of this Agreement, (b) default by the Borrower in making any prepayment of or conversion from Eurodollar Loans after the Borrower has given a notice thereof in accordance with the provisions of this Agreement or (c) the making of a prepayment of Eurodollar Loans on a day that is not the last day of an Interest Period with respect thereto.  Such indemnification may include an amount equal to the excess, if any, of (i) the amount of interest that would have accrued on the amount so prepaid, or not so borrowed, converted or continued, for the period from the date of such prepayment or of such failure to borrow, convert or continue to the last day of such Interest Period (or, in the case of a failure to borrow, convert or continue, the Interest Period that would have commenced on the date of such failure) in each case at the applicable rate of interest for such Loans provided for herein (excluding, however, the Applicable Margin included therein, if any) over (ii) the amount of interest (as reasonably determined by such Lender) that would have accrued to such Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank eurodollar market.  A certificate as to any amounts payable pursuant to this Section submitted to the Borrower by any Lender shall be conclusive in the absence of manifest error.  This covenant shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

 

2.16.        Change of Lending Office.  Each Lender agrees that, upon the occurrence of any event giving rise to the operation of Section 2.13 or 2.14(a) and (d) with respect to such Lender, it will, if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans affected by such event with the object of avoiding the consequences of such event; provided that such designation is made on terms that, in the sole judgment of such Lender, cause such Lender and its lending offices to suffer no economic, legal or regulatory disadvantage, and provided, further, that nothing in this Section shall affect or postpone any of the obligations of the Borrower or the rights of any Lender pursuant to Section 2.13 or 2.14(a) and (d).

 

2.17.        Replacement of Lenders.  The Borrower shall be permitted to replace any Lender that (a) requests reimbursement for amounts owing pursuant to Section 2.13 or 2.14(a) and (d), (b) becomes a Defaulting Lender, or (c) does not consent to any proposed amendment, supplement, modification, consent or waiver of any provision of this Agreement or any other Loan Document that requires the consent of each of the Lenders or each of the Lenders affected thereby (so long as the consent of the Required Lenders has been obtained), with a replacement financial institution; provided that (i) such replacement does not conflict with any Requirement of Law, (ii) no Event of Default shall have occurred and be continuing at the time of such replacement, (iii) prior to any such replacement, such Lender shall have taken no action under Section 2.16 so as to eliminate the continued need for payment of amounts owing pursuant to Section 2.13 or 2.14(a) and (d), (iv) the replacement financial institution shall purchase, at par, all Loans and other amounts owing to such replaced Lender on or prior to the date of replacement, (v) the Borrower shall be liable to such replaced Lender under Section 2.15 if any Eurodollar Loan owing to such replaced Lender shall be purchased other than on the last day of the Interest Period relating thereto, (vi) the replacement financial institution shall be reasonably satisfactory to the Administrative Agent, (vii) the replaced Lender shall be obligated to make such replacement in accordance with the provisions of Section 9.6 (provided that the Borrower shall be obligated to pay the registration and processing fee referred to therein), (viii) until such time as such replacement shall be consummated, the Borrower shall pay all additional amounts (if any) required pursuant to Section 2.13 or 2.14(a) and (d), as the case may be, and (ix) any such replacement shall not be deemed to be a waiver of any rights that the Borrower, the Administrative Agent or any other Lender shall have against the replaced Lender.

  

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2.18.        Incremental Facilities.  (a) The Borrower and any one or more Lenders (including New Lenders) may from time to time agree that such Lenders shall make, obtain or increase the amount of their Term Loans (such increased amount, the “Incremental Term Loans”), by executing and delivering to the Administrative Agent an Increased Facility Activation Notice specifying (i) the amount of such increase and the Facility involved, (ii) the applicable Increased Facility Closing Date and (iii) (x) the applicable Incremental Term Maturity Date, (y) the amortization schedule for such Incremental Term Loans, which shall comply with Section 2.3(b), and (z) the Applicable Margin for such Incremental Term Loans,); provided that (A) the final maturity date of any Incremental Term Loans shall be no earlier than the Tranche B Maturity Date, (B) the average life to maturity of the Incremental Term Loans shall be no shorter than the remaining average  life to maturity of the Tranche B Term Loans, and (C) if the total yield (calculated for both the Incremental Term Loans and the Tranche B Term Loans, including the upfront fees, any interest rate floors and any OID (as defined below but excluding any arrangement, underwriting or similar fee paid by the Borrower)) in respect of any Incremental Term Loans exceeds by more than 0.50% the total yield for the existing Tranche B Term Loans (it being understood that any such increase may take the form of original issue discount (“OID”), with OID being equated to the interest rates in a manner determined by the Administrative Agent based on an assumed four-year life to maturity), the Applicable Margin for the Tranche B Term Loans shall be increased so that the total yield in respect of such Incremental Term Loans is no more than 0.50% higher than the total yield for the existing Tranche B Term Loans.  Notwithstanding the foregoing, (i) the aggregate amount of borrowings of Incremental Term Loans shall not exceed $50,000,000, provided that, the aggregate amount of such borrowings of Incremental Term Loans shall not exceed $35,000,000 without consent of the Required Lenders and (ii) without the consent of the Administrative Agent, each increase effected pursuant to this paragraph shall be in a minimum amount of at least $5,000,000.  No Lender shall have any obligation to participate in any increase described in this paragraph unless it agrees to do so in its sole discretion.

 

(b)           Any additional bank, financial institution or other entity which, with the consent of the Borrower and the Administrative Agent (which consent shall not be unreasonably withheld), elects to become a “Lender” under this Agreement in connection with any transaction described in Section 2.18(a) shall execute a New Lender Supplement (each, a “New Lender Supplement”), substantially in the form of Exhibit G-2, whereupon such bank, financial institution or other entity (a “New Lender”) shall become a Lender for all purposes and to the same extent as if originally a party hereto and shall be bound by and entitled to the benefits of this Agreement.

 

(c)           Notwithstanding the foregoing, no Incremental Term Loan shall become effective unless (i) on the date of such effectiveness (A) the representations and warranties set forth in Article 3 and in each other Loan Document shall be true and correct in all material respects as of such date with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties shall be true and correct in all material respects as of such earlier date), (B) at the time of and immediately after giving effect to such Incremental Term Loan, no Default or Event of Default shall have occurred and be continuing, (C) after giving effect to the making of any Incremental Term Loan and the use of proceeds thereof, (ii) the Borrower shall be in compliance with the financial covenants set forth in Section 6.1 on a pro forma basis, recomputed as of the last day of the most recently ended fiscal quarter of the Borrower for which financial statements are available, (y) the Administrative Agent shall have received a certificate to that effect dated such date and executed by a Responsible Officer of the Borrower and (iii) the Administrative Agent shall have received legal opinions, board resolutions and other closing certificates and reaffirmation agreements reasonably requested by the Administrative Agent.

  

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(d)            Notwithstanding anything to the contrary in this Agreement, each of the parties hereto hereby agrees that, on each Increased Facility Activation Date, this Agreement shall be amended to the extent (but only to the extent) necessary to reflect the existence and terms of Incremental Term Loans evidenced thereby; provided that, to the extent such terms and documentation of the Incremental Term Loans are more favorable to the Lenders of such Incremental Term Loans than the existing Tranche B Term Loan Facility (except to the extent permitted by Section 2.18(a)), such terms and documentation shall be reasonably satisfactory to the Administrative Agent and Required Lenders.  Any such amendment may be effected in writing by the Administrative Agent with the Borrower’s consent (not to be unreasonably withheld) and furnished to the other parties hereto.

 

ARTICLE 3. REPRESENTATIONS AND WARRANTIES

 

To induce the Administrative Agent and the Lenders to enter into this Agreement and to make the Loans, the Borrower hereby represents and warrants to the Administrative Agent and each Lender that:

 

3.1.           Financial Condition.  (a) The unaudited pro forma consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at February 26, 2011 (including the notes thereto) (the “Pro Forma Balance Sheet”), copies of which have heretofore been furnished to each Lender, has been prepared giving effect (as if such events had occurred on such date) to (i) the Loans to be made on the Closing Date and the use of proceeds thereof, (ii) the proceeds of the initial ABL Loans and the use of proceeds thereof and (iii) the payment of fees and expenses in connection with the foregoing.  The Pro Forma Balance Sheet has been prepared based on the best information available to the Borrower as of the date of delivery thereof, and presents fairly on a pro forma basis the estimated financial position of Borrower and its consolidated Subsidiaries as at February 26, 2011, assuming that the events specified in the preceding sentence had actually occurred at such date.

 

(b)            The audited consolidated balance sheets of UniTek Holdings, Inc. as at December 31, 2008 and December 31, 2009 and of the Borrower as at December 31, 2010, and the related consolidated statements of income and of cash flows for the fiscal years ended on such dates, reported on by and accompanied by an unqualified report from Ernst & Young LLP, present fairly the consolidated financial condition of the Borrower and its consolidated Subsidiaries as at such date, and the consolidated results of its operations and its consolidated cash flows for the respective fiscal years then ended.  The unaudited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at February 26, 2011, and the related unaudited consolidated statements of income and cash flows for the two-month period ended on such date, present fairly the consolidated financial condition of the Borrower and its consolidated Subsidiaries as at such date, and the consolidated results of its operations and its consolidated cash flows for the two-month period then ended (subject to normal year-end audit adjustments).  All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by the aforementioned firm of accountants and disclosed therein) subject, as to any unaudited financial statements, to normal year-end audit adjustments and the absence of footnotes.  As of the Closing Date, no Group Member has any material Guarantee Obligations, contingent liabilities and liabilities for taxes, or any long-term leases or unusual forward or long-term commitments, including any interest rate or foreign currency swap or exchange transaction or other obligation in respect of derivatives, that are not reflected in the most recent financial statements referred to in this paragraph.  During the period from December 31, 2010 to and including the date hereof there has been no Disposition by any Group Member of any material part of its business or property.

  

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3.2.           No Change.  Since December 31, 2010, there has been no development or event that has had or could reasonably be expected to have a Material Adverse Effect.

 

3.3.           Existence; Compliance with Law.  Each Group Member (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has the power and authority, and the legal right, to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged, (c) is duly qualified as a foreign corporation or other organization and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification and (d) is in compliance with all Requirements of Law except in each case (other than with respect to clauses (a) and (b)) to the extent that the failure to so qualify or comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

3.4.           Power; Authorization; Enforceable Obligations.  Each Loan Party has the power and authority, and the legal right, to make, deliver and perform the Loan Documents to which it is a party and, in the case of the Borrower, to obtain extensions of credit hereunder.  Each Loan Party has taken all necessary organizational action to authorize the execution, delivery and performance of the Loan Documents to which it is a party and, in the case of the Borrower, to authorize the extensions of credit on the terms and conditions of this Agreement.  No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required in connection with the extensions of credit hereunder or with the execution, delivery, performance, validity or enforceability of this Agreement or any of the Loan Documents, except (i) consents, authorizations, filings and notices described in Schedule 3.4, which consents, authorizations, filings and notices have been obtained or made and are in full force and effect and (ii) the filings referred to in Section 3.19.  Each Loan Document has been duly executed and delivered on behalf of each Loan Party party thereto.  This Agreement constitutes, and each other Loan Document upon execution will constitute, a legal, valid and binding obligation of each Loan Party party thereto, enforceable against each such Loan Party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).

 

3.5.           No Legal Bar.  The execution, delivery and performance of this Agreement and the other Loan Documents, the borrowings hereunder and the use of the proceeds thereof will not violate any Requirement of Law or any Contractual Obligation of any Group Member and will not result in, or require, the creation or imposition of any Lien on any of their respective properties or revenues pursuant to any Requirement of Law or any such Contractual Obligation (other than the Liens created by the Security Documents).  No Requirement of Law or Contractual Obligation applicable to the Borrower or any of its Subsidiaries could reasonably be expected to have a Material Adverse Effect.

 

3.6.           Litigation.  No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of the Borrower, threatened by or against any Group Member or against any of their respective properties or revenues (a) with respect to any of the Loan Documents or any of the transactions contemplated hereby or thereby, or (b) that could reasonably be expected to have a Material Adverse Effect.

 

3.7.           No Default.  No Group Member is in default under or with respect to any of its Contractual Obligations in any respect that could reasonably be expected to have a Material Adverse Effect.  No Default or Event of Default has occurred and is continuing.

  

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3.8.           Ownership of Property; Liens.  Each Group Member has title in fee simple to, or a valid leasehold interest in, all its real property, and good title to, or a valid leasehold interest in, all its other property, and none of such property is subject to any Lien except as permitted by Section 6.3.

 

3.9.           Intellectual Property.  Each Group Member owns, or is licensed to use, all Intellectual Property necessary for the conduct of its business as currently conducted.  No material claim has been asserted and is pending by any Person challenging or questioning the use of any Intellectual Property or the validity or effectiveness of any Intellectual Property, nor does the Borrower know of any valid basis for any such claim.  The use of Intellectual Property by each Group Member does not infringe on the rights of any Person in any material respect.

 

3.10.         Taxes.  Each Group Member has filed or caused to be filed all Federal, state and other material Tax returns that are required to be filed and has paid all Taxes shown to be due and payable on said returns or on any assessments made against it or any of its property and all other Taxes, fees or other charges imposed on it or any of its property by any Governmental Authority (other than any the amount or validity of which are currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of the relevant Group Member); except as set forth on Schedule 3.10 no Tax Lien has been filed, and, to the knowledge of the Borrower, no claim is being asserted, with respect to any such Tax, fee or other charge.

 

3.11.         Federal Regulations.  No part of the proceeds of any Loans, and no other extensions of credit hereunder, will be used (a) for “buying” or “carrying” any “margin stock” within the respective meanings of each of the quoted terms under Regulation U as now and from time to time hereafter in effect for any purpose that violates the provisions of the Regulations of the Board or (b) for any purpose that violates the provisions of the Regulations of the Board.  No more than 25% of the assets of the Group Members consist of “margin stock” as so defined.  If requested by any Lender or the Administrative Agent, the Borrower will furnish to the Administrative Agent and each Lender a statement to the foregoing effect in conformity with the requirements of FR Form G-3 or FR Form U-1, as applicable, referred to in Regulation U.

 

3.12.         Labor Matters.  Except as, in the aggregate, could not reasonably be expected to have a Material Adverse Effect:  (a) there are no strikes or other labor disputes against any Group Member pending or, to the knowledge of the Borrower, threatened; (b) hours worked by and payment made to employees of each Group Member have not been in violation of the Fair Labor Standards Act or any other applicable Requirement of Law dealing with such matters; and (c) all payments due from any Group Member on account of employee health and welfare insurance have been paid or accrued as a liability on the books of the relevant Group Member.

 

3.13.         ERISA.  Except as could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect: (a) each Group Member and each of their respective ERISA Affiliates is in compliance with the applicable provisions of ERISA and the provisions of the Code relating to Plans and the regulations and published interpretations thereunder; (b) no ERISA Event or Foreign Plan Event has occurred or is reasonably expected to occur; and (c) all amounts required by applicable law with respect to, or by the terms of, any retiree welfare benefit arrangement maintained by any Group Member or any ERISA Affiliate or to which any Group Member or any ERISA Affiliate has an obligation to contribute have been accrued in accordance with Statement of Financial Accounting Standards No. 106.  The present value of all accumulated benefit obligations under each Pension Plan (based on the assumptions used for purposes of Accounting Standards Codification No. 715: Compensation-Retirement Benefits) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than an immaterial amount the fair market value of the assets of such Pension Plan allocable to such accrued benefits, and the present value of all accumulated benefit obligations of all underfunded Pension Plans (based on the assumptions used for purposes of Accounting Standards Codification No. 715: Compensation-Retirement Benefits) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than an immaterial amount the fair market value of the assets of all such underfunded Pension Plans.

  

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3.14.         Investment Company Act; Other Regulations.  No Loan Party is an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended.  No Loan Party is subject to regulation under any Requirement of Law (other than Regulation X of the Board) that limits its ability to incur Indebtedness.

 

3.15.         Subsidiaries.  Except as disclosed to the Administrative Agent by the Borrower in writing from time to time after the Closing Date, (a) Schedule 3.15 sets forth the name and jurisdiction of incorporation of each Subsidiary and, as to each such Subsidiary, the percentage of each class of Capital Stock owned by any Loan Party and (b) there are no outstanding subscriptions, options, warrants, calls, rights or other agreements or commitments (other than stock options granted to employees or directors and directors’ qualifying shares) of any nature relating to any Capital Stock of the Borrower or any Subsidiary, except as created by the Loan Documents.

 

3.16.         Use of Proceeds.  The proceeds of the Term Loans shall be used (a) to refinance Existing Subsidiary Debt and to pay related fees and expenses and (b) thereafter to finance the working capital needs and general corporate purposes of the Borrower and its Subsidiaries.  The proceeds of Incremental Term Loans shall be used to finance Permitted Acquisitions and general corporate purposes of the Borrower and its Subsidiaries.

 

3.17.         Environmental Matters.  Except as, in the aggregate, could not reasonably be expected to have a Material Adverse Effect:

 

(a)             the facilities and properties owned, leased or operated by any Group Member (the “Properties”) do not contain, and have not previously contained, any Materials of Environmental Concern in amounts or concentrations or under circumstances that constitute or constituted a violation of, or could give rise to liability under, any Environmental Law;

 

(b)             no Group Member has received or is aware of any notice of violation, alleged violation, non-compliance, liability or potential liability regarding environmental matters or compliance with Environmental Laws with regard to any of the Properties or the business operated by any Group Member (the “Business”), nor does the Borrower have knowledge or reason to believe that any such notice will be received or is being threatened;

 

(c)             Materials of Environmental Concern have not been transported or disposed of from the Properties in violation of, or in a manner or to a location that could give rise to liability under, any Environmental Law, nor have any Materials of Environmental Concern been generated, treated, stored or disposed of at, on or under any of the Properties in violation of, or in a manner that could give rise to liability under, any applicable Environmental Law;

 

(d)             no judicial proceeding or governmental or administrative action is pending or, to the knowledge of the Borrower, threatened, under any Environmental Law to which any Group Member is or will be named as a party with respect to the Properties or the Business, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any Environmental Law with respect to the Properties or the Business;

   

  

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(e)             there has been no release or threat of release of Materials of Environmental Concern at or from the Properties, or arising from or related to the operations of any Group Member in connection with the Properties or otherwise in connection with the Business, in violation of or in amounts or in a manner that could give rise to liability under Environmental Laws;

 

(f)              the Properties and all operations at the Properties are in compliance, and have in the last five years been in compliance, with all applicable Environmental Laws, and there is no contamination at, under or about the Properties or violation of any Environmental Law with respect to the Properties or the Business; and

 

(g)             no Group Member has assumed any liability of any other Person under Environmental Laws.

 

3.18.         Accuracy of Information, etc.  No statement or information contained in this Agreement, any other Loan Document, the Confidential Information Memorandum or any other document, certificate or statement furnished by or on behalf of any Loan Party to the Administrative Agent or the Lenders, or any of them, for use in connection with the transactions contemplated by this Agreement or the other Loan Documents, contained as of the date such statement, information, document or certificate was so furnished (or, in the case of the Confidential Information Memorandum, as of the date of this Agreement), any untrue statement of a material fact or omitted to state a material fact necessary to make the statements contained herein or therein not misleading.  The projections and pro forma financial information contained in the materials referenced above are based upon good faith estimates and assumptions believed by management of the Borrower to be reasonable at the time made, it being recognized by the Lenders that such financial information as it relates to future events is not to be viewed as fact and that actual results during the period or periods covered by such financial information may differ from the projected results set forth therein by a material amount.  There is no fact known to any Loan Party that could reasonably be expected to have a Material Adverse Effect that has not been expressly disclosed herein, in the other Loan Documents, in the Confidential Information Memorandum or in any other documents, certificates and statements furnished to the Administrative Agent and the Lenders for use in connection with the transactions contemplated hereby and by the other Loan Documents.

 

3.19.         Security Documents.  (a) The Guarantee and Collateral Agreement is effective to create in favor of the Administrative Agent, for the benefit of the Lenders, a legal, valid and enforceable security interest in the Collateral described therein and proceeds thereof.  In the case of the Pledged Stock described in the Guarantee and Collateral Agreement, when stock certificates representing such Pledged Stock are delivered to the Administrative Agent (together with a properly completed and signed stock power or endorsement), and in the case of the other Collateral described in the Guarantee and Collateral Agreement, when financing statements and other filings specified on Schedule 3.19(a) in appropriate form are filed in the offices specified on Schedule 3.19(a), the Guarantee and Collateral Agreement shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such Collateral and the proceeds thereof, as security for the Obligations (as defined in the Guarantee and Collateral Agreement), in each case, subject to the terms of the Intercreditor Agreement, prior and superior in right to any other Person (except, in the case of Collateral other than Pledged Stock, Liens permitted by Section 6.3).

 

(b)             Each of the Mortgages is effective to create in favor of the Administrative Agent, for the benefit of the Lenders, a legal, valid and enforceable Lien on the Mortgaged Properties described therein and proceeds thereof, and when the Mortgages are filed in the offices specified on Schedule 3.19(b), each such Mortgage shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in the Mortgaged Properties and the proceeds thereof, as security for the Obligations (as defined in the relevant Mortgage), in each case prior and superior in right to any other Person.  Schedule 1.1B lists, as of the Closing Date, each parcel of owned real property and each leasehold interest in real property located in the United States and held by the Borrower or any of its Subsidiaries that has a value, in the reasonable opinion of the Borrower, in excess of $250,000.

  

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3.20.         Solvency.  Each Loan Party is, and after giving effect to the incurrence of all Indebtedness and obligations being incurred in connection herewith and under the ABL Credit Agreement will be and will continue to be, Solvent.

 

3.21.         Regulation H.  No Mortgage encumbers improved real property that is located in an area that has been identified by the Secretary of Housing and Urban Development as an area having special flood hazards and in which flood insurance has been made available under the National Flood Insurance Act of 1968.

 

3.22.         Certain Documents.  The Borrower has delivered to the Administrative Agent complete copies of the ABL Documents (including all exhibits, schedules and disclosure letters referred to therein or delivered pursuant thereto, if any) and all amendments thereto and waivers relating thereto.  None of such documents and agreements has been amended or supplemented, nor have any of the provisions thereof been waived, except pursuant to a written agreement or instrument which was entered into in accordance with the Intercreditor Agreement and has heretofore been delivered to the Administrative Agent.

 

3.23.         Anti-Terrorism Laws.

 

(a)             General.  Neither any Group Member nor any Affiliate of any Group Member is in violation of any Anti-Terrorism Law or engages in or conspires to engage in any transaction  that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.

 

(b)             Executive Order No. 13224.  Neither any Group Member nor any Affiliate of any Group Member or their respective agents acting or benefiting in any capacity in connection with the Advances or other transactions hereunder, is any of the following (each a “Blocked Person”):

 

(i)              a Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order No. 13224;

 

(ii)             a Person owned or  controlled  by, or acting for or on behalf  of,  any  Person  that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order No. 13224;

 

(iii)            a Person or entity with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;

 

(iv)            a Person or entity that commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order No. 13224;

 

(v)             a Person or entity that is named as a “specially designated national” on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list, or

  

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(vi)            a Person or entity who is affiliated or associated with a Person or entity listed above.

 

Neither any Group Member nor to the knowledge of any Group Member, any of its agents acting in any capacity in connection with the Advances or other transactions hereunder (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, or (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order No. 13224.

3.24.         Trading with the Enemy.  No Group Member has engaged, nor does it intend to engage, in any business or activity prohibited by the Trading with the Enemy Act.

 

ARTICLE 4. CONDITIONS PRECEDENT

 

The agreement of each Lender to make the Tranche B Term Loans requested to be made by it is subject to the satisfaction, prior to or concurrently with the making of such extension of credit on the Closing Date, of the following conditions precedent:

 

(a)             Credit Agreement; Guarantee and Collateral Agreement.  The Administrative Agent shall have received (i) this Agreement, executed and delivered by the Administrative Agent, the Borrower and each Person listed on Schedule 1.1A, (ii) the Guarantee and Collateral Agreement, executed and delivered by the Borrower and each Subsidiary Guarantor, (iii) an Acknowledgement and Consent in the form attached to the Guarantee and Collateral Agreement, executed and delivered by each Issuer (as defined therein), if any, that is not a Loan Party and (iv) a duly executed copy of the Intercreditor Agreement.

 

(b)             Refinancing, etc.  The Administrative Agent shall have received satisfactory evidence that (i) all commitments under the Existing Subsidiary Debt shall have been terminated and all amounts thereunder shall have been paid in full and (ii) satisfactory arrangements shall have been made for the termination of all Liens granted in connection therewith.

 

(c)             Pro Forma Balance Sheet; Financial Statements.  The Lenders shall have received (i) the Pro Forma Balance Sheet, (ii) audited consolidated financial statements of UniTek Holdings, Inc. for the 2008 and 2009 fiscal years, (iii) audited consolidated financial statements of the Borrower for the 2010 fiscal year and (iv) unaudited interim consolidated financial statements of the Borrower for each fiscal month and quarter ended after the date of the latest applicable financial statements delivered pursuant to clause (iii) of this paragraph as to which such financial statements are available, and such financial statements shall not, in the reasonable judgment of the Lenders, reflect any material adverse change in the consolidated financial condition of the Borrower, as reflected in the financial statements or projections contained in the Confidential Information Memorandum.

 

(d)             Projections.  The Lenders shall have received satisfactory projections through 2018.

 

(e)             Approvals.  All governmental and third party approvals (including landlords’ and other consents) necessary in connection with the continuing operations of the Group Members and the transactions contemplated hereby shall have been obtained and be in full force and effect, and all applicable waiting periods shall have expired without any action being taken or threatened by any competent authority that would restrain, prevent or otherwise impose adverse conditions on the financing contemplated hereby.

  

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(f)             Lien Searches.  The Administrative Agent shall have received the results of a recent Lien search with respect to each Loan Party, and such search shall reveal no Liens on any of the assets of the Loan Parties except for Liens permitted by Section 6.3 or discharged on or prior to the Closing Date pursuant to documentation satisfactory to the Administrative Agent.

 

(g)            Fees.  The Lenders and the Administrative Agent shall have received all fees required to be paid, and all expenses for which invoices have been presented (including the reasonable fees and expenses of legal counsel), on or before the Closing Date.  All such amounts will be paid with proceeds of Loans made on the Closing Date and will be reflected in the funding instructions given by the Borrower to the Administrative Agent on or before the Closing Date.

 

(h)            Closing Certificates; Certified Certificate of Incorporation; Good Standing Certificates.  The Administrative Agent shall have received (i) certificates of each Loan Party, dated the Closing Date, substantially in the form of Exhibit C, with appropriate insertions and attachments, including the certificate of incorporation of each Loan Party that is a corporation certified by the relevant authority of the jurisdiction of organization of such Loan Party, and (ii) a good standing certificate for each Loan Party from its jurisdiction of organization.

 

(i)             Legal Opinion.  The Administrative Agent shall have received the legal opinion of Morgan, Lewis & Bockius, counsel to the Borrower and its Subsidiaries, substantially in the form of Exhibit E.  Such legal opinion shall cover such other matters incident to the transactions contemplated by this Agreement as the Administrative Agent may reasonably require.

 

(j)             Pledged Stock; Stock Powers; Pledged Notes.  The Administrative Agent shall have received (i) the certificates representing the shares of Capital Stock pledged pursuant to the Guarantee and Collateral Agreement, together with an undated stock power for each such certificate executed in blank by a duly authorized officer of the pledgor thereof and (ii) each promissory note (if any) pledged to the Administrative Agent pursuant to the Guarantee and Collateral Agreement endorsed (without recourse) in blank (or accompanied by an executed transfer form in blank) by the pledgor thereof.

 

(k)            Filings, Registrations and Recordings.  Each document (including any Uniform Commercial Code financing statement) required by the Security Documents or under law or reasonably requested by the Administrative Agent to be filed, registered or recorded in order to create in favor of the Administrative Agent, for the benefit of the Lenders, a perfected Lien on the Collateral described therein, subject to the terms of the Intercreditor Agreement, prior and superior in right to any other Person (other than with respect to Liens expressly permitted by Section 6.3), shall be in proper form for filing, registration or recordation.

 

(l)             Reserved.

 

(m)           Solvency.  The Administrative Agent shall have received a solvency certificate from the chief financial officer of the Borrower.

 

(n)            Insurance.  The Administrative Agent shall have received insurance certificates satisfying the requirements of Section 5.2(b) of the Guarantee and Collateral Agreement.

 

(o)            ABL Facility.  The Administrative Agent shall have received satisfactory evidence of (i) the execution and delivery of definitive credit documentation in connection with the ABL Credit Agreement and (ii) satisfaction of the conditions to initial funding thereof.  The terms and conditions of the ABL Documents shall be reasonably satisfactory to the Administrative Agent.

  

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(p)             Ratings.  The Borrower shall have obtained monitored public ratings of the Facilities from each of Moody’s and S&P and a corporate family rating for the Borrower from Moody’s and a corporate issuer rating for the Borrower from S&P.  

 

(q)             Representations and Warranties.  Each of the representations and warranties made by any Loan Party in or pursuant to the Loan Documents shall be true and correct in all material respects on and as of the Closing Date as if made on and as of such Closing Date

 

(r)              No Default.  No Default or Event of Default shall have occurred and be continuing on the Closing Date or after giving effect to the Tranche B Term Loans requested to be made on the Closing Date.

 

For the purpose of determining compliance with the conditions specified in this Article 4, each Lender that has signed this Agreement shall be deemed to have accepted, and to be satisfied with, each document or other matter required under this Article 4 unless the Administrative Agent shall have received written notice from such Lender prior to the proposed Closing Date specifying its objection thereto.

 

ARTICLE 5. AFFIRMATIVE COVENANTS

 

The Borrower hereby agrees that, so long as the Commitments remain in effect or any Loan or other amount is owing to any Lender or the Administrative Agent hereunder, the Borrower shall and shall cause each of its Subsidiaries to:

 

5.1.           Financial Statements.  Furnish to the Administrative Agent and each Lender:

 

(a)             as soon as available, but in any event within 90 days after the end of each fiscal year of the Borrower, a copy of the audited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at the end of such year and the related audited consolidated statements of income and of cash flows for such year, setting forth in each case in comparative form the figures for the previous year, reported on without a “going concern” or like qualification or exception, or qualification arising out of the scope of the audit, by Ernst & Young LLP or other independent certified public accountants of nationally recognized standing;

 

(b)             as soon as available, but in any event not later than 45 days after the end of each of the first three quarterly periods of each fiscal year of the Borrower, the unaudited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at the end of such quarter and the related unaudited consolidated statements of income and of cash flows for such quarter and the portion of the fiscal year through the end of such quarter, setting forth in each case in comparative form the figures for the previous year, certified by a Responsible Officer as being fairly stated in all material respects (subject to normal year-end audit adjustments); and

 

(c)             as soon as available, but in any event not later than 30 days after the end of each fiscal month of the Borrower, (i) the unaudited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at the end of such month and the related unaudited consolidated statements of income and of cash flows for such month and the portion of the fiscal year through the end of such month, setting forth in each case in comparative form the figures for the previous year, and (ii) a schedule containing a detailed comparison of the projected consolidated budget for such month and the portion of the fiscal year through the end of such month delivered pursuant to Section 5.2(c) against the applicable amounts set forth on the balance sheet delivered pursuant to the preceding clause (i) for such month, in each case certified by a Responsible Officer as being fairly stated in all material respects (subject to normal year-end audit adjustments).

  

45

  

 

All such financial statements shall be complete and correct in all material respects and shall be prepared in reasonable detail and in accordance with GAAP (subject, as to such quarterly statements, to normal year-end audit adjustments and the absence of footnotes) applied (except as approved by such accountants or officer, as the case may be, and disclosed in reasonable detail therein) consistently throughout the periods reflected therein and with prior periods.

 

5.2.           Certificates; Other Information.  Furnish to the Administrative Agent (for further distribution to the Lenders):

 

(a)             concurrently with the delivery of the financial statements referred to in Section 5.1(a), a certificate of the independent certified public accountants reporting on such financial statements stating that in making the examination necessary therefor no knowledge was obtained of any Default or Event of Default pursuant to Section 6.1, except as specified in such certificate;

 

(b)             concurrently with the delivery of any financial statements pursuant to Section 5.1, (i) a certificate of a Responsible Officer stating that, to the best of each such Responsible Officer’s knowledge, each Loan Party during such period has observed or performed all of its covenants and other agreements, and satisfied every condition contained in this Agreement and the other Loan Documents to which it is a party to be observed, performed or satisfied by it, and that such Responsible Officer has obtained no knowledge of any Default or Event of Default except as specified in such certificate and (ii) in the case of quarterly or annual financial statements, (x) a Compliance Certificate containing all information and calculations necessary for determining compliance by each Group Member with the provisions of this Agreement referred to therein as of the last day of the fiscal quarter or fiscal year of the Borrower, as the case may be, and (y) to the extent not previously disclosed to the Administrative Agent, (1) a description of any change in the jurisdiction of organization of any Loan Party, (2) a list of any Intellectual Property acquired by any Loan Party and (3) a description of any Person that has become a Group Member, in each case since the date of the most recent report delivered pursuant to this clause (y) (or, in the case of the first such report so delivered, since the Closing Date);

 

(c)             as soon as available, and in any event no later than 90 days after the end of each fiscal year of the Borrower, a detailed consolidated budget (prepared on a monthly basis) for the following fiscal year (including a projected consolidated balance sheet of the Borrower and its Subsidiaries as of the end of the following fiscal year, the related consolidated statements of projected cash flow and projected income and a description of the underlying assumptions applicable thereto), and, as soon as available, significant revisions, if any, of such budget and projections with respect to such fiscal year (collectively, the “Projections”), which Projections shall in each case be accompanied by a certificate of a Responsible Officer stating that such Projections are based on reasonable estimates, information and assumptions deemed by the Borrower to be reasonable at the time made and that such Responsible Officer has no reason to believe that such Projections are incorrect or misleading in any material respect;

 

(d)             within 45 days after the end of each fiscal quarter of the Borrower (or 90 days, in the case of the fourth fiscal quarter of each fiscal year), a narrative discussion and analysis of the financial condition and results of operations of the Borrower and its Subsidiaries for such fiscal quarter and for the period from the beginning of the then current fiscal year to the end of such fiscal quarter, as compared to the comparable periods of the previous year;

 

(e)             (i) no later than 10 Business Days prior to the effectiveness thereof, copies of substantially final drafts of any proposed amendment, supplement, waiver or other modification with respect to the ABL Documents, (ii) promptly, any material notice delivered by the Borrower to the ABL Representative or the lenders under the ABL Credit Agreement and (iii) upon request of the Administrative Agent, borrowing base certificates delivered by the Borrower under the ABL Credit Agreement;

  

46

  

 

(f)              within five days after the same are sent, copies of all financial statements and reports that the Borrower sends to the holders of any class of its debt securities or public equity securities and, within five days after the same are filed, copies of all financial statements and reports that the Borrower may make to, or file with, the SEC;

 

(g)             promptly following receipt thereof, copies of (i) any documents described in Section 101(k) or 101(l) of ERISA that any Group Member or any ERISA Affiliate may request with respect to any Multiemployer Plan; provided that if the relevant Group Members or ERISA Affiliates have not requested such documents or notices from the administrator or sponsor of the applicable Multiemployer Plans, then, upon reasonable request of the Administrative Agent, such Group Member or the ERISA Affiliate shall promptly make a request for such documents or notices from such administrator or sponsor and the Borrower shall provide copies of such documents and notices to the Administrative Agent promptly after receipt thereof;

 

(h)             the occurrence of any Default or Event of Default or any Default or Event of Default under the ABL Documents (or the receipt of any notice from the ABL Representative alleging the occurrence of any such event);

 

(i)              promptly, such additional financial and other information as any Lender may from time to time reasonably request; and

 

(j)              concurrently with delivery to the lenders under the ABL Credit Agreement, the documents required to be delivered pursuant to Sections 9.1, 9.2, 9.3, 9.4, 9.5, 9.7, 9.8, 9.9, 9.10, 9.11, 9.12, 9.14 and 9.15 of the ABL Credit Agreement (or the comparable provisions of any Permitted Refinancing Indebtedness in respect thereof).

 

Information required to be delivered pursuant to this Section 5.2 shall be deemed to have been delivered if such information, or one or more annual or quarterly reports containing such information, shall have been posted by the Administrative Agent on a SyndTrak, IntraLinks or similar site to which the Lenders have been granted access or shall be available on the website of the Securities and Exchange Commission at http://www.sec.gov or on the website of the Borrower.  Information required to be delivered pursuant to this Section may also be delivered by electronic communications pursuant to procedures approved by the Administrative Agent.

5.3.           Payment of Obligations.  Pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its material obligations of whatever nature, except (a) where the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have been provided on the books of the relevant Group Member or (b) where the failure to pay, discharge or satisfy could not reasonably be expected to have a Material Adverse Effect.

 

5.4.           Maintenance of Existence; Compliance.  (a)  (i)  Preserve, renew and keep in full force and effect its organizational existence and (ii) take all reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business, except, in each case, as otherwise permitted by Section 6.4 and except, in the case of clause (ii) above, to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (b) comply with all Contractual Obligations and Requirements of Law except to the extent that failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

  

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5.5.           Maintenance of Property; Insurance.  (a)  Keep all property useful and necessary in its business in good working order and condition, ordinary wear and tear excepted except where the failure to do so could not reasonably be expected to have a Material Adverse Effect and (b) maintain with financially sound and reputable insurance companies insurance on all its property in at least such amounts and against at least such risks (but including in any event public liability, product liability and business interruption) as are usually insured against in the same general area by companies engaged in the same or a similar business.

 

5.6.           Inspection of Property; Books and Records; Discussions.  (a)  Keep proper books of records and account in which full, true and correct entries in conformity with GAAP and all Requirements of Law shall be made of all dealings and transactions in relation to its business and activities and (b) permit representatives of the Administrative Agent or any Lender to visit and inspect any of its properties and examine and make abstracts from any of its books and records at any reasonable time during normal business hours and as often as may reasonably be desired and to discuss the business, operations, properties and financial and other condition of the Group Members with officers and employees of the Group Members and with their independent certified public accountants.

 

5.7.           Notices.  Promptly give notice to the Administrative Agent and each Lender of:

 

(a)             the occurrence of any Default or Event of Default;

 

(b)             any (i) default or event of default under any Contractual Obligation of any Group Member or (ii) litigation, investigation or proceeding that may exist at any time between any Group Member and any Governmental Authority, that in either case, if not cured or if adversely determined, as the case may be, could reasonably be expected to have a Material Adverse Effect;

 

(c)             any litigation or proceeding affecting any Group Member (i) which either individually or in the aggregate could reasonably be expected to have a Material Adverse Effect, (ii) in which injunctive or similar relief is sought or (iii) which relates to any Loan Document;

 

(d)             the occurrence of any ERISA Event or Foreign Plan Event that, alone or together with any other ERISA Events and/or Foreign Plan Events that have occurred, could reasonably be expected to result in liability of any Group Member or any ERISA Affiliate in an aggregate amount exceeding a material amount, as soon as possible and in any event within 10 days after the Borrower knows or has reason to know thereof; and

 

(e)             any development or event that has had or could reasonably be expected to have a Material Adverse Effect.

 

Each notice pursuant to this Section 5.7 shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action the relevant Group Member proposes to take with respect thereto.

 

5.8.           Environmental Laws.  (a) Comply in all material respects with, and ensure compliance in all material respects by all tenants and subtenants, if any, with, all applicable Environmental Laws, and obtain and comply in all material respects with and maintain, and ensure that all tenants and subtenants obtain and comply in all material respects with and maintain, any and all licenses, approvals, notifications, registrations or permits required by applicable Environmental Laws.

 

(b)             Conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions required for material compliance under Environmental Laws and promptly comply in all material respects with all lawful orders and directives of all Governmental Authorities regarding Environmental Laws.

  

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5.9.           Interest Rate Protection.  In the case of the Borrower, within 90 days after the Closing Date, enter into, and thereafter maintain, Swap Agreements to the extent necessary to provide that at least 50% of the aggregate principal amount of the Term Loans is subject to either a fixed interest rate or interest rate protection for a period of not less than two years, which Swap Agreements shall have terms and conditions reasonably satisfactory to the Administrative Agent.

 

5.10.         Additional Collateral, etc.  (a) With respect to any property acquired after the Closing Date by any Group Member (other than (x) any property described in paragraph (b), (c) or (d) below, (y) any property subject to a Lien expressly permitted by Section 6.3(g) and (z) property acquired by any Excluded Foreign Subsidiary) as to which the Administrative Agent, for the benefit of the Lenders, does not have a perfected Lien, promptly (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement or such other documents as the Administrative Agent deems necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, a security interest (with the priority required by the Intercreditor Agreement) in such property and (ii) take all actions necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, (A) a perfected first priority security interest in such property (or, if any Indebtedness under the ABL Credit Agreement is outstanding, a perfected security interest in such property with the priority required by the Intercreditor Agreement), including the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Guarantee and Collateral Agreement or by law or as may be requested by the Administrative Agent.

 

(b)             With respect to any fee interest in any real property having a value (together with improvements thereof) of at least $250,000 acquired after the Closing Date by any Group Member (other than (x) any such real property subject to a Lien expressly permitted by Section 6.3(g) and (y) real property acquired by any Excluded Foreign Subsidiary), promptly (i) execute and deliver a first priority Mortgage, in favor of the Administrative Agent, for the benefit of the Lenders, covering such real property, (ii) if requested by the Administrative Agent, provide the Lenders with (x) title and extended coverage insurance covering such real property in an amount at least equal to the purchase price of such real property (or such other amount as shall be reasonably specified by the Administrative Agent) as well as a current ALTA survey thereof, together with a surveyor’s certificate and (y) any consents or estoppels reasonably deemed necessary or advisable by the Administrative Agent in connection with such Mortgage, each of the foregoing in form and substance reasonably satisfactory to the Administrative Agent and (iii) if requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent.

 

(c)             With respect to any new Subsidiary (other than in the case of clause (iii), (X) a Subsidiary that does not have active operations and holds less than $100,000 in assets or (Y) an Excluded Foreign Subsidiary) created or acquired after the Closing Date by any Group Member (which, for the purposes of this paragraph (c), shall include any existing Subsidiary that ceases to be an Excluded Foreign Subsidiary), promptly (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement as the Administrative Agent deems necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, a perfected first priority security interest (subject to the Intercreditor Agreement) in the Capital Stock of such new Subsidiary that is owned by any Group Member, (ii) deliver to the Administrative Agent the certificates representing such Capital Stock, together with undated stock powers, in blank, executed and delivered by a duly authorized officer of the relevant Group Member, (iii) cause such new Subsidiary (A) to become a party to the Guarantee and Collateral Agreement, (B) to take such actions necessary or advisable to grant to the Administrative Agent for the benefit of the Lenders a perfected first priority security interest (subject to the Intercreditor Agreement) in the Collateral described in the Guarantee and Collateral Agreement with respect to such new Subsidiary, including the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Guarantee and Collateral Agreement or by law or as may be requested by the Administrative Agent and (C) to deliver to the Administrative Agent a certificate of such Subsidiary, substantially in the form of Exhibit C, with appropriate insertions and attachments, and (iv) if requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent.

  

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(d)             With respect to any new Excluded Foreign Subsidiary created or acquired after the Closing Date by any Group Member (other than by any Group Member that is an Excluded Foreign Subsidiary), promptly (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement as the Administrative Agent deems necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, a perfected first priority security interest (subject to the Intercreditor Agreement) in the Capital Stock of such new Subsidiary that is owned by any such Group Member (provided that in no event shall more than 66% of the total outstanding voting Capital Stock of any such new Subsidiary be required to be so pledged), (ii) deliver to the Administrative Agent the certificates representing such Capital Stock, together with undated stock powers, in blank, executed and delivered by a duly authorized officer of the relevant Group Member, and take such other action as may be necessary or, in the opinion of the Administrative Agent, desirable to perfect the Administrative Agent’s security interest therein, and (iii) if requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent.

 

(e)             Notwithstanding anything to the contrary in this Section 5.10 or any other Security Document, the Administrative Agent shall not require the taking of a Lien on, or require the perfection of any Lien granted in, those assets (to the extent not constituting collateral for the ABL Credit Agreement) as to which the cost of obtaining or perfecting such Lien (including any mortgage stamp, intangibles or other tax or expenses relating to such Lien) is excessive in relation to the benefit to the Lenders of the security afforded thereby as reasonably determined by the Administrative Agent.

 

(f)              Promptly upon the request by the Administrative Agent do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register any and all such further acts, deeds, conveyances, pledge agreements, mortgages, deeds of trust, trust deeds, assignments, financing statements and continuations thereof, termination statements, notices of assignment, transfers, certificates, assurances and other instruments as the Administrative Agent may reasonably require from time to time in order to perfect and maintain the validity, effectiveness and priority of any of the Security Documents and any of the Liens intended to be created thereunder.

 

5.11.         Ratings.  Maintain at all times monitored public ratings of the Facilities by Moody’s and S&P and a corporate family rating for the Borrower from Moody’s and a corporate issuer rating for the Borrower from S&P.

 

5.12.         Post-Closing Obligations.  On or prior to the date that is 60 days following the Closing Date:

 

(a)             The Administrative Agent shall have received a Mortgage with respect to each Mortgaged Property, executed and delivered by a duly authorized officer of each party thereto.

  

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(b)             If requested by the Administrative Agent, the Administrative Agent shall have received, and the title insurance company issuing the policy referred to in clause (c) below (the “Title Insurance Company”) shall have received, maps or plats of an as-built survey of the sites of the Mortgaged Properties certified to the Administrative Agent and the Title Insurance Company in a manner satisfactory to them, dated a date satisfactory to the Administrative Agent and the Title Insurance Company by an independent professional licensed land surveyor satisfactory to the Administrative Agent and the Title Insurance Company.

 

(c)             The Administrative Agent shall have received in respect of each Mortgaged Property a mortgagee’s title insurance policy (or policies) or marked up unconditional binder for such insurance, in each case in form and substance satisfactory to the Administrative Agent.  The Administrative Agent shall have received evidence satisfactory to it that all premiums in respect of each such policy, all charges for mortgage recording tax, and all related expenses, if any, have been paid.

 

(d)             If requested by the Administrative Agent, the Administrative Agent shall have received (A) a policy of flood insurance that (1) covers any parcel of improved real property that is encumbered by any Mortgage, (2) is written in an amount not less than the outstanding principal amount of the indebtedness secured by such Mortgage that is reasonably allocable to such real property or the maximum limit of coverage made available with respect to the particular type of property under the National Flood Insurance Act of 1968, whichever is less, and (3) has a term ending not later than the maturity of the Indebtedness secured by such Mortgage and (B) confirmation that the Borrower has received the notice required pursuant to Section 208(e)(3) of Regulation H of the Board.

 

(e)             The Administrative Agent shall have received a copy of all recorded documents referred to, or listed as exceptions to title in, the title policy or policies referred to in clause (c) above and a copy of all other material documents affecting the Mortgaged Properties.

 

(f)              The Administrative Agent shall have received an environmental audit with respect to the real properties of the Borrower and its Subsidiaries specified by the Administrative Agent.

 

(g)             The Administrative Agent shall have received the legal opinion of local counsel in Texas with regard to the Mortgaged Properties.

 

ARTICLE 6. NEGATIVE COVENANTS

 

The Borrower hereby agrees that, so long as the Commitments remain in effect or any Loan or other amount is owing to any Lender or the Administrative Agent hereunder, the Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly:

 

6.1.           Financial Condition Covenants.  (a) Consolidated Leverage Ratio.  Permit the Consolidated Leverage Ratio as at the last day of any period of four consecutive fiscal quarters of the Borrower ending with any fiscal quarter set forth below to exceed the ratio set forth below opposite such fiscal quarter:

 

	
Fiscal Quarter

	  	
Consolidated Leverage Ratio

	
June 30, 2011

	  	
4.75:1.00

	
September 30, 2011

	  	
4.50:1.00

	
December 31, 2011

	  	
4.25:1.00

	
March 31, 2012

	  	
4.00:1.00

	
June 30, 2012

	  	
3.75:1.00

	
September 30, 2012

	  	
3.50:1.00

  

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December 31, 2012

	  	
3.50:1.00

	
March 31, 2013

	  	
3.50:1.00

	
June 30, 2013

	  	
3.25:1.00

	
September 30, 2013

	  	
3.25:1.00

	
December 31, 2013

	  	
3.25:1.00

	
March 31, 2014

	  	
3.25:1.00

	
June 30, 2014

	  	
3.25:1.00

	
September 30, 2014

	  	
3.25:1.00

	
December 31, 2014

	  	
3.25:1.00

	
March 31, 2015

	  	
3.25:1.00

	
June 30, 2015

	  	
3.25:1.00

	
September 30, 2015

	  	
3.25:1.00

	
December 31, 2015

	  	
3.25:1.00

	
March 31, 2016

	  	
3.00:1.00

	
June 30, 2016

	  	
3.00:1.00

	
September 30, 2016

	  	
3.00:1.00

	
December 31, 2016

	  	
3.00:1.00

	
March 31, 2017

	  	
3.00:1.00

	
June 30, 2017

	  	
3.00:1.00

	
September 30, 2017

	  	
3.00:1.00

	
December 31, 2017

	  	
3.00:1.00

	
March 31, 2018

	  	
3.00:1.00

 

(b)             Consolidated Fixed Charge Coverage Ratio.  Permit the Consolidated Fixed Charge Coverage Ratio for any period of four consecutive fiscal quarters of the Borrower to be less than (i) 1.10:1.00 for any such period ending in 2011 and (ii) for any such period ending thereafter 1.20:1.00.

 

6.2.           Indebtedness.  Create, issue, incur, assume, become liable in respect of or suffer to exist any Indebtedness, except:

 

(a)             Indebtedness of any Loan Party pursuant to any Loan Document;

 

(b)             Indebtedness of (i) the Borrower to any Subsidiary, (ii) any Subsidiary Guarantor to the Borrower or any other Subsidiary, and (iii) to the extent allowed by Sections 6.7(l) and (p), any Subsidiary that is not a Loan Party to the Borrower or any Subsidiary Guarantor;

 

(c)             (i) Guarantee Obligations incurred in the ordinary course of business by any Loan Party of obligations of any other Loan Party, (ii) Guarantee Obligations incurred in the ordinary course of business by any Subsidiary which is not a Loan Party in respect of obligations of any Loan Party and (iii) Guarantee Obligations permitted pursuant to Sections 6.7(l) and (p);

 

(d)             Indebtedness outstanding on the date hereof and listed on Schedule 6.2(d) and any Permitted Refinancing Indebtedness in respect thereof;

 

(e)             Indebtedness (including, without limitation, Capital Lease Obligations) created after the Closing Date secured by Liens permitted by Section 6.3(g) in an aggregate principal amount not to exceed (i) $30,000,000 less (ii) the amount of any Indebtedness consisting of Capital Lease Obligations outstanding pursuant to Section 6.2(d), at any one time outstanding and any Permitted Refinancing Indebtedness in respect thereof;

  

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(f)             (i) Indebtedness of the Borrower and the Subsidiary Guarantors incurred pursuant to the ABL Credit Agreement in an aggregate principal amount not to exceed $75,000,000, provided that, the Borrower and the Subsidiary Guarantors may incur additional Indebtedness pursuant to the ABL Credit Agreement in excess of such limitation not to exceed an additional aggregate principal amount of not more than $25,000,000 pursuant to “Borrower Revolver Increases” (as defined and provided for in the ABL Credit Agreement as in effect on the date hereof) but only to the extent that no later than five (5) Business Days prior to the incurrence of any such additional Indebtedness under the ABL Credit Agreement, the Borrower shall have delivered to the Administrative Agent a pro forma balance sheet and pro forma financial statements and a Compliance Certificate demonstrating that the Borrower would be in compliance with the financial covenants set forth in Section 6.1 on a pro forma basis after giving effect to such Indebtedness (assuming the full amount of any such Borrower Revolving Increase was drawn) as if such Indebtedness had been incurred on the first day of the most recent period of four consecutive fiscal quarters in respect of which the financial covenants have been tested in accordance with Section 7.1; and any Permitted Refinancing Indebtedness in respect thereof (including Permitted Refinancing Indebtedness in respect of Borrower Revolving Increases which are permitted by this paragraph (f) as if such Borrower Revolving Increases had been implemented) and (ii) if applicable, Guarantee Obligations of any Subsidiary Guarantor under the ABL Credit Agreement in respect of such Indebtedness;

 

(g)            Swap Agreements permitted under Section 6.11;

 

(h)            Indebtedness of a Person or Indebtedness secured by assets of a Person that, in either case, becomes a Subsidiary or Indebtedness attaching to assets that are acquired by the Borrower or any of its Subsidiaries, in each case after the Closing Date, provided that (i) the aggregate principal amount of all such Indebtedness does not exceed $5,000,000 at any one time outstanding, (ii) such Indebtedness existed at the time such Person became a Subsidiary or at the time such assets were acquired and, in each case, was not created in anticipation thereof and (iii) such Indebtedness is not guaranteed in any respect by the Borrower or any Subsidiary (other than by any such Person that so becomes a Subsidiary and existing Subsidiaries of such Person); and any Permitted Refinancing Indebtedness in respect thereof;

 

(i)             Indebtedness in respect of performance, surety, bid, appeal bonds, completion guarantees or other similar obligations provided in the ordinary course of business, including guarantees or obligations of the Borrower and its Subsidiaries with respect to letters of credit supporting such performance, surety, bid, appeal bonds, completion guarantees or other similar obligations but excluding Indebtedness incurred through the borrowing of money, Capital Lease Obligations and purchase money obligations;

 

(j)             Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business;

 

(k)            the incurrence by the Borrower or any Subsidiary of contingent obligations in respect of purchase price adjustments or indemnification obligations set forth in agreements providing for the Permitted Acquisition or disposition of any asset of the Borrower or such Subsidiary so long as all such contingent obligations are discharged within 30 days of the date the amount thereof becomes due under the terms of such Permitted Acquisition and the Permitted Acquisition or subject disposition is otherwise permitted hereby;

  

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(l)              cash management obligations and other Indebtedness in respect of netting services, overdraft protections and similar arrangements in each case in connection with cash management and deposit accounts in the ordinary course of business;

 

(m)            Indebtedness consisting of the financing of insurance premiums, so long as the aggregate amount payable pursuant to such Indebtedness does not materially exceed the amount of the premium for such insurance;

 

(n)             Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;

 

(o)             Indebtedness consisting of Permitted Earn-Out Obligations;

 

(p)             Subordinated Debt incurred in connection with Permitted Acquisitions in an aggregate outstanding principal amount not to exceed $5,000,000 at any one time; and

 

(q)             additional Indebtedness of the Borrower or any of its Subsidiaries in an aggregate principal amount (for the Borrower and all Subsidiaries) not to exceed $1,500,000 at any one time outstanding.

 

6.3.           Liens.  Create, incur, assume or suffer to exist any Lien upon any of its property, whether now owned or hereafter acquired, except:

 

(a)             Liens for Taxes not overdue for a period of more than 30 days or that are being contested in good faith by appropriate proceedings, provided that adequate reserves with respect thereto are maintained on the books of the Borrower or its Subsidiaries, as the case may be, in conformity with GAAP;

 

(b)             carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business that are not overdue for a period of more than 30 days or that are being contested in good faith by appropriate proceedings;

 

(c)             pledges or deposits in connection with workers’ compensation, unemployment insurance and other social security legislation;

 

(d)             deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

 

(e)             easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business that, in the aggregate, are not substantial in amount and that do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the Borrower or any of its Subsidiaries;

 

(f)              (i) Liens in existence on the date hereof listed on Schedule 6.3(f), securing Indebtedness permitted by Section 6.2(d), provided that no such Lien is spread to cover any additional property after the Closing Date and that the amount of Indebtedness secured thereby is not increased and (ii) Liens securing any Permitted Refinancing Indebtedness in respect of such Indebtedness; provided that no such Lien is spread to cover any additional property;

  

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(g)            Liens securing Indebtedness of the Borrower or any Subsidiary incurred pursuant to Section 6.2(e) to finance the acquisition, construction or improvement of fixed or capital assets, provided that (i) such Liens shall be created substantially simultaneously with the acquisition, construction or improvement of such fixed or capital assets, (ii) such Liens do not at any time encumber any property other than the property financed by such Indebtedness (and the proceeds and products thereof) and (iii) the amount of Indebtedness secured thereby is not increased;

 

(h)            Liens created pursuant to the Security Documents;

 

(i)             Liens created pursuant to the ABL Documents and any Permitted Refinancing Indebtedness in respect thereof;

 

(j)             Liens securing Indebtedness of a Group Member permitted by Section 6.2(h) on property existing at the time such Indebtedness is incurred by such Group Member; provided that such Liens existed prior to the time the relevant Person or assets were acquired by the Borrower and its Subsidiaries, were not created in anticipation thereof and attach only to specific assets of such Group Member and the proceeds and products thereof;

 

(k)            leases, subleases, licenses and sublicenses granted to other Persons not interfering in any material respect with the ordinary course of the business of the Borrower or its Subsidiaries;

 

(l)             any interest or title of a lessor under any lease entered into by the Borrower or any Subsidiary in the ordinary course of its business and covering only the assets so leased;

 

(m)           any judgment Lien not constituting an Event of Default;

 

(n)            non-exclusive licenses of Intellectual Property granted by the Borrower or any of its Subsidiaries in the ordinary course of business and not interfering in any material respect with the ordinary conduct of business;

 

(o)            bankers’ Liens, rights of setoff and other similar Liens, in each case existing solely with respect to cash and Cash Equivalents on deposit in one or more accounts maintained by any Group Member and in each case granted in the ordinary course of business in favor of the bank or banks with which such accounts are maintained, securing amounts owing to such bank or banks with respect to cash management and operating account arrangements, including those involving pooled accounts and netting arrangements;

 

(p)            Liens arising by virtue of deposits made in the ordinary course of business to secure liability for premiums to insurance carriers;

 

(q)            Liens not otherwise permitted by this Section so long as neither (i) the aggregate outstanding principal amount of the obligations secured thereby nor (ii) the aggregate fair market value (determined as of the date such Lien is incurred) of the assets subject thereto exceeds (as to the Borrower and all Subsidiaries) $1,500,000 at any one time; and

 

(r)             Liens on the DIRECTV Inventory created under the DIRECTV/DirectSat Contract;

  

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provided that notwithstanding the foregoing (i) no Loan Party shall create or suffer to exist any Lien or transfer upon or against any of its DIRECTV Inventory in favor of any Person other than DIRECTV other than (A) non-consensual Liens arising under clause (a), (b) or (m) of this Section 6.3 to the extent such non-consensual Liens would not violate the provisions of the DIRECTV/DirectSat Contract, and (B) Liens arising under clause (i) of this Section 6.3 but only to the extent the property subject to such Liens constitute Collateral and (ii) no property shall constitute collateral under the ABL Documentation unless such property is Collateral subject to the Intercreditor Agreement.

 

6.4.           Fundamental Changes.  Enter into any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or Dispose of all or substantially all of its property or business, except that:

 

(a)             any Subsidiary of the Borrower may be merged or consolidated with or into the Borrower (provided that the Borrower shall be the continuing or surviving corporation) or with or into any other Subsidiary (provided that in the case of any such merger or consolidation of a Subsidiary Guarantor, the Person formed by such merger or consolidation shall be a Subsidiary Guarantor or a Person who becomes a Subsidiary Guarantor simultaneously therewith);

 

(b)             any Subsidiary of the Borrower may Dispose of any or all of its assets (i) to the Borrower or any other Loan Party (upon voluntary liquidation or otherwise) or (ii) pursuant to a Disposition permitted by Section 6.5;

 

(c)             any Investment expressly permitted by Section 6.7 may be structured as a merger, consolidation or amalgamation as long as the Borrower is the surviving entity or the Person formed by such merger, consolidation or amalgamation is a Subsidiary Guarantor or (so long as neither the Borrower nor any other Subsidiary is a party to the transaction) an Excluded Foreign Subsidiary; and

 

(d)             any Subsidiary that is not a Subsidiary Guarantor may be liquidated, wound up or dissolved, provided that immediately thereafter all of the assets of such Subsidiary are distributed to the holders of its Capital Stock on a pro rata basis.

 

6.5.           Disposition of Property.  Dispose of any of its property, whether now owned or hereafter acquired, or, in the case of any Subsidiary, issue or sell any shares of such Subsidiary’s Capital Stock to any Person, except:

 

(a)             the Disposition of obsolete, damaged or worn out property in the ordinary course of business;

 

(b)             the sale of inventory in the ordinary course of business;

 

(c)             Dispositions permitted by clause (i) of Section 6.4(b);

 

(d)             the sale or issuance of any Subsidiary’s Capital Stock to the Borrower or any Wholly Owned Subsidiary Guarantor;

 

(e)             the non-exclusive licensing of Intellectual Property in the ordinary course of business;

 

(f)              a Disposition of cash or Cash Equivalents;

 

(g)             the sale, lease, transfer or other disposition of accounts in the ordinary course of business for collection and not for financing purposes;

  

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(h)             leases, subleases, licenses or sublicenses of property in the ordinary course of business which do not materially interfere with the business of the Borrower and its Subsidiaries taken as a whole;

 

(i)              transfers of property subject to any casualty or other insured damage or any taking under power of eminent domain or by condemnation or any similar proceedings;

 

(j)              the discount or other compromise for less than the face value thereof, notes or accounts receivable in order to resolve disputes that occur in the ordinary course of business;

 

(k)             Dispositions of Property from the Borrower to any Subsidiary Guarantor, and from a Subsidiary to the Borrower or a Subsidiary Guarantor;

 

(l)              issuance and sale or disposition by any Subsidiary of its shares of Capital Stock to directors or members of a governing body similar to a board of directors in order to qualify such directors or members to serve as such under applicable law;

 

(m)            the sale of vehicles in the ordinary course of business; and

 

(n)             so long as no Event of Default shall have occurred and be continuing, or would result from such Disposition, the Disposition of other property having a fair market value not to exceed $5,000,000 in the aggregate for any fiscal year of the Borrower.

 

6.6.           Restricted Payments.  Declare or pay any dividend (other than dividends payable solely in common stock of the Person making such dividend) on, or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any Capital Stock of any Group Member, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of any Group Member (collectively, “Restricted Payments”), except that:

 

(a)             any Subsidiary may make Restricted Payments to the Borrower or any other Loan Party;

 

(b)             so long as no Default or Event of Default shall have occurred and be continuing, the Borrower may purchase the Borrower’s common stock or common stock options from present or former officers or employees of any Group Member upon the death, disability or termination of employment of such officer or employee; provided that the aggregate amount of payments under this paragraph (b) in any fiscal year (net of any proceeds received by the Borrower after the date hereof in connection with resales of any common stock or common stock options so purchased) shall not exceed $1,000,000;

 

(c)             the Borrower and its Subsidiaries may make a cashless repurchase of Capital Stock which is deemed to occur upon the exercise of options, rights or warrants to the extent such Capital Stock represents a portion of the exercise price of those options, rights or warrants.

 

6.7.           Investments.  Make any advance, loan, extension of credit (by way of guaranty or otherwise) or capital contribution to, or purchase any Capital Stock, bonds, notes, debentures or other debt securities of, or any assets constituting a business unit of, or make any other investment in, any Person (all of the foregoing, “Investments”), except:

  

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(a)             extensions of trade credit and endowments of negotiable instructions, in each case in the ordinary course of business;

 

(b)             investments in cash and Cash Equivalents;

 

(c)             Guarantee Obligations permitted by Section 6.2;

 

(d)             loans and advances to employees of any Group Member in the ordinary course of business (including payroll advances and advances for travel, entertainment and relocation expenses) in an aggregate amount for all Group Members not to exceed $250,000 at any one time outstanding;

 

(e)             Investments in assets useful in the business of the Borrower and its Subsidiaries made by the Borrower or any of its Subsidiaries with the proceeds of any Reinvestment Deferred Amount;

 

(f)              intercompany Investments by any Group Member in the Borrower or any Person that, prior to such investment, is a Loan Party;

 

(g)             Permitted Acquisitions;

 

(h)             Restricted Payments to the extent permitted by Section 6.6;

 

(i)              promissory notes and other non-cash consideration received by the Borrower and its Subsidiaries pursuant to Dispositions permitted by Section 6.5;

 

(j)              Investments received in compromise or settlement of claims against any other Person arising in the ordinary course of business, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any Person;

 

(k)             Investments related to Swap Agreements permitted by this Agreement;

 

(l)              Investments in Subsidiaries which are not Loan Parties in an aggregate amount (valued at cost) not to exceed $2,700,000 at any time outstanding;

 

(m)            Investments existing on the date hereof and described on Schedule 6.7(m) hereto with any modifications, replacements, renewals or extensions thereof; provided that the amount of the original Investment is not increased except by the terms of such Investment or as otherwise permitted by this Section 6.7(m);

 

(n)             Investments constituting (i) accounts or notes receivable arising, (ii) trade debt granted, (iii) deposits made in connection with the purchase price of goods or services, (iv) endorsement of negotiable instruments held for collection or (v) lease, utility and other similar deposits, in each case in the ordinary course of business;

 

(o)             purchase price adjustments, earnouts and similar obligations (“Earn-Out Obligations”) which (i) are incurred in connection with Permitted Acquisitions, (ii) will not result in an increase in the Consolidated Leverage Ratio as determined on a pro forma basis and (iii) are subject to terms pursuant to which payments in respect thereof during the continuance of an Event of Default may accrue, but shall not be payable in cash during such period, but may be payable in cash upon the cure or waiver of such Event of Default (such obligations, “Permitted Earn-Out Obligations”); provided, further, the Borrower and its Subsidiaries shall (x) be in compliance with the financial covenants set forth in Section 6.1 on a pro forma basis after giving effect to such Permitted Earn-Out Obligation and (y) have minimum liquidity (consisting of amounts then available to be borrowed under the ABL Credit Agreement plus the aggregate amount of Unrestricted Cash) of no less than $15,000,000; and

  

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(p)             in addition to Investments otherwise expressly permitted by this Section, Investments by the Borrower or any of its Subsidiaries in an aggregate amount (valued at cost) not to exceed $1,000,000 during the term of this Agreement.

 

6.8.           Optional Payments and Modifications of Certain Debt Instruments.  (a)  Make or offer to make any optional or voluntary payment, prepayment, repurchase or redemption of or otherwise optionally or voluntarily defease or segregate funds with respect to Material Debt (other than the ABL Credit Agreement to the extent of revolving indebtedness thereunder and Capital Lease Obligations); or (b) amend, modify, waive or otherwise change, or consent or agree to any amendment, modification, waiver or other change to, any of the terms of Material Debt (other than ABL Indebtedness, amendments, modifications and waivers of which are governed by Section 6.17) or any Subordinated Debt other than any such amendment, modification, waiver or other change that (x) (i) would extend the maturity or reduce the amount of any payment of principal thereof or reduce the rate or extend any date for payment of interest thereon, and (ii) does not make the covenants, events of default or remedies in such agreement more burdensome, taken as a whole, (y) that is not adverse to the Administrative Agent, the Lenders or the Loan Parties or (z) in the case of Capital Lease Obligations, is entered in the ordinary course of business.

 

6.9.           Transactions with Affiliates.  Enter into any transaction, including any purchase, sale, lease or exchange of property, the rendering of any service or the payment of any management, advisory or similar fees, with any Affiliate (other than the Borrower or any other Loan Party) unless such transaction is (a) otherwise permitted under this Agreement, (b) in the ordinary course of business of the relevant Group Member, and (c) upon fair and reasonable terms no less favorable to the relevant Group Member than it would obtain in a comparable arm’s length transaction with a Person that is not an Affiliate; provided, however, that nothing in this Section 6.9 shall prevent (i) payments permitted by Section 6.6, (ii) Investments in Loan Parties and their Subsidiaries permitted pursuant to Section 6.7, (iii) reasonable and customary director, officer and employee compensation (including bonuses and severance) and other benefits (including retirement, health, stock option and other benefit plans) and indemnification arrangements in the ordinary course of business and in good faith or to the extent approved in good faith by the board of directors of the Borrower, (iv) loans and transactions between or among the Borrower and one or more of its Subsidiaries expressly permitted by Section 6.2, (v) reasonable and customary fees paid to members of the board of directors of the Borrower and its Subsidiaries and reimbursement of reasonable out-of-pocket costs and expenses of such Persons, (vi) employment and severance arrangements between the Borrower and any of its Subsidiaries and their directors, officers, employees and members of management in the ordinary course of business, and (vii) transactions with customers, clients, suppliers, joint venture partners or purchasers or sellers of goods and services, in each case, in the ordinary course of business or otherwise not prohibited by the Loan Documents.

 

6.10.         Sales and Leasebacks.  Enter into any arrangement with any Person providing for the leasing by any Group Member of real or personal property that has been or is to be sold or transferred by such Group Member to such Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of such Group Member.

  

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6.11.         Swap Agreements.  Enter into any Swap Agreement, except (a) Swap Agreements entered into to hedge or mitigate risks to which the Borrower or any Subsidiary has actual exposure (other than those in respect of Capital Stock) and (b) Swap Agreements entered into in order to effectively cap, collar or exchange interest rates (from fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect to any interest-bearing liability or investment of the Borrower or any Subsidiary.

 

6.12.         Changes in Fiscal Periods.  Permit the fiscal year of the Borrower to end on a day other than December 31 or change the Borrower’s method of determining fiscal quarters.

 

6.13.         Negative Pledge Clauses.  Enter into or suffer to exist or become effective any agreement that prohibits or limits the ability of any Group Member to create, incur, assume or suffer to exist any Lien upon any of its property or revenues, whether now owned or hereafter acquired, to secure its obligations under the Loan Documents to which it is a party other than (a) this Agreement and the other Loan Documents, (b) the ABL Documentation as in effect on the Closing Date, (c) any agreements governing any purchase money Liens or Capital Lease Obligations otherwise permitted hereby (in which case, any prohibition or limitation shall only be effective against the assets financed thereby), (d) any Indebtedness outstanding on the date any Subsidiary of such Group Member becomes such a Subsidiary (so long as such agreement was not entered into in contemplation of such Subsidiary becoming a Subsidiary of such Group Member), (e) any agreement where such the prohibition of the creation of the Lien is rendered ineffective by the Uniform Commercial Code, (f) restrictions imposed by any Requirement of Law, (g) customary provisions restricting subletting or assignment of any lease governing a leasehold interest of the Borrower or a Subsidiary, (h) customary provisions in an agreement restricting assignment of such agreement entered into by the Borrower or a Subsidiary in the ordinary course of business, (i) customary restrictions and conditions contained in any agreement relating to the sale of any property permitted under Section 6.5 pending the consummation of such sale (in which case such restrictions and conditions shall be limited to such property), (j) customary provisions in partnership agreements, limited liability company organizational governance documents and other similar agreements with respect to joint ventures entered into in the ordinary course of business that restrict the transfer of ownership interests in such partnership, limited liability company or similar Person, (k) restrictions on cash or other deposits imposed by suppliers or landlords under contracts entered into in the ordinary course of business, (l) any instrument governing Indebtedness acquired or assigned in connection with any Permitted Acquisition, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person or the properties or assets of the Person so acquired (so long as such instrument was not entered in contemplation of such acquisition), (m) customary provisions in joint venture agreements and similar agreements applicable to joint ventures relating solely to such joint venture, or (n) any encumbrances or restrictions imposed by any amendments or refinancings that are otherwise permitted by the Loan Documents of the contracts, instruments or obligations referred to above; provided that such amendments or refinancings are no more restrictive with respect to such encumbrances and restrictions than those prior to such amendment or refinancing.

 

6.14.         Clauses Restricting Subsidiary Distributions.  Enter into or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Subsidiary of the Borrower to (a) make Restricted Payments in respect of any Capital Stock of such Subsidiary held by, or pay any Indebtedness owed to, the Borrower or any other Subsidiary of the Borrower, (b) make loans or advances to, or other Investments in, the Borrower or any other Subsidiary of the Borrower or (c) transfer any of its assets to the Borrower or any other Subsidiary of the Borrower, except for such encumbrances or restrictions (i) existing under or by reason of (A) any restrictions existing under the Loan Documents or (B) any restrictions existing under the ABL Documentation as in effect on the Closing Date, (ii) with respect to a Subsidiary imposed pursuant to an agreement that has been entered into in connection with the Disposition of all or substantially all of the Capital Stock or assets of such Subsidiary, (iii) representing any agreement or instrument binding upon a Person acquired in connection with an acquisition permitted hereby as such agreement or instrument is in effect at the time of such acquisition (except to the extent such agreement or instrument was entered into in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, (iv) customary anti-assignment, subletting and transfer provisions in leases and licenses and other contracts entered into in the ordinary course of business, (v) customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending such sale, provided such restrictions and conditions apply only to the Subsidiary that is to be sold and such sale is permitted hereunder, (vi) restrictions and conditions imposed by any Requirement of Law, and (vii) any agreements governing any purchase money Liens or Capital Lease Obligations otherwise permitted hereby.

  

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6.15.         Lines of Business.  Enter into any business, either directly or through any Subsidiary, except for those businesses in which the Borrower and its Subsidiaries are engaged on the date of this Agreement or that are reasonably related thereto or other outsourcing services.

 

6.16.         Compliance with ABL Incorporated Provisions.  Fail to comply with the ABL Incorporated Provisions.  As used herein “ABL Incorporated Provisions” means those provisions in Sections 6.5, VII and X of the ABL Credit Agreement that are more restrictive than the provisions of this Agreement together with related defined terms, in each case as in effect on the Closing Date, which provisions are incorporated by reference in this Agreement as if set forth at length herein, mutatis mutandis and without limitation with references in the Incorporated Provisions to (i) “Agent” being deemed to be references to “Administrative Agent,” (ii) “Lenders” being deemed to be references to Lenders hereunder, (iii) “Agreement” being deemed to be references to this Agreement, (iv) “Other Documents” being deemed references to Loan Documents, (v) “Advances” being deemed references to Loans and (vi) “Borrowers” being deemed references to “Loan Parties”.

 

6.17.         Amendments to ABL Documents.  Enter into any amendment, waiver or modification of the ABL Documents (or new ABL Documents) the effect of which is (i) to increase any applicable interest rate on the ABL Indebtedness by more than 300 basis points, except in connection with (1) the imposition of a default rate of interest in accordance with the terms of the ABL Indebtedness (provided that the incremental increase resulting solely from the imposition of such default rate of interest shall not at any time exceed the greater of (x) 200 basis points and (y) the difference between “LIBOR”, the “Eurodollar Rate”, the “Adjusted Eurodollar Rate” (in each case, or any equivalent term) at such time, on the one hand, and the “Alternate Base Rate” or the “Base Rate” (in each case, or any equivalent term) at such time, on the other hand, plus 200 basis points), (2) the imposition of fees for forbearance, amendments, waivers and other modifications and supplements or (3) any increase in “LIBOR”, the “Eurodollar Rate”, the “Adjusted Eurodollar Rate”, the Alternate Base Rate” or the “Base Rate” (in each case, or any equivalent term) (it being understood that, in the case of a pricing matrix or grid based upon a measure of financial performance provided for in the ABL Documents as in effect on the date hereof (x) any change in rate due to the operation thereof shall not constitute an increase and (y) each of the interest rates specified in such matrix or grid may be increased by an amount up to 300 basis points), (ii) to provide for any incurrence of additional or increased ABL Indebtedness after the Closing Date, except for any such incurrence and increase of the ABL Indebtedness pursuant to “Borrower Revolving Increases” (as defined and provided for in the ABL Credit Agreement as in effect on the date hereof) permitted under the provisions of Section 6.2(f) hereof and which does not otherwise violate the provisions of this Section 6.17, (iii) to change the final maturity date for any of the ABL Indebtedness to a date that is earlier than the expiration of the Term as in effect under the ABL Credit Agreement on the Closing Date and (iv) to increase or accelerate any amortization payments or mandatory prepayments provided for under the ABL Documentation as in effect on the date hereof (except for any amendments to provide for amortization with respect to any exercise by Borrower of its right to incur additional ABL Indebtedness pursuant to the “Borrower Revolving Increases” (as defined and provided for in the ABL Credit Agreement as in effect on the date hereof), in which case the amortization terms and final maturity date of any applicable “Borrower Revolving Increases” (as defined and provide for in the ABL Credit Agreement as in effect on the date hereof) shall not be materially less favorable to the Loan Parties as compared to such amortization and maturity terms of the ABL Loans as in effect on the date hereof) or otherwise make a change to the terms and conditions of the amortization payments or mandatory prepayments under the ABL Documents as in effect on the date hereof in a manner that is materially adverse to the interests of Loan Parties and/or Administrative Agent and Lenders; provided that, Borrower shall deliver to Administrative Agent a copy of any amendment, waiver or modification of the ABL Documents to be entered into in compliance with this Section 6.17 within five (5) Business Days of the execution thereof.  For the avoidance of draft the Loan Parties may refinance the ABL Credit Agreement with the proceeds of Permitted Refinancing Indebtedness having terms consistent with this Section 6.17.

  

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ARTICLE 7. EVENTS OF DEFAULT

 

If any of the following events shall occur and be continuing:

 

(a)           the Borrower shall fail to pay any principal of any Loan when due in accordance with the terms hereof; or the Borrower shall fail to pay any interest on any Loan, or any other amount payable hereunder or under any other Loan Document, within five days after any such interest or other amount becomes due in accordance with the terms hereof; or

 

(b)           any representation or warranty made or deemed made by any Loan Party herein or in any other Loan Document or that is contained in any certificate, document or financial or other statement furnished by it at any time under or in connection with this Agreement or any such other Loan Document shall prove to have been inaccurate in any material respect on or as of the date made or deemed made; or

 

(c)           any Loan Party shall default in the observance or performance of any agreement contained in clause (i) or (ii) of Section 5.4(a), Section 5.7(a) or Article 6 of this Agreement or Sections 5.5 and 5.7(b) of the Guarantee and Collateral Agreement; or

 

(d)           any Loan Party shall default in the observance or performance of any other agreement contained in this Agreement or any other Loan Document (other than as provided in paragraphs (a) through (c) of this Section), and such default shall continue unremedied for a period of 30 days after notice to the Borrower from the Administrative Agent or the Required Lenders; or

 

(e)           any Group Member shall (i) default in making any payment of any principal of any Indebtedness (including any Guarantee Obligation, but excluding the Loans) on the scheduled or original due date with respect thereto or beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness was created; or (ii) default in making any payment of any interest on any such Indebtedness beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness was created; or (iii) default in the observance or performance of any other agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or beneficiary of such Indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to cause, with the giving of notice if required, such Indebtedness to become due prior to its stated maturity or (in the case of any such Indebtedness constituting a Guarantee Obligation) to become payable; provided that a default, event or condition described in clause (i), (ii) or (iii) of this paragraph (e) shall not at any time constitute an Event of Default unless, at such time, one or more defaults, events or conditions of the type described in clauses (i), (ii) and (iii) of this paragraph (e) shall have occurred and be continuing with respect to Indebtedness the aggregate outstanding principal amount of which is $3,500,000 or more; or, without limitation of the foregoing, an Event of Default shall occur under the ABL Credit Agreement (as the ABL Credit Agreement is in effect on the date hereof); or

  

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(f)            (i) any Group Member shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets; or (ii) there shall be commenced against any Group Member any case, proceeding or other action of a nature referred to in clause (i) above that (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed or undischarged for a period of 60 days; or (iii) there shall be commenced against any Group Member any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets that results in the entry of an order for any such relief that shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) any Group Member shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) any Group Member shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or (vi) or any Group Member shall make a general assignment for the benefit of its creditors; or

 

(g)           (i) an ERISA Event and or a Foreign Plan Event shall have occurred; (ii) a trustee shall be appointed by a United States district court to administer any Pension Plan; (iii) the PBGC shall institute proceedings to terminate any Pension Plan; (iv) any Group Member or any of their respective ERISA Affiliates shall have been notified by the sponsor of a Multiemployer Plan that it has incurred or will be assessed Withdrawal Liability to such Multiemployer Plan and such entity does not have reasonable grounds for contesting such Withdrawal Liability or is not contesting such Withdrawal Liability in a timely and appropriate manner; or (v) any other event or condition shall occur or exist with respect to a Plan, a Foreign Benefit Arrangement, or a Foreign Plan; and in each case in clauses (i) through (v) above, such event or condition, together with all other such events or conditions, if any, could, in the sole judgment of the Required Lenders, reasonably be expected to result in a Material Adverse Effect; or

 

(h)           one or more judgments or decrees shall be entered against any Group Member involving in the aggregate a liability (to the extent not paid or covered by insurance as to which the relevant insurance company has acknowledged coverage) of $3,500,000 or more, and all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 30 days from the entry thereof; or

 

(i)            other than with respect to de minimis items of Collateral not exceeding $250,000 in the aggregate, any Security Document or financing statement after delivery thereof pursuant to Article IV or Section 5.10 shall for any reason (other than pursuant to the terms thereof) cease to create a valid and perfected first priority lien on and security interest in the Collateral purported to be covered thereby, except (i) to the extent otherwise permitted by the Loan Documents, (ii) to the extent that any such lack of validity, perfection or priority results from any act of the Administrative Agent and (iii) as to Collateral consisting of real property, to the extent that such lack of validity, perfection or priority are covered by a lender’s title insurance policy and such insurer has not denied coverage; or

 

(j)            any of the Security Documents shall cease, for any reason, to be in full force and effect, or any Loan Party shall so assert; or

  

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(k)           the guarantee contained in Section 2 of the Guarantee and Collateral Agreement shall cease, for any reason, to be in full force and effect or any Loan Party or any Affiliate of any Loan Party shall so assert; or

 

(l)            (i) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) shall (x) become, or obtain rights (whether by means or warrants, options or otherwise) to become, the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of more than 51% of the outstanding common stock of the Borrower or (y) obtain the ability to nominate or elect at least a majority of the board of directors of the Borrower; or (ii) a Specified Change of Control shall occur; or

 

(m)          the Intercreditor Agreement shall cease, for any reason, to be in full force and effect, or any Loan Party or any Affiliate of any Loan Party shall assert the foregoing; or

 

then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or (ii) of paragraph (f) above with respect to the Borrower, automatically the Commitments shall immediately terminate and the Loans (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents shall immediately become due and payable, and (B) if such event is any other Event of Default, with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower, declare the Loans (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents to be due and payable forthwith, whereupon the same shall immediately become due and payable.  Except as expressly provided above in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived by the Borrower.

 

ARTICLE 8. THE AGENTS

 

8.1.           Appointment.  Each Lender hereby irrevocably designates and appoints the Administrative Agent as the agent of such Lender under this Agreement and the other Loan Documents, and each such Lender irrevocably authorizes the Administrative Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto.  Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Administrative Agent.

 

8.2.           Delegation of Duties.  The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any attorneys-in-fact or one or more agents appointed by the Administrative Agent, and shall be entitled to advice of counsel concerning all matters pertaining to such duties.  The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Affiliates.  The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.  The exculpatory provisions of this Article shall apply to any such sub-agent and to the Affiliates of the Administrative Agent and any such agents, and shall apply to their respective activities in connection with the syndication of the facility provided for herein as well as activities as Administrative Agent.

  

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8.3.           Exculpatory Provisions.  Neither any Agent nor any of their respective officers, directors, employees, agents, advisors, attorneys-in-fact or affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or any other Loan Document (except to the extent that any of the foregoing are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from its or such Person’s own gross negligence or willful misconduct) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by any Loan Party or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Agents under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or for any failure of any Loan Party a party thereto to perform its obligations hereunder or thereunder.  The Agents shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of any Loan Party.

 

8.4.           Reliance by Administrative Agent.  The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any instrument, writing, resolution, notice, consent, certificate, affidavit, letter, telecopy or email message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including counsel to the Borrower), independent accountants and other experts selected by the Administrative Agent.  The Administrative Agent may deem and treat the payee of any Note as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent.  The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders (or, if so specified by this Agreement, all Lenders) as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action.  The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Required Lenders (or, if so specified by this Agreement, all Lenders), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans.

 

8.5.           Notice of Default.  The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default unless the Administrative Agent has received notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default”.  In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give notice thereof to the Lenders.  The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders (or, if so specified by this Agreement, all Lenders); provided that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders.

  

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8.6.           Non-Reliance on Agents and Other Lenders.  Each Lender expressly acknowledges that neither the Agents nor any of their respective officers, directors, employees, agents, advisors, attorneys-in-fact or affiliates have made any representations or warranties to it and that no act by any Agent hereafter taken, including any review of the affairs of a Loan Party or any affiliate of a Loan Party, shall be deemed to constitute any representation or warranty by any Agent to any Lender.  Each Lender represents to the Agents that it has, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Loan Parties and their affiliates and made its own decision to make its Loans hereunder and enter into this Agreement.  Each Lender also represents that it will, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Loan Parties and their affiliates.  Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of any Loan Party or any affiliate of a Loan Party that may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, advisors, attorneys-in-fact or affiliates.

 

8.7.           Indemnification.  The Lenders agree to indemnify each Agent and its officers, directors, employees, affiliates, agents, advisors and controlling persons (each, an “Agent Indemnitee”) (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to their respective Aggregate Exposure Percentages in effect on the date on which indemnification is sought under this Section (or, if indemnification is sought after the date upon which the Commitments shall have terminated and the Loans shall have been paid in full, ratably in accordance with such Aggregate Exposure Percentages immediately prior to such date), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time (whether before or after the payment of the Loans) be imposed on, incurred by or asserted against such Agent Indemnitee in any way relating to or arising out of, the Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by such Agent Indemnitee under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements that are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from such Agent Indemnitee’s gross negligence or willful misconduct.  The agreements in this Section shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

 

8.8.           Agent in Its Individual Capacity.  Each Agent and its affiliates may make loans to, accept deposits from and generally engage in any kind of business with any Loan Party as though such Agent were not an Agent.  With respect to its Loans made or renewed by it, each Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as though it were not an Agent, and the terms “Lender” and “Lenders” shall include each Agent in its individual capacity.

 

8.9.           Successor Administrative Agent.  The Administrative Agent may resign as Administrative Agent upon 10 days’ notice to the Lenders and the Borrower.  If the Administrative Agent shall resign as Administrative Agent under this Agreement and the other Loan Documents, then the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, which successor agent shall (unless an Event of Default shall have occurred and be continuing) be subject to approval by the Borrower (which approval shall not be unreasonably withheld or delayed), whereupon such successor agent shall succeed to the rights, powers and duties of the Administrative Agent, and the term “Administrative Agent” shall mean such successor agent effective upon such appointment and approval, and the former Administrative Agent’s rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any holders of the Loans.  If no successor agent has accepted appointment as Administrative Agent by the date that is 10 days following a retiring Administrative Agent’s notice of resignation, the retiring Administrative Agent’s resignation shall nevertheless thereupon become effective, and the Lenders shall assume and perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above.  After any retiring Administrative Agent’s resignation as Administrative Agent, the provisions of this Article 8 and of Section 9.5 shall continue to inure to its benefit.

  

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8.10.         Documentation Agent and Syndication Agent.  Neither the Documentation Agent nor the Syndication Agent shall have any duties or responsibilities hereunder in its capacity as such.

 

8.11.         Intercreditor Agreement.  Each of the Lenders hereby acknowledges that it has received and reviewed the Intercreditor Agreement and agrees to be bound by the terms thereof.  Each Lender (and each Person that becomes a Lender hereunder pursuant to Section 9.6) hereby authorizes and directs the Administrative Agent to enter into the Intercreditor Agreement on behalf of such Lender and agrees that the Administrative Agent may take such action on its behalf as is contemplated by the terms of the Intercreditor Agreement.  Each Lender hereby agrees that, notwithstanding anything herein to the contrary, the Liens and security interests granted to the Administrative Agent pursuant to any Loan Document and the exercise of any right or remedy by the Administrative Agent hereunder or under any other Loan Document are subject to the provisions of the Intercreditor Agreement.  Without limiting the generality of the foregoing, and notwithstanding anything herein to the contrary, all rights and remedies of the Administrative Agent (and the Lenders) with respect to the ABL Priority Collateral shall be subject to the terms of the Intercreditor Agreement, and, until the ABL Debt Obligations Payment Date, any obligation of the Borrower and any Guarantor hereunder or under any other Loan Document with respect to the delivery or control of any ABL Priority Collateral, the novation of any lien on any certificate of title, bill of lading or other document, the giving of any notice to any bailee or other Person, the provision of voting rights or the obtaining of any consent of any Person, in each case in connection with any ABL Priority Collateral, shall be deemed to be satisfied if the Borrower or such Guarantor, as applicable, complies with the requirements of the similar provision of the applicable ABL Documentation. Until the ABL Obligations Payment Date, the delivery of any ABL Priority Collateral to the ABL Representative pursuant to the ABL Documentation shall satisfy any delivery requirement hereunder or under any other Loan Document (it being understood this sentence and the preceding sentence are for the benefit of the Administrative Agent and the Lenders and not the Loan Parties).  In the event of any conflict between the terms of the Intercreditor Agreement, this Agreement and any other Loan Document, the terms of the Intercreditor Agreement shall govern and control with respect to any right or remedy.  Notwithstanding the foregoing, the Administrative Agent of the Lenders may take actions necessary or advisable in order to create or perfect Liens on the ABL Priority Collateral.

  

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ARTICLE 9. MISCELLANEOUS

 

9.1.           Amendments and Waivers.  Neither this Agreement, any other Loan Document, nor any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this Section 9.1.  The Required Lenders and each Loan Party party to the relevant Loan Document may, or, with the written consent of the Required Lenders, the Administrative Agent and each Loan Party party to the relevant Loan Document may, from time to time, (a) enter into written amendments, supplements or modifications hereto and to the other Loan Documents for the purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any manner the rights of the Lenders or of the Loan Parties hereunder or thereunder or (b) waive, on such terms and conditions as the Required Lenders or the Administrative Agent, as the case may be, may specify in such instrument, any of the requirements of this Agreement or the other Loan Documents or any Default or Event of Default and its consequences; provided, however, that no such waiver and no such amendment, supplement or modification shall (i) forgive the principal amount or extend the scheduled date of maturity of any Loan, reduce the stated rate of any interest or fee payable hereunder (except (x) in connection with the waiver of applicability of any post-default increase in interest rates (which waiver shall be effective with the consent of all Lenders of each adversely affected Facility) and (y) that any amendment or modification of defined terms used in the financial covenants in this Agreement shall not constitute a reduction in the rate of interest or fees for purposes of this clause (i)) or extend the scheduled date of any payment thereof, in each case without the written consent of each Lender directly affected thereby; (ii) eliminate or reduce the voting rights of any Lender under this Section 9.1 without the written consent of such Lender; (iii) reduce any percentage specified in the definition of Required Lenders, consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement and the other Loan Documents, release all or substantially all of the Collateral or release all or substantially all of the Subsidiary Guarantors from their obligations under the Guarantee and Collateral Agreement, in each case without the written consent of all Lenders; (iv) amend, modify or waive any provision of Section 2.12 without the written consent of all Lenders in respect of each Facility adversely affected thereby; (v) reduce the amount of Net Cash Proceeds or Excess Cash Flow required to be applied to prepay Loans under this Agreement without the written consent of all Lenders with respect to each Facility adversely affected thereby; (vi) reduce the percentage specified in the definition of Majority Facility Lenders with respect to any Facility without the written consent of all Lenders under such Facility; or (vii) amend, modify or waive any provision of Article 8 or any other provision of any Loan Document that affects the Administrative Agent without the written consent of the Administrative Agent.  Any such waiver and any such amendment, supplement or modification shall apply equally to each of the Lenders and shall be binding upon the Loan Parties, the Lenders, the Administrative Agent and all future holders of the Loans.  In the case of any waiver, the Loan Parties, the Lenders and the Administrative Agent shall be restored to their former position and rights hereunder and under the other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon.

 

Notwithstanding the foregoing, this Agreement may be amended (or amended and restated) with the written consent of the Required Lenders, the Administrative Agent and the Borrower (a) to add one or more additional credit facilities to this Agreement and to permit the extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share in the benefits of this Agreement and the other Loan Documents with the Term Loans and the accrued interest and fees in respect thereof and (b) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders and Majority Facility Lenders.

 

In addition, notwithstanding the foregoing, this Agreement may be amended with the written consent of the Administrative Agent, the Borrower and the Lenders providing the relevant Replacement Term Loans (as defined below) to permit the refinancing, replacement or modification of all outstanding Tranche B Term Loans (“Replaced Term Loans”) with a replacement term loan tranche hereunder (“Replacement Term Loans”), provided that (a) the aggregate principal amount of such Replacement Term Loans shall not exceed the aggregate principal amount of such Replaced Term Loans (plus the amount of any prepayment premium, fees and expenses in connection with replacing the Replaced Term Loans), (b) the Applicable Margin for such Replacement Term Loans shall not be higher than the Applicable Margin for such Replaced Term Loans and (c) the weighted average life to maturity of such Replacement Term Loans shall not be shorter than the weighted average life to maturity of such Replaced Term Loans at the time of such refinancing.

  

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Notwithstanding anything to the contrary contained in this Section 9.1, if the Administrative Agent and the Borrower (a) shall have jointly identified an obvious error or any error or omission of a technical or immaterial nature, in each case, in any provision of the Loan Documents, or (b) shall seek to amend the Loan Documents in a manner more favorable to the Lenders, taken as a whole, then, in each case, the Administrative Agent and the Borrower shall be permitted to amend such provision and such amendment shall become effective without any further action or consent of any other party to any Loan Document if the same is not objected to in writing by the Required Lenders within five Business Days following receipt of notice thereof.

 

9.2.           Notices.  All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by telecopy), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered, or three Business Days after being deposited in the mail, postage prepaid, or, in the case of telecopy notice, when received, addressed as follows in the case of the Borrower and the Administrative Agent, and as set forth in an administrative questionnaire delivered to the Administrative Agent in the case of the Lenders, or to such other address as may be hereafter notified by the respective parties hereto:

 

	
Borrower:

	
UniTek Global Services, Inc.

1777 Sentry Parkway West

Gwynedd Hall, Suite 202

Blue Bell, PA 19422

	  	
Attention: Ronald J. Lejman

	  	
Telecopy: 484-493-1613

	  	
Telephone: 267-464-1700

	  	  
	
Administrative Agent:

	
FBR Capital Markets LT, Inc.

237 Park Avenue, 19th Floor

New York, NY 10017

	  	
Attention: Scott Woods

	  	
Telecopy: 212-457-3376

Telephone: 646-885-5611

 

With a copy to:

 

Cortland Capital Market Services LLC

225 W. Washington Street, Suite 1450

Chicago, IL 60606

Attention: Beata Konopko

Telephone: 312-564-5080

	  	  

provided that any notice, request or demand to or upon the Administrative Agent or the Lenders shall not be effective until received.

 

Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Article 2 unless otherwise agreed by the Administrative Agent and the applicable Lender.  The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

 

9.3.           No Waiver; Cumulative Remedies.  No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Lender, any right, remedy, power or privilege hereunder or under the other Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

  

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9.4.           Survival of Representations and Warranties.  All representations and warranties made hereunder, in the other Loan Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans and other extensions of credit hereunder.

 

9.5.           Payment of Expenses and Taxes.  The Borrower agrees (a) to pay or reimburse the Administrative Agent for all its costs and expenses incurred in connection with the development, preparation and execution of, and any amendment, supplement or modification to, this Agreement and the other Loan Documents and any other documents prepared in connection herewith or therewith, and the consummation and administration of the transactions contemplated hereby and thereby, including the reasonable fees and disbursements of counsel to the Administrative Agent and filing and recording fees and expenses, with statements with respect to the foregoing to be submitted to the Borrower prior to the Closing Date (in the case of amounts to be paid on the Closing Date) and from time to time thereafter on a quarterly basis or such other periodic basis as the Administrative Agent shall deem appropriate, (b) to pay or reimburse each Lender and the Administrative Agent for all its costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement or after the occurrence of an Event of Default in connection with a workout of the Obligations, the other Loan Documents and any such other documents, including the fees and disbursements of counsel (including the allocated fees and expenses of in-house counsel) to each Lender and of counsel to the Administrative Agent, (c) to pay, indemnify, and hold each Lender and the Administrative Agent harmless from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other Taxes, if any, that may be payable or determined to be payable in connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, the other Loan Documents and any such other documents, and (d) to pay, indemnify, and hold each Lender and the Administrative Agent and their respective officers, directors, employees, affiliates, agents, advisors and controlling persons (each, an “Indemnitee”) harmless from and against any and all other 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, the other Loan Documents and any such other documents, including any of the foregoing relating to the use of proceeds of the Loans or the violation of, noncompliance with or liability under, any Environmental Law applicable to the operations of any Group Member or any of the Properties and the reasonable fees and expenses of legal counsel in connection with claims, actions or proceedings by any Indemnitee against any Loan Party under any Loan Document (all the foregoing in this clause (d), collectively, the “Indemnified Liabilities”), provided that the Borrower shall have no obligation hereunder to any Indemnitee with respect to Indemnified Liabilities to the extent such Indemnified Liabilities are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of such Indemnitee, and provided, further, that this Section 9.5(d) shall not apply with respect to Taxes other than any Taxes that represent losses or damages arising from any non-Tax claim.  Without limiting the foregoing, and to the extent permitted by applicable law, the Borrower agrees not to assert and to cause its Subsidiaries not to assert, and hereby waives and agrees to cause its Subsidiaries to waive, all rights for contribution or any other rights of recovery with respect to all claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature, under or related to Environmental Laws, that any of them might have by statute or otherwise against any Indemnitee.  All amounts due under this Section 9.5 shall be payable not later than 10 days after written demand therefor.  The agreements in this Section 9.5 shall survive the termination of this Agreement and the repayment of the Loans and all other amounts payable hereunder.

  

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9.6.          Successors and Assigns; Participations and Assignments.  (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section.

 

(b)           (i)  Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more assignees (each, an “Assignee”), other than a natural person, all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans at the time owing to it) with the prior written consent of:

 

(A)           the Borrower (such consent not to be unreasonably withheld), provided that no consent of the Borrower shall be required for an assignment to a Lender, an affiliate of a Lender, an Approved Fund (as defined below) or, if an Event of Default has occurred and is continuing, any other Person; and provided, further, that the Borrower shall be deemed to have consented to any such assignment unless the Borrower shall object thereto by written notice to the Administrative Agent within five Business Days after having received notice thereof; and

 

(B)           the Administrative Agent, provided that no consent of the Administrative Agent shall be required for an assignment of all or any portion of a Term Loan to a Lender, an affiliate of a Lender or an Approved Fund.

 

(ii)          Assignments shall be subject to the following additional conditions:

 

(A)           except in the case of an assignment to a Lender, an affiliate of a Lender or an Approved Fund or an assignment of the entire remaining amount of the assigning Lender’s Commitments or Loans under any Facility, the amount of the Commitments or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than $1,000,000 (or, in the case of the Incremental Term Facility, $1,000,000) unless each of the Borrower and the Administrative Agent otherwise consent, provided that (1) no such consent of the Borrower shall be required if an Event of Default has occurred and is continuing and (2) such amounts shall be aggregated in respect of each Lender and its affiliates or Approved Funds, if any;

 

(B)           (1) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500 and (2) the assigning Lender shall have paid in full any amounts owing by it to the Administrative Agent; and

 

(C)           the Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an administrative questionnaire in which the Assignee designates one or more credit contacts to whom all syndicate-level information (which may contain material non-public information about the Borrower and its Affiliates and their related parties or their respective securities) will be made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including Federal and state securities laws.

  

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For the purposes of this Section 9.6, “Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an affiliate of a Lender or (c) an entity or an affiliate of an entity that administers or manages a Lender.

 

(iii)           Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) below, from and after the effective date specified in each Assignment and Assumption the Assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.13, 2.14, 2.15 and 9.5).  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 9.6 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c) of this Section.

 

(iv)           The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amount of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.

 

(v)            Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an Assignee, the Assignee’s completed administrative questionnaire (unless the Assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register.  No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

  

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(c)           Any Lender may, without the consent of the Borrower or the Administrative Agent, sell participations to one or more banks or other entities (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and (iii) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.  Any agreement pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver that (i) requires the consent of each Lender directly affected thereby pursuant to the proviso to the second sentence of Section 9.1 and (ii) directly affects such Participant.  The Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.13, 2.14, and 2.15 (subject to the requirements and limitations therein, including the requirements under Section 2.14(f) (it being understood that the documentation required under Section 2.14(f) shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section; provided that such Participant (i) agrees to be subject to the provisions of Sections 2.13 and 2.14 as if it were an assignee under paragraph (b) of this Section and (ii) shall not be entitled to receive any greater payment under Sections 2.13 or 2.14, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from an adoption of or any change in any Requirement of Law or in the interpretation or application thereof or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof that occurs after the Participant acquired the applicable participation.  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.7(b) as though it were a Lender, provided such Participant shall be subject to Section 9.7(a) as though it were a Lender.  Each Lender that sells a participation shall, acting solely for this purpose as an agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under this Agreement (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register to any Person (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans or its other obligations under any Loan Document) except to the extent that such disclosure is necessary to establish that such Commitment, Loan or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations.  The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.

 

(d)           Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or Assignee for such Lender as a party hereto.

 

(e)           The Borrower, upon receipt of written notice from the relevant Lender, agrees to issue Notes to any Lender requiring Notes to facilitate transactions of the type described in paragraph (d) above.

 

(f)            Notwithstanding the foregoing, any Conduit Lender may assign any or all of the Loans it may have funded hereunder to its designating Lender without the consent of the Borrower or the Administrative Agent and without regard to the limitations set forth in Section 9.6(b).  Each of the Borrower, each Lender and the Administrative Agent hereby confirms that it will not institute against a Conduit Lender or join any other Person in instituting against a Conduit Lender any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding under any state bankruptcy or similar law, for one year and one day after the payment in full of the latest maturing commercial paper note issued by such Conduit Lender; provided, however, that each Lender designating any Conduit Lender hereby agrees to indemnify, save and hold harmless each other party hereto for any loss, cost, damage or expense arising out of its inability to institute such a proceeding against such Conduit Lender during such period of forbearance.

  

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9.7.           Adjustments; Set-off.  (a) Except to the extent that this Agreement or a court order expressly provides for payments to be allocated to a particular Lender or to the Lenders under a particular Facility, if any Lender (a “Benefitted Lender”) shall receive any payment of all or part of the Obligations owing to it (other than in connection with an assignment made pursuant to Section 9.6), or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 7(f), or otherwise), in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect of the Obligations owing to such other Lender, such Benefitted Lender shall purchase for cash from the other Lenders a participating interest in such portion of the Obligations owing to each such other Lender, or shall provide such other Lenders with the benefits of any such collateral, as shall be necessary to cause such Benefitted Lender to share the excess payment or benefits of such collateral ratably with each of the Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such Benefitted Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest.

 

(b)             In addition to any rights and remedies of the Lenders provided by law, each Lender shall have the right, without notice to the Borrower, any such notice being expressly waived by the Borrower to the extent permitted by applicable law, upon any Obligations becoming due and payable by the Borrower (whether at the stated maturity, by acceleration or otherwise), to apply to the payment of such Obligations, by setoff or otherwise, any and all deposits (general or special, time or demand, provisional or final), 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 such Lender, any affiliate thereof or any of their respective branches or agencies to or for the credit or the account of the Borrower.  Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such application made by such Lender, provided that the failure to give such notice shall not affect the validity of such application.

 

9.8.           Counterparts.  This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.  Delivery of an executed signature page of this Agreement by email or facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.

 

9.9.           Severability.  Any provision of this Agreement that 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.

 

9.10.         Integration.  This Agreement and the other Loan Documents represent the entire agreement of the Borrower, the Administrative Agent and the Lenders with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Administrative Agent or any Lender relative to the subject matter hereof not expressly set forth or referred to herein or in the other Loan Documents.

 

9.11.         GOVERNING LAW.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

  

74

  

 

9.12.       Submission To Jurisdiction; Waivers.  The Borrower 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 exclusive general jurisdiction of the courts of the State of New York, the courts of the United States 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 the Borrower, as the case may be at its address set forth in Section 9.2 or at such other address of which the Administrative 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.

 

9.13.       Acknowledgements.  The Borrower hereby acknowledges that:

 

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

 

(b)           neither the Administrative Agent nor any Lender has any fiduciary relationship with or duty to the Borrower arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between Administrative Agent and Lenders, on one hand, and the Borrower, 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 Lenders or among the Borrower and the Lenders.

 

9.14.       Releases of Guarantees and Liens.  (a) Notwithstanding anything to the contrary contained herein or in any other Loan Document, the Administrative Agent is hereby irrevocably authorized by each Lender (without requirement of notice to or consent of any Lender except as expressly required by Section 9.1) to take any action requested by the Borrower having the effect of releasing any Collateral or guarantee obligations (i) to the extent necessary to permit consummation of any transaction not prohibited by any Loan Document or that has been consented to in accordance with Section 9.1 or (ii) under the circumstances described in paragraph (b) below.

  

75

  

 

(b)           At such time as the Loans and the other obligations under the Loan Documents (other than obligations under or in respect of Specified Swap Agreements) shall have been paid in full, the Commitments have been terminated, the Collateral shall be released from the Liens created by the Security Documents, and the Security Documents and all obligations (other than those expressly stated to survive such termination) of the Administrative Agent and each Loan Party under the Security Documents shall terminate, all without delivery of any instrument or performance of any act by any Person.

 

9.15.       Confidentiality.  Each of the Administrative Agent and each Lender agrees to keep confidential all non-public information provided to it by any Loan Party, the Administrative Agent or any Lender pursuant to or in connection with this Agreement that is designated by the provider thereof as confidential; provided that nothing herein shall prevent the Administrative Agent or any Lender from disclosing any such information (a) to the Administrative Agent, any other Lender or any affiliate thereof, (b) subject to an agreement to comply with the provisions of this Section, to any actual or prospective Transferee or any direct or indirect counterparty to any Swap Agreement (or any professional advisor to such counterparty), (c) to its employees, directors, agents, attorneys, accountants and other professional advisors or those of any of its affiliates, (d) upon the request or demand of any Governmental Authority, (e) in response to any order of any court or other Governmental Authority or as may otherwise be required pursuant to any Requirement of Law, (f) if requested or required to do so in connection with any litigation or similar proceeding, (g) that has been publicly disclosed, (h) to the National Association of Insurance Commissioners or any similar organization or any nationally recognized rating agency that requires access to information about a Lender’s investment portfolio in connection with ratings issued with respect to such Lender, (i) in connection with the exercise of any remedy hereunder or under any other Loan Document, or (j) if agreed by the Borrower in its sole discretion, to any other Person.

 

Each Lender acknowledges that information furnished to it pursuant to this Agreement or the other Loan Documents may include material non-public information concerning the Borrower and its Affiliates and their related parties or their respective securities, and confirms that it has developed compliance procedures regarding the use of material non-public information and that it will handle such material non-public information in accordance with those procedures and applicable law, including Federal and state securities laws.

 

All information, including requests for waivers and amendments, furnished by the Borrower or the Administrative Agent pursuant to, or in the course of administering, this Agreement or the other Loan Documents will be syndicate-level information, which may contain material non-public information about the Borrower and its Affiliates and their related parties or their respective securities.  Accordingly, each Lender represents to the Borrower and the Administrative Agent that it has identified in its administrative questionnaire a credit contact who may receive information that may contain material non-public information in accordance with its compliance procedures and applicable law, including Federal and state securities laws.

 

9.16.       WAIVERS OF JURY TRIAL.  THE BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

9.17.       USA Patriot Act.  Each Lender hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender to identify the Borrower in accordance with the Patriot Act.

  

76

  

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

 

	  	
UNITEK GLOBAL SERVICES, INC.

	  	  	  
	  	
By: 

	
/s/ Ronald J. Lejman

	  	  	
Name: Ronald J. Lejman

	  	  	
Title:   Chirf Financial Officer

	  	  	  
	  	
FBR CAPITAL MARKETS LT, INC., as

	  	  	
Administrative Agent,

	  	  	
Syndication Agent and Documentation Agent

	  	  	  
	  	
By: 

	
/s/ Robert J. Kiernan

	  	  	
Name: Robert J. Kiernan

	  	  	
Title:   Senior Vice President

 

	  	
COREPOINTE CAPITAL FINANCE LLC

	  	  	  
	  	
By: 

	
/s/ Seth Fink

	  	  	
Name: Seth Fink

	  	  	
Title:   Managing Director

	  	  	  
	  	  	  

 

 

 

 

 

 

  

  

  

 

EXHIBIT A

EXECUTION VERSION

	
 

 

GUARANTEE AND COLLATERAL AGREEMENT

 

made by

 

UNITEK GLOBAL SERVICES, INC.

 

and certain of its Subsidiaries

 

in favor of

 

FBR CAPITAL MARKETS LT, INC.,

 

as Administrative Agent

 

Dated as of April 15, 2011

 

	
 

  

  

  

 

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

	
5

	 
	  	
2.3

	
No Subrogation

	
6

	 
	  	
2.4

	
Amendments, etc. with respect to the Borrower Obligations

	
6

	 
	  	
2.5

	
Guarantee Absolute and Unconditional

	
7

	 
	  	
2.6

	
Reinstatement

	
7

	 
	  	
2.7

	
Payments

	
7

	 
	 	 	 	 	 
	
SECTION 3. GRANT OF SECURITY INTEREST

	
7

	 
	 	 	 
	
SECTION 4. REPRESENTATIONS AND WARRANTIES

	
8

	 
	  	
4.1

	
Title; No Other Liens

	
9

	 
	  	
4.2

	
Perfected First Priority Liens

	
9

	 
	  	
4.3

	
Jurisdiction of Organization; Chief Executive Office

	
9

	 
	  	
4.4

	
Inventory and Equipment

	
9

	 
	  	
4.5

	
Farm Products

	
9

	 
	  	
4.6

	
Investment Property

	
9

	 
	  	
4.7

	
Receivables

	
10

	 
	  	
4.8

	
Contracts

	
10

	 
	  	
4.9

	
Intellectual Property

	
10

	 
	  	
4.10

	
Vehicles

	
11

	 
	  	
4.11

	
Commercial Tort Claims

	
11

	 
	 	 	 	 	 
	
SECTION 5. COVENANTS

	
11

	 
	  	
5.1

	
Delivery of Instruments, Certificated Securities and Chattel Paper

	
11

	 
	  	
5.2

	
Maintenance of Insurance

	
11

	 
	  	
5.3

	
Payment of Obligations

	
12

	 
	  	
5.4

	
Maintenance of Perfected Security Interest; Further Documentation

	
12

	 
	  	
5.5

	
Changes in Name, etc

	
12

	 
	  	
5.6

	
Notices

	
13

	 
	  	
5.7

	
Investment Property

	
13

	 
	  	
5.8

	
Receivables

	
14

	 
	  	
5.9

	
[RESERVED]

	
14

	 
	  	
5.10

	
Intellectual Property

	
14

	 
	  	
5.11

	
Commercial Tort Claims

	
15

	 
	  	
5.12

	
Vehicles.

	
15

	 
	  	
5.13

	
Uncertificated Pledged Stock

	
15

	 
	 	 	 	 	 
	
SECTION 6. REMEDIAL PROVISIONS

	
16

	 
	  	
6.1

	
Certain Matters Relating to Receivables

	
16

	 
	  	
6.2

	
Communications with Obligors; Grantors Remain Liable

	
16

	 
	  	
6.3

	
Pledged Stock

	
17

	 

 

  

i

  

 

	  	
6.4

	
Proceeds to be Turned Over To Administrative Agent

	
18

	 
	  	
6.5

	
Application of Proceeds

	
18

	 
	  	
6.6

	
Code and Other Remedies

	
19

	 
	  	
6.7

	
Registration Rights

	
19

	 
	  	
6.8

	
Subordination

	
20

	 
	  	
6.9

	
Deficiency

	
20

	 
	 	 	 	 	 
	
SECTION 7. THE ADMINISTRATIVE AGENT

	
20

	 
	  	
7.1

	
Administrative Agent’s Appointment as Attorney-in-Fact, etc

	
20

	 
	  	
7.2

	
Duty of Administrative Agent

	
22

	 
	  	
7.3

	
Execution of Financing Statements

	
22

	 
	  	
7.4

	
Authority of Administrative Agent

	
22

	 
	 	 	 	 	 
	
SECTION 8. MISCELLANEOUS

	
22

	 
	  	
8.1

	
Amendments in Writing

	
22

	 
	  	
8.2

	
Notices

	
22

	 
	  	
8.3

	
No Waiver by Course of Conduct; Cumulative Remedies

	
22

	 
	  	
8.4

	
Enforcement Expenses; Indemnification

	
23

	 
	  	
8.5

	
Successors and Assigns

	
23

	 
	  	
8.6

	
Set-Off

	
23

	 
	  	
8.7

	
Counterparts

	
23

	 
	  	
8.8

	
Severability

	
23

	 
	  	
8.9

	
Section Headings

	
24

	 
	  	
8.10

	
Integration

	
24

	 
	  	
8.11

	
GOVERNING LAW

	
24

	 
	  	
8.12

	
Submission To Jurisdiction; Waivers

	
24

	 
	  	
8.13

	
Acknowledgements

	
24

	 
	  	
8.14

	
Additional Grantors

	
25

	 
	  	
8.15

	
Releases

	
25

	 
	  	
8.16

	
WAIVER OF JURY TRIAL

	
25

	 
	  	
8.17

	
Intercreditor Agreement

	
26

	 

SCHEDULES

 

	
Schedule 1

	
Notice Addresses

	
Schedule 2

	
Investment Property

	
Schedule 3

	
Perfection Matters

	
Schedule 4

	
Jurisdictions of Organization and Chief Executive Offices

	
Schedule 5

	
Inventory and Equipment Locations

	
Schedule 6

	
Intellectual Property

	
Schedule 7

	
Contracts

	
Schedule 8

	
Vehicles

	
Schedule 9

	
Commercial Tort Claims

EXHIBIT

 

	
Exhibit A

	
Form of Perfection Certificate

  

ii

  

This Guarantee and Collateral Agreement is subject to the terms and provisions of the Intercreditor Agreement, dated as of April 15, 2011 (as such agreement may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Intercreditor Agreement”), between FBR Capital Markets LT, Inc. (or any successor thereto), as administrative agent for the Term Debt Secured Parties referred to therein, and PNC Bank, National Association (or any successor thereto), as administrative agent for the ABL Secured Parties referred to therein.

 

GUARANTEE AND COLLATERAL AGREEMENT

 

GUARANTEE AND COLLATERAL AGREEMENT, dated as of  April 15, 2011, made by each of the signatories hereto (together with any other entity that may become a party hereto as provided herein, the “Grantors”), in favor of FBR Capital Markets LT, Inc., as Administrative Agent (in such capacity, the “Administrative Agent”) for the banks and other financial institutions or entities (the “Lenders”) from time to time parties to the Credit Agreement, dated as of  April 15, 2011 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among UniTek Global Services, Inc. (the “Borrower”), the Lenders and FBR Capital Markets LT, Inc., as Documentation Agent, Syndication Agent and Administrative Agent.

 

WITNESSETH:

 

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;

 

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 Administrative Agent for the benefit of the Secured Parties;

 

NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent and the Lenders 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 Administrative Agent, for the benefit of the Secured Parties, 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:  Accounts, Certificated Security, Chattel Paper, Commercial Tort Claims, Documents, Equipment, Farm Products, General Intangibles, Instruments, Inventory, Letter-of-Credit Rights and Supporting Obligations.

 

  

1

  

 

(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 Obligations”:  the collective reference to the unpaid principal of and interest on the Loans 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 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 or any Lender, 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 or any other document made, delivered or given in connection with any of the foregoing, 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 or to the Lenders that are required to be paid by the Borrower pursuant to the terms of any of the foregoing agreements).

 

“Collateral”:  as defined in Section 3.

 

“Collateral Account”:  any collateral account established by the Administrative Agent as provided in Section 6.1 or 6.4.

 

“Contracts”:  the contracts and agreements listed in Schedule 7, as the same may be amended, supplemented or otherwise modified from time to time, including, without limitation, (i) all rights of any Grantor to receive moneys due and to become due to it thereunder or in connection therewith, (ii) all rights of any Grantor to damages arising thereunder and (iii) all rights of any Grantor to perform and to exercise all remedies thereunder.

 

“Copyrights”:  (i) all copyrights arising under the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered and whether published or unpublished (including, without limitation, those listed in Schedule 6), 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.

 

“Copyright Licenses”:  any written agreement naming any Grantor as licensor or licensee (including, without limitation, those listed in Schedule 6), granting any right under any Copyright, including, without limitation, the grant of rights to manufacture, distribute, exploit and sell materials derived from any Copyright.

 

“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.

 

“DIRECTV/DirectSat Contract”: the DIRECTV, Inc. 2009 Home Services Provider Agreement dated as of July 1, 2009 between DIRECTV, Inc. and DirectSat USA LLC, including all exhibits and schedules thereto, as such agreement may have been or hereafter may be amended, modified, supplemented, restated or replaced from time to time.

 

  

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“DIRECTV Inventory”: all Inventory purchased by any Grantor pursuant to and in connection with the DIRECTV/DirectSat Contract that is subject to a Lien in favor of DIRECTV, Inc. created under the DIRECTV/DirectSat Contract and in which, pursuant to the terms and conditions of the DIRECTV/DirectSat Contract, no Liens may be created in favor of any Person other than DIRECTV, Inc.

 

“Foreign Subsidiary”:  any Subsidiary organized under the laws of any jurisdiction outside the United States of America.

 

“Foreign Subsidiary Voting Stock”:  the voting Capital Stock of any Foreign Subsidiary.

 

“Grantor”:  as defined in the preamble hereto.

 

“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 [or any Specified Swap Agreement] 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 Administrative Agent or to the Lenders 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 each Grantor other than the Borrower.

 

“Intellectual Property”:  the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, 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 the Borrower 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 Foreign Subsidiary Voting Stock excluded from the definition of “Pledged Stock”) and (ii) whether or not constituting “investment property” as so defined, all Pledged Notes and all Pledged Stock.

 

“Issuers”:  the collective reference to each issuer of any Investment Property.

 

“New York UCC”:  the Uniform Commercial Code as 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.

 

“Patents”:  (i) all letters patent of the United States, any other country or any political subdivision thereof, all reissues and extensions thereof and all goodwill associated therewith, including, without limitation, any of the foregoing referred to in Schedule 6, (ii) all applications for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof, including, without limitation, any of the foregoing referred to in Schedule 6, and (iii) all rights to obtain any reissues or extensions of the foregoing.

 

  

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“Patent License”:  all agreements, whether written or oral, 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 6.

 

“Perfection Certificate”:  a certificate substantially in the form of Exhibit A completed and supplemented with the schedules and attachments contemplated thereby, and duly executed by a Responsible Officer of the Borrower.

 

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

 

“Pledged Stock”:  the shares of Capital Stock listed on Schedule 2, together with any other shares, stock certificates, options, interests or rights of any nature 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; provided that in no event shall more than 66% of the total outstanding Foreign Subsidiary Voting Stock of any Foreign Subsidiary 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).

 

“Secured Parties”:  the collective reference to the Administrative Agent, the Lenders and any affiliate of any Lender to which Borrower Obligations or Guarantor Obligations, as applicable, are owed.

 

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

 

“Trademarks”:  (i) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos, domain names 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, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof, or otherwise, and all common-law rights related thereto, including, without limitation, any of the foregoing referred to in Schedule 6, and (ii) the right to obtain all renewals thereof.

 

“Trademark License”:  any agreement, whether written or oral, 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 6.

 

“Vehicles”:  all cars, trucks, trailers, construction and earth moving equipment and other vehicles covered by a certificate of title law of any state and, in any event including, without limitation, the vehicles listed on Schedule 8 and all tires and other appurtenances to any of the foregoing.

 

  

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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 Administrative Agent, for the benefit of the Secured Parties and their respective 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.

 

(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 or any Lender 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 and the Commitments shall be terminated, notwithstanding that from time to time during the term of the Credit Agreement the Borrower may be free from any Borrower Obligations.

(e)           No payment made by the Borrower, any of the Guarantors, any other guarantor or any other Person or received or collected by the Administrative Agent or any Lender 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 are paid in full and the Commitments are terminated.

 

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 and the Lenders, and each Guarantor shall remain liable to the Administrative Agent and the Lenders for the full amount guaranteed by such Guarantor hereunder.

 

  

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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 or any Lender, no Guarantor shall be entitled to be subrogated to any of the rights of the Administrative Agent or any Lender against the Borrower or any other Guarantor or any collateral security or guarantee or right of offset held by the Administrative Agent or any Lender 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 Guarantor in respect of payments made by such Guarantor hereunder, until all amounts owing to the Administrative Agent and the Lenders by the Borrower on account of the Borrower Obligations are paid in full and the Commitments are terminated.  If any amount shall be paid to any Guarantor on account of such subrogation rights at any time when all of the Borrower Obligations shall not have been paid in full, such amount shall be held by such Guarantor in trust for the Administrative Agent and the Lenders, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Administrative Agent in the exact form received by such Guarantor (duly indorsed by such Guarantor to the Administrative Agent, if required), to be applied against the Borrower Obligations, whether matured or unmatured, in such order as the Administrative 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 or any Lender may be rescinded by the Administrative Agent or such Lender 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 or any Lender, 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 all Lenders, as the case may be) may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by the Administrative Agent or any Lender for the payment of the Borrower Obligations may be sold, exchanged, waived, surrendered or released.  Neither the Administrative Agent nor any Lender 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.

  

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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 or any Lender 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, and the Administrative Agent and the Lenders, 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 the guarantee 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 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 or any Lender, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Borrower or such Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of the Borrower for the Borrower Obligations, or of such Guarantor under the guarantee 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 or any Lender 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 or any Lender 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 or any Lender 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 or any Lender 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

 

Each Grantor hereby assigns and transfers to the Administrative Agent, and hereby grants to the Administrative Agent, for the ratable benefit of the Secured Parties, a security interest 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 Contracts;

 

(d)           all Deposit Accounts;

 

(e)           all Documents (other than title documents with respect to Vehicles);

 

  

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(f)            all Equipment;

 

(g)           all Fixtures;

 

(h)           all General Intangibles;

 

(i)            all Instruments;

 

(j)            all Intellectual Property;

 

(k)           all Inventory (excluding any DIRECTV Inventory to the extent such property is not Collateral under the ABL Documents);

 

(l)            all Investment Property;

 

(m)          all Letter-of-Credit Rights;

 

(n)           all Vehicles and title documents with respect to Vehicles;

 

(o)           all Commercial Tort Claims with respect to the matters described on Schedule 9;

 

(p)           all other property not otherwise described above (except for any property specifically excluded from any clause in this section above, and any property specifically excluded from any defined term used in any clause of this section above);

 

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

 

(r)            to the extent not otherwise included, all Proceeds, Supporting Obligations 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, this Agreement shall not constitute a grant of a security interest in any property to the extent that such grant of a security interest is prohibited by any Requirement 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 or other document evidencing or giving rise to such property or, in the case of any Investment Property, Pledged Stock or Pledged Note, 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.  In addition, the Grantors shall not be required to take actions to perfect the security interest in Vehicles created by this Agreement except to the extent required by Section 5.12.

 

SECTION 4.     REPRESENTATIONS AND WARRANTIES

 

To induce the Administrative Agent and the Lenders 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 represents and warrants to the Administrative Agent and each Lender that:

 

  

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4.1           Title; No Other Liens.  Except for the security interest granted to the Administrative Agent for the benefit of the Secured Parties pursuant to this Agreement and the other Liens permitted to exist on the Collateral by the Credit Agreement, such Grantor owns each item of the Collateral free and clear of any and all Liens or claims of others.  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 such as have been filed in favor of the Administrative Agent, for the benefit of the Secured Parties, pursuant to this Agreement or as are permitted by the Credit Agreement.  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 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 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 or transfer the related Intellectual Property or otherwise realize value from such Intellectual Property pursuant hereto.

 

4.2           Perfected First Priority Liens.  The security interests granted pursuant to this Agreement (a) upon completion of the filings and other actions specified on Schedule 3 (which, in the case of all filings and other documents referred to on said Schedule, have been delivered to the Administrative Agent in completed and duly executed form) will constitute valid perfected security interests in all of the Collateral in favor of the Administrative Agent, for the ratable benefit of the Secured Parties, as collateral security for such Grantor’s Obligations, enforceable in accordance with the terms hereof against all creditors of such Grantor and any Persons purporting to purchase any Collateral from such Grantor and (b) are prior to all other Liens on the Collateral in existence on the date hereof subject only to (i) Liens permitted by the Credit Agreement which have priority over the Liens on the Collateral by operation of law and (ii) Liens securing the ABL Credit Agreement to the extent set forth in the Intercreditor Agreement.

 

4.3           Jurisdiction of Organization; Chief Executive Office.  On the date hereof, such Grantor’s jurisdiction of organization, identification number from the jurisdiction of organization (if any), and the location of such Grantor’s chief executive office or sole place of business or principal residence, as the case may be, are specified on Schedule 4.  Such Grantor has furnished to the Administrative Agent a certified charter, certificate of incorporation or other organization document and long-form good standing certificate as of a date which is recent to the date hereof.

 

4.4           Inventory and Equipment.  On the date hereof, the Inventory and the Equipment (other than mobile goods) are kept at the locations listed on Schedule 5.

 

4.5           Farm Products.  None of the Collateral constitutes, or is the Proceeds of, Farm Products.

 

4.6           Investment Property.  (a)  The shares of Pledged Stock pledged by such Grantor hereunder 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, if less, 66% of the outstanding Foreign Subsidiary Voting Stock of each relevant Issuer.

 

(b)           All the shares of the Pledged Stock have been duly and validly issued and are fully paid and nonassessable.

 

(c)           Each of the Pledged Notes constitutes the legal, valid and binding obligation of the obligor with respect thereto, enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing.

 

  

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(d)           Such Grantor is the record and beneficial owner of, and has good and marketable title to, the Investment Property pledged by it hereunder, free of any and all Liens or options in favor of, or claims of, any other Person, except the security interest created by this Agreement and liens permitted under Section 4.2.

 

4.7           Receivables.  (a)  No amount payable to such Grantor under or in connection with any Receivable is evidenced by any Instrument or Chattel Paper which has not been delivered to the Administrative Agent, unless otherwise required under the Intercreditor Agreement.

 

(b)           None of the obligors on any Receivables is a Governmental Authority.

 

(c)           The amounts represented by such Grantor to the Lenders from time to time as owing to such Grantor in respect of the Receivables will at such times be accurate in all material respects.

 

4.8           Contracts.  (a)  No consent of any party (other than such Grantor) to any Contract is required, or purports to be required, in connection with the execution, delivery and performance of this Agreement, except as has been obtained.

 

(b)           No consent or authorization of, filing with or other act by or in respect of any Governmental Authority is required in connection with the execution, delivery, performance, validity or enforceability of any of the Contracts by any party thereto other than those which have been duly obtained, made or performed, are in full force and effect and do not subject the scope of any such Contract to any material adverse limitation, either specific or general in nature.

 

(c)           Neither such Grantor nor (to the best of such Grantor’s knowledge) any of the other parties to the Contracts is in default in the performance or observance of any of the terms thereof in any manner that, in the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

(d)           The right, title and interest of such Grantor in, to and under the Contracts are not subject to any defenses, offsets, counterclaims or claims that, in the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

(e)           No amount payable to such Grantor under or in connection with any Contract is evidenced by any Instrument or Chattel Paper which has not been delivered to the Administrative Agent.

 

(f)            None of the parties to any Contract is a Governmental Authority.

 

4.9           Intellectual Property.  (a)  Schedule 6 lists all registered Intellectual Property owned by such Grantor in its own name on the date hereof.

 

(b)           On the date hereof, all material Intellectual Property is valid, subsisting, unexpired and enforceable, has not been abandoned and does not infringe the intellectual property rights of any other Person in all material respects.

 

(c)           Except as set forth in Schedule 6, on the date hereof, none of the Intellectual Property is the subject of any licensing or franchise agreement pursuant to which such Grantor is the licensor or franchisor.

 

  

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(d)           No holding, decision or judgment has been rendered by any Governmental Authority which would limit, cancel or question the validity, enforceability, ownership or use of, or such Grantor’s rights in, any Intellectual Property in any respect that could reasonably be expected to have a Material Adverse Effect.

 

(e)           No action or proceeding is pending, or, to the knowledge of such Grantor, threatened, on the date hereof (i) seeking to limit, cancel or question the validity, enforceability, ownership or use of any Intellectual Property or such Grantor’s ownership interest therein, or (ii) which, if adversely determined, would have a material adverse effect on the value of any Intellectual Property, as to both (i) and (ii) above, in a manner that could reasonably be expected to have a Material Adverse Effect.

 

4.10         Vehicles.  Schedule 8 is a complete and correct list of all Vehicles owned by such Grantor on the date hereof.

 

4.11         Commercial Tort Claims

 

(a)           On the date hereof, except to the extent listed in Section 3 above, no Grantor has rights in any Commercial Tort Claim with potential value in excess of $250,000.

 

(b)           Upon the filing of a financing statement covering any Commercial Tort Claim referred to in Section 5.11 hereof against such Grantor in the jurisdiction specified in Schedule 3 hereto, the security interest granted in such Commercial Tort Claim will constitute a valid perfected security interest in favor of the Administrative Agent, for the benefit of the Secured Parties, as collateral security for such Grantor’s Obligations, enforceable in accordance with the terms hereof against all creditors of such Grantor and any Persons purporting to purchase such Collateral from Grantor, which security interest shall be prior to all other Liens on such Collateral except for unrecorded liens permitted by the Credit Agreement which have priority over the Liens on such Collateral by operation of law.

 

SECTION 5.     COVENANTS

 

Each Grantor covenants and agrees with the Administrative Agent and the Lenders that, from and after the date of this Agreement until the Obligations shall have been paid in full and the Commitments shall have terminated:

 

5.1           Delivery of Instruments, Certificated Securities and Chattel Paper.  Subject to the Intercreditor Agreement, if any amount payable under or in connection with any of the Collateral shall be or become evidenced by any Instrument, Certificated Security or Chattel Paper, such Instrument, Certificated Security or Chattel Paper shall be immediately delivered to the Administrative Agent, duly indorsed in a manner satisfactory to the Administrative Agent, to be held as Collateral pursuant to this Agreement.

 

5.2           Maintenance of Insurance.  (a)  Such Grantor will maintain, with financially sound and reputable companies, insurance policies (i) insuring the Inventory and Equipment and Vehicles against loss by fire, explosion, theft and such other casualties as may be reasonably satisfactory to the Administrative Agent and (ii) insuring such Grantor, the Administrative Agent and the Lenders against liability for personal injury and property damage relating to such Inventory and Equipment and Vehicles, such policies to be in such form and amounts and having such coverage as may be reasonably satisfactory to the Administrative Agent and the Lenders.

 

(b)           All such insurance shall (i) provide that no cancellation, material reduction in amount or material change in coverage thereof shall be effective until at least 30 days after receipt by the Administrative Agent of written notice thereof, (ii) name the Administrative Agent as insured party or loss payee and (iii) be reasonably satisfactory in all other respects to the Administrative Agent.

  

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(c)           The Borrower shall deliver to the Administrative Agent and the Lenders a report of a reputable insurance broker with respect to such insurance substantially concurrently with each delivery of the Borrower’s audited annual financial statements and such supplemental reports with respect thereto as the Administrative Agent may from time to time reasonably request.

 

5.3           Payment of Obligations.  Such Grantor will pay and discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all taxes, assessments and governmental charges or levies imposed upon the Collateral or in respect of income or profits therefrom, as well as all claims of any kind (including, without limitation, claims for labor, materials and supplies) against or with respect to the Collateral, except that no such charge need be paid if the amount or validity thereof is currently being contested in good faith by appropriate proceedings, reserves in conformity with GAAP with respect thereto have been provided on the books of such Grantor and such proceedings could not reasonably be expected to result in the sale, forfeiture or loss of any material portion of the Collateral or any interest therein.

 

5.4           Maintenance of Perfected Security Interest; Further Documentation.  (a)  Such Grantor shall maintain the security interest created by this Agreement as a perfected security interest having at least the priority described in Section 4.2 and shall defend such security interest against the claims and demands of all Persons whomsoever, subject to the rights of such Grantor under the Loan Documents to dispose of the Collateral.

 

(b)           Such Grantor will furnish to the Administrative Agent and the Lenders from time to time statements and schedules further identifying and describing the assets and property of such Grantor and such other reports in connection therewith as the Administrative Agent may reasonably request, all in reasonable detail.

 

(c)           At any time and from time to time, upon the written request of the Administrative Agent, and at the sole expense of such Grantor, such Grantor will promptly and duly execute and deliver, and have recorded, such further instruments and documents and take such further actions as the Administrative Agent may reasonably request for the purpose of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted, including, without limitation, (i) filing any financing or continuation statements under the Uniform Commercial Code (or other similar laws) in effect in any jurisdiction with respect to the security interests created hereby and (ii) in the case of Investment Property, Deposit Accounts, Letter-of-Credit Rights and any other relevant Collateral, taking any actions necessary to enable the Administrative Agent to obtain “control” (within the meaning of the applicable Uniform Commercial Code) with respect thereto.  Without limitation of the foregoing, the Grantors shall cause all control agreements and similar arrangements entered into by the ABL Administrative Agent and ABL Lenders with respect to the ABL Priority Collateral to acknowledge the security interest created by the Loan Documents in the ABL Priority Collateral and provide that the Administrative Agent shall have control with respect to the ABL Priority Collateral following the ABL Obligations Payment Date.

 

5.5           Changes in Name, etc.  Such Grantor will not, except upon 15 days’ prior written notice to the Administrative Agent and delivery to the Administrative Agent of all additional executed financing statements and other documents reasonably requested by the Administrative Agent to maintain the validity, perfection and priority of the security interests provided for herein, (i) change its jurisdiction of organization or the location of its chief executive office or sole place of business or principal residence from that referred to in Section 4.3 or (ii) change its name.

  

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5.6           Notices.  Such Grantor will advise the Administrative Agent and the Lenders promptly, in reasonable detail, of:

 

(a)           any Lien (other than security interests created hereby or Liens permitted under the Credit Agreement) on any of the Collateral which would adversely affect the ability of the Administrative Agent to exercise any of its remedies hereunder; and

 

(b)           of the occurrence of any other event which could reasonably be expected to have a Material Adverse Effect or a material adverse effect on the security interests created hereby.

 

5.7           Investment Property.  (a)  If such Grantor shall become entitled to receive or shall receive any certificate (including, without limitation, any certificate representing a dividend or a distribution in connection with any reclassification, increase or reduction of capital or any certificate issued in connection with any reorganization), option or rights in respect of the Capital Stock of any Issuer, whether in addition to, in substitution of, as a conversion of, or in exchange for, any shares of the Pledged Stock, or otherwise in respect thereof, such Grantor shall accept the same as the agent of the Administrative Agent and the Lenders, hold the same in trust for the Administrative Agent and the Lenders and deliver the same forthwith to the Administrative Agent in the exact form received, duly indorsed by such Grantor to the Administrative Agent, if required, together with an undated stock power covering such certificate duly executed in blank by such Grantor and with, if the Administrative Agent so requests, signature guaranteed, to be held by the Administrative Agent, subject to the terms hereof, as additional collateral security for the Obligations.  During an Event of Default, any sums paid upon or in respect of the Investment Property upon the liquidation or dissolution of any Issuer shall be paid over to the Administrative Agent to be held by it hereunder as additional collateral security for the Obligations, and in case any distribution of capital shall be made on or in respect of the Investment Property or any property shall be distributed upon or with respect to the Investment Property pursuant to the recapitalization or reclassification of the capital of any Issuer or pursuant to the reorganization thereof, the property so distributed shall, unless otherwise subject to a perfected security interest in favor of the Administrative Agent, be delivered to the Administrative Agent to be held by it hereunder as additional collateral security for the Obligations.  During an Event of Default, any sums of money or property so paid or distributed in respect of the Investment Property shall be received by such Grantor, such Grantor shall, until such money or property is paid or delivered to the Administrative Agent, hold such money or property in trust for the Administrative Agent and the Lenders, segregated from other funds of such Grantor, as additional collateral security for the Obligations.

 

(b)           Without the prior written consent of the Administrative Agent, such Grantor will not (i) vote to enable, or take any other action to permit, any Issuer to issue any Capital Stock of any nature or to issue any other securities convertible into or granting the right to purchase or exchange for any Capital Stock of any nature of any Issuer except to the extent permitted by the Credit Agreement, (ii) sell, assign, transfer, exchange, or otherwise dispose of, or grant any option with respect to, the Investment Property or Proceeds thereof (except pursuant to a transaction expressly permitted by the Credit Agreement), (iii) create, incur or permit to exist any Lien or option in favor of, or any claim of any Person with respect to, any of the Investment Property or Proceeds thereof, or any interest therein, except for the security interests created by this Agreement and Liens permitted by the Credit Agreement or (iv) enter into any agreement or undertaking restricting the right or ability of such Grantor or the Administrative Agent to sell, assign or transfer any of the Investment Property or Proceeds thereof.

  

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(c)           In the case of each Grantor which is an Issuer, such Issuer agrees that (i) it will be bound by the terms of this Agreement relating to the Investment Property issued by it and will comply with such terms insofar as such terms are applicable to it, (ii) it will notify the Administrative Agent promptly in writing of the occurrence of any of the events described in Section 5.7(a)) with respect to the Investment Property issued by it and (iii) the terms of Sections 6.3(c) and 6.7 shall apply to it, mutatis mutandis, with respect to all actions that may be required of it pursuant to Section 6.3(c) or 6.7 with respect to the Investment Property issued by it.

 

5.8           Receivables.  (a)  Other than in the ordinary course of business consistent with its past practice, such Grantor will not (i) grant any extension of the time of payment of any Receivable, (ii) compromise or settle any Receivable for less than the full amount thereof, (iii) release, wholly or partially, any Person liable for the payment of any Receivable, (iv) allow any credit or discount whatsoever on any Receivable or (v) amend, supplement or modify any Receivable in any manner that could adversely affect the value thereof.

 

(b)           Such Grantor will deliver to the Administrative Agent a copy of each material demand, notice or document received by it that questions or calls into doubt the validity or enforceability of more than 5% of the aggregate amount of the then outstanding Receivables.

 

5.9           [RESERVED].

 

5.10         Intellectual Property.  (a)  Such Grantor (either itself or through licensees) will (i) continue to use each material Trademark on each and every trademark class of goods applicable to its current line as reflected in its current catalogs, brochures and price lists in order to maintain such Trademark in full force free from any claim of abandonment for non-use, (ii) maintain as in the past the quality of products and services offered under such Trademark, (iii) use such Trademark with the appropriate notice of registration and all other notices and legends required by applicable Requirements of Law, (iv) not adopt or use any mark which is confusingly similar or a colorable imitation of such Trademark unless the Administrative Agent, for the benefit of the Secured Parties, shall obtain a perfected security interest in such mark pursuant to this Agreement, and (v) not (and not permit any licensee or sublicensee thereof to) do any act or knowingly omit to do any act whereby such Trademark may become invalidated or impaired in any way.

 

(b)           Such Grantor (either itself or through licensees) will not do any act, or omit to do any act, whereby any material Patent may become forfeited, abandoned or dedicated to the public.

 

(c)           Such Grantor (either itself or through licensees) (i) will employ each material Copyright and (ii) will not (and will not permit any licensee or sublicensee thereof to) do any act or knowingly omit to do any act whereby any material portion of the Copyrights may become invalidated or otherwise impaired.  Such Grantor will not (either itself or through licensees) do any act whereby any material portion of the Copyrights may fall into the public domain.

 

(d)           Such Grantor (either itself or through licensees) will not do any act that knowingly uses any material Intellectual Property to infringe the intellectual property rights of any other Person.

(e)           Such Grantor will notify the Administrative Agent and the Lenders immediately if it knows, or has reason to know, that any application or registration relating to any material Intellectual Property may become forfeited, abandoned or dedicated to the public, or of any adverse determination or development (including, without limitation, the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office or any court or tribunal in any country) regarding such Grantor’s ownership of, or the validity of, any material Intellectual Property or such Grantor’s right to register the same or to own and maintain the same.

 

  

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(f)            Whenever such Grantor, either by itself or through any agent, employee, licensee or designee, shall file an application for the registration of any Intellectual Property with the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency in any other country or any political subdivision thereof, such Grantor shall report such filing to the Administrative Agent within 45 days after the last day of the fiscal quarter in which such filing occurs.  Upon request of the Administrative Agent, such Grantor shall execute and deliver, and have recorded, any and all agreements, instruments, documents, and papers as the Administrative Agent may request to evidence the Administrative Agent’s and the Lenders’ security interest in any Copyright, Patent or Trademark and the goodwill and general intangibles of such Grantor relating thereto or represented thereby.

 

(g)           Such Grantor will take all reasonable and necessary steps, including, without limitation, in any proceeding before the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency in any other country or any political subdivision thereof, to maintain and pursue each application (and to obtain the relevant registration) and to maintain each registration of the material Intellectual Property, including, without limitation, filing of applications for renewal, affidavits of use and affidavits of incontestability.

 

(h)           In the event that any material Intellectual Property is infringed, misappropriated or diluted by a third party, such Grantor shall (i) take such actions as such Grantor shall reasonably deem appropriate under the circumstances to protect such Intellectual Property and (ii) if such Intellectual Property is of material economic value, promptly notify the Administrative Agent after it learns thereof and sue for infringement, misappropriation or dilution, to seek injunctive relief where appropriate and to recover any and all damages for such infringement, misappropriation or dilution.

 

5.11         Commercial Tort Claims.  If such Grantor shall obtain an interest in any Commercial Tort Claim with a potential value in excess of $250,000, such Grantor shall within 30 days of obtaining such interest sign and deliver documentation acceptable to the Administrative Agent granting a security interest under the terms and provisions of this Agreement in and to such Commercial Tort Claim. Vehicles .

 

5.12         Vehicles.   Promptly following receipt by the Borrower of a written request from the Administrative Agent requesting that the security interest in Vehicles created by this Agreement be perfected, take actions necessary or advisable to perfect such security interest, and the Grantors shall, without limitation, cause all certificates of title and all applications for certificates of title indicating the Administrative Agent’s first priority security interest in the Vehicle covered by such certificate, and any other necessary documentation, to be filed in each office in each jurisdiction which the Administrative Agent shall deem advisable to perfect its security interests in the Vehicles.

 

5.13         Uncertificated Pledged Stock.  (a)  With respect to any Pledged Stock owned by it, such Grantor will take any commercially reasonable actions necessary to cause each Issuer of uncertificated securities which are Pledged Stock to cause the Administrative Agent to have and retain control (as defined in Article 8 of the New York UCC) over such Pledged Stock.

 

(b)      Each Grantor acknowledges and agrees that each interest in any limited liability company or limited partnership that is pledged hereunder that is represented by a certificate, shall be a “security” within the meaning of Article 8 of the New York UCC and governed by Article 8 of the Uniform Commercial Code of the applicable jurisdiction and, unless otherwise approved by the Administrative Agent, shall at all times hereafter be represented by a certificate (unless it is no longer a “security” within the meaning of Article 8 of the New York UCC) which shall be a “security” within the meaning of Article 8 of the New York UCC and governed by Article 8 of the Uniform Commercial Code of such jurisdiction.

 

  

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(c)      Each Grantor further acknowledges and agrees that (i) the interests in any limited liability company or limited partnership that is pledged hereunder and not represented by a certificate shall not be a “security” within the meaning of Article 8 of the New York UCC and shall not be governed by Article 8 of the Uniform Commercial Code of the applicable jurisdiction and (ii) the Grantors shall at no time elect to treat any such interest as a “security” within the meaning of Article 8 of the New York UCC or issue any certificate representing such interest (except that the Grantors may elect to so treat any such interest as a “security” within the meaning of Article 8 of the New York UCC and issue any certificate representing such interest if simultaneously therewith the applicable Grantor delivers such certificate to the Administrative Agent).

 

SECTION 6.     REMEDIAL PROVISIONS

 

6.1           Certain Matters Relating to Receivables. (a) So long as the ABL Obligations Payment Date shall have occurred  or with the consent of the ABL Representative, (i) the Administrative Agent shall have the right to make test verifications of the Receivables in any manner and through any medium that it reasonably considers advisable, and each Grantor shall furnish all such assistance and information as the Administrative Agent may require in connection with such test verifications and (ii) at any time and from time to time, upon the Administrative Agent’s request and at the expense of the relevant Grantor, such Grantor shall cause independent public accountants or others satisfactory to the Administrative Agent to furnish to the Administrative Agent reports showing reconciliations, aging and test verifications of, and trial balances for, the Receivables.

 

(b)           So long as the ABL Obligations Payment Date shall have occurred or with the consent of the ABL Representative, the Administrative Agent hereby authorizes each Grantor to collect such Grantor’s Receivables, subject to the Administrative Agent’s direction and control, and the Administrative Agent may curtail or terminate said authority at any time after the occurrence and during the continuance of an Event of Default.  If required by the Administrative Agent at any time after the occurrence and during the continuance of an Event of Default, 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 Administrative Agent if required, in a Collateral Account maintained under the sole dominion and control of the Administrative Agent, subject to withdrawal by the Administrative Agent for the account of the Lenders only as provided in Section 6.5, and (ii) until so turned over, shall be held by such Grantor in trust for the Administrative Agent and the Lenders, 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.  Borrower will collect Receivables in trust for the Administrative Agent.

 

(c)           So long as the ABL Obligations Payment Date shall have occurred or with the consent of the ABL Representative, at the Administrative Agent’s request, each Grantor shall deliver to the Administrative Agent all original and other documents evidencing, and relating to, the agreements and transactions which gave rise to the Receivables, including, without limitation, all original orders, invoices and shipping receipts.

 

6.2           Communications with Obligors; Grantors Remain Liable.  (a) So long as the ABL Obligations Payment Date shall have occurred or with the consent of the ABL Representative, the Administrative Agent in its own name or in the name of others may at any time after the occurrence and during the continuance of an Event of Default communicate with obligors under the Receivables to verify with them to the Administrative Agent’s satisfaction the existence, amount and terms of any Receivables.

 

  

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(b)           So long as the ABL Obligations Payment Date shall have occurred or with the consent of the ABL Representative, upon the request of the Administrative Agent at any time after the occurrence and during the continuance of an Event of Default, each Grantor shall notify obligors on the Receivables and parties to the Contracts that the Receivables have been assigned to the Administrative Agent for the benefit of the Secured Parties and that payments in respect thereof shall be made directly to the Administrative Agent.

 

(c)           Anything herein to the contrary notwithstanding, each Grantor shall remain liable under each of the Receivables and Contracts 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 nor any Lender shall have any obligation or liability under any Receivable (or any agreement giving rise thereto) or Contract by reason of or arising out of this Agreement or the receipt by the Administrative Agent or any Lender of any payment relating thereto, nor shall the Administrative Agent or any Lender 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) or Contract, 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 Stock.  (a)  Unless an Event of Default shall have occurred and be continuing and the Administrative Agent shall have given notice to the relevant Grantor of the Administrative Agent’s intent to exercise its corresponding rights pursuant to Section 6.3(b), each Grantor shall be permitted to receive all cash dividends paid in respect of the Pledged Stock and all payments made in respect of the Pledged Notes, in each case paid in the normal course of business of the relevant Issuer and consistent with past practice, to the extent permitted in the Credit Agreement, and to exercise all voting and corporate or other organizational rights with respect to the Investment Property; provided, however, that no vote shall be cast or corporate or other organizational right exercised or other action taken which, in the Administrative Agent’s reasonable judgment, would impair the Collateral or which would be inconsistent with or result in any violation of any provision of the Credit Agreement, this Agreement or any other Loan Document.

(b)           If an Event of Default shall occur and be continuing and the Administrative Agent shall give notice of its intent to exercise such rights to the relevant Grantor or Grantors, (i) the Administrative Agent shall have the right to receive any and all cash dividends, payments or other Proceeds paid in respect of the Investment Property and make application thereof to the Obligations in such order as the Administrative Agent may determine, and (ii) any or all of the Investment Property shall be registered in the name of the Administrative Agent or its nominee, and the Administrative Agent or its nominee may thereafter exercise (x) all voting, corporate and other rights pertaining to such Investment Property 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 Investment Property as if it were the absolute owner thereof (including, without limitation, the right to exchange at its discretion any and all of the Investment Property upon the merger, consolidation, reorganization, recapitalization or other fundamental change in the corporate or other organizational structure of any Issuer, or upon the exercise by any Grantor or the Administrative Agent of any right, privilege or option pertaining to such Investment Property, and in connection therewith, the right to deposit and deliver any and all of the Investment Property with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as the Administrative Agent may determine), all without liability except to account for property actually received by it, but the Administrative 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.

 

  

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(c)           Each Grantor hereby authorizes and instructs each Issuer of any Investment Property pledged by such Grantor hereunder to (i) 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, and (ii) unless otherwise expressly permitted hereby, pay any dividends or other payments with respect to the Investment Property directly to the Administrative Agent.

 

6.4           Proceeds to be Turned Over To Administrative Agent.  Subject to the Intercreditor Agreement, in addition to the rights of the Administrative Agent and the Lenders specified in Section 6.1 with respect to payments of Receivables, if an Event of Default shall occur and be continuing, 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 and the Lenders, segregated from other funds of such Grantor, and shall, forthwith upon receipt by such Grantor, be turned over to the Administrative Agent in the exact form received by such Grantor (duly indorsed by such Grantor to the Administrative Agent, if required).  All Proceeds received by the Administrative Agent hereunder shall be held by the Administrative Agent in a Collateral Account maintained under its sole dominion and control.  All Proceeds while held by the Administrative Agent in a Collateral Account (or by such Grantor in trust for the Administrative Agent and the Lenders) shall continue to be held as collateral security for all the Obligations and shall not constitute payment thereof until applied as provided in Section 6.5.

 

6.5           Application of Proceeds.  At such intervals as may be agreed upon by the Borrower and the Administrative Agent, or, if an Event of Default shall have occurred and be continuing, at any time at the Administrative Agent’s election, the Administrative Agent may apply all or any part of Proceeds constituting Collateral, whether or not held in any Collateral Account, and any proceeds of the guarantee set forth in Section 2, in payment of the Obligations in the following order:

 

First, to pay incurred and unpaid fees and expenses of the Administrative Agent under the Loan Documents;

 

Second, to the Administrative 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 Secured Parties according to the amounts of the Obligations then due and owing and remaining unpaid to the Secured Parties;

 

Third, to the Administrative Agent, for application by it towards prepayment of the Obligations, pro rata among the Secured Parties according to the amounts of the Obligations then held by the Secured Parties; and

 

Fourth, any balance remaining after the Obligations shall have been paid in full, no Letters of Credit shall be outstanding and the Commitments shall have terminated shall be paid over to the Borrower or to whomsoever may be lawfully entitled to receive the same.

 

  

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6.6           Code and Other Remedies. If an Event of Default shall occur and be continuing, the Administrative Agent, on behalf of the Lenders, 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, in accordance with the Intercreditor Agreement. Without limiting the generality of the foregoing, the Administrative 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) to or upon any Grantor or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith 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 or any Lender 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 or any Lender 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 Administrative Agent’s request, to assemble the Collateral and make it available to the Administrative Agent at places which the Administrative Agent shall reasonably select, whether at such Grantor’s premises or elsewhere. The Administrative Agent shall apply the net proceeds of any action taken by it pursuant to this Section 6.6, after deducting all reasonable costs and expenses of every kind 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 and the Lenders 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 Administrative Agent may elect, and only after such application and after the payment by the Administrative 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 Administrative Agent account for the surplus, if any, to any Grantor. To the extent permitted by applicable law, each Grantor waives all claims, damages and demands it may acquire against the Administrative Agent or any Lender arising out of the exercise by them of any rights hereunder. 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.

 

6.7           Registration Rights.  (a)  If the Administrative Agent shall determine to exercise its right to sell any or all of the Pledged Stock pursuant to Section 6.6, and if in the opinion of the Administrative Agent it is necessary or advisable to have the Pledged Stock, or that portion thereof to be sold, registered under the provisions of the Securities Act, the relevant Grantor will cause the Issuer thereof to (i) execute and deliver, and cause the directors and officers of such Issuer to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts as may be, in the opinion of the Administrative Agent, necessary or advisable to register the Pledged Stock, or that portion thereof to be sold, under the provisions of the Securities Act, (ii) use its best efforts to cause the registration statement relating thereto to become effective and to remain effective for a period of one year from the date of the first public offering of the Pledged Stock, or that portion thereof to be sold, and (iii) make all amendments thereto and/or to the related prospectus which, in the opinion of the Administrative Agent, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the Securities and Exchange Commission applicable thereto.  Each Grantor agrees to cause such Issuer to comply with the provisions of the securities or “Blue Sky” laws of any and all jurisdictions which the Administrative Agent shall designate and to make available to its security holders, as soon as practicable, an earnings statement (which need not be audited) which will satisfy the provisions of Section 11(a) of the Securities Act.

 

(b)           Each Grantor recognizes that the Administrative 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 Administrative 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.

 

  

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(c)           Each Grantor agrees to use its best efforts to do or cause to be done all such other acts as may be necessary to make such sale or sales of all or any portion of the Pledged Stock pursuant to this Section 6.7 valid and binding and in compliance with any and all other applicable Requirements of Law.  Each Grantor further agrees that a breach of any of the covenants contained in this Section 6.7 will cause irreparable injury to the Administrative Agent and the Lenders, that the Administrative Agent and the Lenders have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section 6.7 shall be specifically enforceable against such Grantor, and such Grantor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no Event of Default has occurred under the Credit Agreement.

 

6.8           Subordination.  Each Grantor hereby agrees that, upon the occurrence and during the continuance of an Event of Default, unless otherwise agreed by the Administrative Agent, all Indebtedness owing by it to any Subsidiary of the Borrower shall be fully subordinated to the indefeasible payment in full in cash of such Grantor’s Obligations.

 

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 fees and disbursements of any attorneys employed by the Administrative Agent or any Lender to collect such deficiency.

 

SECTION 7.     THE ADMINISTRATIVE AGENT

 

7.1           Administrative Agent’s Appointment as Attorney-in-Fact, etc.  (a)  Each Grantor hereby irrevocably constitutes and appoints the Administrative 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 Administrative 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:

 

(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 Contract 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 Administrative Agent for the purpose of collecting any and all such moneys due under any Receivable or Contract or with respect to any other Collateral whenever payable;

 

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

 

  

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(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 6.6 or 6.7, 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 Administrative Agent or as the Administrative 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 Administrative Agent may deem appropriate; (7) assign any Copyright, Patent or Trademark (along with the goodwill of the business to which any such Copyright, Patent or Trademark pertains), throughout the world for such term or terms, on such conditions, and in such manner, as the Administrative Agent shall in its sole discretion determine; and (8) 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 Administrative Agent were the absolute owner thereof for all purposes, and do, at the Administrative Agent’s option and such Grantor’s expense, at any time, or from time to time, all acts and things which the Administrative Agent deems necessary to protect, preserve or realize upon the Collateral and the Administrative Agent’s and the Lenders’ security interests therein and to effect the intent of this Agreement, all as fully and effectively as such Grantor might do.

 

Anything in this Section 7.1(a) to the contrary notwithstanding, the Administrative 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.

 

(b)           If any Grantor fails to perform or comply with any of its agreements contained herein, the Administrative Agent, at its option, but without any obligation so to do, may perform or comply, or otherwise cause performance or compliance, with such agreement.

 

(c)           The expenses of the Administrative Agent incurred in connection with actions undertaken as provided in this Section 7.1, together with interest thereon at a rate per annum equal to the highest rate per annum at which interest would then be payable on any category of past due ABR Loans under the Credit Agreement, from the date of payment by the Administrative Agent to the date reimbursed by the relevant Grantor, shall be payable by such Grantor to the Administrative Agent on demand.

 

(d)           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.

 

  

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7.2           Duty of Administrative Agent.  The Administrative 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 Administrative Agent deals with similar property for its own account.  Neither the Administrative Agent, any Lender nor 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 and the Lenders hereunder are solely to protect the Administrative Agent’s and the Lenders’ interests in the Collateral and shall not impose any duty upon the Administrative Agent or any Lender to exercise any such powers.  The Administrative Agent and the Lenders 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.

 

7.3           Execution of Financing Statements.  Pursuant to any applicable law, each Grantor authorizes the Administrative 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 Administrative Agent determines appropriate to perfect the security interests of the Administrative Agent under this Agreement.  Each Grantor authorizes the Administrative Agent to use the collateral description “all personal property” in any such financing statements.  Each Grantor hereby ratifies and authorizes the filing by the Administrative Agent of any financing statement with respect to the Collateral made prior to the date hereof.

 

7.4           Authority of Administrative Agent.  Each Grantor acknowledges that the rights and responsibilities of the Administrative Agent under this Agreement with respect to any action taken by the Administrative Agent or the exercise or non-exercise by the Administrative 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 between the Administrative Agent and the Lenders, be governed by the Credit Agreement, the Intercreditor Agreement and by such other agreements with respect thereto as may exist from time to time among them, but, as between the Administrative Agent and the Grantors, the Administrative Agent shall be conclusively presumed to be acting as agent for the Lenders 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 9.1 of the Credit Agreement.

 

8.2           Notices.  All notices, requests and demands to or upon the Administrative Agent or any Grantor hereunder shall be effected in the manner provided for in Section 9.2 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.

 

8.3           No Waiver by Course of Conduct; Cumulative Remedies.  Neither the Administrative Agent nor any Lender 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 or any Lender, 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 or any Lender 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 or such Lender 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.

 

  

22

  

 

8.4           Enforcement Expenses; Indemnification.  (a)  Each Guarantor agrees to pay or reimburse each Lender and the Administrative Agent for all its costs and expenses incurred in collecting against such Guarantor under the guarantee contained in Section 2 or otherwise enforcing or preserving any rights under this Agreement and the other Loan Documents to which such Guarantor is a party, including, without limitation, the fees and disbursements of counsel (including the allocated fees and expenses of in-house counsel) to each Lender and of counsel to the Administrative Agent.

 

(b)           Each Guarantor agrees to pay, and to save the Administrative Agent and the Lenders harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Agreement.

 

(c)           Each Guarantor agrees to pay, and to save the Administrative Agent and the Lenders harmless from, any and all 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 9.5 of the Credit Agreement.

 

(d)           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 and the Lenders 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 Administrative Agent.

 

8.6           Set-Off.  In addition to any rights and remedies of the Lenders provided by law, each Lender shall have the right, without notice to any Grantor, any such notice being expressly waived by each Grantor to the extent permitted by applicable law, upon any Obligations becoming due and payable by any Grantor (whether at the stated maturity, by acceleration or otherwise), to apply to the payment of such Obligations, by setoff or otherwise, any and all deposits (general or special, time or demand, provisional or final), 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 such Lender, any affiliate thereof or any of their respective branches or agencies to or for the credit or the account of such Grantor.  Each Lender agrees promptly to notify the relevant Grantor and the Administrative Agent after any such application made by such Lender, provided that the failure to give such notice shall not affect the validity of such 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, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.  Delivery of an executed signature page of this Agreement by email or facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.

 

8.8           Severability.  Any provision of this Agreement that 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.

 

  

23

  

 

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 and the Lenders with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Administrative Agent or any Lender relative to subject matter hereof and thereof not expressly set forth or referred to herein or in the other Loan Documents.

 

           8.11         GOVERNING LAW.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER 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 Grantor 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 exclusive general jurisdiction of the courts of the State of New York, the courts of the United States 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 Administrative 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;

 

  

24

  

 

(b)           neither the Administrative Agent nor any Lender has any fiduciary relationship with or duty to any Grantor arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between the Grantors, on the one hand, and the Administrative Agent and Lenders, 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 Lenders or among the Grantors and the Lenders.

 

8.14         Additional Grantors.  Each Subsidiary of the Borrower that is required to become a party to this Agreement pursuant to Section 5.10 of the Credit Agreement shall become a Grantor for all purposes of this Agreement upon execution and delivery by such Subsidiary of an Assumption Agreement in the form of Annex 1 hereto.

 

8.15         Releases.  (a)  At such time as the Loans, the Reimbursement Obligations and the other Obligations  shall have been paid in full, the Commitments have been terminated and no Letters of Credit shall be outstanding, the Collateral shall be released from the Liens created hereby, and this Agreement and all obligations (other than those expressly stated to survive such termination) of the Administrative Agent and each Grantor hereunder shall 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 Administrative Agent shall deliver to such Grantor any Collateral held by the Administrative 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 and the Intercreditor Agreement, then the Administrative 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 for the release of the Liens created hereby on such Collateral.  At the request and sole expense of the Borrower, a Subsidiary Guarantor shall be released from its obligations hereunder in the event that all the Capital Stock of such Subsidiary Guarantor shall be sold, transferred or otherwise disposed of in a transaction permitted by the Credit Agreement and the Intercreditor Agreement; provided that the Borrower shall have delivered to the Administrative Agent, at least ten Business Days prior to the date of the proposed release, a written request for release identifying the relevant Subsidiary Guarantor and the terms of the sale or other disposition in reasonable detail, including the price thereof and any expenses in connection therewith, together with a certification by the Borrower stating that such transaction is in compliance with the Credit Agreement and the other Loan Documents.

 

8.16         WAIVER OF JURY TRIAL.  EACH GRANTOR 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.

  

25

  

8.17         Intercreditor Agreement.  Notwithstanding anything to the contrary contained in this Agreement, the Liens, security interests and rights granted pursuant to this Agreement or any other Loan Document shall be as set forth in, and subject to the terms and conditions of (and the exercise of any right or remedy by the Administrative Agent hereunder or thereunder shall be subject to the terms and conditions of), the Intercreditor Agreement.  In the event of any conflict between this Agreement or any other Loan Document and the Intercreditor Agreement, the Intercreditor Agreement shall control, and no right, power, or remedy granted to the Administrative Agent hereunder or under any other Loan Document shall be exercised by the Administrative Agent, and no direction shall be given by the Administrative Agent in contravention of the Intercreditor Agreement.   Without limiting the generality of the foregoing, and notwithstanding anything herein to the contrary, all rights and remedies of the Administrative Agent (and the Secured Parties) shall be subject to the terms of the Intercreditor Agreement, and, with respect to the ABL Priority Collateral until the ABL Obligations Payment Date, any obligation of the Borrower and other Grantor hereunder or under any other Loan Document with respect to the delivery or control of any ABL Priority Collateral, the novation of any lien on any certificate of title, bill of lading or other document, the giving of any notice to any bailee or other Person, the provision of voting rights or the obtaining of any consent of any Person, in each case in connection with any ABL Priority Collateral shall be deemed to be satisfied if the Borrower or such Grantor, as applicable, complies with the requirements of the similar provision of the applicable ABL Documentation.  Until the ABL Obligations Payment Date, the delivery of any ABL Priority Collateral to the ABL Representative pursuant to the ABL Documentation shall satisfy any delivery requirement hereunder or under any other Loan Document (it being understood this sentence and the preceding sentence are for the benefit of the Administrative Agent and the Secured Parties and not the Grantors).  Notwithstanding the foregoing, the Administrative Agent may take actions necessary or advisable to create and perfect the security interest in the ABL Priority Collateral created by the Loan Documents.

  

26

  

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.

 

	 	UNITEK GLOBAL SERVICES, INC.
	 	 	 
	  	
By:

	
 /s/ Ronald J. Lejman

	  	  	
Name: Ronald J. Lejman

	  	  	
Title:    Chief Financial Officer

	  	
UNITEK ACQUISITION, INC.

BCI COMMUNICATIONS, INC.

UNITEK USA, LLC

ADVANCED COMMUNICATIONS USA, INC

DIRECTSAT USA, LLC

FTS USA, LLC

	  	  	  
	  	
By:

	
/s/ Ronald J. Lejman

	  	  	
Name:  Ronald J. Lejman

	  	  	
Title:     Treasurer

 

	  	
FBR CAPITAL MARKETS LT, INC., as

Administrative Agent

	  	  
	  	
By:

	
 /s/ Robert J. Kiernan

	  	  	
Name: Robert J. Kiernan

	  	  	
Title:    Senior Vice President

  

27

  

ACKNOWLEDGEMENT AND CONSENT

 

The undersigned hereby acknowledges receipt of a copy of the Guarantee and Collateral Agreement dated as of  April 15, 2011 (the “Agreement”), made by the Grantors parties thereto for the benefit of FBR Capital Markets LT, Inc., as Administrative Agent.  The undersigned agrees for the benefit of the Administrative Agent and the Lenders as follows:

 

1.           The undersigned will be bound by the terms of the Agreement and will comply with such terms insofar as such terms are applicable to the undersigned.

 

2.           The undersigned will notify the Administrative Agent promptly in writing of the occurrence of any of the events described in Section 5.7(a) of the Agreement.

 

3.           The terms of Sections 6.3(c) and 6.7 of the Agreement shall apply to it, mutatis mutandis, with respect to all actions that may be required of it pursuant to Section 6.3(c) or 6.7 of the Agreement.

 

	  	
WIRECOMM SYSTEMS (2008), INC.

	 	 
	  	
By:

	
/s/ Ronald J. Lejman

	  	  	
Name:  Ronald J. Lejman

	  	  	
Title:     Treasurer

	 	 	 
	  	
Address for Notices:

	  	
1777 Sentry Parkway West

	  	
Suite 301

	  	
Blue Bell, PA 19422

	  	
Fax: 267-493-1613

	  	  	  
	  	
UNITEK CANADA, INC.

	 	 
	  	
By:

	
/s/ Ronald J. Lejman

	  	  	
Name:  Ronald J. Lejman

	  	  	
Title:     Treasurer

	  	  	  
	  	
Address for Notices:

	  	
1777 Sentry Parkway West

	  	
Suite 301

	  	
Blue Bell, PA 19422

	  	
Fax: 267-493-1613

  

28

  

Annex 1 to

Guarantee and Collateral Agreement

 

ASSUMPTION AGREEMENT, dated as of [●], 20[●], made by ______________________________ (the “Additional Grantor”), in favor of FBR Capital Markets LT, Inc., as administrative agent (in such capacity, the “Administrative Agent”) for the banks and other financial institutions or entities (the “Lenders”) from time to time 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.

 

WITNESSETH :

 

WHEREAS, UniTek Global Services, Inc. (the “Borrower”), the Lenders, FBR Capital Markets LT, Inc., as Documentation Agent, Syndication Agent and Administrative Agent have entered into a Credit Agreement, dated as of April 15, 2011 (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 April 15, 2011 (as amended, supplemented or otherwise modified from time to time, the “Guarantee and Collateral Agreement”) in favor of the Administrative Agent for the benefit of the Secured Parties;

 

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 Grantor thereunder with the same force and effect as if originally named therein as a Grantor and, without limiting the generality of the foregoing, hereby expressly assumes all obligations and liabilities of 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 that each of the representations and warranties contained in Section 4 of the Guarantee and Collateral Agreement is true and correct on and as the date hereof (after giving effect to this Assumption Agreement) as if made on and as of such date.

 

2.  Governing Law.  THIS ASSUMPTION AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

  

29

  

 

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:

	 

 

 

  

30

  

 

EXHIBIT B

 

FORM OF

COMPLIANCE CERTIFICATE

 

This Compliance Certificate is delivered pursuant to Section 5.2(b) of the Credit Agreement, dated as of April 15, 2011 (as amended, supplemented or otherwise modified from time to time (the “Credit Agreement”), among UniTek Global Services, Inc. (the “Borrower”), the Lenders from time to time party thereto, FBR Capital Markets LT, Inc., as Documentation Agent, Syndication Agent and Administrative Agent.  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 [Chief Financial 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 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 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 Event of Default[, except as set forth below].

 

4.      Without limiting the foregoing, I certify that the Loan Parties are in compliance with the requirements or restrictions imposed by Sections 6.1, 6.2, 6.3, 6.5, 6.6, 6.7 and 6.8 of the Credit Agreement and attached hereto as Attachment 2 are the computations showing compliance with the covenants set forth in Section 6.1 of the Credit Agreement.

 

IN WITNESS WHEREOF, I have executed this Compliance Certificate this [●] day of [●], 20__.

 

	  	
By:

	
  

	 
	  	  	
Name:

	 
	  	  	
Title:  [Chief Financial Officer]

	 

 

  

  

  

 

Attachment 1

to Compliance Certificate

 

[Attach Financial Statements]

 

  

  

  

 

Attachment 2

to Compliance Certificate

 

The information described herein is as of ______, ____, and pertains to the period from _________, ____ to ________________ __, ____.

 

[Set forth covenant calculations]

 

  

  

  

 

EXHIBIT C

 

FORM OF

CLOSING CERTIFICATES

 

SECRETARY’S CERTIFICATE

I, Kyle M. Hall, the undersigned, acting solely in my official capacity as the Secretary of [UNITEK GLOBAL SERVICES, INC.], a corporation organized under the laws of the State of Delaware (“[Borrower]”), and not in my individual capacity, do hereby certify as of April [______], 2011 that: (i) I am Secretary of [Borrower], (ii) I am authorized to execute and deliver this Secretary’s Certificate in connection with the execution and delivery of that certain Credit Agreement, dated as of even date herewith, among [Borrower], the Lenders from time to time party thereto and FBR Capital Markets LT, Inc. (the “Term Loan Credit Agreement”), and (iii) as follows:

1.           Attached hereto as Exhibit A are true and complete copies of resolutions of the board of directors of [Borrower] authorizing (a) the execution, delivery and performance of the Term Loan Credit Agreement and each Loan Document to which [Borrower] is a party, and (b) the granting by [Borrower] of the security interests in and liens upon the collateral to secure all of the obligations of [Borrower] pursuant to the Term Loan Credit Agreement and each Loan Document to which [Borrower] is a party, which resolutions have not been amended, modified, revoked or rescinded as of the date hereof, have been in full force and effect since their adoption to and including the date hereof and are now in full force and effect and are the only corporate proceedings of [Borrower] now in force relating to or affecting the matters referred to therein.

 

2.           Attached hereto as Exhibit B is a true and complete copy of the Amended and Restated [Certificate of Incorporation], as amended, of [Borrower] as in effect on the date hereof.

3.           Attached hereto as Exhibit C is a true and complete copy of the [Bylaws] of [Borrower] as in effect on the date hereof.

4.           [Borrower] is, as of the date hereof, a corporation duly incorporated, validly existing and in good standing in its jurisdiction of organization and, if different than its jurisdiction of organization, the jurisdiction in which the chief executive office of [Borrower] is located, as evidenced by good standing certificate(s) (or the equivalent thereof issued by any applicable jurisdiction) dated not more than thirty (30) days prior to the Closing Date, issued by the Secretary of State or other appropriate official of each such jurisdiction as attached hereto as Exhibit D.

5.           There are no liquidation or dissolution proceedings pending or to my knowledge threatened against [Borrower], nor has any other event occurred adversely affecting or threatening the continued corporate existence of [Borrower].

6.           The following persons are now duly elected and qualified officers of [Borrower] holding the offices indicated next to their respective names below, and the signatures appearing opposite their respective names below are the true and genuine signatures of such officers, and each of such officers is duly authorized to execute and deliver on behalf of [Borrower] (a) the Term Loan Credit Agreement and each Loan Document to which [Borrower] is a party and (b) any certificate or other document to be delivered by the [Borrower] pursuant to the Term Loan Credit Agreement and each Loan Document to which [Borrower] is a party:

 

  

  

  

	
Name

	
Office

	
Signature

	  
	  	  	  	  
	
Ronald J. Lejman

	
Chief Financial Officer

	 	  
	  	  	  	  
	
Kyle M. Hall

	
Secretary

	  	  

Capitalized terms used in this Secretary’s Certificate and not otherwise defined herein shall have the meanings assigned to them in the Term Loan Credit Agreement.

[SIGNATURE TO APPEAR ON FOLLOWING PAGE]

 

  

  

  

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the date first written above.

	  	
UNITEK GLOBAL SERVICES, INC.

	 
	  	  	  	 
	  	
By:

	
  

	 
	  	
Name:

	
Kyle M. Hall

	 
	  	
Title:

	
Secretary

	 

 

I, Ronald J. Lejman, [Chief Financial Officer] of [Borrower], do hereby certify that Kyle M. Hall is the duly appointed, qualified, and acting Secretary of [Borrower] and that the signature of Kyle M. Hall set forth above is his true and genuine signature.

 

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the date first written above.

 

	  	
UNITEK GLOBAL SERVICES, INC.

	 
	  	  	 
	  	
By:

	
  

	 
	  	
Name:

	
Ronald J. Lejman

	 
	  	
Title:

	
[Chief Financial Officer]

	 

  

  

  

 

OFFICER’S CERTIFICATE

I, Ronald J. Lejman, the undersigned, acting solely in my official capacity as (1) the Chief Financial Officer of UNITEK GLOBAL SERVICES, INC., a corporation organized under the laws of the State of Delaware (“UniTek Parent”) and (2) the Treasurer of UNITEK ACQUISITION, INC., a corporation organized under the laws of the State of Delaware (“UniTek Acquisition”), BCI COMMUNICATIONS, INC., a corporation organized under the laws of the State of Delaware (“BCI”), UNITEK USA, LLC, a limited liability company organized under the laws of the State of Delaware (“UniTek USA”), ADVANCED COMMUNICATIONS USA, INC., a corporation organized under the laws of the State of Delaware (“Advanced Communications”), DIRECTSAT USA, LLC, a limited liability company organized under the laws of the State of Delaware (“DirectSat”), and FTS USA, LLC, a limited liability company organized under the laws of the State of Delaware (“FTS”) (UniTek Parent, UniTek Acquisition, BCI, UniTek USA, Advanced Communications, DirectSat and FTS collectively, the “Loan Parties”, and each a “Loan Party”), and not in my individual capacity, do hereby certify as of April [______], 2011 that: (i) I am authorized to execute and deliver this Officer’s Certificate in connection with the execution and delivery of that certain Credit Agreement, dated as of even date herewith, among UniTek Parent, the Lenders from time to time party thereto and FBR Capital Markets LT, Inc. (the “Term Loan Credit Agreement”), and (ii) as follows:

1.           The representations and warranties of the Loan Parties set forth in each of the Loan Documents to which it is a party or which are contained in any certificate furnished by or on behalf of the Loan Parties pursuant to any of the Loan Documents to which it is a party are true and correct in all material respects on and as of the date hereof with the same effect as if made on the date hereof, except for representations and warranties expressly stated to relate to a specific earlier date, in which case such representations and warranties were true and correct in all material respects as of such earlier date;

 

2.           No Default or Event of Default has occurred and is continuing as of the date hereof or after giving effect to the Loans to be made on the date hereof and the use of proceeds thereof; and

3.           Since December 31, 2010, no event, condition or state of facts has occurred which has or could reasonably be expected to have a Material Adverse Effect.

4.           The conditions precedent set forth in Article 4 of the Credit Agreement were satisfied as of the Closing Date.

5.           There are no liquidation or dissolution proceedings pending or to my knowledge threatened against any Loan Party, nor has any other event occurred adversely affecting or threatening the continued corporate existence of any Loan Party.

Capitalized terms used in this Officer’s Certificate and not otherwise defined herein shall have the meanings assigned to them in the Term Loan Credit Agreement.

 

  

  

  

 

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the date first written above.

	  	
UNITEK GLOBAL SERVICES, INC.

	 
	  	  	  	 
	  	
By:

	
 

	 
	  	
Name:

	
Ronald J. Lejman

	 
	  	
Title:

	
Chief Financial Officer

	 
	  	  	  	 
	  	
UNITEK ACQUISITION, INC.

	 
	 	 	 
	  	
BCI COMMUNICATIONS, INC.

	 
	 	 	 
	  	
UNITEK USA, LLC

	 
	 	 	 
	  	
ADVANCED COMMUNICATIONS USA, INC.

	 
	 	 	 
	  	
DIRECTSAT USA, LLC

	 
	 	 	 
	  	
FTS USA, LLC

	 
	  	  	  	 
	  	
By:

	  	 
	  	
Name:

	
Ronald J. Lejman

	 
	  	
Title:

	
Treasurer

	 

 

  

  

  

EXHIBIT D

 

FORM OF

ASSIGNMENT AND ASSUMPTION

 

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into between the Assignor named below (the “Assignor”) and the Assignee named below (the “Assignee”).  Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent below (i) all of the Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including any guarantees included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as the “Assigned Interest”).  Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.

	
1.

	
Assignor:

	
______________________________

	  	  	  
	
2.

	
Assignee:

	
______________________________

	  	  	
[and is an Affiliate/Approved Fund of [identify Lender]1]

	  	  	  
	
3.

	
Borrower:

	
UniTek Global Services, Inc.

	  	  	  
	
4.

	
Administrative Agent:

	
FBR Capital Markets LT, Inc., as administrative agent under the Credit Agreement

	  	  	  
	
5.

	
Credit Agreement:

	
The Credit Agreement, dated as of April 15, 2011, among UniTek Global Services, Inc., the Lenders from time to time parties thereto, FBR Capital Markets LT, Inc., as Administrative Agent, and the other agents parties thereto

 

1 Select as applicable.

 

  

  

  

 

	
6.

	
Assigned Interest:

	
Aggregate Amount of 

Commitment/Loans 

for all Lenders

	 	
Amount of 

Commitment/Loans 

Assigned

	 	 	
Percentage Assigned of 

Commitment/Loans2

	 
	$	 	 	$	 	 	 	 	 	%
	$	 	 	$	 	 	 	 	 	%
	$	 	 	$	 	 	 	 	 	%

Effective Date:   ______________, 20__ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

The Assignee agrees to deliver to the Administrative Agent a completed administrative questionnaire in which the Assignee designates one or more credit contacts to whom all syndicate-level information  (which may contain material non-public information about the Borrower, the Loan Parties and their Affiliates or their respective securities) will be made available and who may receive such information in accordance with the Assignee’s compliance procedures and applicable laws, including Federal and state securities laws.

The terms set forth in this Assignment and Assumption are hereby agreed to:

	  	
ASSIGNOR

	  
	 	 	 
	  	
  

	  
	  	
NAME OF ASSIGNOR

	  
	  	  	  
	  	
By:

	
  

	  
	  	  	
Name:

	  
	  	  	
Title:

	  
	  	  	  
	  	
ASSIGNEE

	  
	 	 	 
	  	
  

	  
	  	
NAME OF ASSIGNEE

	  
	  	  	  
	  	
By:

	
  

	  
	  	  	
Name:

	  
	  	  	
Title:

	  

 

2 Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders.

 

  

  

  

 

	
[Consented to and]3 Accepted:

	  
	  	  
	
FBR CAPITAL MARKETS LT, INC., as

	  
	
Administrative Agent

	  
	  	  
	
By:

	
  

	  
	  	
Name:

	  
	  	
Title:

	  
	  	  
	
[Consented to:]4

	  
	  	  
	
[NAME OF BORROWER]

	  
	  	  
	
By:

	
  

	  
	  	
Name:

	  
	  	
Title:

	  
	  	  
	
[NAME OF ANY OTHER RELEVANT PARTY]

	  
	  	  
	
By:

	
  

	  
	  	
Name:

	  
	  	
Title:

	  

 

3 To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.

 

4 To be added only if the consent of the Borrower and/or other parties is required by the terms of the Credit Agreement.

 

  

  

  

 

ANNEX 1

Credit Agreement dated as of April 15, 2011, among UniTek Global Services, Inc.,

the Lenders from time to time party thereto,

FBR Capital Markets LT, Inc., as Administrative Agent, and the other agents party thereto

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

 

1.  Representations and Warranties.

1.1   Assignor.  The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

1.2.  Assignee.  The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Credit Agreement that are required to be satisfied by it in order to acquire the Assigned Interest and become a Lender, (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 5.1 thereof, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender and (v) if it is a Non-U.S. Lender, attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

2.   Payments.    From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.

3.  General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.  This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of a signature page of this Assignment and Assumption by email or telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption.  This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.

 

 

 

 

 

EXHIBIT E

 

April 15, 2011

 

	
FBR  

	
Capital Markets LT, Inc., as Documentation Agent,

	
  

	
Syndication Agent and Administrative Agent under

	
  

	
the Credit Agreement Referred to Herein

	
  

	
and the Lenders

	
  

	
listed on Schedule 1.1A to

	
  

	
the Credit Agreement

	
c/o

	
FBR Capital Markets LT, Inc.

	
  

	
237 Park Avenue, 19th Floor

	
  

	
New York, NY 10017

Re:         Credit Agreement dated as of April 15, 2011 of UniTek Global Services, Inc.

 

Ladies and Gentlemen:

 

We have acted as counsel for UniTek Global Services, Inc., a Delaware corporation (the “Company”), in connection with the Credit Agreement, dated as of April 15, 2011 (the “Credit Agreement”), among the Company, the lenders referred to therein (the “Lenders”) and FBR Capital Markets LT, Inc., as Documentation Agent and Syndication Agent and FBR Capital Markets LT, Inc., as Administrative Agent for the Lenders (the “Agent”).  Terms defined in the Credit Agreement are used as therein defined, unless otherwise defined herein.  References in this opinion letter to the “New York UCC” are to the Uniform Commercial Code as currently in effect in the State of New York.  The terms in paragraphs 8-11 that are defined in the New York UCC and that are not capitalized have the respective meanings given to them in the New York UCC.  This opinion letter is being delivered to you pursuant to Article 4(j) of the Credit Agreement.

 

In connection with this opinion letter, we have examined originals, or copies certified or otherwise identified to our satisfaction, of the certificate of incorporation, articles of incorporation, certificate of formation, bylaws and operating agreement, as applicable, of the Company and each of its Named Subsidiaries (as hereafter defined) and such other documents and records, and other instruments as we have deemed appropriate for purposes of the opinions set forth herein, including the following documents (the documents referred to in clauses (a) through (e) below are referred to herein as the “Credit Documents”):

 

  

  

  

FBR Capital Markets LT, Inc.

April 15, 2011

Page 2 

 

(a)          the Credit Agreement;

 

(b)          the promissory notes executed by the Company on the date hereof in favor of the Lenders;

 

(c)          the Guarantee and Collateral Agreement;

 

(d)          the Intercreditor Agreement;

 

(e)          the Grant of Security Interest in Trademark Rights by each of the Company and BCI  Communications, Inc. (the “Trademark Security Grants”); and

 

(f)          unfiled copies of Uniform Commercial Code financing statements (the “Financing Statements”) naming the Company or a Named Subsidiary as debtor and the Agent as secured party, to be filed in the office of the Secretary of State of the State of Delaware (the “Filing Office”).

 

We have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of the documents submitted to us as originals, the conformity to the original documents of all documents submitted to us as certified, facsimile or photostatic copies, and the authenticity of the originals of all documents submitted to us as copies. We have also assumed that the Credit Documents constitute valid and binding obligations of each party thereto other than the Company and the Named Subsidiaries (as hereafter defined) party thereto.

 

As to any facts that are material to the opinions hereinafter expressed that we did not independently establish or verify, we have relied without investigation upon the representations of the Company and the Named Subsidiaries contained in the Credit Documents and upon certificates of officers of the Company and the Named Subsidiaries.

 

In rendering the opinions set forth herein, whenever a statement or opinion set forth therein is qualified by “to our knowledge,” “known to us” or by words of similar import, it is intended to indicate that, during the course of our representation of the Company and the Named Subsidiaries in the subject transaction, no information has come to the attention of those lawyers in our firm who have rendered legal services in connection with such transaction that gives us actual knowledge of the inaccuracy of such statement or opinion.  We have not undertaken any independent investigation to determine the accuracy of facts material to any such statement or opinion, and no inference as to such statement or opinion should be drawn from the fact of our representation of the Company or the Named Subsidiaries.

 

We have relied upon a certificate of the Secretary of the Company dated the date hereof, certifying that the items listed in such certificate are (i) all of the indentures, loan or credit agreements, leases, guarantees, mortgages, security agreements, bonds, notes, other agreements or instruments including the ABL Credit Agreement (the “Other Company Agreements”), and (ii) all of the judicial or administrative orders, writs, judgments, awards, injunctions and decrees (the “Company Orders”), which as to any matter in (i) or (ii) affect or purport to affect the Company’s or any Subsidiary’s right to borrow money or the Company’s or any Subsidiary’s obligations under the Credit Documents.

 

  

  

  

FBR Capital Markets LT, Inc.

April 15, 2011

Page 3 

Based upon and subject to the foregoing, and to the limitations and qualifications described below, we are of the opinion that:

 

1.           The Company is a corporation validly existing and in good standing under the laws of the State of Delaware.

 

2.           Each subsidiary (a “Named Subsidiary”) of the Company listed on Schedule I hereto is a corporation or limited liability company validly existing and in good standing under the laws of the jurisdiction of organization indicated opposite the name of such Named Subsidiary on Schedule I hereto.

 

3.           Each of the Company and each Named Subsidiary has the organizational power and authority to enter into and perform the Credit Documents to which it is a party, has taken all necessary corporate or limited liability company action to authorize the execution, delivery and performance of such Credit Documents and has duly executed and delivered such Credit Documents.

 

4.           Each Credit Document to which the Company or a Named Subsidiary is a party is the valid and binding obligation of the Company or such Named Subsidiary, as applicable, enforceable against the Company and each such Named Subsidiary in accordance with its terms.

 

5.           The execution and delivery by the Company and the Named Subsidiaries of the Credit Documents to which they are parties do not, and the performance by the Company and the Named Subsidiaries of their respective obligations thereunder will not (i) result in a violation of the certificate of incorporation, articles of incorporation, certificate of formation, bylaws and operating agreement, as applicable, of the Company or any Named Subsidiary, (ii) result in a breach or default under any Other Company Agreement or (iii) result in a violation of any Company Order.

 

6.           The execution and delivery by each of the Company and each Named Subsidiary of the Credit Documents to which it is a party do not, and the performance by each of the Company and each such Named Subsidiary of its obligations thereunder will not, require any approval from or filing with any governmental authority of the United States or the State of New York.

 

7.           The execution and delivery by each of the Company and each Named Subsidiary of the Credit Documents to which it is a party do not, and the performance by the Company and each such Named Subsidiary of its obligations thereunder will not, result in any violation of any federal law of the United States or law of the State of New York or any regulation thereunder, or any provision of the Delaware General Corporation Law.

 

  

  

  

FBR Capital Markets LT, Inc.

April 15, 2011

Page 4

 

8.           The Guarantee and Collateral Agreement is effective to create in favor of the Agent, as security for the Obligations, as defined in the Guarantee and Collateral Agreement, a security interest (the “Article 9 Security Interest”) in the collateral described in the Guarantee and Collateral Agreement in which a security interest may be created under Article 9 of the New York UCC (the “Article 9 Collateral”).

 

9.           Upon the filing of the Financing Statements in the applicable Filing Office, the Article 9 Security Interest in that portion of the Article 9 Collateral in which a security interest may be perfected by the filing of a financing statement under the New York UCC is perfected.

 

10.         The Article 9 Security Interest in that portion of the Article 9 Collateral consisting of instruments will be perfected upon delivery of the instruments to the Agent.  The Article 9 Security Interest in that portion of the Article 9 Collateral consisting of certificated securities in registered form represented by the certificates identified on Schedule 2 to the Guarantee and Collateral Agreement will be perfected upon delivery of the certificates to the Agent, indorsed in blank by an effective indorsement.  Assuming none of the Agent and the Lenders has notice of any adverse claim to the securities, and further assuming that such parties have given value, the Agent will acquire the security interest in such certificated securities free of any adverse claim.

 

11.         Upon the filing of the Financing Statements in the applicable Filing Office and the proper and timely filing of the Trademark Security Grants with the United States Patent and Trademark Office, the security interest of the Agent in the trademarks listed on Schedule A thereto will be perfected.

 

12.         The Loans made on the date hereof and the use of the proceeds thereof in accordance with the provisions of the Credit Agreement do not violate the provisions of Regulations T, U or X of the Board of Governors of the Federal Reserve System.

 

13.         Neither the Company nor any Named Subsidiary is an “investment company” within the meaning of, and subject to regulation under, the Investment Company Act of 1940, as amended.

 

14.         To our knowledge, there are no pending lawsuits or other proceedings against the Company, any of the Subsidiaries or their respective businesses, assets or properties before any court, arbitrator or governmental agency or authority that challenge the legality, validity or enforceability of the Credit Documents.

 

The opinions expressed above are subject to the following limitations, exceptions, qualifications and assumptions:

 

A.          The opinions expressed herein are subject to bankruptcy, insolvency, fraudulent transfer and other similar laws affecting the rights and remedies of creditors generally and general principles of equity.

 

  

  

  

FBR Capital Markets LT, Inc.

April 15, 2011

Page 5

 

B.          Provisions of the Credit Documents relating to indemnification or exculpation may be limited by public policy or by law.

 

C.          The opinions expressed in this opinion letter are limited to the laws of the Commonwealth of Pennsylvania, the State of New York, the General Corporation Law and the Limited Liability Act of the State of Delaware and the Federal laws of the United States of America, and we express no opinion with respect to the laws of any other state or jurisdiction.  With respect to the laws of  the State of Delaware (other than as specified in the preceding sentence) we have, with your permission, confined our investigation of the laws of such jurisdiction to an examination of the relevant provisions of the Uniform Commercial Code as in effect in such jurisdictions as set forth in a standard compilation such as the CCH Secured Transactions Guide

 

D.          For purposes of our opinions in paragraphs 1 and 2 hereof as to the valid existence and good standing of the Company and the Named Subsidiaries, we have relied solely upon good standing or similar certificates issued by the appropriate authorities in the subject jurisdictions.

 

E.          For purpose of the opinion in paragraph 5, no opinion is expressed as to whether, upon the occurrence and during the continuance of an Event of Default, performance by the Company and the Named Subsidiaries of their obligations under the Credit Documents may conflict with or result in a breach or default under the ABL Documentation with respect to the Collateral.

 

F.          For purposes of the opinion in paragraph 7, we have considered only such laws and regulations that in our experience are typically applicable to a transaction of the nature contemplated by the Credit Documents.

 

G.         Certain waivers by the Company and the Named Subsidiaries in the Credit Documents may relate to matters that cannot, as a matter of law, be effectively waived.  Without limiting the foregoing, you should be aware that under applicable law guarantors may be entitled to certain rights or protections which as a matter of statutory or common law may not be waived or altered.  We express no opinion herein as to the enforceability of any provisions of the Guarantee and Collateral Agreement whereby a Subsidiary provides a guaranty of the Obligations  and which purport to waive or alter such rights or protections, except to the extent permitted by law.

 

H.         The enforceability of the Credit Documents may be limited by the unenforceability under certain circumstances of provisions imposing penalties, forfeitures, late payment charges or an increase in interest rate upon delinquency in payment or an occurrence of default.

 

  

  

  

FBR Capital Markets LT, Inc.

April 15, 2011

Page 6

 

I.           For purposes of the opinion in paragraph 5, where any Other Company Agreement states that it is governed by laws of a state other than the laws of New York, we have not made any investigation of the laws of such other state but have merely assumed that they would be interpreted in accordance with their plain meaning.  We have not reviewed the covenants in the Other Company Agreements that contain financial ratios and other similar financial restrictions, and no opinion is provided with respect thereto.

 

J.           We express no opinion as to:

 

(i)          The enforceability of any provision of the Credit Documents insofar as it provides that any Person purchasing a participation from a Lender or other Person may exercise set-off or similar rights with respect to such participation or that a Lender or other Person may exercise set-off or similar rights other than in accordance with applicable law.

 

(ii)         The enforceability of any provision of the Credit Documents permitting modification thereof only by means of an agreement in writing signed by the parties thereto.

 

(iii)        The enforceability of any provision of the Credit Documents purporting to waive the right to trial by jury.

 

(iv)        The enforceability of any provision of the Credit Documents purporting to grant the right to confess judgment against the Company or the Named Subsidiary.

 

K.          In connection with the opinions set forth in paragraphs 8-11, we have assumed that the Company and each Named Subsidiary have, or have power to transfer, rights (to the extent necessary to grant a security interest) in the Article 9 Collateral existing on the date hereof and will have, or will have the power to transfer, rights (to such extent) in property which becomes Article 9 Collateral after the date hereof.

 

L.          We express no opinion as to the perfection of any security interest in any Collateral consisting of timber to be cut or as-extracted collateral or goods which are or are to become fixtures.

 

M.         In connection with the opinions set forth in paragraphs 8-11, the perfection of a security interest in any collateral consisting of “proceeds” (as defined in the Uniform Commercial Code of the applicable jurisdiction) is subject to limitations set forth in Section 9-315 of the Uniform Commercial Code of the applicable jurisdiction.

 

This opinion letter is effective only as of the date hereof.  We do not assume responsibility for updating this opinion letter as of any date subsequent to its date, and we assume no responsibility for advising you of any changes with respect to any matters described in this opinion letter that may occur subsequent to the date of this opinion letter or from the discovery, subsequent to the date of this opinion letter, of information not previously known to us pertaining to the events occurring prior to such date.

 

  

  

  

FBR Capital Markets LT, Inc.

April 15, 2011

Page 7

 

This opinion letter is furnished by us solely for the benefit of the Agent and the Lenders and their respective successors and permitted assigns and participants pursuant to the Credit Agreement, and this opinion letter may not be relied upon by such parties for any other purpose or by any other person or entity for any purpose whatsoever. This opinion letter is not to be quoted in whole or in part or otherwise referred to or used or furnished to any other person, except as may be required by any governmental authority or pursuant to legal process, without our express written consent.

 

	
Very truly yours,

	  
	  	  
	
/s/ Morgan, Lewis & Bockius LLP

	  

 

  

  

  

FBR Capital Markets LT, Inc.

April 15, 2011

Page 8

SCHEDULE I

	
Company

	 	
State of Organization

	 	
Foreign Jurisdiction(s)

in which Qualified

	
UniTek Global Services, Inc.

	 	
DE

	 	
PA

	
Named Subsidiaries

	 	
State of Organization

	 	
Foreign Jurisdiction(s)

in which Qualified

	
UniTek Acquisition, Inc.

	 	
DE

	 	
PA (application pending)

	
BCI Communications, Inc.

	 	
DE

	 	
PA

	
UniTek USA, LLC

	 	
DE

	 	
PA

	
Advanced Communications USA, Inc.

	 	
DE

	 	
PA

	
DirectSat USA, LLC

	 	
DE

	 	
PA

	
FTS USA, LLC

	 	
DE

	 	
TX

 

 

 

 

 

 EXHIBIT F-1

 

FORM OF

U.S. TAX CERTIFICATE

 

(For Non-U.S. Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

 

Reference is made to the Credit Agreement, dated as of April 15, 2011 (as amended, supplemented or otherwise modified from time to time (the “Credit Agreement”), among UniTek Global Services, Inc. (the “Borrower”), the Lenders from time to time party thereto, FBR Capital Markets LT, Inc., as Documentation Agent, Syndication Agent and Administrative Agent, and the other agents named therein.  Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

Pursuant to the provisions of Section 2.14 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code and (v) the interest payments in question are not effectively connected with the undersigned's conduct of a U.S. trade or business.

 

The undersigned has furnished the Administrative Agent and the Borrower with a certificate of its non-U.S. Person status on IRS Form W-8BEN.  By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

 

IN WITNESS WHEREOF, the undersigned has duly executed this certificate.

 

	
[NAME OF LENDER]

	  
	
By: 

	  
	  	
Name:

	  	
Title:

	 
	
Date: ___________, 20__

  

  

  

EXHIBIT F-2

 

FORM OF

U.S. TAX CERTIFICATE

 

(For Non-U.S. Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

 

Reference is made to the Credit Agreement, dated as of April 15, 2011 (as amended, supplemented or otherwise modified from time to time (the “Credit Agreement”), among UniTek Global Services, Inc. (the “Borrower”), the Lenders from time to time party thereto, FBR Capital Markets LT, Inc., as Documentation Agent, Syndication Agent and Administrative Agent, and the other agents named therein.  Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

Pursuant to the provisions of Section 2.14 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its partners/members are the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)), (iii) with respect to the extension of credit pursuant to this Credit Agreement, neither the undersigned nor any of its partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (v) none of its partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (vi) the interest payments in question are not effectively connected with the undersigned's or its partners/members' conduct of a U.S. trade or business.

 

The undersigned has furnished the Administrative Agent and the Borrower with IRS Form W-8IMY accompanied by an IRS Form W-8BEN from each of its partners/members claiming the portfolio interest exemption.  By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

 

IN WITNESS WHEREOF, the undersigned has duly executed this certificate.

 

	
[NAME OF LENDER]

	  
	
By: 

	  
	  	
Name:

	  	
Title:

	  
	
Date: ___________, 20__

 

  

  

  

EXHIBIT F-3

 

FORM OF

U.S. TAX CERTIFICATE

 

(For Non-U.S. Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

 

Reference is made to the Credit Agreement, dated as of April 15, 2011 (as amended, supplemented or otherwise modified from time to time (the “Credit Agreement”), among UniTek Global Services, Inc. (the “Borrower”), the Lenders from time to time party thereto, FBR Capital Markets LT, Inc., as Documentation Agent, Syndication Agent and Administrative Agent, and the other agents named therein.  Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

Pursuant to the provisions of Section 2.14 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (v) the interest payments in question are not effectively connected with the undersigned's conduct of a U.S. trade or business.

 

The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN.  By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

 

IN WITNESS WHEREOF, the undersigned has duly executed this certificate.

 

	
[NAME OF PARTICIPANT]

	  
	
By: 

	  
	  	
Name:

	  	
Title:

	  
	
Date: ___________, 20__

  

  

  

EXHIBIT F-4

 

FORM OF

U.S. TAX CERTIFICATE

 

(For Non-U.S. Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

 

Reference is made to the Credit Agreement, dated as of April 15, 2011 (as amended, supplemented or otherwise modified from time to time (the “Credit Agreement”), among UniTek Global Services, Inc. (the “Borrower”), the Lenders from time to time party thereto, FBR Capital Markets LT, Inc., as Documentation Agent, Syndication Agent and Administrative Agent, and the other agents named therein.  Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

Pursuant to the provisions of Section 2.14 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its partners/members are the sole beneficial owners of such participation, (iii) with respect such participation, neither the undersigned nor any of its partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (v) none of its partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (vi) the interest payments in question are not effectively connected with the undersigned's or its partners/members' conduct of a U.S. trade or business.

 

The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by an IRS Form W-8BEN from each of its partners/members claiming the portfolio interest exemption.  By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

 

IN WITNESS WHEREOF, the undersigned has duly executed this certificate.

 

	
[NAME OF PARTICIPANT]

	  
	
By: 

	  
	  	
Name:

	  	
Title:

	  
	
Date: ___________, 20__

 

 

 

 

 

 

EXHIBIT G-1

 

FORM OF

INCREASED FACILITY ACTIVATION NOTICE

	
To:

	
FBR Capital Markets LT, Inc., as Administrative Agent

	
  

	
under the Credit Agreement referred to below

Reference is made to the Credit Agreement, dated as of April 15, 2011 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Unitek Global Services, Inc. (the “Borrower”), the Lenders from time to time parties thereto, FBR Capital Markets LT, Inc., as Documentation Agent, as Syndication Agent and Administrative Agent (in such capacity, the “Administrative Agent”).  Unless otherwise defined herein, terms defined in the Credit Agreement used herein shall have the meanings given to them in the Credit Agreement.

This notice is an Increased Facility Activation Notice referred to in Section 2.18 of the Credit Agreement, and the Borrower and each of the Lenders party to this Increased Facility Activation Notice notify the Administrative Agent of the following pursuant to Section 2.18 of the Credit Agreement:

1.           Each Lender party hereto agrees to make Incremental Term Loans as set forth opposite such Lender’s name on the signature pages hereof under the caption “Increased Facility Amount”.

	
  

	
2.

	
The aggregate principal amount of Incremental Term Loans requested by this Increased Facility Activation Notice is $____________.1

	
  

	
3.

	
The Increased Facility Closing Date is ___________________.

	
  

	
4.

	
The Incremental Term Maturity Date is ___________________.

	
  

	
5.

	
The amortization schedule for Incremental Term Loans is attached hereto as Annex I and complies with Section 2.3(b).

	
  

	
6.

	
The Applicable Margin for the Incremental Term Loans is _____.

The agreement of each Lender party hereto to make the Incremental Term Loans is subject to the satisfaction, prior to or concurrently with the making of such commitment or extension of credit on the Increased Facility Closing Date, of the following conditions precedent:

(a)  The Administrative Agent shall have received this notice, executed and delivered by the Borrower and each Lender party hereto.

(b)  The Administrative Agent shall have received a certificate stating that the conditions set forth in Section 2.18(c) to the Credit Agreement are satisfied, executed by a Responsible Officer of the Borrower.

1 Not to exceed $50,000,000.  Minimum amount of at least $[5,000,000].

 

  

  

  

 

(c)  To the extent reasonably requested by the Administrative Agent, attached hereto as Attachment I are: legal opinions, board resolutions and other closing certificates and reaffirmation agreements and additional documents and filings (including amendments to the Mortgages and other Security Documents and title endorsement bring downs).

 

(d)  Attached hereto as Annex II are the computations demonstrating compliance on a pro forma basis with the financial covenants set forth in Section 6.1 of the Credit Agreement after giving effect to such Incremental Term Loan and the application of the proceeds therefrom as if made and applied on the date of the most-recent financial statements of the Borrower delivered pursuant to Section 5.1 of the Credit Agreement.

(e)(i) Each of the representations and warranties made by any Loan Party in or pursuant to the Loan Documents shall be true and correct in all material respects on and as of such date as if made on and as of such date, except to the extent such representations and warranties expressly date to an earlier date, in which case such representations and warranties shall be true and correct in all material respects on and as of such earlier date, and (ii) no Default or Event of Default shall have then occurred and be continuing.

 

[Signature page follows]

  

  

  

	  	
UNITEK GLOBAL SERVICES, INC.

	  	  
	  	
By:

	  
	  	  	
Name:

	  	  	
Title:

	
Incremental Term Loan Amount

	
[NAME OF LENDER]

	
$________________

	  
	  	  
	  	
By:

	  
	  	  	
Name:

	  	  	
Title:

	
CONSENTED TO BY:

	  
	
FBR CAPITAL MARKETS LT, INC.,

	  
	
as Administrative Agent

	  
	  	  
	
By:

	  	  
	  	
Name:

	  
	  	
Title:

	  

  

  

  

Annex I to EXHIBIT G-1

[Incremental Term Loans Amortization Schedule]

  

  

  

Annex II to EXHIBIT G-1

The information described herein is as of ______, ____, and pertains to the period from _________, ____ to ________________ __, ____.

 

[Set forth covenant calculations]

 

  

  

  

Attachment I to EXHIBIT G-1

 

[Legal opinions]

[Resolutions]

[By-Laws/Limited Liability Company Agreement]

[Certificate of Incorporation/Formation and Long-Form Good Standing]

[Additional documents and filings to the extent requested by the Administrative Agent and consistent with those delivered on Closing Date pursuant to Article 4 of the Credit Agreement]

 

  

  

  

EXHIBIT G-2

FORM OF

NEW LENDER SUPPLEMENT

SUPPLEMENT, dated as of _______ ___, _____, to the Credit Agreement, dated as of April 15, 2011, (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement), among Unitek Global Services, Inc. (the “Borrower”), the Lenders from time to time parties thereto, FBR Capital Markets LT, Inc., as Documentation Agent, Syndication Agent and Administrative Agent (in such capacity, the “Administrative Agent”).  Unless otherwise defined herein, terms defined in the Credit Agreement used herein shall have the meanings given to them in the Credit Agreement.

WITNESSETH:

 WHEREAS, the Credit Agreement provides in Section 2.18(b) thereof that any bank, financial institution or other entity may become a party to the Credit Agreement with the consent of the Borrower and the Administrative Agent (which consent, in the case of the Administrative Agent, shall not be unreasonably withheld) by executing and delivering to the Borrower and the Administrative Agent a supplement to the Credit Agreement in substantially the form of this Supplement; and

WHEREAS, the undersigned now desires to become a party to the Credit Agreement;

NOW, THEREFORE, the undersigned hereby agrees as follows:

1.  The undersigned agrees to be bound by the provisions of the Credit Agreement, and agrees that it shall, on the date this Supplement is accepted by the Borrower and the Administrative Agent, become a Lender for all purposes of the Credit Agreement to the same extent as if originally a party thereto, with an Incremental Term Loan of $__________.

2.  The undersigned (a) represents and warrants that it is legally authorized to enter into this Supplement; (b) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 5.1 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Supplement; (c) agrees that it has made and will, independently and without reliance upon anyAgent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement or any instrument or document furnished pursuant hereto or thereto; (d) appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Credit Agreement, the other Loan Documents or any instrument or document furnished pursuant hereto or thereto as are delegated to the Administrative Agent by the terms thereof, together with such powers as are incidental thereto; and (e) agrees that it will be bound by the provisions of the Credit Agreement and will perform in accordance with its terms all the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender including, without limitation, if it is organized under the laws of a jurisdiction outside the United States, its obligation pursuant to Section 2.12(c) of the Credit Agreement.

 

  

  

  

3.  The undersigned’s address for notices for the purposes of the Credit Agreement is as follows:

 

	  	
 

	  
	  	
(Address)

	  
	  	
 

	  
	  	
(Attention)

	  
	  	
 

	  
	  	
(Telecopy)

	  
	  	
 

	  
	  	
(Telephone)

	  

 

4.  This Supplement may be executed in counterparts, each of which shall be deemed to constitute an original, but all of which when taken together shall constitute one and the same instrument.  Delivery of an executed signature page of this Supplement by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart thereof.

  

  

  

IN WITNESS WHEREOF, the undersigned has caused this Supplement to be executed and delivered by a duly authorized officer on the date first above written.

 

	  	 	
 

	  	
(Name of Lender)

	  	  
	  	
By:

	  
	  	  	
Name:

	  	  	
Title:

Accepted this __ day of

_________, _______.

	
UNITEK GLOBAL SERVICES, INC.

	  
	  	  
	
By:

	  	  
	  	
Name:

	  
	  	
Title:

	  

  

  

  

Accepted this __ day of

__________, _______.

	
FBR CAPITAL MARKETS LT, INC., as Administrative Agent

	  
	
By:

	  
	  	
Name:

	  	
Title:

 

 

 

 

 

EXHIBIT H

EXECUTION VERSION

 

INTERCREDITOR AGREEMENT

 

Intercreditor Agreement (this “Agreement”), dated as of April 15, 2011, between PNC Bank, National Association, as administrative agent (in such capacity, with its successors and assigns, and as more specifically defined below, the “ABL Representative”) for the ABL Secured Parties (as defined below), FBR Capital Markets LT, Inc., as collateral agent (in such capacity, with its successors and assigns, and as more specifically defined below, the “Term Debt Representative”) for the Term Debt Secured Parties (as defined below).

 

WHEREAS, UniTek Global Services, Inc., a Delaware corporation (“Parent Borrower”), together with certain of the other Loan Parties as joint and several “Borrowers” thereunder (collectively, the “ABL Borrowers”), the ABL Representative and certain financial institutions and other entities are parties to the Revolving Credit and Security Agreement dated as of the date hereof (the “Existing ABL Agreement”), pursuant to which such financial institutions and other entities have agreed to make loans and extend other financial accommodations to the Loan Parties;

 

WHEREAS, Parent Borrower, the Term Debt Representative and certain financial institutions and other entities are parties to the Credit Agreement dated as of the date hereof (as amended, the “Existing Term Debt Agreement”), pursuant to which such financial institutions and other entities have agreed to make term loans to Parent Borrower, and such term loans are guaranteed by certain of the Loan Parties;

 

WHEREAS, ABL Borrowers have granted to the ABL Representative security interests and liens in the Collateral (as defined below) as security for payment and performance of the ABL Obligations; and

 

WHEREAS, Parent Borrower and the other Loan Parties have granted to the Term Debt Representative security interests and liens in the Collateral as security for payment and performance of the Term Debt Obligations (as defined below).

 

NOW THEREFORE, in consideration of the foregoing and the mutual covenants herein contained and other good and valuable consideration, the existence and sufficiency of which is expressly recognized by all of the parties hereto, the parties agree as follows:

 

SECTION 1.  Definitions; Rules of Construction.

 

1.1           UCC Definitions.  The following terms which are defined in the Uniform Commercial Code are used herein as so defined:  Accounts, Deposit Accounts, Documents, Instruments, Inventory, Investment Property, Letter of Credit Rights, Promissory Notes, Records, Securities and Supporting Obligations.

 

1.2.          Defined Terms.  The following terms, as used herein, have the following meanings:

 

“ABL Agreement” means the collective reference to (a) the Existing ABL Agreement and (b) any other credit agreement, loan agreement, note agreement, promissory note, indenture or other agreement or instrument evidencing or governing the terms of any indebtedness or other financial accommodation that has at any time been incurred to extend, replace, refinance or refund in whole or in part the indebtedness and other obligations outstanding under the Existing ABL Agreement (regardless of whether such replacement, refunding or refinancing (i) is a “working capital” facility, asset-based facility, revolving loan facility, term loan facility or otherwise or (ii) was entered into after the ABL Obligations Payment Date) or any other agreement or instrument previously entered into to effectuate such an extension, replacement, refinancing or refunding unless such agreement or instrument expressly provides that it is not intended to be and is not an ABL Agreement hereunder (a “Replacement ABL Agreement”).  Any reference to the ABL Agreement hereunder shall be deemed a reference to any ABL Agreement then extant.

 

  

  

  

 

“ABL Creditors” means, collectively, the “Lenders” and all other holders of the “Obligations”, each as defined in the ABL Agreement.

 

“ABL DIP Financing” has the meaning set forth in Section 5.2(a).

 

“ABL Documents” means the ABL Agreement, each ABL Security Document, each ABL Guarantee (if any) and each “Other Document” as defined in the ABL Agreement.

 

“ABL Guarantee” means any present or future guarantee by any Loan Party of any or all of the ABL Obligations.

 

“ABL Lien” means any Lien created by the ABL Security Documents.

 

“ABL Obligations” means (a) all principal of and interest (including without limitation any Post-Petition Interest) and premium (if any) on all revolving credit advances and other loans and advances made pursuant to the ABL Agreement or any ABL DIP Financing by the ABL Creditors, (b) all reimbursement obligations (if any) and fees and/or interest thereon (including without limitation any Post-Petition Interest) with respect to any letter of credit or similar instruments issued pursuant to the ABL Agreement, (c) all Swap Obligations, (d) all Banking Services Obligations, (e) all guarantee obligations, indemnities, fees, costs and expenses and other amounts payable from time to time pursuant to the ABL Documents, in each case whether arising prior to or after, and whether or not allowed or allowable in, an Insolvency Proceeding and (f) without limiting the generality of any of the foregoing, all “Obligations” as defined in the ABL Agreement. To the extent any payment with respect to any ABL Obligation (whether by or on behalf of any Loan Party, as Proceeds of security, enforcement of any right of setoff or otherwise) is declared to be a fraudulent conveyance or a preference in any respect, set aside or required to be paid to a debtor in possession, any Term Debt Secured Party, receiver or similar Person, then the obligation or part thereof originally intended to be satisfied shall, for the purposes of this Agreement and the rights and obligations of the ABL Secured Parties and the Term Debt Secured Parties, be deemed to be reinstated and outstanding as if such payment had not occurred.

 

“ABL Obligations Cap” means  as of any date of calculation with respect to (x) the principal amount of the ABL Obligations consisting of loans, revolving credit advances and reimbursement and/or cash collateralization obligations (without duplication) in respect of letters of credit (exclusive of such amounts under any ABP DIP Financing) (“ABL Principal Obligations”), (y) ABL Obligations consisting of amounts owing to any ABL Creditors in respect of any advances made or funds expended by any of them to protect, preserve or complete the Collateral or any other similar “protective” advances made by any ABL Creditors (“ABL Protective Advances”) and (z) the principal amount of the ABL Obligations consisting of loans, revolving credit advances and reimbursement and/or cash collateralization obligations (without duplication) in respect of letters of credit under any ABL DIP Financing (“ABL DIP Principal Obligations”) (such ABL Principal Obligations, such ABL Protective Advances, and such ABL DIP Principal Obligations, collectively, the “ABL Capped Obligations”), an amount equal to:

 

(i)           subject to the provisions of clauses (1) and (2) of the final paragraph of this definition below, the ABL Principal Obligations as of such date of calculation not in excess of (x) $105,000,000 minus (y) the amount of any permanent loan repayments and permanent reductions in the lending commitments for loans, revolving credit advances and letters of credit of the ABL Creditors under the ABL Agreement prior to such date of calculation (whether pursuant to the terms of the ABL Agreement or pursuant to a separate agreement between Loan Parties and ABL Creditors) but excluding the amount of any such permanent loan repayments and reduction in the lending commitments for loans, revolving credit advances and letters of credit of the ABL Creditors under the ABL Agreement resulting from a termination of lending commitments by ABL Creditors following the occurrence of an event of default under the ABL Documents or that is imposed in or results from an Insolvency Proceeding or in connection with a refinancing of the ABL Agreement permitted by the Term Debt Agreement; plus

 

  

2

  

 

(ii)           the ABL Protective Obligations as of such date of calculation not in excess of $10,000,000; plus

 

(iii)          the ABL DIP Principal Obligations as of such date of calculation not in excess of $25,000,000.

 

The ABL Obligations Cap shall not under any circumstances limit or affect any: (1) interest or fees on the ABL Obligations (in respect of a principal amount not to exceed the ABL Obligations Cap) of any kind provided for in the ABL Documents or otherwise included in the ABL Obligations (including without limitation interest and/or fees accruing at any default rate provided for in the ABL Documents and/or interest and/or fees accruing after any default or event of default or after or during the pendency of any Insolvency Proceeding, whether or not a claim for such interest or fees are allowed or allowable in such Insolvency Proceeding), whether or not any or all of such interest or fees is charged as a revolving credit advance against Loan Parties’ loan account under the ABL Agreement by ABL Representative as a matter of administrative convenience, (2) costs, charges or expenses  payable to any ABL Creditor provided for in the ABL Documents or otherwise included in the ABL Obligations whether or not any or all of such costs, charges and expenses are charged as a revolving credit advance against Loan Parties’ loan account under the ABL Agreement by ABL Representative as a matter of administrative convenience, (3) indemnification obligations owing to any ABL Creditor provided for in the ABL Documents or otherwise included in the ABL Obligations, (4) Banking Services Obligations owing to any ABL Creditors, or (5) Swap Obligations owing to any ABL Creditors; provided that for purposes of Section 4.1 the aggregate amount of Banking Services Obligations under clause (4) shall not exceed $1,000,000 and the aggregate amount of Swap Obligations under clause (5) shall not exceed the amount of Swap Obligations on a notional principal amount of $50,000,000 (such amounts, the “Banking Services/Swap Cap Amount”) (all of the ABL Obligations described in the foregoing clauses (1) through (5), “ABL Uncapped Obligations”).

 

“ABL Obligations Payment Date” means the first date on which (a) the ABL Obligations (other than those that constitute Unasserted Contingent Obligations) have been indefeasibly paid in cash in full (or cash collateralized or defeased in accordance with the terms of the ABL Documents), (b) all commitments to extend credit under the ABL Documents have been terminated, (c) there are no outstanding letters of credit or similar instruments issued under the ABL Documents (other than such as have been cash collateralized or defeased in accordance with the terms of the ABL Documents), and (d) so long as the Term Debt Obligations Payment Date shall not have occurred, the ABL Representative has delivered a written notice to the Term Debt Representative stating that the events described in clauses (a), (b) and (c) have occurred to the satisfaction of the ABL Secured Parties.

 

“ABL Percentage”  means at any time, an amount equal to the percentage equivalent of a fraction (a) the numerator of which is the then outstanding ABL Capped Obligations and (b) the denominator of which is the sum of the then outstanding ABL Capped Obligations and Term Debt Capped Obligations.

 

“ABL Portion of Specified Insurance”  means at any time with respect to any Specified Insurance or the proceeds thereof, an undivided interest therein equal to the ABL Percentage.

 

“ABL Post-Petition Assets” has the meaning set forth in Section 5.2(b).

 

  

3

  

 

“ABL Priority Collateral” means all Collateral consisting of the following:

 

	
  

	
(1)

	
all Accounts;

 

	
  

	
(2)

	
all Inventory and all bills of lading and other Documents to the extent they relate to or represent claims of Inventory;

 

	
  

	
(3)

	
all Deposit Accounts and all funds, moneys and assets deposited in or credited to or otherwise held in such Deposit Accounts at any time and from time to time, except for and to the extent of any Term Debt Priority Collateral deposited in or credited to or otherwise held in such Deposit Accounts at any time and from time to time, which shall be and shall remain Term Debt Priority Collateral;

 

	
  

	
(4)

	
all books and records relating to the foregoing (including without limitation all books, databases, customer lists and records, whether tangible or electronic which contain any information relating to any of the foregoing);

 

	
  

	
(5)

	
the ABL Portion of Specified Insurance; and

 

	
  

	
(6)

	
all Proceeds of and Supporting Obligations including, without limitation, Letter of Credit Rights, with respect to any of the foregoing, including, without limitation, any Promissory Notes or other Instruments issued by any account debtor in payment, satisfaction and/or settlement of any Account and any Securities or Investment Property issued by any account debtor in the course of or pursuant to a plan of reorganization under any Insolvency Proceeding of such account debtor as a distribution in respect of any Loan Party’s claims with respect to any Account, and all collateral security and guarantees given by any Person with respect to any of the foregoing.

 

 “ABL Representative” has the meaning set forth in the introductory paragraph hereof, and shall include any and all successor “Agents” appointed under the terms of the Existing ABL Agreement.  In the case of any Replacement ABL Agreement, the ABL Representative shall be the Person identified as such in such Agreement.

 

“ABL Secured Parties” means the ABL Representative, the ABL Creditors and any other holders of the ABL Obligations.

 

“ABL Security Documents” means the Existing ABL Agreement, any other ABL Document pursuant to which any Lien is created in favor of any ABL Creditor to secure all or any portion of the ABL Obligations, and any other documents that are designated under the ABL Agreement as “ABL Security Documents” for purposes of this Agreement.

 

“Access Period” means, with respect to each parcel or item of Term Debt Priority Collateral, the period, following the commencement of any Enforcement Action, which begins on the earlier of (a) the day on which the ABL Representative provides the Term Debt Representative with the notice of its election to request access to such parcel or item of Term Debt Priority Collateral pursuant to Section 3.4(c) and (b) the fifth Business Day after the Term Debt Representative provides the ABL Representative with notice that the Term Debt Representative (or its agent) has obtained possession or control of such parcel or item of Term Debt Priority Collateral and ends on the earliest of (i) the day which is 180 days after the date (the “Initial Access Date”) on which the ABL Representative initially obtains the ability to take physical possession of, remove or otherwise control physical access to, or actually uses, such parcel or item of Term Debt Priority Collateral plus such number of days, if any, after the Initial Access Date that it is stayed or otherwise prohibited by law or court order from exercising remedies with respect to associated ABL Priority Collateral, (ii) the date on which all or substantially all of the ABL Priority Collateral associated with such parcel or item of Term Debt Priority Collateral is sold, collected or liquidated, (iii) the ABL Obligations Payment Date and (iv) the date on which the default which resulted in such Enforcement Action has been cured or waived in writing.

 

  

4

  

 

“Additional Debt” has the meaning set forth in Section 10.5(b).

 

“Banking Services Obligations” means, with respect to any Loan Party, any obligations of such Loan Party, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), owed to any ABL Secured Party (or any of its affiliates) in respect of the following bank services:  (a) credit cards for commercial customers (including, without limitation, “commercial credit cards” and purchasing cards), (b) stored value cards, (c) cash management and treasury management services (including, without limitation, lockbox services, controlled disbursement, automated clearinghouse transactions, return items, overdrafts and interstate depository network services) and (d) all other “Cash Management Obligations” as defined in the ABL Agreement.

 

“Bankruptcy Code” means the United States Bankruptcy Code (11 U.S.C. §101 et seq.), as amended from time to time.

 

“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed.

 

“Capital Stock” means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing.

 

“Collateral” means, collectively, all property upon which a Lien is granted pursuant to the Security Documents.

 

 “Copyrights” means, with respect to any Person, all of such Person’s right, title, and interest in and to the following:  (a) all copyrights, rights and interests in copyrights, works protectable by copyright, copyright registrations, and copyright applications; (b) all renewals of any of the foregoing; (c) all income, royalties, damages, and payments now or hereafter due and/or payable under any of the foregoing, including, without limitation, damages or payments for past or future infringements for any of the foregoing; (d) the right to sue for past, present, and future infringements of any of the foregoing; and (e) all rights corresponding to any of the foregoing throughout the world.

 

“Enforcement Action” means, with respect to the ABL Obligations or the Term Debt Obligations, the exercise of any rights and remedies with respect to any Collateral securing such obligations or the commencement or prosecution of enforcement of any of the rights and remedies under, as applicable, the ABL Documents or the Term Debt Documents, or applicable law, including without limitation the exercise of any rights of set-off or recoupment, and the exercise of any rights or remedies of a secured creditor under the Uniform Commercial Code of any applicable jurisdiction or under the Bankruptcy Code.

 

“Existing ABL Agreement” has the meaning set forth in the first WHEREAS clause of this Agreement.

 

“Existing Term Debt Agreement” has the meaning set forth in the second WHEREAS clause of this Agreement.

 

  

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“Insolvency Proceeding” means any proceeding in respect of bankruptcy, insolvency, winding up, receivership, dissolution or assignment for the benefit of creditors, in each of the foregoing events whether under the Bankruptcy Code or any similar federal, state or foreign bankruptcy, insolvency, reorganization, receivership or similar law.

 

“Intellectual Property” means, the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, the Copyrights, the Patents, the Trademarks and the Licenses, and all rights to sue at law or in equity for any Infringement thereof, including the right to receive all proceeds and damages therefrom.

 

“Junior Capped Obligations” means (a) with respect to any ABL Priority Collateral, the Term Debt Capped Obligations and (b) with respect to any Term Debt Priority Collateral, the ABL Capped Obligations.

 

“Junior Collateral” means with respect to any Junior Secured Party, any Collateral on which it has a Junior Lien.

 

“Junior Documents” means, collectively, with respect to any Junior Obligations, any provision pertaining to such Junior Obligation in any Loan Document or any other document, instrument or certificate evidencing or delivered in connection with such Junior Obligation.

 

“Junior Liens” means (a) with respect to any ABL Priority Collateral, all Liens securing the Term Debt Obligations and (b) with respect to any Term Debt Priority Collateral, all Liens securing the ABL Obligations.

 

“Junior Obligations” means (a) with respect to any ABL Priority Collateral, all Term Debt Obligations and (b) with respect to any Term Debt Priority Collateral, all ABL Obligations.

 

“Junior Obligations Cap” means (a) with respect to any ABL Priority Collateral, the Term Debt Obligations Cap and (b) with respect to any Term Debt Priority Collateral, the ABL Obligations Cap.

 

“Junior Representative” means (a) with respect to any ABL Obligations or any ABL Priority Collateral, the Term Debt Representative and (b) with respect to any Term Debt Obligations or any Term Debt Priority Collateral, the ABL Representative.

 

“Junior Secured Parties” means (a) with respect to the ABL Priority Collateral, all Term Debt Secured Parties and (b) with respect to the Term Debt Priority Collateral, all ABL Secured Parties.

 

“Junior Security Documents” means with respect to any Junior Secured Party, the Security Documents that secure the Junior Obligations.

 

“Junior Uncapped Obligations” means (a) with respect to any ABL Priority Collateral, the Term Debt Uncapped Obligations and (b) with respect to any Term Debt Priority Collateral, the ABL Uncapped Obligations.

 

“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, deed to secure debt, lien, pledge, hypothecation, assignment, assignation, debenture, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

 

  

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“Licenses” means, with respect to any Person, all of such Person’s right, title, and interest in and to (a) any and all licensing agreements or similar arrangements in and to its Patents, Copyrights, or Trademarks, (b) all income, royalties, damages, claims, and payments now or hereafter due or payable under and with respect thereto, including, without limitation, damages and payments for past and future breaches thereof, and (c) all rights to sue for past, present, and future breaches thereof.

 

“Lien Priority” means with respect to any Lien of the ABL Representative or Term Debt Representative in the Collateral, the order of priority of such Lien specified in Section 2.1.

 

“Loan Documents” means, collectively, the ABL Documents and the Term Debt Documents.

 

“Loan Party” means Parent Borrower and each direct or indirect affiliate or shareholder (or equivalent) of Parent Borrower or any of its affiliates that is now or hereafter becomes a party to any ABL Document or any Term Debt Document.  All references in this Agreement to any Loan Party shall include such Loan Party as a debtor-in-possession and any receiver or trustee for such Loan Party in any Insolvency Proceeding.  The Loan Parties as of the date hereof are listed on Schedule I attached hereto.

 

“Parent Borrower” has the meaning set forth in the first WHEREAS clause above.

 

“Patents” means with respect to any Person, all of such Person’s right, title, and interest in and to:  (a) any and all patents and patent applications; (b) all inventions and improvements described and claimed therein; (c) all reissues, divisions, continuations, renewals, extensions, and continuations-in-part thereof; (d) all income, royalties, damages, claims, and payments now or hereafter due or payable under and with respect thereto, including, without limitation, damages and payments for past and future infringements thereof; (e) all rights to sue for past, present, and future infringements thereof; and (f) all rights corresponding to any of the foregoing throughout the world.

 

“Person” means any person, individual, sole proprietorship, partnership, joint venture, corporation, limited liability company, unincorporated organization, association, institution, entity, party, including any government and any political subdivision, agency or instrumentality thereof.

 

“Post-Petition Interest” means any interest or entitlement to fees, indemnities, or costs and expenses or other charges that accrues after the commencement of any Insolvency Proceeding (or would accrue but for the commencement of an Insolvency Proceeding), whether or not allowed or allowable in any such Insolvency Proceeding.

 

“Priority Collateral” means the ABL Priority Collateral or the Term Debt Priority Collateral.

 

“Proceeds” means (a) all “proceeds,” as defined in Article 9 of the Uniform Commercial Code, with respect to the Collateral, and (b) whatever is recoverable or recovered when any Collateral is sold, exchanged, collected, or disposed of, whether voluntarily or involuntarily, including, without limitation, all proceeds of any insurance policy covering the Collateral.

 

“Real Property” means any right, title or interest in and to real property, including any fee interest, leasehold interest, easement, or license and any other right to use or occupy real property, including any right arising by contract.

 

“Replacement ABL Agreement” has the meaning set forth in the definition of “ABL Agreement.”

 

“Replacement Term Debt Agreement” has the meaning set forth in the definition of “Term Debt Agreement.”

 

  

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“Secured Obligations” means the ABL Obligations and the Term Debt Obligations.

 

“Secured Parties” means the ABL Secured Parties and the Term Debt Secured Parties.

 

“Security Documents” means, collectively, the ABL Security Documents and the Term Debt Security Documents.

 

“Senior Capped Obligations” means (a) with respect to any ABL Priority Collateral, the ABL Capped Obligations and (b) with respect to any Term Debt Priority Collateral, the Term Debt Capped Obligations.

 

“Senior Collateral” means with respect to any Senior Secured Party, any Collateral on which it has a Senior Lien.

 

“Senior Documents” means, collectively, with respect to any Senior Obligation, any provision pertaining to such Senior Obligation in any Loan Document or any other document, instrument or certificate evidencing or delivered in connection with such Senior Obligation.

 

“Senior Liens” means (a) with respect to the ABL Priority Collateral, all Liens securing the ABL Obligations and (b) with respect to the Term Debt Priority Collateral, all Liens securing the Term Debt Obligations.

 

“Senior Obligations” means (a) with respect to any ABL Priority Collateral, all ABL Obligations and (b) with respect to any Term Debt Priority Collateral, all Term Debt Obligations.

 

“Senior Obligations Cap” means (a) with respect to the ABL Obligations or any ABL Priority Collateral, the ABL Obligations Cap and (b) with respect to the Term Debt Obligations or any Term Debt Priority Collateral, the Term Debt Obligations Cap.

 

“Senior Obligations Payment Date” means (a) with respect to ABL Obligations, the ABL Obligations Payment Date and (b) with respect to any Term Debt Obligations, the Term Debt Obligations Payment Date.

 

“Senior Representative” means (a) with respect to any ABL Priority Collateral, the ABL Representative and (b) with respect to any Term Debt Priority Collateral, the Term Debt Representative.

 

“Senior Secured Parties” means (a) with respect to the ABL Priority Collateral, all ABL Secured Parties and (b) with respect to the Term Debt Priority Collateral, all Term Debt Secured Parties.

 

“Senior Security Documents” means with respect to any Senior Secured Party, the Security Documents that secure the Senior Obligations.

 

“Senior Uncapped Obligations” means (a) with respect to any ABL Priority Collateral, the ABL Uncapped Obligations and (b) with respect to any Term Debt Priority Collateral, the Term Debt Uncapped Obligations.

 

“Specified Insurance”  means (i) business interruption insurance, (ii) liability insurance (except to the extent the proceeds thereof are payable on account of a claim by a Secured Party against the Parent Borrower or its Subsidiaries in respect of an event covered by such liability insurance), (iii) key-man life insurance, (iv) insurance against larceny, embezzlement or other criminal misappropriation and (v) insurance similar to any of the foregoing; in each case maintained by the Loan Parties.  For avoidance of doubt, casualty insurance shall not be included in Specified Insurance.

 

  

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“Swap Obligations” means, with respect to any Loan Party, any obligations of such Loan Party owed to any ABL Creditor (or any of its affiliates) in respect of any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions or any and all cancellations, buy backs, reversals, terminations or assignments of any these transactions, including without limitation all “Hedge Liabilities” as defined in the Existing ABL Agreement.

 

“Term Debt Agreement” means the collective reference to (a) the Existing Term Debt Agreement and (b) any other credit agreement, loan agreement, note agreement, promissory note, indenture or other agreement or instrument evidencing or governing the terms of any indebtedness or other financial accommodation that has at any time been incurred to extend, replace, refinance or refund in whole or in part the indebtedness and other obligations outstanding under the Existing Term Debt Agreement (regardless of whether such replacement, refunding or refinancing (i) is a “working capital” facility, asset-based facility, revolving loan facility, term loan facility or otherwise or (ii) was entered into after the Term Debt Obligations Payment Date) or any other agreement or instrument previously entered into to effectuate such an extension, replacement, refinancing or refunding unless such agreement or instrument expressly provides that it is not intended to be and is not a Term Debt Agreement hereunder (a “Replacement Term Debt Agreement”).  Any reference to the Term Debt Agreement hereunder shall be deemed a reference to any Term Debt Agreement then extant.

 

“Term Debt Creditors” means “Lenders” and the “Secured Parties”, each as defined in the Term Debt Documents.

 

“Term Debt DIP Financing” has the meaning set forth in Section 5.2(b).

 

“Term Debt Documents” means the Term Debt Agreement, each Term Debt Security Document, the Term Debt Guarantee and Collateral Agreement, each Term Debt Guarantee and each other “Loan Document” as defined in the Term Debt Agreement.

 

“Term Debt Guarantee” means any guarantee by any Loan Party of any or all of the Term Debt Obligations.

 

“Term Debt Guarantee and Collateral Agreement” means the Guarantee and Collateral Agreement (as defined in the Term Debt Agreement).

 

“Term Debt Lien” means any Lien created by the Term Debt Security Documents.

 

“Term Debt Obligations” means (a) all principal of and interest (including without limitation any Post-Petition Interest), prepayment penalty and premium (if any) on all loans and indebtedness under the Term Debt Agreement or any Term Debt DIP Financing, (b) all guarantee obligations, indemnities, fees, costs and expenses and other amounts payable from time to time pursuant to the Term Debt Documents, in each case whether arising prior to or after, and whether or not allowed or allowable, in an Insolvency Proceeding, and (c) without limiting the generality of any of the foregoing, all “Obligations” as defined in the Term Debt Guarantee and Collateral Agreement.  To the extent any payment with respect to any Term Debt Obligation (whether by or on behalf of any Loan Party, as Proceeds of security, enforcement of any right of setoff or otherwise) is declared to be a fraudulent conveyance or a preference in any respect, set aside or required to be paid to a debtor in possession, any ABL Secured Party, receiver or similar Person, then the obligation or part thereof originally intended to be satisfied shall, for the purposes of this Agreement and the rights and obligations of the ABL Secured Parties and the Term Debt Secured Parties, be deemed to be reinstated and outstanding as if such payment had not occurred.

 

  

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“Term Debt Obligations Cap” means as of any date of calculation with respect to (x) the principal amount of the Term Debt Obligations consisting of loans, revolving credit advances and reimbursement and/or cash collateralization obligations (without duplication) in respect of letters of credit (exclusive of such amounts under any Term Debt DIP Financing) (“Term Debt Principal Obligations”), (y) Term Debt Obligations consisting of amounts owing to any Term Debt Creditors in respect of any advances made or funds expended by any of them to protect, preserve or complete the Collateral or any other similar “protective” advances made by any Term Debt Creditors (“Term Debt Protective Advances”) and (z) the principal amount of the Term Debt Obligations consisting of loans, revolving credit advances and reimbursement and/or cash collateralization obligations (without duplication) in respect of letters of credit under any Term Debt DIP Financing (“Term Debt DIP Principal Obligations”) (such Term Debt Principal Obligations, such Term Debt Protective Advances, and such Term Debt DIP Principal Obligations, collectively, the “Term Debt Capped Obligations”), an amount equal to:

 

(i)          subject to the provisions of clauses (1) and (2) of the final paragraph of this definition below, the Term Debt Principal Obligations as of such date of calculation not in excess of (x) $157,500,000 minus (y) the amount of any permanent loan repayments and permanent reductions in the lending commitments for loans, revolving credit advances and letters of credit of the Term Debt Creditors under the Term Debt Agreement prior to such date of calculation (whether pursuant to the terms of the Term Debt Agreement or pursuant to a separate agreement between Loan Parties and Term Debt Creditors) but excluding the amount of any such permanent loan repayments and reduction in the lending commitments for loans, revolving credit advances and letters of credit of the Term Debt Creditors under the Term Debt Agreement resulting from a termination of lending commitments by Term Debt Creditors following the occurrence of an event of default under the Term Debt Documents or that is imposed in or results from an Insolvency Proceeding or in connection with a refinancing of the Term Debt Agreement permitted by the ABL Agreement; plus

 

(ii)         the Term Debt Protective Obligations as of such date of calculation not in excess of $10,000,000; plus

 

(iii)        the Term Debt DIP Principal Obligations as of such date of calculation not in excess of $25,000,000.

 

The Term Debt Obligations Cap shall not under any circumstances limit or affect any: (1) interest or fees on the Term Debt Capped Obligations (in respect of a principal amount not to exceed the Term Debt Obligations Cap) of any kind provided for in the Term Debt Documents or otherwise included in the Term Debt Obligations (including without limitation interest and/or fees accruing at any default rate provided for in the Term Debt Documents and/or interest and/or fees accruing after any default or event of default or after or during the pendency of any Insolvency Proceeding, whether or not a claim for such interest or fees are allowed or allowable in such Insolvency Proceeding), whether or not any or all of such interest or fees is charged as a revolving credit advance against Loan Parties’ loan account under the Term Debt Agreement by Term Debt Representative as a matter of administrative convenience, (2) costs, charges or expenses  payable to any Term Debt Creditor provided for in the Term Debt Documents or otherwise included in the Term Debt Obligations whether or not any or all of such costs, charges and expenses are charged as a revolving credit advance against Loan Parties’ loan account under the Term Debt Agreement by Term Debt Representative as a matter of administrative convenience and (3) indemnification obligations owing to any Term Debt Creditor provided for in the Term Debt Documents or otherwise included in the Term Debt Obligations (all of the Term Debt Obligations described in the foregoing clauses (1) through (3), “Term Debt Uncapped Obligations”).

 

  

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“Term Debt Obligations Payment Date” means the first date on which (a) the Term Debt Obligations (other than those that constitute Unasserted Contingent Obligations) have been indefeasibly paid in cash or cash collateralized in full, (b) all commitments to extend credit under the Term Debt Documents have been terminated, and (c) so long as the ABL Obligations Payment Date shall not have occurred, the Term Debt Representative has delivered a written notice to the ABL Representative stating that the events described in clauses (a) and (b) have occurred to the satisfaction of the Term Debt Secured Parties.

 

“Term Debt Percentage”  means at any time, an amount equal to the percentage equivalent of a fraction (a) the numerator of which is the then outstanding Term Debt Capped Obligations and (b) the denominator of which is the sum of the then outstanding ABL Capped Obligations and Term Debt Capped Obligations.

 

“Term Debt Portion of Specified Insurance”  means at any time with respect to any Specified Insurance or the proceeds thereof an undivided interest therein equal to the Term Debt Percentage.

 

“Term Debt Priority Collateral” means all Collateral (including the Term Debt Portion of Specified Insurance) other than the ABL Priority Collateral.

 

“Term Debt Representative” has the meaning set forth in the introductory paragraph hereof, and shall include any and all successor “Administrative Agents” appointed under the terms of the Existing Term Debt Agreement.  In the case of any Replacement Term Debt Agreement, the Term Debt Representative shall be the Person identified as such in such Agreement.

 

“Term Debt Secured Parties” means the Term Debt Representative, the Term Debt Creditors and any other holders of Term Debt Obligations.

 

“Term Debt Security Documents” means the “Security Documents” as defined in the Term Debt Agreement and any documents that are designated under the Term Debt Agreement as “Term Debt Security Documents” for purposes of this Agreement.

 

“Term Post-Petition Assets” has the meaning set forth in Section 5.2(a).

 

“Trademarks” means with respect to any Person, all of such Person’s right, title, and interest in and to the following:  (a) all trademarks (including service marks), trade names, trade dress, trade styles, brand names, corporate names, business names, domain names, logos and other source or business identifiers and the registrations and applications for registration thereof, all common-law rights related thereto, and the goodwill of the business symbolized by the foregoing; (b) all renewals of the foregoing; (c) all income, royalties, damages, and payments now or hereafter due or payable with respect thereto, including, without limitation, damages, claims, and payments for past and future infringements thereof; (d) all rights to sue for past, present, and future infringements of the foregoing, including the right to settle suits involving claims and demands for royalties owing; and (e) all rights corresponding to any of the foregoing throughout the world.

 

“Unasserted Contingent Obligations” means, at any time, ABL Obligations or Term Debt Obligations, as applicable, for taxes, costs, indemnifications, reimbursements, damages and other liabilities (excluding (a) the principal of, and interest and premium (if any) on, and fees and expenses relating to, any ABL Obligation or Term Debt Obligation, as applicable, and (b) with respect to ABL Obligations contingent reimbursement obligations in respect of amounts that may be drawn under outstanding letters of credit) in respect of which no assertion of liability (whether oral or written) and no claim or demand for payment (whether oral or written) has been made (and, in the case of ABL Obligations or Term Debt Obligations, as applicable, for indemnification, no notice for indemnification has been issued by the indemnitee) at such time.

 

  

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“Uniform Commercial Code” means the Uniform Commercial Code as in effect from time to time in the applicable jurisdiction.

 

1.3          Rules of Construction.  The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

 

SECTION 2.  Lien Priority.

 

2.1          Lien Subordination.  Notwithstanding the date, manner or order of grant, attachment or perfection of any Junior Lien in respect of any Collateral or of any Senior Lien in respect of any Collateral and notwithstanding any provision of the UCC, any applicable law, any Security Document, any alleged or actual defect or deficiency in any of the foregoing or any other circumstance whatsoever, the Junior Representative, on behalf of each Junior Secured Party, in respect of such Collateral hereby agrees that:

 

(a)          any Senior Lien in respect of such Collateral, regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall be and shall remain senior and prior to any Junior Lien in respect of such Collateral (whether or not such Senior Lien is subordinated to any Lien securing any other obligation); and

 

(b)          any Junior Lien in respect of such Collateral, regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall be junior and subordinate in all respects to any Senior Lien in respect of such Collateral.

 

2.2           Prohibition on Contesting Liens, Obligations and Credit Documents.  In respect of any Collateral, the Junior Representative, on behalf of each Junior Secured Party, agrees that it shall not, and hereby waives any right to:

 

(a)          contest, or support any other Person in contesting, in any proceeding (including any Insolvency Proceeding), the priority, legality, validity or enforceability, or seek the avoidance, of any Senior Lien on such Collateral; or

 

(b)          demand, request, plead or otherwise assert or claim the benefit of any marshalling, appraisal, valuation or similar right which it may have in respect of such Collateral or the Senior Liens on such Collateral, except to the extent that such rights are expressly granted in this Agreement.

 

  

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2.3          Nature of Obligations.  The Term Debt Representative on behalf of itself and the other Term Debt Secured Parties acknowledges that a portion of the ABL Obligations represents debt that is revolving in nature and that the amount thereof that may be outstanding at any time or from time to time may be increased, reduced or repaid and subsequently reborrowed, that the ABL Obligations may be replaced or refinanced, and that the terms of the ABL Obligations and any ABL Document or any provision thereof may be waived, modified, extended, amended, restated or supplemented from time to time, and that the aggregate amount of the ABL Obligations may be increased (including by means of making available under the ABL Agreement to Loan Parties loans or other extensions of credit that are of additional and/or different types or kinds from the types and kinds of loans and extensions of credit available to Loan Parties under the ABL Documents as of the date hereof), replaced or refinanced, in each event, without notice to or consent by the Term Debt Secured Parties and without affecting the provisions hereof; provided that any increase in the amount of the ABL Obligations shall be subject to the limitations under the ABL Obligations Cap, and the ABL Creditors shall not agree to any amendment, waiver or other change to the final maturity date (except in connection with an acceleration of the ABL Obligations following an event of default) under the ABL Agreement as in effect on the date hereof (including pursuant to any execution of a Replacement ABL Agreement) that would advance such maturity date.  The ABL Representative on behalf of itself and the other ABL Secured Parties acknowledges that Term Debt Obligations may be replaced or refinanced and the amount of any Term Debt Obligations may be increased, reduced, or repaid, and that the terms of the Term Debt Obligations and any Term Debt Document or any provision thereof may be waived, modified, extended, amended, restated or supplemented from time to time, and that the aggregate amount of the Term Debt Obligations may be increased (including by means of making available under the Term Debt Agreement to Loan Parties loans or other extensions of credit that are of additional and/or different types or kinds from the types and kinds of loans and extensions of credit available to Loan Parties under the Term Debt Documents as of the date hereof), replaced or refinanced, in each event, without notice to or consent by the ABL Secured Parties and without affecting the provisions hereof; provided that any increase in the amount of the Term Debt Obligations shall be subject to the limitations under the Term Debt Obligations Cap, and the Term Debt Creditors shall not agree to any amendment, waiver or other change to the final maturity date (except in connection with an acceleration of the Term Debt Obligations following an event of default) under the Term Debt Agreement as in effect on the date hereof (including pursuant to any execution of a Replacement Term Debt Agreement) that would advance such maturity date to a date that is earlier than the final maturity date under the ABL Agreement as in effect on the date hereof.  The Lien Priorities provided in Section 2.1 shall not be altered or otherwise affected by any such amendment, modification, supplement, extension, repayment, reborrowing, increase, replacement, renewal, restatement or refinancing of either the ABL Obligations or the Term Debt Obligations, or any portion thereof.  Without limiting the generality of the foregoing, if either the ABL Creditors or the Term Debt Creditors shall amend their respective Loan Documents  or otherwise make extensions of credit (or permit extensions of credit to be outstanding) such that the ABL Obligations consisting of ABL Capped Obligations should exceed the ABL Obligations Cap or that the Term Debt Obligations consisting of Term Debt Capped Obligations should exceed the Term Debt Obligations Cap, then, in any such case (i) the amount of the ABL Capped Obligations up to the ABL Obligations Cap or the amount of the Term Debt Capped Obligations up to the Term Debt Obligations Cap (as applicable) shall retain its priority under the waterfall provided for in Section 4.1 hereof, (ii) the rights of and remedies available to the other parties hereto under such circumstance shall be limited to the imposition of the limitations on the recoveries of such non-complying parties from the Collateral in accordance with Section 4.1 hereof, and (iii) such event shall not otherwise constitute a breach of this Agreement or invalidate or affect in any manner any of the other provisions hereof.

 

  

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2.4          No New Liens.  (a)  Until the ABL Obligations Payment Date, no Term Debt Secured Party shall acquire or hold any Lien on any assets of any Loan Party securing any Term Debt Obligation which assets are not also subject to the Lien of the ABL Representative under the ABL Documents, subject to the Lien Priority set forth herein.  If any Term Debt Secured Party shall (nonetheless and in breach hereof) acquire or hold any Lien on any assets of any Loan Party securing any Term Debt Obligation which assets are not also subject to the Lien of the ABL Representative under the ABL Documents, subject to the Lien Priority set forth herein, then the Term Debt Representative (or the relevant Term Debt Secured Party) shall, without the need for any further consent of any other Term Debt Secured Party and notwithstanding anything to the contrary in any other Term Debt Document be deemed to also hold and have held such lien for the benefit of the ABL Representative as security for the ABL Obligations (subject to the Lien Priority and other terms hereof) and shall promptly notify the ABL Representative in writing of the existence of such Lien.

 

(b)  Until the Term Debt Obligations Payment Date, no ABL Secured Party shall acquire or hold any Lien on any assets of any Loan Party securing any ABL Obligation which assets are not also subject to a Lien of the Term Debt Representative under the Term Debt Documents, subject to the Lien Priority set forth herein.  If any ABL Secured Party shall (nonetheless and in breach hereof) acquire or hold any Lien on any assets of any Loan Party securing any ABL Obligation which assets are not also subject to a Lien of the Term Debt Representative under the Term Debt Documents, subject to the Lien Priority set forth herein, then the ABL Representative (or the relevant ABL Secured Party) shall, without the need for any further consent of any other ABL Secured Party and notwithstanding anything to the contrary in any other ABL Document be deemed to also hold and have held such lien for the benefit of the Term Debt Representative as security for the Term Debt Obligations (subject to the Lien Priority and other terms hereof) and shall promptly notify the Term Debt Representative in writing of the existence of such Lien.

 

2.5          Separate Grants of Security and Separate Classification.  Each Secured Party acknowledges and agrees that (i) the grants of Liens pursuant to the ABL Security Documents and the Term Debt Security Documents constitute two separate and distinct grants of Liens and (ii) because of, among other things, their differing rights in the Collateral, the Term Debt Obligations are fundamentally different from the ABL Obligations and should be separately classified in any plan of reorganization proposed or adopted in an Insolvency Proceeding.  To further effectuate the intent of the parties as provided in the immediately preceding sentence, if it is held that the claims of the ABL Secured Parties and the Term Debt Secured Parties in respect of the Collateral constitute claims in the same class (rather than separate classes of senior and junior secured claims), then the ABL Secured Parties and the Term Debt Secured Parties hereby acknowledge and agree that all distributions shall be made as if there were separate classes of ABL Obligation claims and Term Debt Obligation claims against the Loan Parties (with the effect being that, to the extent that the aggregate value of the ABL Priority Collateral or Term Debt Priority Collateral is sufficient (for this purpose ignoring all claims held by the other Secured Parties), the ABL Secured Parties or the Term Debt Secured Parties, respectively, shall be entitled to receive, in addition to amounts distributed to them in respect of principal, pre-petition interest and other claims, all amounts owing in respect of Post-Petition Interest that are available from each pool of Priority Collateral for each of the ABL Secured Parties and the Term Debt Secured Parties, respectively, before any distribution is made in respect of the claims held by the other Secured Parties, with the other Secured Parties hereby acknowledging and agreeing to turn over to the respective other Secured Parties amounts otherwise received or receivable by them to the extent necessary to effectuate the intent of this sentence, even if such turnover has the effect of reducing the aggregate recoveries by the Secured Parties making any such turnover.

 

2.6          Agreements Regarding Actions to Perfect Liens.  (a)  The ABL Representative agrees on behalf of itself and the other ABL Secured Parties that all mortgages, deeds of trust, deeds and similar instruments (collectively, “mortgages”) now or hereafter filed against Real Property in favor of or for the benefit of the ABL Representative shall contain the following notation:  “The lien created by this mortgage on the property described herein is junior and subordinate to the lien on such property created by any mortgage, deed of trust or similar instrument now or hereafter granted to FBR Capital Markets LT, Inc., as Term Debt Representative, in accordance with the provisions of the Intercreditor Agreement dated as of April 15, 2011, as amended from time to time.”

 

  

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(b)  Each of the ABL Representative and the Term Debt Representative hereby acknowledges that, to the extent that it holds, or a third party holds on its behalf, physical possession of or “control” (as defined in the Uniform Commercial Code) over Collateral pursuant to the ABL Security Documents or the Term Debt Security Documents, as applicable, such possession or control is also for the benefit of the Term Debt Representative and the other Term Debt Secured Parties or the ABL Representative and the other ABL Secured Parties, as applicable, solely to the extent required to perfect their security interest in such Collateral.  Nothing in the preceding sentence shall be construed to impose any duty or fiduciary role or status on the ABL Representative or the Term Debt Representative (or any third party acting on either such Person’s behalf) with respect to such Collateral or provide the Term Debt Representative, any other Term Debt Secured Party, the ABL Representative or any other ABL Secured Party, as applicable, with any rights with respect to such Collateral beyond those specified in this Agreement, the ABL Security Documents and the Term Debt Security Documents, as applicable, provided that subsequent to the occurrence of the ABL Obligations Payment Date (so long as the Term Debt Obligations Payment Date shall not have occurred), the ABL Representative shall (i) deliver to the Term Debt Representative, at the Loan Parties’ sole cost and expense, the Collateral in its possession together with any necessary endorsements to the extent required by the Term Debt Documents and take all commercially reasonable actions requested by Term Debt Representative to transfer to Term Debt Representative control over any Collateral then subject to ABL Representative’s control to the extent required by the Term Debt Documents (provided that ABL Representative shall have no obligations to transfer any of ABL Representative’s rights or interests in any control agreement to the extent such transfer would require the consent or approval of any third party (including any applicable depository bank or financial intermediary) that has not been granted) or (ii) direct and deliver and/or take such actions with respect to such Collateral as a court of competent jurisdiction otherwise directs; provided, further, that subsequent to the occurrence of the Term Debt Obligations Payment Date (so long as the ABL Obligations Payment Date shall not have occurred), the Term Debt Representative shall (i) deliver to the ABL Loan Representative, at the Loan Parties’ sole cost and expense, the Collateral in its possession together with any necessary endorsements to the extent required by the ABL Documents and take all commercially reasonable actions requested by ABL Representative to transfer to ABL Representative control over any Collateral then subject to Term Debt Representative’s control to the extent required by the ABL Documents (provided that Term Debt Representative shall have no obligations to transfer any of Term Debt Representative’s rights or interests in any control agreement to the extent such transfer would require the consent or approval of any third party (including any applicable depository bank or financial intermediary) that has not been granted) or (ii) direct and deliver and/or take such actions with respect to such Collateral as a court of competent jurisdiction otherwise directs; provided, further, that (i) prior to the occurrence of the Term Obligations Payment Date, upon the request of the Term Debt Representative or the Parent Borrower, the ABL Loan Representative shall turn over to the Term Debt Representative any Term Debt Priority Collateral of which it has physical possession, and (ii) prior to the occurrence of the ABL Obligations Payment Date, upon the request of the ABL Representative or the Parent Borrower, the Term Debt Representative shall turn over to the ABL Representative any ABL Priority Collateral of which it has physical possession.  To the extent that the ABL Representative and the Term Debt Representative are jointly party to (x) any landlord’s agreement regarding any business location of Loan Parties or any warehouseman’s or bailee’s agreement with respect to any of the Collateral or (y) any “control” agreement with respect to any Deposit Account, securities account or investment account of any Loan Party, and the provisions of such agreement shall provide that such agreement is for the benefit of both ABL Creditors and Term Debt Creditors but further provide that either the ABL Representative or the Term Debt Representative (for purposes of this sentence, either a “Representative”) is the “lender representative” with the sole authority to give instructions on behalf of the ABL Creditors and the Term Debt Creditors under such agreement, then (1) in the event of any commencement of Enforcement Actions in accordance with this Agreement by the Representative that is not designated as such “lender representative” under any such agreement (as to any such agreement, the “Non-Designated Representative”), upon reasonable request of such Non-Designated Representative, the Representative that is designated as such “lender representative” (as to any such agreement, the “Designated Representative”) shall exercise its rights as “lender representative” under such agreement as necessary to provide the Non-Designated Representative with access to such business premises or Collateral that is the Senior  Collateral of such Non-Designated Representative for the purposes of such Non-Designated Representative exercising its Enforcement Actions with respect to its Senior Collateral located at such business location or with respect to its Senior Collateral in possession of such bailee or on deposit in such account and (2) upon the occurrence of the ABL Obligations Payment Date or the Term Debt Obligations Payment Date (as applicable), the ABL Representative or Term Debt Representative (as applicable) shall give notice under each such agreement as to which it is the Designated Representative to notify the other parties to such agreement that thereafter the Term Debt Representative or ABL Representative (as applicable) should be the Designated Representative under such agreement.  The provisions of this Agreement are intended solely to govern the respective Lien priorities as between the ABL Secured Parties and the Term Debt Secured Parties and shall not impose on the ABL Secured Parties or the Term Debt Secured Parties any obligations in respect of the disposition of any Collateral (or any proceeds thereof) that would conflict with prior perfected Liens or any claims thereon in favor of any other Person that is not a Secured Party.

 

  

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SECTION 3.  Enforcement Rights.

 

3.1          Exclusive Enforcement.  Until the Senior Obligations Payment Date has occurred, whether or not an Insolvency Proceeding has been commenced by or against any Loan Party, the Senior Secured Parties shall have the exclusive right to take and continue any Enforcement Action (including the right to credit bid their debt) with respect to the Senior Collateral, without any consultation with or consent of any Junior Secured Party, but subject to the proviso set forth in Section 5.1.  Upon the occurrence and during the continuance of a default or an event of default under the Senior Documents, the Senior Representative and the other Senior Secured Parties may take and continue any Enforcement Action with respect to the Senior Obligations and the Senior Collateral in such order and manner as they may determine in their sole discretion in accordance with the terms and conditions of the Senior Documents.

 

3.2          Standstill and Waivers.  Each Junior Representative, on behalf of itself and the other Junior Secured Parties, agrees that, until the Senior Obligations Payment Date has occurred, but subject to the proviso set forth in Section 5.1:

 

(i)  they will not take or cause to be taken any action, the purpose or effect of which is to make any Lien on any Senior Collateral that secures any Junior Obligation pari passu with or senior to, or to give any Junior Secured Party any preference or priority relative to, the Liens on the Senior Collateral securing the Senior Obligations;

 

(ii)  they will not contest, oppose, object to, interfere with, hinder or delay, in any manner, whether by judicial proceedings (including without limitation the filing of an Insolvency Proceeding) or otherwise, any foreclosure, sale, lease, exchange, transfer or other disposition of the Senior Collateral by any Senior Secured Party or any other Enforcement Action taken (or any forbearance from taking any Enforcement Action) in respect of the Senior Collateral by or on behalf of any Senior Secured Party;

 

(iii)  they have no right to (x) direct either the Senior Representative or any other Senior Secured Party to exercise any right, remedy or power with respect to the Senior Collateral or pursuant to the Senior Security Documents in respect of the Senior Collateral or (y) consent or object to the exercise by the Senior Representative or any other Senior Secured Party of any right, remedy or power with respect to the Senior Collateral or pursuant to the Senior Security Documents with respect to the Senior Collateral or to the timing or manner in which any such right is exercised or not exercised (or, to the extent they may have any such right described in this clause (iii), whether as a junior lien creditor in respect of the Senior Collateral or otherwise, they hereby irrevocably waive such right);

 

  

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(iv)  they will not institute any suit or other proceeding or assert in any suit, Insolvency Proceeding or other proceeding any claim against any Senior Secured Party seeking damages from or other relief by way of specific performance, instructions or otherwise, with respect to, and no Senior Secured Party shall be liable for, any action taken or omitted to be taken by any Senior Secured Party with respect to the Senior Collateral or pursuant to the Senior Documents in respect of the Senior Collateral;

 

(v)  they will not commence judicial or nonjudicial foreclosure proceedings with respect to, seek to have a trustee, receiver, liquidator or similar official appointed for or over, attempt any action to take possession of any Senior Collateral, exercise any right, remedy or power with respect to, or otherwise take any action to enforce their interest in or realize upon, the Senior Collateral;

 

(vi)  they will not seek, and hereby waive any right, to have the Senior Collateral or any part thereof marshaled upon any foreclosure or other disposition of the Senior Collateral; and

 

(vii)  they will not exercise any rights with respect to the Senior Collateral (except to the extent necessary or advisable to create or perfect a Junior Lien on such Senior Collateral) without the consent of the Senior Agent.

 

3.3          Judgment Creditors.  In the event that any Term Debt Secured Party becomes a judgment lien creditor in respect of Collateral as a result of its enforcement of its rights as an unsecured creditor, such judgment lien shall be subject to the terms of this Agreement for all purposes (including in relation to the ABL Liens and the ABL Obligations) to the same extent as all other Liens securing the Term Debt Obligations are subject to the terms of this Agreement.  In the event that any ABL Secured Party becomes a judgment lien creditor in respect of Collateral as a result of its enforcement of its rights as an unsecured creditor, such judgment lien shall be subject to the terms of this Agreement for all purposes (including in relation to the Term Debt Liens and the Term Debt Obligations) to the same extent as all other Liens securing the ABL Obligations are subject to the terms of this Agreement.

 

3.4          Cooperation; Sharing of Information and Access.  (a)  The Term Debt Representative, on behalf of itself and the other Term Debt Secured Parties, agrees that each of them shall take such commercially reasonable actions as the ABL Representative shall request in connection with the exercise by the ABL Secured Parties of their rights set forth herein in respect of the ABL Priority Collateral.  The ABL Representative, on behalf of itself and the other ABL Secured Parties, agrees that each of them shall take such commercially reasonable actions as the Term Debt Representative shall request in connection with the exercise by the Term Debt Secured Parties of their rights set forth herein in respect of the Term Debt Priority Collateral.

 

  

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(b)          In the event that the ABL Representative shall, in the exercise of its rights under the ABL Security Documents or otherwise, receive possession or control of any books and Records of any Loan Party which contain information identifying or pertaining to the Term Debt Priority Collateral, the ABL Representative shall promptly notify the Term Debt Representative of such fact and, upon request from the Term Debt Representative and as promptly as practicable thereafter, either make available to the Term Debt Representative such books and Records for inspection and duplication or provide to the Term Debt Representative copies thereof.  In the event that a Term Debt Representative shall, in the exercise of its rights under the Term Debt Security Documents or otherwise, receive possession or control of any books and records of any Loan Party which contain information identifying or pertaining to any of the ABL Priority Collateral, the Term Debt Representative shall promptly notify the ABL Representative of such fact and, upon request from the ABL Representative and as promptly as practicable thereafter, either make available to the ABL Representative such books and records for inspection and duplication or provide the ABL Representative copies thereof.  The Term Debt Representative hereby irrevocably grants the ABL Representative a non-exclusive worldwide license or right (through the ABL Obligations Payment Date) to use, to the maximum extent permitted by applicable law and to the extent of the Term Debt Representative’s interest therein, exercisable without payment of royalty or other compensation, to use any of the Intellectual Property now or hereafter owned by, licensed to, or otherwise used by the Loan Parties in order for the ABL Representative and ABL Secured Parties to purchase, use, market, repossess, possess, store, assemble, manufacture, process, sell, transfer, distribute or otherwise dispose of any asset included in the ABL Priority Collateral in connection with the liquidation, disposition or realization upon the ABL Priority Collateral in accordance with the terms and conditions of the ABL Security Documents and the other ABL Documents. The Term Debt Representative agrees that any sale, transfer or other disposition of any of the Loan Parties’ Intellectual Property (whether by foreclosure or otherwise) will be subject to the ABL Representative’s rights as set forth in this Section 3.4.

 

(c)  If the Term Debt Representative, or any agent or representative thereof, or any receiver, shall, after the commencement of any Enforcement Action, obtain possession or physical control of any of the Term Debt Priority Collateral, the Term Debt Representative shall promptly notify the ABL Representative in writing of that fact, and the ABL Representative shall, within ten Business Days thereafter, notify the Term Debt Representative in writing as to whether the ABL Representative desires to exercise access rights under this Agreement.  In addition, if the ABL Representative, or any agent or representative of the ABL Representative, or any receiver, shall obtain possession or physical control of any of the Term Debt Priority Collateral in connection with an Enforcement Action, then the ABL Representative shall promptly either (i) turn over and deliver such Term Debt Priority Collateral to the Term Debt Representative or (ii) notify the Term Debt Representative that the ABL Representative is exercising its access rights under this Agreement and its rights under Section 3.4 under either circumstance.  Upon delivery of such notice by the ABL Representative to the Term Debt Representative, the ABL Representative and Term Debt Representative shall confer in good faith to coordinate with respect to the ABL Representative’s exercise of such access rights, with such access rights to apply to any parcel or item of Term Debt Priority Collateral access to which is reasonably necessary to enable the ABL Representative during normal business hours to convert ABL Priority Collateral consisting of raw materials and work-in-process into saleable finished goods and/or to transport such ABL Priority Collateral to a point where such conversion can occur, to otherwise prepare ABL Priority Collateral for sale and/or to arrange or effect the collection and/or sale of ABL Priority Collateral (including without limitation access to and use of any Term Debt Priority Collateral consisting of Loan Parties’ computer equipment and IT systems (and, if applicable, any Term Debt Priority Collateral consisting of any owned or leased real property of any Loan Party on which any such computer equipment and IT systems are located) in connection with any actions by the ABL Representative to collect, sell or otherwise realize on any ABL Priority Collateral consisting of Accounts), all in accordance with the manner in which such matters are completed in the ordinary course of business.  Consistent with the definition of “Access Period,” access rights will apply to differing parcels or items of Term Debt Priority Collateral at differing times, in which case, a differing Access Period will apply to each such parcel or items.  During any pertinent Access Period, the ABL Representative and its agents, representatives and designees shall have an irrevocable, non-exclusive right to have access to, and a rent-free right to use, the relevant parcel or item of the Term Debt Priority Collateral for the purposes described above.  The ABL Representative shall take proper and reasonable care under the circumstances of any Term Debt Priority Collateral that is used by the ABL Representative during the Access Period and repair and replace any damage (ordinary wear-and-tear excepted) caused by the ABL Representative or its agents, representatives or designees and the ABL Representative shall comply with all applicable laws in all material respects in connection with its use or occupancy or possession of the ABL Priority Collateral.  The ABL Representative shall indemnify and hold harmless the Term Debt Representative and the Term Debt Creditors for any injury or damage to Persons or property (ordinary wear-and-tear excepted) caused by the acts or omissions of Persons under its control; provided, however, that the ABL Representative and the ABL Creditors will not be liable for any diminution in the value of Term Debt Priority Collateral caused by the absence of the ABL Priority Collateral therefrom or to restore any owned or leased real property of any Loan Party to its original condition prior to the installation or location of any of the Collateral thereon (regardless of any obligations by Loan Parties for such a restoration under any mortgage or lease with respect to such real property).  The ABL Representative and the Term Debt Representative shall cooperate and use reasonable efforts to ensure that their activities during the Access Period as described above do not interfere materially with the activities of the other as described above, including the right of Term Debt Representative to show the Term Debt Priority Collateral to prospective purchasers and to ready the Term Debt Priority Collateral for sale.  Consistent with the definition of the term “Access Period,” if any order or injunction is issued or stay is granted or is otherwise effective by operation of law that prohibits the ABL Representative from exercising any of its rights hereunder, then the Access Period granted to the ABL Representative under this Section 3.4 shall be stayed during the period of such prohibition and shall continue thereafter for the number of days remaining as required under this Section 3.4.  The Term Debt Representative shall not foreclose or otherwise sell, remove or dispose of any of the Term Debt Priority Collateral during the Access Period with respect to such Collateral if such Collateral is reasonably necessary to enable the ABL Representative to convert, transport or arrange to sell the ABL Priority Collateral as described above unless the applicable purchaser, assignee or transferee thereof agrees to provide the access and use rights of ABL Creditors described in this Section 3.4(c).  Nothing contained in this Section 3.4(c) shall be construed or interpreted to contradict or limit the respective rights of the Term Debt Representative under the first sentence of Section 3.4(b) or of the ABL Representative under the second sentence of Section 3.4(b).

 

  

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3.5          No Additional Rights For the Loan Parties Hereunder.  if any ABL Secured Party or Term Debt Secured Party shall enforce its rights or remedies in violation of the terms of this Agreement, no Loan Party shall be entitled to use such violation as a defense to any action by any ABL Secured Party or Term Debt Secured Party, nor to assert such violation as a counterclaim or basis for set off or recoupment against any ABL Secured Party or Term Debt Secured Party.

 

3.6          Actions Upon Breach.  Should any ABL Secured Party or Term Debt Secured Party, contrary to this Agreement, in any way take, attempt to or threaten to take any action with respect to the Collateral (including, without limitation, any attempt to realize upon or enforce any remedy with respect to this Agreement), or fail to take any action required by this Agreement, any ABL Secured Party or Term Debt Secured Party, as applicable, may obtain relief against such ABL Secured Party or Term Debt Secured Party, as applicable, by injunction, specific performance and/or other appropriate equitable relief, it being understood and agreed by each of the ABL Representative on behalf of each ABL Secured Party and the Term Debt Representative on behalf of each Term Debt Secured Party that (i) the ABL Secured Parties’ or Term Debt Secured Parties’, as applicable, damages from its actions may at that time be difficult to ascertain and may be irreparable, and (ii) each Term Debt Secured Party or ABL Secured Party, as applicable, waives any defense that the Term Debt Secured Parties and/or ABL Secured Parties, as applicable, cannot demonstrate damage and/or be made whole by the awarding of damages.

 

SECTION 4.  Application of Proceeds of Senior Collateral; Dispositions and Releases of Lien; Notices and Insurance.

 

  

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4.1          Application of Proceeds.

 

(a)  Application of Proceeds of Senior Collateral.  The Senior Representative and Junior Representative hereby agree that all Senior Collateral, and all Proceeds thereof, received by either of them in connection with the collection, sale or disposition of Senior Collateral shall be applied,

 

first, to the payment of costs and expenses (including reasonable attorneys fees and expenses and court costs) of the Senior Representative in connection with such Enforcement Action;

 

second, to the payment of the Senior Obligations in accordance with the Senior Documents until the Senior Obligations Payment Date but only to the extent that any such Senior Obligations consisting of Senior Capped Obligations do not exceed the limitations under the applicable Senior Obligations Cap (but further provided that all Senior Uncapped Obligations (subject to the Banking Services/Swap Cap Amount in the case of the ABL Obligations) shall be paid in full pursuant to this paragraph second prior to any application in accordance with the following paragraphs of Section 4.1(a)) (and in the case of the application of proceeds of ABL Priority Collateral received from an Enforcement Action to the ABL Obligations constituting revolving loans, together with a concurrent permanent termination of the commitments to make such revolving loans or a permanent reserve to the borrowing base with respect to such revolving loans);

 

third, to the payment of the Junior Obligations in accordance with the Junior Documents, but only to the extent that any such Junior Obligations consisting of Junior Capped Obligations do not exceed the limitations under the applicable Junior Lien Cap (but further provided that all Junior Uncapped Obligations (subject to the Banking Services/Swap Cap Amount in the case of ABL Obligations) shall be paid in full pursuant to this paragraph second prior to any application in accordance with the following paragraphs of this Section 4.1(a));

 

fourth, to the payment of any and all remaining Senior Capped Obligations in excess of the applicable Senior Obligations Cap and all remaining Senior Uncapped Obligations in excess of the Banking Services/Swap Cap Amount until the Senior Obligations Payment Date;

 

fifth, to the payment of any and all remaining Junior Capped Obligations in excess of the applicable Junior Obligations Cap and all remaining Junior Uncapped Obligations in excess of the Banking Services/Swap Cap Amount until the Junior Obligations Payment Date; and

 

sixth, the balance, if any, to the Loan Parties or to whosoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct.

 

 (b)  Limited Obligation or Liability.  In exercising remedies, whether as a secured creditor or otherwise, the Senior Representative shall have no obligation or liability to the Junior Representative or to any Junior Secured Party, regarding the adequacy of any Proceeds or for any action or omission, save and except solely for an action or omission that breaches the express obligations undertaken by each party under the terms of this Agreement.

 

(c)  Segregation of Collateral.  Until the occurrence of the Senior Obligations Payment Date, any Senior Collateral (including all proceeds of any Senior Collateral) that may be received by any Junior Secured Party in violation of this Agreement shall be segregated from all other funds and assets of such Junior Secured Party and held in trust and promptly paid over to the Senior Representative, for the benefit of the Senior Secured Parties, in the same form as received, with any necessary endorsements, and each Junior Secured Party hereby authorizes the Senior Representative to make any such endorsements as agent for the Junior Representative (which authorization, being coupled with an interest, is irrevocable).

 

  

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4.2          Releases of Liens.  (a) (i) Upon any release, sale or disposition of ABL Priority Collateral permitted pursuant to the terms of the ABL Documents that results in the release of the ABL Lien (other than release of the ABL Lien due to the occurrence of the ABL Obligations Payment Date, and any release of the ABL Lien after the occurrence and during the continuance of any event of default under the Term Debt Agreement) on any ABL Priority Collateral, the Term Debt Lien on such ABL Priority Collateral (excluding any portion of the ABL Priority Collateral and proceeds of ABL Priority Collateral remaining after the ABL Obligations Payment Date occurs) shall be automatically and unconditionally released with no further consent or action of any Person so long as such release, sale or disposition of ABL Priority Collateral is permitted pursuant to the terms of the Term Debt Documents.

 

(ii)  Upon any release, sale or disposition of ABL Priority Collateral pursuant to any Enforcement Action that results in the release of the ABL Lien on any ABL Priority Collateral pursuant to any Enforcement Action, the Term Debt Lien on such ABL Priority Collateral (excluding any portion of the ABL Priority Collateral and the proceeds of the ABL Priority Collateral remaining after the ABL Obligations Payment Date occurs) shall be automatically and unconditionally released with no further consent or action of any Person so long as the proceeds of such ABL Priority Collateral are applied in accordance with Section 4.1(a) (with, in the case of ABL Obligations consisting of debt of a revolving nature, a corresponding permanent reduction in the commitments thereto).

 

(iii)  The Term Debt Representative shall promptly execute and deliver such release documents and instruments and shall take such further actions as the ABL Representative shall request in writing to evidence any release of the Term Debt Lien described herein.  The Term Debt Representative hereby appoints the ABL Representative and any officer or duly authorized person of the ABL Representative, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power of attorney in the place and stead of the Term Debt Representative and in the name of the Term Debt Representative or in the ABL Representative’s own name, from time to time, in the ABL Representative’s sole discretion, for the purposes of carrying out the terms of this Section 4.2, to take any and all appropriate action and to execute and deliver any and all documents and instruments as may be necessary or desirable to accomplish the purposes of this Section 4.2, including, without limitation, any financing statements (or amendments, partial releases or terminations thereof), endorsements, assignments, releases or other documents or instruments of transfer (which appointment, being coupled with an interest, is irrevocable).

 

(b)  (i) Upon any release, sale or disposition of Term Debt Priority Collateral permitted pursuant to the terms of the Term Debt Documents that results in the release of the Term Debt Lien (other than release of the Term Debt Lien due to the occurrence of the Term Debt Obligations Payment Date, and any release of the Term Debt Lien after the occurrence and during the continuance of any event of default under the ABL Agreement) on any Term Debt Priority Collateral, the ABL Lien on such Term Debt Priority Collateral (excluding any portion of the Term Debt Priority Collateral and the proceeds of Term Debt Priority Collateral remaining after the Term Debt Obligations Payment Date occurs) shall be automatically and unconditionally released with no further consent or action of any Person so long as such release, sale or disposition of Term Debt Priority Collateral is permitted pursuant to the terms of the ABL Documents.

 

(ii)  Upon any release, sale or disposition of Term Debt Priority Collateral pursuant to any Enforcement Action that results in the release of the Term Debt Lien on any Term Debt Priority Collateral pursuant to any Enforcement Action, the ABL Lien on such Term Debt Priority Collateral (excluding any portion of the Term Debt Priority Collateral and the proceeds of the Term Debt Priority Collateral remaining after the Term Debt Obligations Payment Date occurs) shall be automatically and unconditionally released with no further consent or action of any Person so long as the proceeds of such Term Debt Priority Collateral are applied in accordance with Section 4.1(a) (with, in the case of Term Debt Obligations consisting of debt of a revolving nature, a corresponding permanent reduction in the commitments thereto).

 

  

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(iii)  The ABL Representative shall promptly execute and deliver such release documents and instruments and shall take such further actions as the Term Debt Representative shall request in writing to evidence any release of the ABL Lien described herein.  The ABL Representative hereby appoints the Term Debt Representative and any officer or duly authorized person of the Term Debt Representative, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power of attorney in the place and stead of the ABL Representative and in the name of the ABL Representative or in the Term Debt Representative’s own name, from time to time, in the Term Debt Representative’s sole discretion, for the purposes of carrying out the terms of this Section 4.2, to take any and all appropriate action and to execute and deliver any and all documents and instruments as may be necessary or desirable to accomplish the purposes of this Section 4.2, including, without limitation, any financing statements (or amendments, partial releases or terminations thereof), endorsements, assignments, releases or other documents or instruments of transfer (which appointment, being coupled with an interest, is irrevocable).

 

4.3          Certain Real Property Notices; Insurance.  (a)  The Term Debt Representative shall give the ABL Representative at least 30 days notice prior to commencing any Enforcement Action against any Real Property owned by any Loan Party at which ABL Priority Collateral is stored or otherwise located or to dispossess any Loan Party from such Real Property.

 

(b)  Proceeds of Collateral include insurance proceeds and therefore the Lien Priority shall govern the ultimate disposition of casualty insurance proceeds.  The ABL Representative and Term Debt Representative shall be named as additional insureds and loss payees with respect to all insurance policies relating to Collateral.  The ABL Representative shall have the sole and exclusive right, as against the Term Debt Representative, to adjust settlement of insurance claims in the event of any covered loss, theft or destruction of ABL Priority Collateral.  The Term Debt Representative shall have the sole and exclusive right, as against the ABL Representative, to adjust settlement of insurance claims in the event of any covered loss, theft or destruction of Term Debt Priority Collateral.  All proceeds of such insurance shall be remitted to the ABL Representative or the Term Debt Representative, as the case may be, and each of the Term Debt Representative and ABL Representative shall cooperate (if necessary) in a reasonable manner in effecting the payment of insurance proceeds in accordance with Section 4.1.

 

SECTION 5.  Insolvency Proceedings.

 

5.1          Filing of Motions.  Until the Senior Obligations Payment Date has occurred, the Junior Representative agrees on behalf of itself and the other Junior Secured Parties that no Junior Secured Party shall, in or in connection with any Insolvency Proceeding, file any pleadings or motions, take any position at any hearing or proceeding of any nature, or otherwise take any action whatsoever, in each case in respect of any of the Senior Collateral, including, without limitation, with respect to the determination of any Liens or claims held by the Senior Representative (including the validity and enforceability thereof) or any other Senior Secured Party in respect of any Senior Collateral or the value of any claims of such parties under Section 506(a) of the Bankruptcy Code or otherwise; provided that the Junior Representative may (i) file a proof of claim in an Insolvency Proceeding (which proof of claim may assert any and all Junior Liens on the Senior Collateral), and (ii) file any necessary responsive or defensive pleadings in opposition of any motion or other pleadings made by any Person objecting to or otherwise seeking the disallowance of any Person objecting to or otherwise seeking the disallowance of the claims (or any portions thereof, including any such claims for Post-Petition Interest) and/or Junior Liens of the Junior Secured Parties on the Senior Collateral, subject to the limitations contained in this Agreement and only if consistent with the terms and the limitations on the Junior Representative imposed hereby.  The provisions of this Section 5.1 are supplemental to, and shall not be interpreted or construed to limit or contradict the provisions of, Section 2.2 hereof, which shall continue to apply during any Insolvency Proceeding.

 

  

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5.2          Financing Matters.  (a)  If any Loan Party becomes subject to any Insolvency Proceeding in the United States at any time prior to the ABL Obligations Payment Date, and if the ABL Representative or the other ABL Secured Parties desire to consent (or not object) to the use of cash collateral constituting ABL Priority Collateral under the Bankruptcy Code or to provide financing to any Loan Party under the Bankruptcy Code or to consent (or not object) to the provision of such financing to any Loan Party by any third party (any such financing, “ABL DIP Financing”), then the Term Debt Representative agrees, on behalf of itself and the other Term Debt Secured Parties, that so long as, in the case of any such ABL DIP Financing, the principal amount of credit (including any revolving credit advances) consisting of ABL DIP Principal Obligations to be made available to Loan Parties under such ABL DIP Financing does not exceed the limitations under the ABL Obligations Cap, each Term Debt Secured Party (i) (x) will be deemed to have consented to, will raise no objection to, nor support any other Person objecting to, the use of such cash collateral or to such ABL DIP Financing on the grounds of a failure to provide “adequate protection” for the Term Debt Representative’s Lien on the Collateral to secure the Term Debt Obligations or on any other grounds and (y) will not request any adequate protection solely as a result of such ABL DIP Financing except as set forth in Section 5.4 below and (ii) will subordinate (and will be deemed hereunder to have subordinated) the Term Debt Liens on any ABL Priority Collateral (A) to any Liens on the ABL Priority Collateral granted to secure such ABL DIP Financing on the same terms as the ABL Liens securing ABL Obligations other than the ABL DIP Financing (the “Pre-Petition ABL Liens”) are subordinated thereto (and such subordination will not alter in any manner the terms of this Agreement, including without limitation the provisions hereof with respect to the senior priority of the Pre-Petition ABL Liens on the ABL Priority Collateral over any Junior Liens of any Term Debt Secured Party on the ABL Priority Collateral) (provided that, in the event any of the proceeds of the ABL DIP Financing are used to refinance the ABL Obligations other than the ABL DIP Financing, the Term Debt Liens on the ABL Priority Collateral will be subordinated to the Liens on the ABL Priority Collateral securing the ABL DIP Financing), (B) to any adequate protection provided to the ABL Secured Parties to secure such ABL DIP Financing and (C) to any “carve-out” agreed to by the ABL Representative or the other ABL Secured Parties, so long as (x) the Term Debt Representative retains its Lien on the Collateral to secure the Term Debt Obligations (in each case, including Proceeds thereof arising after the commencement of the case under the Bankruptcy Code) and, as to the Term Debt Priority Collateral only, such Lien has the same priority as existed prior to the commencement of the case under the Bankruptcy Code and any Lien securing such ABL DIP Financing, adequate protection or carve-out is junior and subordinate to the Lien of the Term Debt Representative on the Term Debt Priority Collateral, (y) except in any case where the proceeds of the ABL DIP Financing are used to refinance the ABL Obligations other than the ABL DIP Financing, all Liens on ABL Priority Collateral securing any such ABL DIP Financing shall be senior to or on a parity with the Pre-Petition ABL Liens of the ABL Representative and the ABL Secured Parties securing the ABL Obligations other than the ABL DIP Financing on ABL Priority Collateral and (z) if the ABL Representative receives a replacement or adequate protection Lien on post-petition assets of the debtor to secure the ABL Obligations other than the ABL DIP Financing, and such replacement or adequate protection Lien is on any of the Term Debt Priority Collateral, (1) such replacement or adequate protection Lien on such post-petition assets which are part of the Term Debt Priority Collateral (the “Term Post-Petition Assets”) is junior and subordinate to the Lien in favor of the Term Debt Representative on the Term Debt Priority Collateral and (2) the Term Debt Representative also receives a replacement or adequate protection Lien on such Term Post-Petition Assets of the debtor to secure the Term Debt Obligations.  In no event will any of the ABL Secured Parties seek to obtain a priming Lien on any of the Term Debt Priority Collateral and nothing contained herein shall be deemed to be a consent by Term Debt Secured Parties to any adequate protection payments using Term Debt Priority Collateral.

  

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(b) If any Loan Party becomes subject to any Insolvency Proceeding in the United States at any time prior to the Term Debt Obligations Payment Date, and if the Term Debt Representative or the other Term Debt Secured Parties desire to consent (or not object) to the use of cash collateral constituting Term Debt Priority Collateral under the Bankruptcy Code or to provide financing to any Loan Party under the Bankruptcy Code or to consent (or not object) to the provision of such financing to any Loan Party by any third party (any such financing, “Term Debt DIP Financing”), then the ABL Representative agrees, on behalf of itself and the other ABL Secured Parties, that so long as, in the case of any such Term Debt DIP Financing, the principal amount of credit (including any revolving credit advances) consisting of Term Debt DIP Principal Obligations to be made available to Loan Parties under such Term Debt DIP Financing does not exceed the limitations under the Term Debt Obligations Cap, each ABL Secured Party (i) (x) will be deemed to have consented to, will raise no objection to, nor support any other Person objecting to, the use of such cash collateral or to such Term Debt DIP Financing on the grounds of a failure to provide “adequate protection” for the ABL Representative’s Lien on the Collateral to secure the ABL Obligations or on any other grounds and (y) will not request any adequate protection solely as a result of such Term Debt DIP Financing except as set forth in Section 5.4 below and (ii) will subordinate (and will be deemed hereunder to have subordinated) the ABL Liens on any Term Debt Priority Collateral (A) to any Liens on the Term Debt Priority Collateral granted to secure such Term Debt DIP Financing on the same terms as the Term Debt Liens securing Term Debt Obligations other than the Term Debt DIP Financing (the “Pre-Petition Term Debt Liens”) are subordinated thereto (and such subordination will not alter in any manner the terms of this Agreement, including without limitation the provisions hereof with respect to the senior priority of the Pre-Petition Term Debt Liens on the Term Debt Priority Collateral over any Junior Liens of any ABL Secured Party on the Term Debt Priority Collateral) (provided that, in the event any of the proceeds of the Term Debt DIP Financing are used to refinance the Term Debt Obligations other than the Term Debt DIP Financing, the ABL Liens on the Term Debt Priority Collateral will be subordinated to the Liens on the Term Debt Priority Collateral securing the Term Debt DIP Financing), (B) to any adequate protection provided to the Term Debt Secured Parties to secure such Term Debt DIP Financing and (C) to any “carve-out” agreed to by the Term Debt Representative or the other Term Debt Secured Parties, so long as (x) the ABL Representative retains its Lien on the Collateral to secure the ABL Obligations (in each case, including Proceeds thereof arising after the commencement of the case under the Bankruptcy Code) and, as to the ABL Priority Collateral only, such Lien has the same priority as existed prior to the commencement of the case under the Bankruptcy Code and any Lien securing such Term Debt DIP Financing, adequate protection or carve-out is junior and subordinate to the Lien of the ABL Representative on the ABL Priority Collateral, (y) except in any case where the proceeds of the Term Debt DIP Financing are used to refinance the Term Debt Obligations other than the Term Debt DIP Financing, all Liens on Term Debt Priority Collateral securing any such Term Debt DIP Financing shall be senior to or on a parity with the Pre-Petition Term Debt Liens of the Term Debt Representative and the Term Debt Secured Parties securing the Term Debt Obligations other than the Term Debt DIP Financing on Term Debt Priority Collateral and (z) if the Term Debt Representative receives a replacement or adequate protection Lien on post-petition assets of the debtor to secure the Term Debt Obligations other than the Term Debt DIP Financing, and such replacement or adequate protection Lien is on any of the ABL Priority Collateral, (1) such replacement or adequate protection Lien on such post-petition assets which are part of the ABL Priority Collateral (the “ABL Post-Petition Assets”) is junior and subordinate to the Lien in favor of the ABL Representative on the ABL Priority Collateral and (2) the ABL Representative also receives a replacement or adequate protection Lien on such ABL Post-Petition Assets of the debtor to secure the ABL Obligations.  In no event will any of the Term Debt Secured Parties seek to obtain a priming Lien on any of the ABL Priority Collateral, and nothing contained herein shall be deemed to be a consent by the ABL Secured Parties to any adequate protection payments using ABL Priority Collateral.

  

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(c)  All Liens granted to the Term Debt Representative or the ABL Representative in any Insolvency Proceeding, whether as adequate protection or otherwise, are intended to be and shall be deemed to be subject to the Lien Priority and the other terms and conditions of this Agreement, excluding any Liens granted to secure any Term Debt DIP Financing or ABL DIP Financing, which shall be subject to the provisions of this Section 5.2 only.

5.3          Relief From the Automatic Stay.  Until the ABL Obligations Payment Date, the Term Debt Representative agrees, on behalf of itself and the other Term Debt Secured Parties, that none of them will seek relief from the automatic stay or from any other stay in any Insolvency Proceeding or take any action in derogation thereof, in each case in respect of any ABL Priority Collateral, without the prior written consent of the ABL Representative.  Until the Term Debt Obligations Payment Date, the ABL Representative agrees, on behalf of itself and the other ABL Secured Parties, that none of them will seek relief from the automatic stay or from any other stay in any Insolvency Proceeding or take any action in derogation thereof, in each case in respect of any Term Debt Priority Collateral, without the prior written consent of the Term Debt Representative.  In addition, neither the Term Debt Representative nor the ABL Representative shall seek any relief from the automatic stay with respect to any Collateral without providing at least 15 days’ prior written notice to the other of the date on which the hearing in such Insolvency Proceeding regarding such requested relief will be held, unless otherwise agreed by both the ABL Representative and the Term Debt Representative.

 

5.4          Adequate Protection.  (a)  The Term Debt Representative, on behalf of itself and the other Term Debt Secured Parties, agrees that, prior to the ABL Obligations Payment Date, so long as the ABL Representative and the other ABL Secured Parties comply with Section 5.4(b), none of them shall object, contest, or support any other Person objecting to or contesting, (i) any request by the ABL Representative or the other ABL Secured Parties for adequate protection of its interest in the Collateral or any adequate protection provided to the ABL Representative or the other ABL Secured Parties or (ii) any objection by the ABL Representative or any other ABL Secured Parties to any motion, relief, action or proceeding based on a claim of a lack of adequate protection in the Collateral or (iii) the payment of interest, fees, expenses or other amounts to the ABL Representative or any other ABL Secured Party under Section 506(b) or 506(c) of the Bankruptcy Code or otherwise; provided that any action described in the foregoing clauses (i) and (ii) does not violate Section 5.2.  The Term Debt Representative, on behalf of itself and the other Term Debt Secured Parties, further agrees that, prior to the ABL Obligations Payment Date, none of them shall assert or enforce any claim under Section 506(b) or 506(c) of the Bankruptcy Code or otherwise that is senior to or on a parity with the ABL Liens for costs or expenses of preserving or disposing of any ABL Priority Collateral.  Notwithstanding anything to the contrary set forth in this Section and in Section 5.2(a)(i)(y), but subject to all other provisions of this Agreement (including, without limitation, Section 5.2(a)(i)(x) and Section 5.3), in any Insolvency Proceeding, if the ABL Secured Parties (or any subset thereof) are granted adequate protection consisting of additional collateral that constitutes ABL Priority Collateral (with replacement liens on such additional collateral) and superpriority claims in connection with any ABL DIP Financing or use of cash collateral, and the ABL Secured Parties do not object to the adequate protection being provided to them, then in connection with any such ABL DIP Financing or use of cash collateral the Term Debt Representative, on behalf of itself and any of the Term Debt Secured Parties, may, as adequate protection of their interests in the ABL Priority Collateral, seek or accept (and the ABL Representative and the ABL Secured Parties shall not object to) adequate protection consisting solely of (x) a replacement Lien on the same additional collateral, subordinated to the Liens securing any applicable ABL DIP Financing, and subordinated to any Pre-Petition ABL Liens securing the ABL Obligations other than any ABL DIP Financing on the same basis as the other Term Debt Liens on the ABL Priority Collateral are so subordinated to the ABL Obligations under this Agreement and (y) superpriority claims junior in all respects to the superpriority claims granted to the ABL Secured Parties securing any applicable ABL DIP Financing and all other ABL Obligations; provided, however, that the Term Debt Representative shall have irrevocably agreed, pursuant to Section 1129(a)(9) of the Bankruptcy Code, on behalf of itself and the Term Debt Secured Parties, in any stipulation and/or order granting such adequate protection, that such junior superpriority claims may be paid under any plan of reorganization in any combination of cash, debt, equity or other property having a value on the effective date of such plan equal to the allowed amount of such claims.

 

  

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(b)  The ABL Representative, on behalf of itself and the other ABL Secured Parties, agrees that, prior to the Term Debt Obligations Payment Date, so long as the Term Debt Representative and the other Term Debt Secured Parties comply with Section 5.4(a), none of them shall object, contest, or support any other Person objecting to or contesting, (i) any request by the Term Debt Representative or the other Term Debt Secured Parties for adequate protection of its interest in the Collateral or any adequate protection provided to the Term Debt Representative or the other Term Debt Secured Parties or (ii) any objection by the Term Debt Representative or any other Term Debt Secured Parties to any motion, relief, action or proceeding based on a claim of a lack of adequate protection in the Collateral or (iii) the payment of interest, fees, expenses or other amounts to the Term Debt Representative or any other Term Debt Secured Party under Section 506(b) or 506(c) of the Bankruptcy Code or otherwise; provided that any action described in the foregoing clauses (i) and (ii) does not violate Section 5.2.  The ABL Representative, on behalf of itself and the other ABL Secured Parties, further agrees that, prior to the Term Debt Obligations Payment Date, none of them shall assert or enforce any claim under Section 506(b) or 506(c) of the Bankruptcy Code or otherwise that is senior to or on a parity with the Term Debt Liens for costs or expenses of preserving or disposing of any Term Debt Priority Collateral.  Notwithstanding anything to the contrary set forth in this Section and in Section 5.2(b)(i)(y), but subject to all other provisions of this Agreement (including, without limitation, Section 5.2(b)(i)(x) and Section 5.3), in any Insolvency Proceeding, if the Term Debt Secured Parties (or any subset thereof) are granted adequate protection consisting of additional collateral that constitutes Term Debt Priority Collateral (with replacement liens on such additional collateral) and superpriority claims in connection with any Term Debt DIP Financing or the use of cash collateral, and the Term Debt Secured Parties do not object to the adequate protection being provided to them, then in connection with any such Term Debt DIP Financing or use of cash collateral the ABL Representative, on behalf of itself and any of the ABL Secured Parties, may, as adequate protection of their interests in the Term Debt Priority Collateral, seek or accept (and the Term Debt Representative and the Term Debt Secured Parties shall not object to) adequate protection consisting solely of (x) a replacement Lien on the same additional collateral, subordinated to the Liens securing any applicable Term Debt DIP Financing, and subordinated to any Pre-Petition Term Debt Liens securing the Term Debt Obligations other than any Term Debt DIP Financing on the same basis as the other ABL Liens on the Term Debt Priority Collateral are so subordinated to the Term Debt Obligations under this Agreement and (y) superpriority claims junior in all respects to the superpriority claims granted to the Term Debt Secured Parties securing any applicable Term Debt DIP Financing and all other Term Debt Obligations; provided, however, that the ABL Representative shall have irrevocably agreed, pursuant to Section 1129(a)(9) of the Bankruptcy Code, on behalf of itself and the ABL Secured Parties, in any stipulation and/or order granting such adequate protection, that such junior superpriority claims may be paid under any plan of reorganization in any combination of cash, debt, equity or other property having a value on the effective date of such plan equal to the allowed amount of such claims.

 

5.5          Avoidance Issues.  If any Senior Secured Party is required in any Insolvency Proceeding or otherwise to disgorge, turn over or otherwise pay to the estate of any Loan Party, because such amount was avoided or ordered to be paid or disgorged for any reason, including without limitation because it was found to be a fraudulent or preferential transfer, any amount (a “Recovery”), whether received as proceeds of security, enforcement of any right of set-off or otherwise, then the Senior Obligations shall be reinstated to the extent of such Recovery and deemed to be outstanding as if such payment had not occurred and the Senior Obligations Payment Date shall be deemed not to have occurred.  If this Agreement shall have been terminated prior to such Recovery, this Agreement shall be reinstated in full force and effect, and such prior termination shall not diminish, release, discharge, impair or otherwise affect the obligations of the parties hereto.  The Junior Secured Parties agree that none of them shall be entitled to benefit from any avoidance action affecting or otherwise relating to any distribution or allocation made in accordance with this Agreement, whether by preference or otherwise, it being understood and agreed that the benefit of such avoidance action otherwise allocable to them shall instead be allocated and turned over for application in accordance with the priorities set forth in this Agreement.

 

  

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5.6          Asset Dispositions in an Insolvency Proceeding.  Neither the Junior Representative nor any other Junior Secured Party shall, in an Insolvency Proceeding or otherwise, oppose any sale or disposition of any Senior Collateral that is supported by the Senior Secured Parties, and the Junior Representative and each other Junior Secured Party will be deemed to have consented under Section 363 of the Bankruptcy Code (and otherwise) to any sale of any Senior Collateral supported by the Senior Secured Parties and to have released the Junior Liens on such assets, but only if and to the extent that the Junior Liens shall attach to the proceeds of such assets remaining after the ABL Obligations Payment Date or Term Debt Obligations Payment Date (as applicable) occurs.

 

5.7          Other Matters.  To the extent that the Junior Representative or any Junior Secured Party has or acquires rights under Section 363 or Section 364 of the Bankruptcy Code with respect to any of the Collateral on which it has a Junior Lien, such Junior Representative agrees, on behalf of itself and the other Junior Secured Parties, not to assert any of such rights without the prior written consent of the Senior Representative; provided that if requested by the Senior Representative, such Junior Representative shall timely exercise such rights in the manner requested by the Senior Representative, including any rights to payments in respect of such rights.

 

5.8          Effectiveness in Insolvency Proceedings.  This Agreement, which the parties hereto expressly acknowledge is a “subordination agreement” under Section 510(a) of the Bankruptcy Code, shall be effective before, during and after the commencement of an Insolvency Proceeding.

 

SECTION 6.  Term Debt Documents and ABL Documents

 

(a)  The Term Debt Representative, on behalf of itself and the Term Debt Secured Parties, agrees that it shall not at any time execute or deliver any amendment or other modification to any of the Term Debt Documents in violation of this Agreement.

 

(b)  The ABL Representative, on behalf of itself and the ABL Secured Parties, agrees that it shall not at any time execute or deliver any amendment or other modification to any of the ABL Documents in violation of this Agreement.

 

SECTION 7.  Purchase Options.

 

7.1          Notice of Exercise.  (a)  Upon the occurrence and during the continuance of an “Event of Default” under the ABL Documents, if such Event of Default remains uncured or unwaived for at least thirty (30) consecutive days and the requisite lenders under the ABL Agreement have not agreed to forbear from the exercise of remedies, all or a portion of the Term Debt Creditors, acting as a single group, shall have the option at any time upon five (5) Business Days’ prior written notice to the ABL Representative to purchase all of the ABL Obligations from the ABL Secured Parties.  Such notice from such Term Debt Creditors to the ABL Representative shall be irrevocable.

 

(b)  Upon the occurrence and during the continuance of an “Event of Default” under the Term Debt Documents, if such Event of Default remains uncured or unwaived for at least thirty (30) consecutive days and the requisite lenders under the Term Debt Agreement have not agreed to forbear from the exercise of remedies, all or a portion of the ABL Creditors, acting as a single group, shall have the option at any time upon five (5) Business Days’ prior written notice to the Term Debt Representative to purchase all of the Term Debt Obligations from the Term Debt Secured Parties.  Such notice from such ABL Creditors to the Term Debt Representative shall be irrevocable.

 

  

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7.2          Purchase and Sale.  (a)  On the date specified by the relevant Term Debt Creditors in the notice contemplated by Section 7.1(a) above (which shall not be less than five (5) Business Days, nor more than twenty (20) calendar days, after the receipt by the ABL Representative of the notice of the relevant Term Debt Creditor’s election to exercise such option), the lenders under the ABL Agreement shall sell to the relevant Term Debt Creditors, and the relevant Term Debt Creditors shall purchase from the lenders under the ABL Agreement, the ABL Obligations; provided that, the ABL Representative and the ABL Secured Parties shall retain all rights to be indemnified or held harmless by the Loan Parties in accordance with the terms of the ABL Documents but shall not retain any rights to the security therefor.

 

(b)  On the date specified by the relevant ABL Creditors in the notice contemplated by Section 7.1(b) above (which shall not be less than five (5) Business Days, nor more than twenty (20) calendar days, after the receipt by Term Debt Representative of the notice of the relevant ABL Creditor’s election to exercise such option), the lenders under the Term Debt Agreement shall sell to the relevant ABL Creditors, and the relevant ABL Creditors shall purchase from lenders under the Term Debt Agreement, the Term Debt Obligations; provided that, the Term Debt Representative and the Term Debt Secured Parties shall retain all rights to be indemnified or held harmless by the Loan Parties in accordance with the terms of the Term Debt Documents but shall not retain any rights to the security therefor.

 

7.3          Payment of Purchase Price.  Upon the date of such purchase and sale, the relevant Term Debt Creditors or the relevant ABL Creditors, as applicable, shall (a) pay to the ABL Representative for the benefit of the lenders under the ABL Agreement (with respect to a purchase of the ABL Obligations) or to the Term Debt Representative for the benefit of the lenders under the Term Debt Agreement (with respect to a purchase of the Term Debt Obligations) as the purchase price therefor the full amount of all the ABL Obligations or Term Debt Obligations, as applicable, then outstanding and unpaid (including principal, interest, fees and expenses, including reasonable attorneys’ fees and legal expenses but specifically excluding any prepayment premium, termination or similar fees), (b) with respect to a purchase of the ABL Obligations, furnish cash collateral to the ABL Representative in a manner and in such amounts as the ABL Representative determines is reasonably necessary to secure the ABL Representative, the ABL Secured Parties, letter of credit issuing banks and applicable affiliates in connection with any issued and outstanding letters of credit (including all reimbursement obligations relating thereto and all obligations for fees thereon through the then-effective termination dates thereof), hedging obligations (including Swap Obligations) and cash management obligations (including Banking Services Obligations) secured by the ABL Documents, (c) with respect to a purchase of the ABL Obligations, agree to reimburse the ABL Representative, the ABL Secured Parties and letter of credit issuing banks for any loss, cost, damage or expense (including reasonable attorneys’ fees and legal expenses) in connection with any commissions, fees, costs or expenses related to any issued and outstanding letters of credit as described above and any checks or other payments provisionally credited to the ABL Obligations, and/or as to which the ABL Representative has not yet received final payment, (d) agree to reimburse the ABL Secured Parties or the Term Debt Secured Parties, as applicable, and with respect to a purchase of the ABL Obligations letter of credit issuing banks, in respect of indemnification obligations of the Loan Parties under the ABL Documents or the Term Debt Documents, as applicable, as to matters or circumstances known to the ABL Representative or the Term Debt Representative, as applicable, at the time of the purchase and sale which would reasonably be expected to result in any loss, cost, damage or expense (including reasonable attorneys’ fees and legal expenses) to the ABL Secured Parties, the Term Debt Secured Parties or letter of credit issuing banks, as applicable, and (e) agree to indemnify and hold harmless the ABL Secured Parties or the Term Debt Secured Parties, as applicable, and with respect to a purchase of the ABL Obligations letter of credit issuing banks, from and against any loss, liability, claim, damage or expense (including reasonable fees and expenses of legal counsel) arising out of any claim asserted by a third party in respect of the ABL Obligations or the Term Debt Obligations, as applicable, as a direct result of any acts by any Term Debt Secured Party or any ABL Secured Party, as applicable, occurring after the date of such purchase.  Such purchase price and cash collateral shall be remitted by wire transfer in federal funds to such bank account in New York, New York as the ABL Representative or the Term Debt Representative, as applicable, may designate in writing for such purpose.

 

  

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7.4          Limitation on Representations and Warranties.  Such purchase shall be expressly made without representation or warranty of any kind by any selling party (or the ABL Representative or the Term Debt Representative, as applicable) and without recourse of any kind, except that the selling party shall represent and warrant:  (a) the amount of the ABL Obligations or Term Debt Obligations, as applicable, being purchased from it, (b) that such ABL Secured Party or Term Debt Secured Party, as applicable, owns the ABL Obligations or Term Debt Obligations, as applicable, free and clear of any Liens or encumbrances and (c) that such ABL Secured Party or Term Debt Secured Party, as applicable, has the right to assign such ABL Obligations or Term Debt Obligations, as applicable, and the assignment is duly authorized.

 

SECTION 8.  Reliance; Waivers; etc.

 

8.1          Reliance.  The ABL Documents are deemed to have been executed and delivered, and all extensions of credit thereunder are deemed to have been made or incurred, in reliance upon this Agreement.  The Term Debt Representative, on behalf of it itself and the other Term Debt Secured Parties, expressly waives all notice of the acceptance of and reliance on this Agreement by the ABL Representative and the other ABL Secured Parties.  The Term Debt Documents are deemed to have been executed and delivered and all extensions of credit thereunder are deemed to have been made or incurred, in reliance upon this Agreement.  The ABL Representative, on behalf of itself and the other ABL Secured Parties, expressly waives all notices of the acceptance of and reliance on this Agreement by the Term Debt Representative and the other Term Debt Secured Parties.

 

8.2          No Warranties or Liability.  The Term Debt Representative and the ABL Representative acknowledge and agree that neither has made any representation or warranty with respect to the execution, validity, legality, completeness, collectability or enforceability of any other ABL Document or any Term Debt Document.  Except as otherwise provided in this Agreement, the Term Debt Representative and the ABL Representative will be entitled to manage and supervise the respective extensions of credit to any Loan Party in accordance with law and their usual practices, modified from time to time as they deem appropriate.

 

8.3          No Waivers.  No right or benefit of any party hereunder shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of such party or any other party hereto or by any noncompliance by any Loan Party with the terms and conditions of any of the ABL Documents or the Term Debt Documents.

 

SECTION 9.  Obligations Unconditional.  All rights, interests, agreements and obligations hereunder of the Senior Representative and the Senior Secured Parties in respect of any Collateral and the Junior Representative and the Junior Secured Parties in respect of such Collateral shall remain in full force and effect regardless of:

 

(a)          any lack of validity or enforceability of any Senior Document or any Junior Document and regardless of whether the Liens of the Senior Representative and Senior Secured Parties are not perfected or are voidable for any reason;

 

  

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(b)          any change in the time, manner or place of payment of, or in any other terms of, all or any of the Senior Obligations or Junior Obligations, or any amendment or waiver or other modification, including any increase in the amount thereof or any refinancing, whether by course of conduct or otherwise, of the terms of any Senior Document or any Junior Document;

 

(c)          any exchange, release or lack of perfection of any Lien on any Collateral or any other asset, or any amendment, waiver or other modification, whether in writing or by course of conduct or otherwise, of all or any of the Senior Obligations or Junior Obligations or any guarantee thereof;

 

(d)          the commencement of any Insolvency Proceeding in respect of any Loan Party; or

 

(e)          any other circumstances which otherwise might constitute a defense available to, or a discharge of, any Loan Party in respect of any Secured Obligation or of any Junior Secured Party in respect of this Agreement.

 

SECTION 10.  Miscellaneous.

 

10.1        Rights of Subrogation.  The Term Debt Representative, for and on behalf of itself and the Term Debt Secured Parties, agrees that no payment to the ABL Representative or any ABL Secured Party pursuant to the provisions of this Agreement shall entitle the Term Debt Representative or any Term Debt Secured Party to exercise any rights of subrogation in respect thereof until the ABL Obligations Payment Date.  Following the ABL Obligations Payment Date, the ABL Representative agrees to execute such documents, agreements, and instruments as the Term Debt Representative or any Term Debt Secured Party may reasonably request to evidence the transfer by subrogation to any such Person of an interest in the ABL Obligations resulting from payments to the ABL Representative by such Person, so long as all costs and expenses (including all reasonable legal fees and disbursements) incurred in connection therewith by the ABL Representative are paid by such Person upon request for payment thereof.  The ABL Representative, for and on behalf of itself and the ABL Secured Parties, agrees that no payment to the Term Debt Representative or any Term Debt Secured Party pursuant to the provisions of this Agreement shall entitle the ABL Representative or any ABL Secured Party to exercise any rights of subrogation in respect thereof until the Term Debt Obligations Payment Date.  Following the Term Debt Obligations Payment Date, the Term Debt Representative agrees to execute such documents, agreements, and instruments as the ABL Representative or any ABL Secured Party may reasonably request to evidence the transfer by subrogation to any such Person of an interest in the Term Debt Obligations resulting from payments to the Term Debt Representative by such Person, so long as all costs and expenses (including all reasonable legal fees and disbursements) incurred in connection therewith by the Term Debt Representative are paid by such Person upon request for payment thereof.  No Senior Secured Parties, when dealing with and/or pursuing Enforcement Actions with respect to their respective Senior Collateral, shall have any duty or obligation or limitation on its actions to take any actions (or refrain from acting), or to act (or refrain from acting) in any particular manner, so as to preserve or protect any potential rights of subrogation of the applicable Junior Secured Parties, and without limiting the generality of the foregoing, (x) any Senior Secured Parties may release their liens on any Senior Collateral (without affecting or releasing the Junior Lien on such Collateral) (provided that nothing contained in this clause (x) shall be construed under any circumstances to limit or contradict the provisions of Sections 4.2 and 5.6) and (y) any ABL Secured Parties or Term Debt Secured Parties (as applicable) may release any Loan Party or any other Person from its obligations under any ABL Documents or Term Debt Documents (as applicable) and/or with respect to its liability for any ABL Obligations or Term Debt Obligations (as applicable), in all cases under clauses (x) and (y) without any duty or obligation to any other party to this Agreement to preserve or protect any potential rights of subrogation of such other party.

 

  

30

  

 

10.2        Further Assurances.  Each of the Term Debt Representative and the ABL Representative will, at their own expense and at any time and from time to time, promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that the other party may reasonably request, in order to protect any right or interest granted or purported to be granted hereby or to enable the ABL Representative or the Term Debt Representative to exercise and enforce its rights and remedies hereunder; provided, however, that no party shall be required to pay over any payment or distribution, execute any instruments or documents, or take any other action referred to in this Section 10.2, to the extent that such action would contravene any law, order or other legal requirement or any of the terms or provisions of this Agreement, and in the event of a controversy or dispute, such party may interplead any payment or distribution in any court of competent jurisdiction, without further responsibility in respect of such payment or distribution under this Section 10.2.

 

10.3         Conflicts.  In the event of any conflict between the provisions of this Agreement and the provisions of any ABL Document or any Term Debt Document, the provisions of this Agreement shall govern.

 

10.4         Continuing Nature of Provisions.  Subject to Section 5.5, this Agreement shall continue to be effective, and shall not be terminable by any party hereto, until the earlier of (i) the ABL Obligations Payment Date and (ii) the Term Debt Obligations Payment Date; provided that if a Replacement ABL Agreement or Replacement Term Debt Agreement, as applicable, is entered into following such termination, the relevant Secured Parties agree to, upon the request of the Term Debt Representative or ABL Representative (as applicable) or the Parent Borrower, restore this Agreement on the terms and conditions set forth herein until the earlier to occur of the next following ABL Obligations Payment Date or Term Debt Obligations Payment Date.  This is a continuing agreement and the ABL Secured Parties and the Term Debt Secured Parties may continue, at any time and without notice to the other parties hereto, to extend credit and other financial accommodations, lend monies and provide indebtedness to, or for the benefit of, any Loan Party on the faith hereof.  In furtherance of the foregoing:

 

(a)           Upon receipt of a notice from the Loan Parties stating that the Loan Parties (or any of them) have entered into entered into a Replacement ABL Agreement (which notice shall include the identity of the new ABL Representative, if applicable), the Term Debt Representative shall promptly (i) enter into such documents and agreements (including amendments or supplements to this Agreement) as the Loan Parties or the new ABL Representative shall reasonably request in order to provide to the new ABL Representative or the applicable new ABL Secured Parties the rights contemplated hereby, in each case consistent in all material respects with the terms of this Agreement, (ii) deliver to the new ABL Representative any ABL Priority Collateral held by it, together with any necessary endorsements (or otherwise allow the new ABL Representative to obtain control of such ABL Priority Collateral), and (iii) take such other actions as the Loan Parties or the new ABL Representative may reasonably request to provide the new ABL Representative or the applicable the ABL Creditors the benefits of this Agreement.  The new ABL Representative shall agree in a writing addressed to the Term Debt Representative to be bound by the terms of this Agreement, and

 

(b)          Upon receipt of a notice from the Loan Parties stating that the Loan Parties (or any of them) have entered into entered into a Replacement Term Debt Agreement (which notice shall include the identity of the new Term Debt Representative, if applicable), the ABL Representative shall promptly (i) enter into such documents and agreements (including amendments or supplements to this Agreement) as the Loan Parties or the new Term Debt Representative shall reasonably request in order to provide to the new Term Debt Representative or the applicable new Term Debt Secured Parties the rights contemplated hereby, in each case consistent in all material respects with the terms of this Agreement, (ii) deliver to the new Term Debt Representative any Term Debt Priority Collateral held by it, together with any necessary endorsements (or otherwise allow the new Term Debt Representative to obtain control of such Term Debt Priority Collateral), and (iii) take such other actions as the Loan Parties or the new Term Debt Representative may reasonably request to provide the new Term Debt Representative or the applicable Term Debt Creditors the benefits of this Agreement.  The new Term Debt Representative shall agree in a writing addressed to the ABL Representative to be bound by the terms of this Agreement.

 

  

31

  

 

10.5         Amendments; Waivers.  (a)  No amendment or modification of or supplement to any of the provisions of this Agreement shall be effective unless the same shall be in writing and signed by the ABL Representative and the Term Debt Representative.  The ABL Representative and the Term Debt Representative shall use their commercially reasonable best efforts to notify the Parent Borrower at the address specified in the signature pages to this Agreement of any amendment or modification of or supplement to any provisions of this Agreement and provide the Parent Borrower with a copy of such amendment, modification or supplement, provided that no liability shall attach to any party to this Agreement in the event any such notice is not given.

 

(b)  It is understood that the ABL Representative and the Term Debt Representative, without the consent of any other ABL Secured Party or Term Debt Secured Party, may in their discretion determine that a supplemental agreement (which may take the form of an amendment and restatement of this Agreement) is necessary or appropriate to facilitate having additional indebtedness or other obligations (“Additional Debt”) of any of the Loan Parties become ABL Obligations or Term Debt Obligations, as the case may be, under this Agreement, which supplemental agreement shall specify whether such Additional Debt constitutes ABL Obligations or Term Debt Obligations, provided, that such Additional Debt is permitted to be incurred by the ABL Agreement and Term Debt Agreement then extant, and is permitted by such agreements to be subject to the provisions of this Agreement as ABL Obligations or Term Debt Obligations, as applicable.

 

(c)           Notwithstanding the terms of Section 10.5(a) and (b), in the event that the Term Debt Representative does not take the actions contemplated by Section 10.4(a)(i) in connection with any permitted Additional Debt within 10 days after the delivery of a written request to do so, the ABL Representative, without the consent of the Term Debt Representative, may modify this Agreement (which modification may take the form of an amendment and restatement of this Agreement) for the purpose of having any Replacement ABL Agreement or Additional Debt of any of the Loan Parties become ABL Obligations under this Agreement, which agreement shall specify that such Replacement ABL Agreement or Additional Debt constitutes ABL Obligations, provided, that such Additional Debt is permitted to be incurred pursuant to each Term Debt Agreement then extant, and is permitted by such agreements (as determined by the ABL Representative in good faith and certified by an officer of the Parent Borrower to the Term Debt Representative) to be subject to the provisions of this Agreement as ABL Obligations, as applicable.

 

10.6         Information Concerning Financial Condition of the Loan Parties.  Each of the Term Debt Representative and the ABL Representative hereby assume responsibility for keeping itself informed of the financial condition of the Loan Parties and all other circumstances bearing upon the risk of nonpayment of the ABL Obligations or the Term Debt Obligations.  The Term Debt Representative and the ABL Representative hereby agree that no party shall have any duty to advise any other party of information known to it regarding such condition or any such circumstances (except as otherwise provided in the ABL Documents and Term Debt Documents).  In the event the Term Debt Representative or the ABL Representative, in its sole discretion, undertakes at any time or from time to time to provide any information to any other party to this Agreement, it shall be under no obligation (a) to provide any such information to such other party or any other party on any subsequent occasion, (b) to undertake any investigation not a part of its regular business routine, or (c) to disclose any other information.

 

  

32

  

 

10.7         Governing Law.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

10.8         Submission to Jurisdiction; JURY TRIAL WAIVER.  (a)  Each ABL Secured Party, each Term Debt Secured Party and each Loan Party hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each such party hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court.  Each such party agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in this Agreement shall affect any right that the any ABL Secured Party or Term Debt Secured Party may otherwise have to bring any action or proceeding against any Loan Party or its properties in the courts of any jurisdiction.

 

(b)  Each ABL Secured Party, each Term Debt Secured Party and each Loan Party hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so (i) any objection it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (a) of this Section and (ii) the defense of an inconvenient forum to the maintenance of such action or proceeding.

 

(c)  Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 10.9.  Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

 

(d)   EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY TRIAL IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

10.9         Notices.  Unless otherwise specifically provided herein, any notice or other communication herein required or permitted to be given shall be in writing and may be personally served, telecopied, or sent by overnight express courier service or United States mail and shall be deemed to have been given when delivered in person or by courier service, upon receipt of a telecopy or five days after deposit in the United States mail (certified, with postage prepaid and properly addressed).  For the purposes hereof, the addresses of the parties hereto (until notice of a change thereof is delivered as provided in this Section 10.9) shall be as set forth below each party’s name on the signature pages hereof, or, as to each party, at such other address as may be designated by such party in a written notice to all of the other parties.

 

10.10       Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and each of the ABL Secured Parties and Term Debt Secured Parties and their respective successors and assigns, and nothing herein is intended, or shall be construed to give, any other Person any right, remedy or claim under, to or in respect of this Agreement or any Collateral.

 

10.11       Headings.  Section headings used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

 

  

33

  

 

10.12       Severability.  Any provision of this Agreement that 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.

 

10.13       Other Remedies.  For avoidance of doubt, it is understood that nothing in this Agreement shall prevent any ABL Secured Party or any Term Debt Secured Party from exercising any available remedy to accelerate the maturity of any indebtedness or other obligations owing under the ABL Documents or the Term Debt Documents, as applicable, or to demand payment under any guarantee in respect thereof.

 

10.14       Counterparts; Integration.  This Agreement may be executed by one or more of the parties to this Agreement on any number of counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.  Delivery of an executed signature page of this Agreement by email or facsimile transmission shall be effective as delivery of a manually executed counterpart of this Agreement.

 

10.15       Additional Loan Parties.  Parent Borrower shall cause each Person that becomes a Loan Party after the date hereof to execute an Acknowledgement regarding this Agreement in substantially the form of the Acknowledgement hereto executed by the Loan Parties on the date hereof and attached hereto.

 

[SIGNATURE PAGES TO FOLLOW]

 

  

34

  

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

	  	
PNC BANK, NATIONAL ASSOCIATION, as ABL Representative for and on behalf of the ABL Secured Parties

	  	  
	  	
By:

	
 /s/ Charles F. Garoklanian

	  	
Name:

	
Charles F. Garoklanian

	  	
Title:

	
Senior Vice President

	 	 
	  	
Address for Notices:

	 	 
	  	
PNC Bank, National Association

	  	
340 Madison Avenue, 11th Floor

	  	
New York, NY 10017

	  	
Attention: John Trott

	  	
Telecopy: (212) 303-0067

	  	
Email: john.trott@pnc.com

	  	  
	  	
with a copy to:

	  	  
	  	
Blank Rome LLP

	  	
Chrysler Building

	  	
405 Lexington Avenue

	  	
New York, NY 10174

	  	
Attention: Robert B. Stein

	  	
Telecopy: (212) 885-5001

	  	
Email: RStein@blankrome.com

 

  

 

  

 

	  	
FBR CAPITAL MARKETS LT, INC., as Term Debt Representative for and on behalf of the Term Debt Secured Parties

	  	  
	  	
By:

	
 /s/ Robert J. Kiernan

	  	
Name:

	
Robert J. Kiernan

	  	
Title:

	
Senior Vice President

	  	  
	  	
Address for Notices:

	  	  
	  	
FBR Capital Markets LT, Inc.

	  	
237 Park Avvenue, 19th Floor

	  	
New York, NY 10017

	  	
Attention: Scott Woods

	  	
Telephone: 646-885-5611

	  	
Telecopy: 212-457-3376

	  	
Email: swoods@fbr.com

	  	  
	  	
With a copy to:

	  	  
	  	
Cortland Capital Market Services LLC

	  	
225 W. Washington Street, Suite 1450

	  	
Chicago, IL 60606

	  	
Attention: Beata Konopko

	  	
Telephone: 312-564-5080

	  	
Email: beata.konopko@cortlandglobal.com

 

  

 

  

ACKNOWLEDGEMENT

Each of the Loan Parties hereby acknowledges and consents to the terms of the foregoing Agreement.

Each of the Loan Parties agrees that any Secured Party holding or controlling Collateral does so as bailee (under the Uniform Commercial Code) for the other Secured Parties as provided in the foregoing Agreement and is hereby authorized to and may turn over to such other Secured Parties any such Collateral as required by the foregoing Agreement.

Each of the Loan Parties acknowledges and agrees that:  (i) it is not a party to the foregoing Agreement and does not and will not receive any right, benefit, priority, or interest under or because of the existence of the foregoing Agreement (except for the limited rights of UniTek Global Services, Inc. to make certain requests as expressly provided for in Section 10.4 thereof); and (ii) it will execute and deliver such additional documents and take such additional action as may be necessary or desirable in the reasonable opinion of any Secured Party to effectuate the provisions and purposes of the foregoing Agreement

As used above, initially capitalized terms have the respective meanings set forth in the foregoing Agreement.

	  	
UNITEK GLOBAL SERVICES, INC.

	 	 
	  	
UNITEK ACQUISITION, INC.

	 	 
	  	
BCI COMMUNICATIONS, INC.

	 	 
	  	
UNITEK USA, LLC

	 	 
	  	
ADVANCED COMMUNICATIONS USA, INC.

	 	 
	  	
DIRECTSAT USA, LLC

	 	 
	  	
FTS USA, LLC

	 	 	 
	  	By:	
/s/ Ronald J. Lejman

	  	Name:	
Ronald J. Lejman

	  	Title:	
Chief Financial Officer

	 	 
	  	
Address for Notices:

	 	 
	  	
UniTek Global Services, Inc.

	  	
1777 Sentry Parkway West

	  	
Gwynedd Hall, Suite 202

	  	
Blue Bell, PA 19422

	  	
Attention: Ronald J. Lejman

	  	
Telecopy: 484-493-1613

	  	
Telephone: 267-464-1700

	  	
Email: rlejman@unitekgs.comUnassociated Document

EXECUTION VERISON

REVOLVING CREDIT

AND

SECURITY AGREEMENT

 

PNC BANK, NATIONAL ASSOCIATION

(AS LENDER AND AS AGENT)

 

WITH

 

UNITEK GLOBAL SERVICES, INC.

 

AND

 

CERTAIN SUBSIDIARIES THEREOF

 

(BORROWERS)

 

PNC CAPITAL MARKETS LLC

 

AND

 

FBR CAPITAL MARKETS LT, INC.

 

(AS CO-LEAD ARRANGERS AND CO-BOOKRUNNERS)

 

APRIL 15, 2011

  

  

  

TABLE OF CONTENTS

 

	  	  	
Page

	  	  	  
	
I.

	
DEFINITIONS

	
1

	 	 	 
	
1.1.

	
Accounting Terms

	
1

	
1.2.

	
General Terms

	
2

	
1.3.

	
Uniform Commercial Code Terms

	
38

	
1.4.

	
Certain Matters of Construction

	
38

	
1.5.

	
Accounting Change

	
39

	  	  	  
	
II.

	
REVOLVING CREDIT AND SWING LOAN FACILITIES

	
39

	  	  	  
	
2.1.

	
Revolving Advances

	
39

	
2.2.

	
Procedure for Requesting Revolving Advances; Procedures for Selection of Applicable Interest Rates

	
40

	
2.3.

	
Disbursement of Advance Proceeds

	
42

	
2.4.

	
Swing Loans

	
43

	
2.5.

	
Maximum Advances

	
44

	
2.6.

	
Repayment of Advances

	
44

	
2.7.

	
Repayment of Excess Advances

	
45

	
2.8.

	
Statement of Account

	
45

	
2.9.

	
Letters of Credit

	
46

	
2.10.

	
Issuance of Letters of Credit

	
46

	
2.11.

	
Requirements For Issuance of Letters of Credit

	
47

	
2.12.

	
Disbursements, Reimbursement

	
47

	
2.13.

	
Repayment of Participation Advances

	
48

	
2.14.

	
Documentation

	
49

	
2.15.

	
Determination to Honor Drawing Request

	
49

	
2.16.

	
Nature of Participation and Reimbursement Obligations

	
49

	
2.17.

	
Indemnity

	
51

	
2.18.

	
Liability for Acts and Omissions

	
51

	
2.19.

	
Additional Payments

	
52

	
2.20.

	
Manner of Borrowing and Payment

	
52

	
2.21.

	
Voluntary Prepayments,Voluntary Commitment Reductions,Mandatory Prepayments

	
54

	
2.22.

	
Use of Proceeds

	
56

	
2.23.

	
Defaulting Lender

	
56

	
2.24.

	
Increase of the Maximum Revolving Advance Amount by Borrowers

	
59

	  	  	  
	
III.

	
INTEREST AND FEES

	
60

	  	  	  
	
3.1.

	
Interest

	
60

	
3.2.

	
Letter of Credit Fees

	
61

	
3.3.

	
Facility Fee

	
62

	
3.4.

	
Collateral Evaluation Fee and Fee Letter

	
63

	
3.5.

	
Computation of Interest and Fees

	
63

	
3.6.

	
Maximum Charges

	
63

	
3.7.

	
Increased Costs

	
64

  

i

  

	
3.8.

	
Basis For Determining Interest Rate Inadequate or Unfair

	
64

	
3.9.

	
Capital Adequacy

	
65

	
3.10.

	
Gross Up for Taxes

	
66

	
3.11.

	
Withholding Tax Exemption

	
66

	  	  	  
	
IV.

	
COLLATERAL:  GENERAL TERMS

	
67

	  	  	  
	
4.1.

	
Security Interest in the Collateral

	
67

	
4.2.

	
Perfection of Security Interest

	
67

	
4.3.

	
Disposition of Collateral

	
68

	
4.4.

	
Preservation of Collateral

	
68

	
4.5.

	
Ownership of Collateral and Assets

	
69

	
4.6.

	
Defense of Agent’s and Lenders’ Interests

	
69

	
4.7.

	
Books and Records

	
70

	
4.8.

	
Financial Disclosure

	
70

	
4.9.

	
Compliance with Laws

	
70

	
4.10.

	
Inspection of Premises and Inspections/Evaluation of Collateral

	
71

	
4.11.

	
Insurance

	
71

	
4.12.

	
Failure to Pay Insurance

	
72

	
4.13.

	
Payment of Taxes

	
72

	
4.14.

	
Payment of Leasehold Obligations

	
73

	
4.15.

	
Receivables

	
73

	
4.16.

	
Inventory

	
77

	
4.17.

	
Maintenance of Equipment

	
77

	
4.18.

	
Exculpation of Liability

	
77

	
4.19.

	
Environmental Matters

	
77

	
4.20.

	
Financing Statements

	
79

	
4.21.

	
Special Provisions Regarding Term Debt Priority Collateral

	
79

	  	  	  
	
V.

	
REPRESENTATIONS AND WARRANTIES

	
80

	  	  	  
	
5.1.

	
Authority

	
80

	
5.2.

	
Formation and Qualification; Inactive Subsidiaries; Foreign Subsidiaries

	
80

	
5.3.

	
Survival of Representations and Warranties

	
81

	
5.4.

	
Tax Returns

	
81

	
5.5.

	
Financial Statements

	
81

	
5.6.

	
Entity Names

	
82

	
5.7.

	
OSHA and Environmental Compliance

	
82

	
5.8.

	
Solvency; No Litigation, Violation, Indebtedness or Default; ERISA Compliance

	
83

	
5.9.

	
Patents, Trademarks, Copyrights and Licenses

	
85

	
5.10.

	
Licenses and Permits

	
85

	
5.11.

	
[RESERVED]

	
85

	
5.12.

	
No Default

	
85

	
5.13.

	
No Burdensome Restrictions

	
85

	
5.14.

	
No Labor Disputes

	
85

	
5.15.

	
Margin Regulations

	
85

	
5.16.

	
Investment Company Act

	
85

	
5.17.

	
Disclosure

	
86

	
5.18.

	
Delivery of Term Debt Documents

	
86

  

ii

  

	
5.19.

	
Swaps

	
86

	
5.20.

	
Conflicting Agreements

	
86

	
5.21.

	
Application of Certain Laws and Regulations

	
86

	
5.22.

	
Business and Property of Borrowers

	
86

	
5.23.

	
Section 20 Subsidiaries

	
86

	
5.24.

	
Anti-Terrorism Laws

	
86

	
5.25.

	
Trading with the Enemy

	
87

	
5.26.

	
[RESERVED]

	
87

	
5.27.

	
Equity Interests

	
87

	
5.28.

	
Commercial Tort Claims

	
88

	
5.29.

	
Letter of Credit Rights

	
88

	
5.30.

	
Material Contracts

	
88

	  	  	  
	
VI.

	
AFFIRMATIVE COVENANTS

	
88

	  	  	  
	
6.1.

	
Payment of Fees

	
88

	
6.2.

	
Conduct of Business and Maintenance of Existence and Assets

	
88

	
6.3.

	
Violations

	
89

	
6.4.

	
Government Receivables

	
89

	
6.5.

	
Financial Covenants

	
89

	
6.6.

	
Execution of Supplemental Instruments

	
89

	
6.7.

	
Payment of Indebtedness

	
89

	
6.8.

	
Standards of Financial Statements

	
89

	  	  	  
	
VII.

	
NEGATIVE COVENANTS

	
89

	  	  	  
	
7.1.

	
Merger, Consolidation, Acquisition and Sale of Assets

	
89

	
7.2.

	
Creation of Liens

	
90

	
7.3.

	
Guarantees

	
90

	
7.4.

	
Investments

	
90

	
7.5.

	
Loans

	
91

	
7.6.

	
[RESERVED]

	
91

	
7.7.

	
Dividends

	
91

	
7.8.

	
Indebtedness

	
92

	
7.9.

	
Nature of Business

	
93

	
7.10.

	
Transactions with Affiliates

	
93

	
7.11.

	
Leases

	
94

	
7.12.

	
Subsidiaries

	
94

	
7.13.

	
Fiscal Year and Accounting Changes

	
95

	
7.14.

	
Pledge of Credit

	
95

	
7.15.

	
Amendment of Organizational Documents

	
95

	
7.16.

	
Compliance with ERISA

	
95

	
7.17.

	
Prepayment of Indebtedness

	
96

	
7.18.

	
Anti-Terrorism Laws

	
97

	
7.19.

	
Restrictive Agreements

	
97

	
7.20.

	
Trading with the Enemy Act

	
97

	
7.21.

	
Subordinated Debt

	
97

	
7.22.

	
Amendments to Term Debt Documents

	
97

  

iii

  

	
VIII.

	
CONDITIONS PRECEDENT

	
98

	 	 	 
	
8.1.

	
Conditions to Initial Advances

	
98

	
8.2.

	
Conditions to Each Advance

	
101

	  	  	  
	
IX.

	
INFORMATION AS TO BORROWERS

	
102

	  	  	  
	
9.1.

	
Disclosure of Material Matters

	
102

	
9.2.

	
Schedules

	
103

	
9.3.

	
Environmental Reports

	
103

	
9.4.

	
Litigation

	
103

	
9.5.

	
Material Occurrences

	
104

	
9.6.

	
Government Receivables

	
104

	
9.7.

	
Annual Financial Statements

	
104

	
9.8.

	
Quarterly Financial Statements

	
104

	
9.9.

	
Monthly Financial Statements

	
105

	
9.10.

	
Other Reports

	
105

	
9.11.

	
Additional Information

	
105

	
9.12.

	
Projected Operating Budget

	
105

	
9.13.

	
[RESERVED]

	
105

	
9.14.

	
Notice of Suits, Adverse Events

	
106

	
9.15.

	
ERISA Notices and Requests

	
106

	
9.16.

	
Additional Documents

	
106

	  	  	  
	
X.

	
EVENTS OF DEFAULT

	
107

	  	  	  
	
10.1.

	
Nonpayment

	
107

	
10.2.

	
Breach of Representation

	
107

	
10.3.

	
Financial Information

	
107

	
10.4.

	
Judicial Actions

	
107

	
10.5.

	
Noncompliance

	
107

	
10.6.

	
Judgments

	
107

	
10.7.

	
Bankruptcy

	
108

	
10.8.

	
Affiliate or Guarantor Bankruptcy

	
108

	
10.9.

	
Material Adverse Effect

	
108

	
10.10.

	
Lien Priority

	
108

	
10.11.

	
Term Debt Indebtedness Default

	
108

	
10.12.

	
Cross Default

	
109

	
10.13.

	
Breach of Guaranty or Pledge Agreement

	
109

	
10.14.

	
Change of Control

	
109

	
10.15.

	
Invalidity

	
109

	
10.16.

	
Licenses

	
109

	
10.17.

	
Seizures

	
109

	
10.18.

	
Operations

	
110

	
10.19.

	
Pension Plans

	
110

	  	  	  
	
XI.

	
LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT

	
110

	  	  	  
	
11.1.

	
Rights and Remedies

	
110

	
11.2.

	
Agent’s Discretion

	
112

  

iv

  

	
11.3.

	
Setoff

	
112

	
11.4.

	
Rights and Remedies not Exclusive

	
112

	
11.5.

	
Allocation of Payments After Event of Default

	
112

	 	 	 
	
XII.

	
WAIVERS AND JUDICIAL PROCEEDINGS

	
113

	 	 	 
	
12.1.

	
Waiver of Notice

	
113

	
12.2.

	
Delay

	
113

	
12.3.

	
Jury Waiver

	
113

	 	 	 
	
XIII.

	
EFFECTIVE DATE AND TERMINATION

	
114

	 	 	 
	
13.1.

	
Term

	
114

	
13.2.

	
Termination

	
114

	 	 	 
	
XIV.

	
REGARDING AGENT

	
114

	 	 	 
	
14.1.

	
Appointment

	
114

	
14.2.

	
Nature of Duties

	
115

	
14.3.

	
Lack of Reliance on Agent and Resignation

	
115

	
14.4.

	
Certain Rights of Agent

	
116

	
14.5.

	
Reliance

	
116

	
14.6.

	
Notice of Default

	
117

	
14.7.

	
Indemnification

	
117

	
14.8.

	
Agent in its Individual Capacity

	
117

	
14.9.

	
Delivery of Documents

	
117

	
14.10.

	
Borrowers’ Undertaking to Agent

	
117

	
14.11.

	
No Reliance on Agent’s Customer Identification Program

	
118

	
14.12.

	
Other Agreements

	
118

	
14.13.

	
Lenders’ Agreements Regarding Intercreditor Agreement

	
118

	 	 	 
	
XV.

	
BORROWING AGENCY

	
118

	 	 	 
	
15.1.

	
Borrowing Agency Provisions

	
118

	
15.2.

	
Waiver of Subrogation

	
119

	 	 	 
	
XVI.

	
MISCELLANEOUS

	
119

	 	 	 
	
16.1.

	
Governing Law

	
119

	
16.2.

	
Entire Understanding

	
120

	
16.3.

	
Successors and Assigns; Participations; New Lenders

	
122

	
16.4.

	
Application of Payments

	
125

	
16.5.

	
Indemnity

	
125

	
16.6.

	
Notice

	
126

	
16.7.

	
Survival

	
128

	
16.8.

	
Severability

	
128

	
16.9.

	
Expenses

	
128

	
16.10.

	
Injunctive Relief

	
128

	
16.11.

	
Consequential Damages

	
128

	
16.12.

	
Captions

	
129

	
16.13.

	
Counterparts; Facsimile Signatures

	
129

	
16.14.

	
Construction

	
129

  

v

  

	
16.15.

	
Confidentiality; Sharing Information

	
129

	
16.16.

	
Publicity

	
129

	
16.17.

	
Certifications From Banks and Participants; USA PATRIOT Act

	
130

  

vi

  

 

	
LIST OF EXHIBITS AND SCHEDULES

	  	 	  
	
Exhibits

	 	  
	  	 	  
	
Exhibit 1.2

	 	
Borrowing Base Certificate

	
Exhibit 1.2(a)

	 	
Compliance Certificate

	
Exhibit 2.1(a)

	 	
Revolving Credit Note

	
Exhibit 2.4(a)

	 	
Swing Loan Note

	
Exhibit 5.5(b)

	 	
Financial Projections

	
Exhibit 8.1(j)

	 	
Financial Condition Certificate

	
Exhibit 16.3

	 	
Commitment Transfer Supplement

	  	 	  
	
Schedules

	 	  
	  	 	  
	
Schedule 1.2

	 	
Permitted Encumbrances

	
Schedule 4.5

	 	
Equipment and Inventory Locations; Place of Business, Chief Executive Office, Real Property

	
Schedule 4.15(i)

	 	
Deposit and Investment Accounts

	
Schedule 5.1

	 	
Consents

	
Schedule 5.2(a)

	 	
States of Qualification and Good Standing

	
Schedule 5.2(b)

	 	
Subsidiaries

	
Schedule 5.4

	 	
Federal Tax Identification Number

	
Schedule 5.6

	 	
Prior Names

	
Schedule 5.8(b)

	 	
Litigation

	
Schedule 5.8(d)

	 	
Plans

	
Schedule 5.9

	 	
Intellectual Property, Source Code Escrow Agreements

	
Schedule 5.10

	 	
Licenses and Permits

	
Schedule 5.14

	 	
Labor Disputes

	
Schedule 5.27

	 	
Equity Interests

	
Schedule 5.28

	 	
Commercial Tort Claims

	
Schedule 5.29

	 	
Letter of Credit Rights

	
Schedule 5.30

	 	
Material Contracts

	
Schedule 7.3

	 	
Existing Guarantees

	
Schedule 7.5(e)

	 	
Existing Investments

	
Schedule 7.8

	 	
Existing Indebtedness

  

vii

  

The Liens created by this Revolving Credit and Security Agreement and the Other Document (as defined herein) on the collateral described herein and therein, and the rights and remedies of Agent and Lenders with respect to such Liens, are subject to the provisions of the Intercreditor Agreement dated as of April 15, 2011, as amended from time to time, between FBR Capital Markets LT, Inc., as Term Debt Representative (or any successor thereto in such capacity), and PNC Bank, National Association, as ABL Representative (or any successor thereto in such capacity).

 

REVOLVING CREDIT

 

AND

 

SECURITY AGREEMENT

 

Revolving Credit and Security Agreement dated as of April 15, 2011, among UNITEK GLOBAL SERVICES, INC., a corporation organized under the laws of the State of Delaware (“UniTek Parent”), UNITEK ACQUISITION, INC., a corporation organized under the laws of the State of Delaware (“UniTek Acquisition”) BCI COMMUNICATIONS, INC., a corporation organized under the laws of the State of Delaware (“BCI”), UNITEK USA, LLC, a limited liability company organized under the laws of the State of Delaware (“UniTek USA”), ADVANCED COMMUNICATIONS USA, INC., a corporation organized under the laws of the State of Delaware (“Advanced Communications”), DIRECTSAT USA, LLC, a limited liability company organized under the laws of the State of Delaware (“DirectSat”), FTS USA, LLC, a limited liability company organized under the laws of the State of Delaware (“FTS”) (UniTek Parent, UniTek Acquisition, BCI, UniTek USA, Advanced Communication, DirectSat, FTS and each Person joined hereto as a borrower from time to time, collectively, the “Borrowers”, and each a “Borrower”), the financial institutions which are now or which hereafter become a party hereto (collectively, the “Lenders” and each individually a “Lender”) and PNC BANK, NATIONAL ASSOCIATION (“PNC”), as agent for Lenders (PNC, in such capacity, the “Agent”).

 

IN CONSIDERATION of the mutual covenants and undertakings herein contained, Borrowers, Lenders and Agent hereby agree as follows:

 

I.            DEFINITIONS.

 

1.1.           Accounting Terms.  As used in this Agreement, the Other Documents or any certificate, report or other document made or delivered pursuant to this Agreement, accounting terms not defined in Section 1.2 or elsewhere in this Agreement and accounting terms partly defined in Section 1.2 to the extent not defined, shall have the respective meanings given to them under GAAP; provided, however, that, notwithstanding anything to the contrary herein, all accounting or financial terms used herein shall be construed, and all financial computations pursuant hereto shall be made, without giving effect to any election under Statement of Financial Accounting Standards 159 (or any other Financial Accounting Standard having a similar effect) to value any Indebtedness or other liabilities of any Borrower at “fair value,” as defined therein.

  

  

  

 

1.2.           General Terms.  For purposes of this Agreement the following terms shall have the following meanings:

 

“ABL Priority Collateral” shall have the meaning given to such term in the Intercreditor Agreement.

 

“Accountants” shall have the meaning set forth in Section 9.7 hereof.

 

“Advance Rates” shall have the meaning set forth in Section 2.1(a)(y) hereof.

 

“Advances” shall mean and include the Revolving Advances, Swing Loans and Letters of Credit.

 

“Affiliate” of any Person shall mean (a) any Person which, directly or indirectly, is in control of, is controlled by, or is under common control with such Person, or (b) any Person who is a director, manager, member, managing member, general partner or officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of any Person described in clause (a) above.  For purposes of this definition, control of a Person shall mean the power, direct or indirect, (x) to vote 10% or more of the Equity Interests having ordinary voting power for the election of directors of such Person or other Persons performing similar functions for any such Person, or (y) to direct or cause the direction of the management and policies of such Person whether by ownership of Equity Interests, contract or otherwise.

 

“Agent” shall have the meaning set forth in the preamble to this Agreement and shall include its successors and assigns.

 

 “Agreement” shall mean this Revolving Credit and Security Agreement, as it may be amended, modified, supplemented, restated or replaced from time to time.

 

“Alternate Base Rate” shall mean, for any day, a rate per annum equal to the highest of (i) the Base Rate in effect on such day, (ii) the Federal Funds Open Rate in effect on such day plus one half of one-percent (0.50%), and (iii) the sum of the Daily LIBOR Rate in effect on such day plus one percent (1.00%), so long as a Daily LIBOR Rate is offered, ascertainable and not unlawful.

 

“Anti-Terrorism Laws” shall mean any Applicable Laws relating to terrorism or money laundering, including Executive Order No. 13224, the USA PATRIOT Act, the Applicable Laws comprising or implementing the Bank Secrecy Act, and the Applicable Laws administered by the United States Treasury Department’s Office of Foreign Asset Control (as any of the foregoing Applicable Laws may from time to time be amended, renewed, extended, or replaced).

 

“Applicable Law” shall mean all laws, rules and regulations applicable to the Person, conduct, transaction, covenant, Other Document or contract in question, including all applicable common law and equitable principles; all provisions of all applicable state, federal and foreign constitutions, statutes, rules, regulations, treaties, directives and orders of any Governmental Body, and all orders, judgments and decrees of all courts and arbitrators.

  

2

  

 

“Applicable Margin”, for Revolving Advances and the Letter of Credit Fees, shall mean, as of the Closing Date and through and including the date immediately prior to the first Adjustment Date (as defined below), the applicable percentage specified below:

 

	
APPLICABLE MARGINS FOR

DOMESTIC RATE LOANS

	 	 	
APPLICABLE MARGINS FOR

EURODOLLAR RATE LOANS

	 	 	
APPLICABLE

MARGIN FOR

LETTERS OF CREDIT

	 
	 	1.50	%	 	 	2.50	%	 	 	2.25	%

Thereafter, effective as of the first Business Day following receipt by Agent of the quarterly financial statements of Borrowers on a Consolidated Basis and related Compliance Certificate for the fiscal quarter ending September 30, 2011 required under Section 9.8, and thereafter upon receipt of the quarterly financial statements of Borrowers on a Consolidated Basis and related Compliance Certificate required under Section 9.8 for the previous fiscal quarter (each day of such delivery, an “Adjustment Date”), the Applicable Margin for each type of Advance shall be adjusted, if necessary, to the applicable percent per annum set forth in the pricing table set forth below corresponding to the Fixed Charge Coverage Ratio for the trailing twelve month period ending on the last day of the most recently completed fiscal quarter prior to the applicable Adjustment Date (each such period, a “Calculation Period”):

 

	
FIXED CHARGE

COVERAGE

RATIO

	 	
APPLICABLE

MARGINS FOR

DOMESTIC RATE

LOANS

	 	 	
APPLICABLE

MARGINS FOR

EURODOLLAR RATE

LOANS

	 	 	
APPLICABLE

MARGIN FOR

LETTERS OF

CREDIT

	 
	
Less than or equal to 1.10  to 1.00

	 	 	1.75	%	 	 	2.75	%	 	 	2.50	%
	
Greater than 1.10 to 1.00 but equal to or less than 1.25 to 1.00

	 	 	1.50	%	 	 	2.50	%	 	 	2.25	%
	
Greater than 1.25 to 1.00

	 	 	1.25	%	 	 	2.25	%	 	 	2.00	%

If the Borrowers shall fail to deliver the financial statements, certificates and/or other information required under Sections 9.7 or 9.8 by the dates required pursuant to such sections, each Applicable Margin shall be conclusively presumed to equal the highest Applicable Margin specified in the pricing table set forth above until the date of delivery of such financial statements, certificates and/or other information, at which time the rate will be adjusted based upon the Fixed Charge Coverage Ratio reflected in such statements.  Notwithstanding anything to the contrary contained herein, no downward adjustment in any Applicable Margin shall be made on any Adjustment Date on which any Event of Default shall have occurred and be continuing.  Any increase in interest rates payable by Borrowers under this Agreement and the other Loan Documents pursuant to the provisions of the foregoing sentence shall be in addition to and independent of any increase in such interest rates resulting from the occurrence of any Event of Default (including, if applicable, any Event of Default arising from a breach of Sections 9.7 or 9.8 hereof) and/or the effectiveness of the Default Rate provisions of Section 3.1 hereof.

  

3

  

 

If, as a result of any restatement of, or other adjustment to, the financial statements of Borrowers on a Consolidated Basis or for any other reason, the Agent determines that (a) the Fixed Charge Coverage Ratio as previously calculated as of any applicable date for any applicable period was inaccurate, and (b) a proper calculation of the Fixed Charge Coverage Ratio for any such period would have resulted in different pricing for any period, then (i) if the proper calculation of the Fixed Charge Coverage Ratio would have resulted in higher pricing as to any interest and/or fees (as applicable) for such period, automatically and immediately without the necessity of any demand or notice by the Agent or any other affirmative act of any party, the interest accrued on the applicable Advances and/or the amount of the fees accruing for such period under the provisions of this Agreement and the other Loan Documents shall be deemed to be retroactively be deemed to be increased by, and Borrowers shall be obligated to immediately pay to the Agent, for the ratable benefit of the Lenders an amount equal to the excess of the amount of interest and fees that should have been paid for such period over the amount of interest and fees actually paid for such period; and (ii) if the proper calculation of the Fixed Charge Coverage Ratio would have resulted in lower pricing for such period, then the interest accrued on the applicable Advances and the amount of the fees accruing for such period  under the provisions of this Agreement and the other Loan Documents shall be deemed to remain unchanged, and Agent and Lenders shall have no obligation to repay interest or fees to the Borrowers; provided, that, if as a result of any restatement or other event or other determination by Agent a proper calculation of the Fixed Charge Coverage Ratio would have resulted in higher pricing for one or more periods and lower pricing for one or more other periods (due to the shifting of income or expenses from one period to another period or any similar reason), then the amount payable by the Borrowers pursuant to clause (i) above shall be based upon the excess, if any, of the amount of interest and fees that should have been paid for all applicable periods over the amounts of interest and fees actually paid for such periods.

 

“Authority” shall have the meaning set forth in Section 4.19(d) hereof.

 

“Base Rate” shall mean the base commercial lending rate of PNC as publicly announced to be in effect from time to time, such rate to be adjusted automatically, without notice, on the effective date of any change in such rate.  This rate of interest is determined from time to time by PNC as a means of pricing some loans to its customers and is neither tied to any external rate of interest or index nor does it necessarily reflect the lowest rate of interest actually charged by PNC to any particular class or category of customers of PNC.

 

“Benefited Lender” shall have the meaning set forth in Section 2.20(d) hereof.

 

“Billed Receivables Advance Rate” shall have the meaning set forth in Section 2.1(a)(y) hereof.

 

“Blocked Accounts” shall have the meaning set forth in Section 4.15(h) hereof.

  

4

  

 

“Blocked Account Bank” shall have the meaning set forth in Section 4.15(h) hereof.

 

“Blocked Person” shall have the meaning set forth in Section 5.24(b) hereof.

 

“Borrower” or “Borrowers” shall have the meaning set forth in the preamble to this Agreement and shall extend to all permitted successors and assigns of such Persons.

 

“Borrowers on a Consolidated Basis” shall mean the consolidation in accordance with GAAP of the accounts or other items of the Borrowers and their respective Subsidiaries.

 

“Borrowers’ Account” shall have the meaning set forth in Section 2.8 hereof.

 

“Borrowing Agent” shall mean UniTek Parent.

 

“Borrowing Base Certificate” shall mean a certificate in substantially the form of Exhibit 1.2 duly executed by the President, Chief Executive Officer, Chief Financial Officer or Controller of the Borrowing Agent and delivered to the Agent, appropriately completed, by which such officer shall certify to Agent the Formula Amount and calculation thereof as of the date of such certificate.

 

“Borrower Increase Date” shall have the meaning set forth in Section 2.24(a).

 

“Borrower Revolver Increase” shall have the meaning set forth in Section 2.24(a).

 

“Business Day” shall mean any day other than Saturday or Sunday or a legal holiday on which commercial banks are authorized or required by law to be closed for business in East Brunswick, New Jersey and, if the applicable Business Day relates to any Eurodollar Rate Loans, such day must also be a day on which dealings are carried on in the London interbank market.

 

“Capital Expenditures” shall mean expenditures made or liabilities incurred for the acquisition of any fixed assets or improvements, replacements, substitutions or additions thereto which have a useful life of more than one year, which, in accordance with GAAP, would be classified as capital expenditures.

 

“Capitalized Lease Obligation” shall mean any Indebtedness of any Borrower represented by obligations under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP.

  

5

  

“Cash Equivalents” shall mean (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition; (b) certificates of deposit, time deposits, eurodollar time deposits or overnight bank deposits having maturities of six months or less from the date of acquisition issued by any Lender or by any commercial bank organized under the laws of the United States or any state thereof having combined capital and surplus of not less than $500,000,000; (c) commercial paper of an issuer rated at least A-1 by Standard & Poor’s Financial Services LLC (“S&P”) or P-1 by Moody’s Investors Service, Inc. (“Moody’s”), or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and maturing within six months from the date of acquisition; (d) repurchase obligations of any Lender or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than 30 days, with respect to securities issued or fully guaranteed or insured by the United States government; (e) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P or A by Moody’s; (f) securities with maturities of six months or less from the date of acquisition backed by standby letters of credit issued by any Lender or any commercial bank satisfying the requirements of clause (b) of this definition; (g) money market mutual or similar funds that invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition; or (h) money market funds that (i) comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940, as amended, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least $5,000,000,000.

 

“Cash Management Obligations” shall have the meaning set forth in the definition of Obligations.

 

“CERCLA” shall mean the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. §§9601 et seq.

 

Change in Law shall mean the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any Applicable Law, (b) any change in any Applicable Law or in the administration, interpretation or application thereof by any Governmental Body or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Body; provided however, for purposes of this Agreement, the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, guidelines and directives in connection therewith are deemed to have gone into effect and adopted after the date of this Agreement, and provided further, for purposes of Section 3.9, all requests, rules, guidelines or directives promulgated by the Bank of International Settlements, the Basel Committee on Banking Regulations and Supervisory Practices (or any successor or similar authority) or the United States financial regulatory authorities with respect to capital adequacy shall be deemed to be a Change in Law regardless of the date adopted, issued, promulgated or implemented.

  

6

  

 “Change of Control” shall mean (a) the occurrence of any event (whether in one or more transactions) which results in a transfer to a “person” or “group of persons” (within the meaning of Section 13 or 14 of the Securities Exchange Act of 1934) who is not an Original Owner of “beneficial ownership” (within the meaning to Rule 13d-3 promulgated by the SEC under said Act) of or the power to vote, directly or indirectly, more than thirty-five percent (35%) of the Equity Interests of UniTek Parent with the power to vote for and elect members of the board of directors of Unitek Parent (provided that a person or group shall be deemed to have beneficial ownership of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time or the satisfaction of other conditions and irrespective of the financial and other terms upon which such right may be exercised), (b) the occurrence of any event (whether in one or more transactions) which results in any Borrower other than UniTek Parent ceasing to be a 100% wholly-owned direct or indirect Subsidiary of UniTek Parent (provided that, in the case of any Borrower acquired after the Closing Date in a Permitted Acquisition (a “Post-Closing Date Borrower”) where Borrowers acquired less than 100% of the Equity Interests of such Post-Closing Date Borrower in such Permitted Acquisition, a Change of Control shall not be deemed to occur under this clause (b) so long as UniTek Parent and/or one or more of the other Borrowers that are 100% wholly-owned direct or indirect Subsidiaries of UniTek Parent shall continue to own the same percentage of all class of the Equity Interests of such Post-Closing Date Borrower as was owned by Borrowers immediately following the consummation of such Permitted Acquisition), (c) occupation of a majority of the seats (other than vacant seats) on the board of directors of  UniTek Parent by Persons who are not continuing directors.  For purposes of this definition, “continuing directors” shall mean members of the board of directors of each UniTek Parent on the Closing Date and any future member of such board of directors that is nominated for election to such board of directors by at least a majority of the then continuing directors.

 

“Charges” shall mean all taxes, charges, fees, imposts, levies or other assessments, including all net income, gross income, gross receipts, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation and property taxes, custom duties, fees, assessments, liens, claims and charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts, imposed by any taxing or other authority, domestic or foreign (including the Pension Benefit Guaranty Corporation or any environmental agency or superfund), upon the Collateral, any Borrower or any of its Affiliates.

 

“Closing Date” shall mean April 15, 2011, or such other date as may be agreed to by the parties hereto.

 

“Code” shall mean the Internal Revenue Code of 1986, as the same may be amended or supplemented from time to time, and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect.

 

“Collateral” shall mean and include all right, title and interest of each Borrower in all of the following property and assets of such Borrower, in each case whether now existing or hereafter arising or created and whether now owned or hereafter acquired and wherever located:

 

(a)           all Receivables and all supporting obligations relating thereto;

 

(b)           all Equipment;

 

(c)           all General Intangibles and all supporting obligations relating thereto;

 

(d)           all Inventory (excluding any DIRECTV Inventory);

 

(e)           all Investment Property and financial assets;

 

(f)           [RESERVED];

  

7

  

 

(g)           all Subsidiary Stock;

 

(h)           [RESERVED];

 

(i)           all of each Borrower’s right, title and interest in and to, whether now owned or hereafter acquired and wherever located; (i) its respective goods and other property including, but not limited to, all merchandise returned or rejected by Customers, relating to or securing any of the Receivables; (ii) all of each Borrower’s rights as a consignor, a consignee, an unpaid vendor, mechanic, artisan, or other lienor, including stoppage in transit, setoff, detinue, replevin, reclamation and repurchase; (iii) all additional amounts due to any Borrower from any Customer relating to the Receivables; (iv) other property, including warranty claims, relating to any goods securing the Obligations; (v) all of each Borrower’s contract rights, rights of payment which have been earned under a contract right, instruments (including promissory notes), documents, chattel paper (including electronic chattel paper), warehouse receipts, deposit accounts, letters of credit and money; (vi) all commercial tort claims (whether now existing or hereafter arising); (vii) if and when obtained by any Borrower, all real and personal property of third parties in which such Borrower has been granted a lien or security interest as security for the payment or enforcement of Receivables; (viii) all letter of credit rights (whether or not the respective letter of credit is evidenced by a writing); (ix) all supporting obligations; and (x) any other goods, personal property or real property now owned or hereafter acquired in which any Borrower has expressly granted a security interest or may in the future grant a security interest to Agent hereunder, or in any amendment or supplement hereto or thereto, or under any other agreement between Agent and any Borrower;

 

(j)           all of each Borrower’s ledger sheets, ledger cards, files, correspondence, records, books of account, business papers, computers, computer software (owned by any Borrower or in which it has an interest), computer programs, tapes, disks and documents relating to (a), (b), (c), (d), (e), (f), (g), (h) or (i) of this paragraph; and

 

(k)           all proceeds and products of (a), (b), (c), (d), (e), (f), (g), (h), (i) and (j) in whatever form, including, but not limited to:  cash, deposit accounts (whether or not comprised solely of proceeds), certificates of deposit, insurance proceeds (including hazard, flood and credit insurance), negotiable instruments and other instruments for the payment of money, chattel paper, security agreements, documents, eminent domain proceeds, condemnation proceeds and tort claim proceeds.  It is the intention of the parties that if Agent shall fail to have a perfected Lien in any particular property or assets of any Borrower for any reason whatsoever, but the provisions of this Agreement and/or of the Other Documents, together with all financing statements and other public filings relating to Liens filed or recorded by Agent against Borrowers, would be sufficient to create a perfected Lien in any property or assets that such Borrower may receive upon the sale, lease, license, exchange, transfer or disposition of such particular property or assets, then all such “proceeds” of such particular property or assets shall be included in the Collateral.

 

“Commitment Transfer Supplement” shall mean a document in the form of Exhibit 16.3 hereto, properly completed and otherwise in form and substance satisfactory to Agent by which the Purchasing Lender purchases and assumes a portion of the obligation of Lenders to make Advances under this Agreement.

  

8

  

 

“Compliance Certificate” shall mean a compliance certificate substantially in the form attached hereto as Exhibit 1.2(a) to be signed by the Chief Financial Officer or Controller of Borrowing Agent, which shall state that, based on an examination sufficient to permit such officer to make an informed statement, (a) no Default or Event of Default exists, or if such is not the case, specifying such Default or Event of Default, its nature, when it occurred, whether it is continuing and the steps being taken by Borrowers with respect to such default and, such certificate shall have appended thereto calculations which set forth Borrowers’ compliance with the requirements or restrictions imposed by Sections 6.5, 7.4, 7.5, 7.7, 7.8, 7.10 and 7.11; and (b) that to the best of such officer’s knowledge, each Borrower is in compliance in all material respects with all federal, state and local Environmental Laws, or if such is not the case, specifying all areas of non-compliance and the proposed action such Borrower will implement in order to achieve full compliance.

 

“Confidential Information Memorandum” shall mean the Confidential Information Memorandum dated February 2011 and furnished to certain Lenders.

 

“Consents” shall mean all filings and all licenses, permits, consents, approvals, authorizations, qualifications and orders of Governmental Bodies and other third parties, domestic or foreign, necessary to carry on any Borrower’s business or necessary (including to avoid a conflict or breach under any agreement, instrument, other document, license, permit or other authorization) for the execution, delivery or performance of this Agreement, and the Other Documents, including any Consents required under all applicable federal, state or other Applicable Law.

 

“Consigned Inventory” shall mean Inventory of any Borrower that is in the possession of another Person on a consignment, sale or return, or other basis that does not constitute a final sale and acceptance of such Inventory.

 

“Consolidated EBITDA” shall mean, for any period, Consolidated Net Income for such period plus, without duplication and to the extent reflected as a charge in the statement of such Consolidated Net Income for such period, the sum of (a) income tax expense, (b) interest expense, amortization or writeoff of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Indebtedness (including the Advances), (c) depreciation and amortization expense, (d) amortization of intangibles (including, but not limited to, goodwill) and organization costs, (e) non-cash stock compensation expense, (f) one-time transaction costs associated with Permitted Acquisitions (whether or not consummated) and (g) any extraordinary or non-recurring non-cash expenses or losses (including, whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, non-cash losses on sales of assets outside of the ordinary course of business), and minus, (a) to the extent included in the statement of such Consolidated Net Income for such period, the sum of (i) interest income, (ii) any extraordinary, unusual or non-recurring income or gains (including, whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, gains on the sales of assets outside of the ordinary course of business), (iii) income tax credits (to the extent not netted from income tax expense) and (iv) any other non-cash income and (b) any cash payments made during such period in respect of items described in clause (e) above subsequent to the fiscal quarter in which the relevant non-cash expenses or losses were reflected as a charge in the statement of Consolidated Net Income, all as determined on a consolidated basis.  For the purposes of calculating Consolidated EBITDA for any period of four consecutive fiscal quarters (each, a “Reference Period”) pursuant to any determination of the Fixed Charge Coverage Ratio, (i) if at any time during such Reference Period any Borrower or any Subsidiary shall have made any Disposition, the Consolidated EBITDA for such Reference Period shall exclude the Consolidated EBITDA (whether negative or positive) attributable to the property that is the subject of such Disposition for the period from the date of such Disposition through the end of such Reference Period and (ii) if during such Reference Period any Borrower or any Subsidiary shall have made an Acquisition, the Consolidated EBITDA for such Reference Period shall exclude the Consolidated EBITDA (whether negative or positive) attributable to the Person or property that is the subject of such Acquisition for the period from the first day of such Reference Period through the date of such acquisition.  As used in this definition, “Acquisition” means any acquisition of property or series of related acquisitions of property that constitutes assets comprising all or substantially all of an operating unit of a business or constitutes all or substantially all of the common stock of a Person; and “Disposition” means any sale or other disposition of property or series of related dispositions of property that constitutes assets comprising all or substantially all of an operating unit of a business or constitutes all or substantially all of the common stock of a Person.

  

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“Consolidated Net Income” shall mean, for any period, the consolidated net income (or loss) of the Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded (a) the income (or deficit) of any Person accrued prior to the date it becomes a Subsidiary of the Borrowers or is merged into or consolidated with the Borrowers or any of its Subsidiaries, (b) the income (or deficit) of any Person that was a Subsidiary of the Borrowers after the date it ceases to be a Subsidiary of the Borrowers, (c) the income (or deficit) of any Person (other than a wholly-owned Subsidiary of the Borrowers) in which the Borrowers or any of their Subsidiaries has an ownership interest, except to the extent that any such income is actually received by the Borrowers or such Subsidiary in the form of dividends or similar distributions and (d) the undistributed earnings of any Subsidiary of the Borrowers to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any contractual obligation (other than under this Agreement or any Other Document) or Applicable Law.

 

“Contract Rate” shall have the meaning set forth in Section 3.1 hereof.

 

“Controlled Group” shall mean, at any time, each Borrower and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control and all other entities which, together with any Borrower, are treated as a single employer under Section 414 of the Code.

 

“Customer” shall mean and include the account debtor with respect to any Receivable and/or the prospective purchaser of goods, services or both with respect to any contract or contract right, and/or any party who enters into or proposes to enter into any contract or other arrangement with any Borrower, pursuant to which such Borrower is to deliver any personal property or perform any services.

 

“Customs” shall have the meaning set forth in Section 2.11(b) hereof.

  

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“Daily  LIBOR  Rate”  shall  mean,  for  any  day, the rate per annum determined  by  the Agent by dividing (x) the Published Rate by (y) a number equal to 1.00 minus the Reserve Percentage.

 

“Debt Payments” shall mean and include (a) all cash actually expended by any Borrower to make interest payments on any Advances hereunder, plus (b) accrued but unpaid interest on account of Eurodollar Rate Loans, plus (c) all cash actually expended by any Borrower to make payments for all fees, commissions and charges set forth herein and with respect to any Advances, plus (d) all cash actually expended by any Borrower to make payments (including prepayments) on Capitalized Lease Obligations, plus (e) all cash actually expended by any Borrower to make payments (including prepayments) with respect to any other Indebtedness for borrowed money, specifically including all Term Debt Payments, but, for the avoidance of any doubt, excluding any payments in respect of any Permitted Earn-Out Obligations.

 

“Default” shall mean an event, circumstance or condition which, with the giving of notice or passage of time or both, would constitute an Event of Default.

 

“Default Rate” shall have the meaning set forth in Section 3.1 hereof.

 

“Defaulting Lender” shall mean any Revolving Lender that (a) has failed, within two Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans, (ii) fund any portion of its participations in Letters of Credit or Swing Loans or (iii) pay over to Agent, the Issuer, Swing Loan Lender or any Lender any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Revolving Lender notifies the Administrative Agent in writing that such failure is the result of such Revolving Lender’s good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified Borrowers or Agent in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Revolving Lender’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within two Business Days after request by Agent, acting in good faith, to provide a certification in writing from an authorized officer of such Revolving Lender that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Loans and participations in then outstanding Letters of Credit and Swing Loans under this Agreement, provided that such Revolving Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon the Administrative Agent's receipt of such certification in form and substance satisfactory to the Administrative Agent, (d) has become the subject of a Bankruptcy Event or (e) has failed at any time to comply with the provisions of Section 2.22(d) with respect to purchasing participations from the other Lenders, whereby such Lender's share of any payment received, whether by setoff or otherwise, is in excess of its ratable share of such payments due and payable to all of the Lenders.

  

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As used in this definition and in Section 2.23, the term "Bankruptcy Event" means, with respect to any Person, such Person or such Person's direct or indirect parent company becomes the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment, provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person or such Person's direct or indirect parent company by a Governmental Body or instrumentality thereof if, and only if, such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Governmental Body or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.

 

“Disqualified Capital Stock” with respect to any Person, shall mean any Equity Interests of such Person which, by its terms, or by the terms of any security into which it is convertible or for which it is putable or exchangeable, or upon the happening of any event, matures or is mandatorily redeemable (other than solely for Equity Interests which are not Disqualified Capital Stock) pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof (other than solely as a result of a change of control or asset sale), in whole or in part, in each case prior to the date 91 days after the expiration of the Term; provided, however, that if such Equity Interests are issued to any plan for the benefit of employees of any Borrower or by any such plan to such employees, such Equity Interests shall not constitute Disqualified Capital Stock solely because it may be required to be repurchased in order to satisfy applicable statutory or regulatory obligations.

 

“Depository Accounts” shall have the meaning set forth in Section 4.15(h) hereof.

 

“Designated Lender” shall have the meaning set forth in Section 16.2(b) hereof.

 

“DIRECTV/DirectSat Contract” shall mean that certain DIRECTV, Inc. 2009 Home Services Provider Agreement dated as of July 1, 2009 between DIRECTV, Inc. and DirectSat, including all exhibits and schedules thereto, as such agreement may have been or hereafter may be amended, modified, supplemented, restated or replaced from time to time.

 

“DIRECTV Inventory” shall mean all Inventory purchased by any Borrower pursuant to and in connection with the DIRECTV/DirectSat Contract that is subject to a Lien in favor of DIRECTV, Inc. created under the DIRECTV/DirectSat Contract and in which, pursuant to the terms and conditions of the DIRECTV/DirectSat Contract, no Liens may be created in favor of any Person other than DIRECTV, Inc.

 

“Documents” shall have the meaning set forth in Section 8.1(c) hereof.

 

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

 

“Domestic Rate Loan” shall mean any Advance that bears interest based upon the Alternate Base Rate.

 

“Drawing Date” shall have the meaning set forth in Section 2.12(b) hereof.

  

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“Early Termination Date” shall have the meaning set forth in Section 13.1 hereof.

 

“Earn-Out Indebtedness” shall have the meaning set forth in the definition of Indebtedness.

 

“Eligible Receivables” shall mean and include with respect to each Borrower, each Receivable of such Borrower arising in the Ordinary Course of Business and which Agent, in its sole credit judgment exercised in its Permitted Discretion, shall deem to be an Eligible Receivable, based on such considerations as Agent may from time to time deem appropriate.  A Receivable shall not be deemed eligible unless such Receivable is subject to Agent’s first priority perfected security interest and no other Lien (other than Permitted Encumbrances), and is evidenced by an invoice or other documentary evidence (including electronic evidence) satisfactory to Agent.  In addition, no Receivable shall be an Eligible Receivable if:

 

(a)           it arises out of a sale made by any Borrower to an Affiliate of any Borrower or to a Person controlled by an Affiliate of any Borrower;

 

(b)           it is due or unpaid more than ninety (90) days after the original due date or one hundred twenty (120) days after the original invoice date;

 

(c)           fifty percent (50%) or more of the Receivables from such Customer are not deemed Eligible Receivables hereunder (such percentage may, in Agent’s sole discretion, be increased or decreased from time to time);

 

(d)           any covenant, representation or warranty contained in this Agreement with respect to such Receivable has been breached;

 

(e)           the Customer shall (i) apply for, suffer, or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property or call a meeting of its creditors, (ii) admit in writing its inability, or be generally unable, to pay its debts as they become due or cease operations of its present business, (iii) make a general assignment for the benefit of creditors, (iv) commence a voluntary case or proceeding under any state or federal bankruptcy laws (as now or hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition seeking to take advantage of any other law providing for the relief of debtors, (vii) acquiesce to, or fail to have dismissed, any petition which is filed against it in any involuntary case under such bankruptcy laws, or (viii) take any action for the purpose of effecting any of the foregoing;

 

(f)            the sale is to a Customer outside the continental United States of America or Canada, unless the sale is on letter of credit, guaranty or acceptance terms, in each case acceptable to Agent in its sole discretion;

 

(g)           the sale to the Customer is on a bill-and-hold, guaranteed sale, sale-and-return, sale on approval, consignment or any other repurchase or return basis or is evidenced by chattel paper;

  

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(h)           Agent believes, in its sole judgment, that collection of such Receivable is insecure or that such Receivable may not be paid by reason of the Customer’s financial inability to pay;

 

(i)            the Customer is the United States of America, any state or any department, agency or instrumentality of any of them, unless the applicable Borrower assigns its right to payment of such Receivable to Agent pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727 et seq. and 41 U.S.C. Sub-Section 15 et seq.) or has otherwise complied with other applicable statutes or ordinances;

 

(j)            the goods giving rise to such Receivable have not been delivered to and accepted by the Customer or the services giving rise to such Receivable have not been performed by the applicable Borrower and accepted by the Customer or the Receivable otherwise does not represent a final sale or the Receivable represents a “progress billing” or a billing for only a portion or percentage of goods or services to be provided pursuant to the applicable purchase order or contract between such Borrower and such Customer;

 

(k)           the Receivables of the Customer exceed a credit limit determined by Agent, in its sole discretion, to the extent such Receivable exceeds such limit; provided that none of (i) DIRECTV, (ii) Comcast, (iii) Verizon, (iv) AT&T, (v) Time Warner, (vi) Rodgers Communications, (vii) Bell Aliant and (viii) such other Account Debtors as Agent may from time to time approve, in its sole credit judgment exercised in its Permitted Discretion, shall be subject to the provisions of this Section (k);

 

(l)            the Receivable is subject to any offset, deduction, defense, dispute, or counterclaim (but such Receivable shall only be ineligible to the extent of such offset, deduction, defense or counterclaim) or the Receivable is contingent in any respect or for any reason;

 

(m)          the applicable Borrower has made any agreement with any Customer for any deduction therefrom, except for discounts or allowances made in the Ordinary Course of Business for prompt payment, all of which discounts or allowances are reflected in the calculation of the face value of each respective invoice related thereto;

 

(n)           any return, rejection or repossession of the merchandise has occurred or the rendition of services has been disputed (but only to the extent of such return, rejection or repossession);

 

(o)           such Receivable is not payable to a Borrower; or

 

(p)           such Receivable is not otherwise satisfactory to Agent as determined in good faith by Agent in the exercise of its discretion in a reasonable manner.

 

“Eligible Unbilled Receivables” shall mean and include with respect to each Borrower, each Receivable of such Borrower relating to completed projects and arising in the Ordinary Course of Business which would be deemed an Eligible Receivable except for the fact that such Receivable has not been billed and invoiced to the Customer by such Borrower provided, however, such Receivable has not remained unbilled and uninvoiced more than sixty (60) days from the date such Receivable was generated and/or the date that the sale of goods or performance of services giving rise to such Receivable occurred.

  

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“Eligible Unbilled Receivables Sublimit” shall mean $15,000,000.

 

“Eligible Project Receivables” shall mean and include with respect to each Borrower, each Receivable of such Borrower arising in the Ordinary Course of Business which would be deemed an Eligible Receivable except for the facts (i) that the sale of goods and/or provision  of services giving rise to such Receivable represent only a portion or percentage of the goods and/or services to be sold and provided to such Customer pursuant to the applicable purchase order or contract between such Borrower and such Customer and (ii) such Receivable has not been billed and invoiced to the Customer by such Borrower; provided, however, that no such Receivables shall be deemed eligible hereunder unless Borrowers shall be in full compliance with the requirements of the last sentence of Section 9.2 hereof provided, however, such Receivable has not remained unbilled and uninvoiced more than sixty (60) days from the date such Receivable was generated and/or the date that the sale of goods or performance of services giving rise to such Receivable occurred.

 

“Eligible Project Receivables Sublimit” shall mean $3,500,000.

 

“Environmental Complaint” shall have the meaning set forth in Section 4.19(d) hereof.

 

“Environmental Laws” shall mean all federal, state and local environmental, land use, zoning, health, chemical use, safety and sanitation laws, statutes, ordinances and codes relating to the protection of the environment and/or governing the use, storage, treatment, generation, transportation, processing, handling, production or disposal of Hazardous Substances and the rules, regulations, policies, guidelines, interpretations, decisions, orders and directives of federal, state and local governmental agencies and authorities with respect thereto.

 

 “Equipment” shall mean and include as to each Borrower all of such Borrower’s goods (other than Inventory) whether now owned or hereafter acquired and wherever located including all equipment, machinery, apparatus, motor vehicles, fittings, furniture, furnishings, fixtures, parts, accessories and all replacements and substitutions therefor or accessions thereto.

  

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“Equity Interests” of any Person shall mean any and all shares, rights to purchase, options, warrants, general, limited or limited liability partnership interests, member interests, participation or other equivalents of or interest in (regardless of how designated) equity of such Person, whether voting or nonvoting, including common stock, preferred stock, convertible securities or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the Exchange Act), including in each case all of the following rights relating to such Equity Interests, whether arising under the Organizational Documents of the Person issuing such Equity Interests (the “issuer”) or under the applicable laws of such issuer’s jurisdiction of organization relating to the formation, existence and governance of corporations, limited liability companies or partnerships or business trusts or other legal entities, as applicable: (i) all economic rights (including all rights to receive dividends and distributions), (ii) all voting rights and rights to consent to any particular action(s) by the applicable issuer, (iii) all management rights with respect to such issuer, (iv) in the case of any Equity Interests consisting of a general partner interest in a partnership, all powers and rights as a general partner with respect to the management, operations and control of the business and affairs of the applicable issuer, (v) in the case of any Equity Interests consisting of the membership/limited liability company interests of a managing member in a limited liability company, all powers and rights as a managing member with respect to the management, operations and control of the business and affairs of the applicable issuer, (vi) all rights to designate or appoint or vote for or remove any officers, directors, manager(s), general partner(s), managing member(s) and/or any members of any board of members/managers/partners/directors that may at any time have any rights to manage and direct the business and affairs of the applicable issuer under its Organizational Documents as in effect from time to time, (vii) all rights to amend the Organizational Documents of such issuer, (viii) in the case of any Equity Interests in a partnership or limited liability company, the status of the holder of such Equity Interests as a “partner”, general or limited, or “member” (as applicable) under the applicable Organizational Documents and/or applicable state law and (ix) all certificates evidencing such Equity Interests.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time and the rules and regulations promulgated thereunder.

 

“Eurodollar Rate” shall mean for any Eurodollar Rate Loan for the then current Interest Period relating thereto, the interest rate per annum determined by Agent by dividing (the resulting quotient rounded upwards, if necessary, to the nearest 1/100th of 1% per annum) (i) the rate which appears on the Bloomberg Page BBAM1 (or on such other substitute Bloomberg page that displays rates at which US dollar deposits are offered by leading banks in the London interbank deposit market), or the rate which is quoted by another source selected by Agent which has been approved by the British Bankers’ Association as an authorized information vendor for the purpose of displaying rates at which U.S. dollar deposits are offered by leading banks in the London interbank deposit market (an “Alternate Source”), at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period as the London interbank offered rate for U.S. Dollars for an amount comparable to such Eurodollar Rate Loan and having a borrowing date and a maturity comparable to such Interest Period (or if there shall at any time, for any reason, no longer exist a Bloomberg Page BBAM1 (or any substitute page) or any Alternate Source, a comparable replacement rate determined by Agent at such time (which determination shall be conclusive absent manifest error)), by (ii) a number equal 1.00 minus the Reserve Percentage. The Eurodollar Rate may also be expressed by the following formula:

 

	  	  	
Average of London interbank offered rates  quoted by Bloomberg or 

appropriate Successor as shown on

Bloomberg Page BBAM1

	
Eurodollar Rate =

	
  

	
1.00 - Reserve Percentage

The Eurodollar Rate shall be adjusted with respect to any Eurodollar Rate Loan that is outstanding on the effective date of any change in the Reserve Percentage as of such effective date.  The Agent shall give prompt notice to the Borrowing Agent of the Eurodollar Rate as determined or adjusted in accordance herewith, which determination shall be conclusive absent manifest error.

  

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“Eurodollar Rate Loan” shall mean an Advance at any time that bears interest based on the Eurodollar Rate.

 

“Event of Default” shall have the meaning set forth in Article X hereof.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

“Excluded Taxes” shall mean, with respect to Agent, any Lender, Issuer or any other recipient of any payment to be made by or on account of any obligation of Borrowers hereunder, (a) taxes imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which Borrowers is located and (c) in the case of a Foreign Lender, any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party hereto (or designates a new lending office) or is attributable to such Foreign Lender's failure or inability (other than as a result of a Change in Law) to comply with Section 3.11, except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 3.10.

 

“Executive Order No. 13224” shall mean the Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.

 

“Federal Funds Effective Rate” for any day shall mean the rate per annum (based on a year of 360 days and actual days elapsed and rounded upward to the nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York (or any successor) on such day as being the weighted average of the rates on overnight federal funds transactions arranged by federal funds brokers on the previous trading day, as computed and announced by such Federal Reserve Bank (or any successor) in substantially the same manner as such Federal Reserve Bank computes and announces the weighted average it refers to as the “Federal Funds Effective Rate” as of the date of this Agreement; provided, if such Federal Reserve Bank (or its successor) does not announce such rate on any day, the "Federal Funds Effective Rate" for such day shall be the Federal Funds Effective Rate for the last day on which such rate was announced.

 

“Federal Funds Open Rate” for any day shall mean the rate per annum (based on a year of 360 days and actual days elapsed) which is the daily federal funds open rate as quoted by ICAP North America, Inc. (or any successor) as set forth on the Bloomberg Screen BTMM for that day opposite the caption “OPEN” (or on such other substitute Bloomberg Screen that displays such rate), or as set forth on such other recognized electronic source used for the purpose of displaying such rate as selected by PNC (an “Alternate Source”) (or if such rate for such day does not appear on the Bloomberg Screen BTMM (or any substitute screen) or on any Alternate Source, or if there shall at any time, for any reason, no longer exist a Bloomberg Screen BTMM (or any substitute screen) or any Alternate Source, a comparable replacement rate determined by the PNC at such time (which determination shall be conclusive absent manifest error); provided however, that if such day is not a Business Day, the Federal Funds Open Rate for such day shall be the “open” rate on the immediately preceding Business Day.  If and when the Federal Funds Open Rate changes, the rate of interest with respect to any advance to which the Federal Funds Open Rate applies will change automatically without notice to the Borrowers, effective on the date of any such change.

  

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“Fee Letter” shall mean that certain letter agreement regarding fees between PNC, PNC Capital Markets LLC and UniTek Parent dated as of March 13, 2011, as it may be amended, modified, supplemented, restated or replaced from time to time.

 

“Fixed Charge Coverage Ratio” shall mean and include, with respect to any fiscal period, the ratio of (a) Consolidated EBITDA for such period minus Unfunded Capital Expenditures made during such period minus distributions (including tax distributions) and dividends made during such period, minus cash taxes paid during such period, to (b) all Debt Payments paid during such period plus an amount equal to twenty-five percent (25%) of all cash actually paid during such period in respect of any Permitted Earn-Out Obligations (other than the Pinnacle Permitted Earn-Out Obligations); all calculated for Borrowers on a Consolidated Basis in accordance with GAAP.

 

Foreign Lender shall mean any Lender that is organized under the Laws of a jurisdiction other than that in which Borrowers are resident for tax purposes.  For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

 

“Foreign Subsidiary” of any Person, shall mean any Subsidiary of such Person that is not organized or incorporated in the United States or any State or territory thereof.

 

“Formula Amount” shall have the meaning set forth in Section 2.1(a) hereof.

 

“GAAP” shall mean generally accepted accounting principles in the United States of America in effect from time to time.

 

“General Intangibles” shall mean and include as to each Borrower all of such Borrower’s general intangibles, whether now owned or hereafter acquired, including all payment intangibles, all choses in action, causes of action, corporate or other business records, inventions, designs, patents, patent applications, equipment formulations, manufacturing procedures, quality control procedures, trademarks, trademark applications, service marks, trade secrets, goodwill, copyrights, design rights, software, computer information, source codes, codes, records and updates, registrations, licenses, franchises, customer lists, tax refunds, tax refund claims, computer programs, all claims under guaranties, security interests or other security held by or granted to such Borrower to secure payment of any of the Receivables by a Customer (other than to the extent covered by Receivables) all rights of indemnification and all other intangible property of every kind and nature (other than Receivables).

 

“Governmental Acts” shall have the meaning set forth in Section 2.17 hereof.

  

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

 

“Guarantee Obligation” as to any Person (the “guaranteeing person”), shall mean any obligation, including a reimbursement, counterindemnity or similar obligation, of the guaranteeing Person that guarantees or in effect guarantees, or which is given to induce the creation of a separate obligation by another Person (including any bank under any letter of credit) that guarantees or in effect guarantees, any Indebtedness, leases, dividends or other obligations (the “primary obligations”) of any other third Person (the “primary obligor”) in any manner, whether directly or indirectly, including any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business.  The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof as determined by the applicable Borrower in good faith.

 

“Guarantor” shall mean any Person who may hereafter guarantee payment or performance of the whole or any part of the Obligations and “Guarantors” means collectively all such Persons.

 

“Guarantor Security Agreement” shall mean any security agreement executed by any Guarantor in favor of Agent securing the Obligations or the Guaranty of such Guarantor, in form and substance satisfactory to Agent, provided that the terms and conditions thereof (including without limitation terms and conditions concerning Term Debt Priority Collateral) shall be consistent with the terms and conditions of this Agreement.

 

“Guaranty” shall mean any guaranty of the Obligations executed by a Guarantor in favor of Agent for its benefit and for the ratable benefit of Lenders, in form and substance satisfactory to Agent, provided that the terms and conditions thereof (including without limitation terms and conditions concerning Term Debt Priority Collateral) shall be consistent with the terms and conditions of this Agreement.

  

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“Hazardous Discharge” shall have the meaning set forth in Section 4.19(d) hereof.

 

“Hazardous Substance” shall mean, without limitation, any flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous materials, Hazardous Wastes, hazardous or Toxic Substances or related materials as defined in CERCLA, the Hazardous Materials Transportation Act, as amended (49 U.S.C. Sections 5101, et  seq.), RCRA, Articles 15 and 27 of the New York State Environmental Conservation Law or any other applicable Environmental Law and in the regulations adopted pursuant thereto.

 

“Hazardous Wastes” shall mean all waste materials subject to regulation under CERCLA, RCRA or applicable state law, and any other applicable Federal and state laws now in force or hereafter enacted relating to hazardous waste disposal.

 

“Hedge Liabilities” shall have the meaning provided in the definition of “Lender-Provided Interest Rate Hedge”.

 

“Inactive Subsidiary” shall mean any Subsidiary of any Borrower that does not (i) conduct any active business operations (including the operations of a holding company), (ii) have assets with a fair market value of $500,000 or more or (iii) own any capital stock of any Borrower or any other Subsidiary (except another Inactive Subsidiary) of any Borrower; provided that, notwithstanding anything to the contrary contained in any of the foregoing, no Subsidiary may be deemed to be an Inactive Subsidiary for any purpose under this Agreement if the fair market value of all of the assets of such Subsidiary, together with the fair market value of the assets of all other Inactive Subsidiaries of Borrower, shall exceed $1,000,000 at any one time in the aggregate.

 

“Indebtedness” of any Person at any date, shall mean, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services earned but not paid (other than to the extent payable in common stock Equity Interests and other than current trade payables incurred in the ordinary course of such Person’s business), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Capitalized Lease Obligations of such Person, (f) all obligations of such Person, contingent or otherwise, as an account party or applicant under or in respect of acceptances, issued and drawn letters of credit, surety bonds or similar arrangements, (g) all obligations of such Person in respect of Disqualified Capital Stock, (h) all obligations of such Person for “earnouts”, purchase price adjustments, profit sharing arrangements, deferred purchase money amounts and similar payment obligations or continuing obligations of any nature of such Person payable in cash arising out of purchase and sale contracts (“Earn-Out Indebtedness”), (i) all Guarantee Obligations of such Person in respect of obligations of the kind referred to in clauses (a) through (h) above, and (j) all obligations of the kind referred to in clauses (a) through (i) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation.  The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness expressly provide that such Person is not liable therefor.

  

20

  

 

Indemnified Taxes shall mean Taxes other than Excluded Taxes.

 

“Ineligible Security” shall mean any security which may not be underwritten or dealt in by member banks of the Federal Reserve System under Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as amended.

 

“Intellectual Property” shall mean property constituting under any Applicable Law a patent, patent application, copyright, trademark, service mark, trade name, mask work, trade secret or license or other right to use any of the foregoing.

 

“Intellectual Property Claim” shall mean the assertion by any Person of a claim (whether asserted in writing, by action, suit or proceeding or otherwise) that any Borrower’s ownership, use, marketing, sale or distribution of any Inventory, Equipment, Intellectual Property or other property or asset is violative of any ownership of or right to use any Intellectual Property of such Person.

 

“Intellectual Property Security Agreement” shall mean that certain Intellectual Property Security Agreement dated as of the Closing Date by and among Borrowers and Agent, as it may be amended, modified, supplemented, restated or replaced from time to time.

 

“Intercreditor Agreement” shall mean that certain Intercreditor Agreement dated as of the Closing Date by and between Agent and Term Debt Agent, as it may be amended, modified, supplemented, restated or replaced from time to time.

 

“Interest Period” shall mean the period provided for any Eurodollar Rate Loan pursuant to Section 2.2(b) hereof.

 

“Interest Rate Hedge” shall mean an interest rate exchange, collar, cap, swap, adjustable strike cap, adjustable strike corridor or similar agreements entered into by any Borrower or its Subsidiaries in order to provide protection to, or minimize the impact upon, such Borrower, any Guarantor and/or their respective Subsidiaries of increasing floating rates of interest applicable to Indebtedness.

 

“Inventory” shall mean and include as to each Borrower all of such Borrower’s now owned or hereafter acquired goods, merchandise and other personal property, wherever located, to be furnished under any consignment arrangement, contract of service or held for sale or lease, all raw materials, work in process, finished goods and materials and supplies of any kind, nature or description which are or might be used or consumed in such Borrower’s business or used in selling or furnishing such goods, merchandise and other personal property, and all documents of title or other documents representing them.

  

21

  

 

“Investment Property” shall mean and include as to each Borrower, all of such Borrower’s now owned or hereafter acquired securities (whether certificated or uncertificated), securities entitlements, securities accounts, commodities contracts and commodities accounts.

 

“Issuer” shall mean (i) Agent in its capacity as the issuer of Letters of Credit under this Agreement and (ii) any other Person whom Agent in its discretion shall designate as the issuer of and cause to issue any particular Letter of Credit under this Agreement in place of Agent as issuer.

 

“Joint Venture” shall mean a corporation, partnership, limited liability company or other entity in which Borrowers and their wholly-owned Subsidiaries hold, directly or indirectly, less than 51% of the Equity Interests therein.

 

“Leasehold Interests” shall mean all of each Borrower’s right, title and interest in and to, and as lessee, of the premises identified on Schedule 4.5 hereto.

 

“Lender” and “Lenders” shall have the meaning ascribed to such term in the preamble to this Agreement and shall include each Person which becomes a transferee, successor or assign of any Lender.

 

“Lender-Provided Interest Rate Hedge” shall mean an Interest Rate Hedge which is provided by any Lender and with respect to which the Agent confirms in writing meets the following requirements: such Interest Rate Hedge (i) is documented in a standard International Swap Dealer Association Agreement, (ii) provides for the method of calculating the reimbursable amount of the provider's credit exposure in a reasonable and customary manner, and (iii) is entered into for hedging (rather than speculative) purposes.  The liabilities of any Borrower to the provider of any Lender-Provided Interest Rate Hedge (the “Hedge Liabilities”) shall be “Obligations” hereunder, guaranteed obligations under the Guaranty and secured obligations under any Guarantor Security Agreement and otherwise treated as Obligations for purposes of each of the Other Documents.  The Liens securing the Hedge Liabilities shall be pari passu with the Liens securing all other Obligations under this Agreement and the Other Documents.

 

“Letter of Credit Application” shall have the meaning set forth in Section 2.10 hereof.

 

“Letter of Credit Borrowing” shall have the meaning set forth in Section 2.12(d) hereof.

 

“Letter of Credit Fees” shall have the meaning set forth in Section 3.2 hereof.

 

“Letter of Credit Sublimit” shall mean $25,000,000; provided that, upon the effective date of each Borrower Revolver Increase, the Letter of Credit Sublimit shall increase by an amount equal to thirty-three percent (33%) of the amount of such Borrower Revolver Increase.

 

“Letters of Credit” shall have the meaning set forth in Section 2.9 hereof.

  

22

  

“Lien” shall mean any mortgage, deed of trust, pledge, hypothecation, assignment, security interest, lien (whether statutory or otherwise), Charge, claim or encumbrance, or preference, priority or other security agreement or preferential arrangement held or asserted in respect of any asset of any kind or nature whatsoever including any conditional sale or other title retention agreement, any lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction.

 

“Lien Waiver Agreement” shall mean an agreement which is executed in favor of Agent by a Person who owns or occupies premises at which any Collateral may be located from time to time and by which such Person shall waive any Lien that such Person may ever have with respect to any of the Collateral and shall authorize Agent from time to time to enter upon the premises to inspect or remove (or temporarily store) the Collateral from such premises.

 

“Material Adverse Effect” shall mean a material adverse effect on (a) the condition (financial or otherwise), results of operations, assets, business, properties or prospects of any Borrower, (b) any Borrower’s ability to duly and punctually pay or perform the Obligations in accordance with the terms thereof, (c) the value of the Collateral, or Agent’s Liens on the Collateral or the priority of any such Lien or (d) the practical realization of the benefits of Agent’s and each Lender’s rights and remedies under this Agreement and the Other Documents.

 

“Material Contract” shall mean any contract, agreement, instrument, permit, lease or license, written or oral, of Borrowers, which are material to any Borrower’s business or which, the failure to comply with, could reasonably be expected to result in a Material Adverse Effect.

 

“Maximum Face Amount” shall mean, with respect to any outstanding Letter of Credit, the face amount of such Letter of Credit at the time of its issuance (subject to any later amendments increasing the same) including all automatic increases provided for in such Letter of Credit, whether or not any such automatic increase has become effective.

 

“Maximum Revolving Advance Amount” shall mean $75,000,000, as such amount may be increased from time to time as a result of any Borrower Revolver Increase.

 

“Maximum Swing Loan Advance Amount” shall mean $7,500,000; provided that, upon the effective date of each Borrower Revolver Increase, the Maximum Swing Loan Advance Amount shall increase by an amount equal to ten percent (10%) of the amount of such Borrower Revolver Increase.

 

“Maximum Undrawn Amount” shall mean with respect to any outstanding Letter of Credit as of any date, the amount of such Letter of Credit that is or may become available to be drawn, including all automatic increases provided for in such Letter of Credit, whether or not any such automatic increase has become effective.

 

“Minimum Revolving Commitment Amount” shall mean $50,000,000.

 

“Modified Commitment Transfer Supplement” shall have the meaning set forth in Section 16.3(d) hereof.

 

“Multiemployer Plan” shall mean a “multiemployer plan” as defined in Sections 3(37) and 4001(a)(3) of ERISA to which contributions are required by any Borrower or any member of the Controlled Group.

 

  

23

  

 

“Multiple Employer Plan” shall mean a Plan which has two or more contributing sponsors (including any Borrower or any member of the Controlled Group) at least two of whom are not under common control, as such a plan is described in Section 4064 of ERISA.

 

“Non-Defaulting Lender” shall mean, at any time, any Revolving Lender that is not a Defaulting Lender at such time.

 

“Note” shall mean collectively, the Revolving Credit Note and the Swing Loan Note.

 

“Obligations” shall mean and include any and all loans (including without limitation, all Advances), advances, debts, liabilities, obligations (including without limitation all reimbursement obligations and cash collateralization obligations with respect to Letters of Credit issued hereunder as provided for herein), covenants and duties owing by any Borrower to Issuer, Lenders or Agent or to any other direct or indirect subsidiary or affiliate of Agent, Issuer or any Lender of any kind or nature, present or future (including any interest or other amounts accruing thereon, any fees accruing under or in connection therewith, any costs and expenses of any Person payable by any Borrower and any indemnification obligations payable by any Borrower arising or payable after maturity, or after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding relating to any Borrower, whether or not a claim for post-filing or post-petition interest, fees or other amounts is allowable or allowed in such proceeding), whether or not evidenced by any note, guaranty or other instrument, whether direct or indirect (including those acquired by assignment or participation), absolute or contingent, joint or several, due or to become due, now existing or hereafter arising, contractual or tortious, liquidated or unliquidated, regardless of by what agreement or instrument they may be evidenced or whether evidenced by any agreement or instrument, in any such case to the extent advanced to any Borrower under, arising under or out of and/or related to (i) this Agreement, the Other Documents and any amendments, extensions, renewals or increases thereto, including all costs and expenses of Agent, Issuer and any Lender incurred in the documentation, negotiation, modification, enforcement, collection or otherwise in connection with any of the foregoing, including but not limited to reasonable attorneys’ fees and expenses and all obligations of any Borrower to Agent, Issuer or Lenders to perform acts or refrain from taking any action, (ii) all Hedge Liabilities and (iii) all cash management and treasury management services provided to Borrowers and their Subsidiaries by Agent or any Lender or direct or indirect subsidiary or affiliate of Agent or any Lender, including but not limited to all lockbox services, controlled disbursement services, automated clearinghouse transactions, return items, overdrafts, interstate depository network services, credit cars, stored value cards and purchasing cards (or p-cards) (all such obligations described in this clause (iii) owing to Agent, any Lender or any Affiliate, the “Cash Management Obligations”).

 

“Ordinary Course of Business” shall mean with respect to any Borrower, the ordinary course of such Borrower’s business as conducted on the Closing Date.

 

“Organizational Documents” shall mean, with respect to any Person, any charter, articles or certificate of incorporation, certificate of organization, registration or formation, certificate of partnership or limited partnership, bylaws, operating agreement, limited liability company agreement, or partnership agreement of such Person and any and all other applicable documents relating to such Person’s formation, organization or entity governance matters (including any shareholders’ or equity holders’ agreement or voting trust agreement) and specifically includes, without limitation, any certificates of designation for preferred stock or other forms of preferred equity.

  

24

  

 

“Original Owner” shall mean HM Capital.

 

“Other Documents” shall mean the Note, the Perfection Certificates, the Fee Letter, any Guaranty (if any), any Guarantor Security Agreement (if any), any Pledge Agreement, any Lender-Provided Interest Rate Hedge, the Intercreditor Agreement and any and all other agreements, instruments and documents, subordination and/or intercreditor agreements, guaranties, pledges, powers of attorney, consents, interest or currency swap agreements or other similar agreements and all other writings heretofore, now or hereafter executed by any Borrower or any Guarantor and/or delivered to Agent or any Lender in respect of the transactions contemplated by this Agreement.

 

“Other Taxes” shall mean all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any Other Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any Other Document.

 

“Out-of-Formula Loans” shall have the meaning set forth in Section 16.2(b) hereof.

 

“Overadvance Threshold Amount” shall have the meaning set forth in Section 16.2(b) hereof.

 

“Parent” of any Person shall mean a corporation or other entity owning, directly or indirectly at least 50% of the shares of stock or other ownership interests having ordinary voting power to elect a majority of the directors of the Person, or other Persons performing similar functions for any such Person.

 

“Participant” shall mean each Person who shall be granted the right by any Lender to participate in any of the Advances and who shall have entered into a participation agreement in form and substance satisfactory to such Lender.

 

“Participation Advance” shall have the meaning set forth in Section 2.12(d) hereof.

 

“Participation Commitment” shall mean each Lender’s obligation to buy a participation of the Letters of Credit issued hereunder.

 

“Payee” shall have the meaning set forth in Section 3.10 hereof.

 

“Payment Office” shall mean initially Two Tower Center Boulevard, East Brunswick, New Jersey 08816; thereafter, such other office of Agent, if any, which it may designate by notice to Borrowing Agent and to each Lender to be the Payment Office.

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA or any successor.

  

25

  

 

“Pension Benefit Plan” shall mean at any time any employee pension benefit plan (including a Multiple Employer Plan, but not a Multiemployer Plan) which is covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code and either (i) is maintained or to which contributions are required by any member of the Controlled Group for employees of any member of the Controlled Group; or (ii) has at any time within the preceding five years been maintained or to which contributions have been required by any entity which was at such time a member of the Controlled Group for employees of any entity which was at such time a member of the Controlled Group.

 

“Perfection Certificates” shall mean collectively, the Perfection Certificates and the responses thereto provided by each Borrower and delivered to Agent.

 

“Permitted Acquisitions” shall mean acquisitions of the assets or Equity Interests of another Person so long as:

 

(a)           at the time of and after giving effect to such acquisition, Borrowers have Undrawn Availability and ten day average Undrawn Availability of not less than the Undrawn Availability Minimum Amount; provided that, in the case of any such acquisition (other than the Pinnacle Acquisition) where the total consideration paid, costs and liabilities (including without limitation, all assumed liabilities, all deferred payments, the initial principal amount of all Subordinated Debt issued to the seller(s) and the value of any other stock or assets transferred, assigned or encumbered with respect to such acquisitions, but excluding all Earn-Out Indebtedness) equals or exceeds $40,000,000, Borrowers must have Undrawn Availability and ten day average Undrawn Availability of not less than the Undrawn Availability Increased Minimum Amount;

 

(b)           the aggregate amount of all Revolving Advance(s) requested by Borrowers hereunder and balance sheet cash of Borrowers used to pay any portion of the cash consideration for and transactions costs paid by Borrowers in connection with the closing of any such acquisition (other than the Pinnacle Acquisition) shall not exceed $15,000,000 with respect to any particular acquisition or $40,000,000 in the aggregate for all such acquisitions throughout the Term,

 

(c)           no Earn-Out Indebtedness shall be incurred by any Borrower and/or such acquired company in connection with such acquisition other than Permitted Earn-Out Obligations;

  

26

  

(d)           with respect to the acquisition of Equity Interests, (i) UniTek Parent and/or one or more of the other Borrowers that are 100% wholly-owned direct or indirect Subsidiaries of UniTek Parent shall be acquiring not less than fifty-one percent (51%) of the Equity Interests of such acquired company (excluding any directors’ qualifying shares required pursuant to applicable law), (ii) such acquired company shall either (x) have a positive EBITDA (the components of which are calculated in accordance with GAAP) for the period of four fiscal quarters ending with the fiscal quarter most recently ended prior to such acquisition or (y) be projected by Borrowers to have positive EBITDA (the components of which are calculated in accordance with GAAP) for the period of four fiscal quarters following such acquisition as demonstrated by written projections provided by Borrowers to Agent at least fifteen (15) Business Days prior to such acquisition that have been prepared by the Chief Financial Officer of Borrowers and certified by such Chief Financial Officer as having been prepared based on underlying assumption which provide a reasonable basis for the projections contained therein and reflecting Borrowers’ judgment based on then-present circumstances of the most likely set of conditions and course of action for the projected period for such company (after giving pro forma effect to the acquisition), which such assumptions are judged to be reasonable by Agent in its discretion; provided that, notwithstanding anything to the contrary provided for in this clause (ii), under no circumstances shall an acquisition qualify as a Permitted Acquisition if the acquired company EBITDA (the components of which are calculated in accordance with GAAP) for the period of four fiscal quarters ending with the fiscal quarter most recently ended prior to such acquisition shall be worse than ($5,000,000) (i.e., negative $5,000,000), and (iii) Borrowers shall comply with the provisions of Section 7.12 with respect to such acquired company and all of its Subsidiaries;

 

(e)           the acquired company or property is used or useful in the same or a similar line of business as the Borrowers were engaged in on the Closing Date (or any reasonable extensions or expansions thereof);

 

(f)            Agent shall have received a first-priority (subject only to Permitted Encumbrances in favor of Term Debt Agent subject to the Intercreditor Agreement in the case of any Term Debt Priority Collateral and to any other Permitted Encumbrances which by operation of law (including the priority granted under the Uniform Commercial Code to any purchase money security interests that are Permitted Encumbrances) have senior priority) security interest and Lien in all acquired assets or Equity Interests, subject to documentation satisfactory to Agent;

 

(g)           the board of directors (or other comparable governing body) of such company shall have duly approved the transaction;

 

(h)           the Borrowers shall have delivered to Agent at least five (5) Business Days prior to such acquisition (i) a pro forma balance sheet and pro forma financial statements and a Compliance Certificate demonstrating that the Borrowers would be in compliance with the financial covenants set forth in Section 6.5 and the Permitted Acquisitions Leverage Ratio Requirement on a pro forma basis after giving effect to such acquisition as if such acquisition had occurred on the first day of the most recent period of four consecutive fiscal quarters in respect of which the financial covenants have been tested in accordance with Section 6.5 (as to any Permitted Acquisition, the “Permitted Acquisition Measurement Period”) and stating that all the conditions provided for under this definition will be satisfied upon consummation of such acquisition, and (ii)  financial statements of the acquired entity for the most recent fiscal year then ended, which such financial statements shall be audited by an independent certified public accounting firm unless Agent in its sole discretion exercised in its Permitted Discretion shall agree otherwise, plus any interim financial statements for such acquired entity that may be available, all in form and substance reasonably acceptable to Agent.  For the avoidance of any doubt, for purposes of this paragraph (h) and the pro forma calculation of the financial covenants set forth in Section 6.5 and the Permitted Acquisitions Leverage Ratio Requirement provided for herein, all calculations of Consolidated EBITDA shall be made without giving effect to the provisions of the last two sentences of the definition of Consolidated EBITDA or clause (a) of the definition of Consolidated Net Income;

  

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(i)           no assets acquired in any such transaction(s) shall be included in the Formula Amount until Agent has received a field examination and/or appraisal of such assets, in form and substance acceptable to Agent;

 

(j)           no Default or Event of Default shall have occurred or will occur after giving pro forma effect to such acquisition; and

 

(k)          all transactions in connection with such acquisition shall be consummated, in all material respects, in accordance with all applicable laws and in conformity with all applicable governmental authorization

 

For the purposes of calculating Undrawn Availability under this definition, any assets being acquired in the proposed acquisition shall be included in the Formula Amount on the date of closing so long as Agent has received an audit or appraisal of such assets as set forth in clause (i) above and so long as such assets satisfy the applicable eligibility criteria.

 

“Permitted Acquisitions Leverage Ratio Requirement” shall mean, in connection with any Permitted Acquisition, that Borrowers shall have a pro forma Consolidated Leverage Ratio (as defined below) as at the last day of any applicable Permitted Acquisition Measurement Period (as defined in clause (h) of the definition of Permitted Acquisitions) no greater than the ratio set forth below opposite the last fiscal quarter in such Permitted Acquisition Measurement Period:

 

	
Fiscal Quarter

	  	
Consolidated Leverage

Ratio

	  	  	  
	
June 30, 2011

	  	
4.75:1.00

	  	  	  
	
September 30, 2011

	  	
4.50:1.00

	  	  	  
	
December 31, 2011

	  	
4.25:1.00

	  	  	  
	
March 31, 2012

	  	
4.00:1.00

	  	  	  
	
June 30, 2012

	  	
3.75:1.00

	  	  	  
	
September 30, 2012

	  	
3.50:1.00

	  	  	  
	
December 31, 2012

	  	
3.50:1.00

	  	  	  
	
March 31, 2013

	  	
3.50:1.00

	  	  	  
	
June 30, 2013

	  	
3.25:1.00

	  	  	  
	
September 30, 2013

	  	
3.25:1.00

	  	  	  
	
December 31, 2013

	  	
3.25:1.00

  

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March 31, 2014

	  	
3.25:1.00

	  	  	  
	
June 30, 2014

	  	
3.25:1.00

	  	  	  
	
September 30, 2014

	  	
3.25:1.00

	  	  	  
	
December 31, 2014

	  	
3.25:1.00

	  	  	  
	
March 31, 2015

	  	
3.25:1.00

	  	  	  
	
June 30, 2015

	  	
3.25:1.00

	  	  	  
	
September 30, 2015

	  	
3.25:1.00

	  	  	  
	
December 31, 2015

	  	
3.25:1.00

	  	  	  
	
March 31, 2016

	  	
3.00:1.00

	  	  	  
	
June 30, 2016

	  	
3.00:1.00

	  	  	  
	
September 30, 2016

	  	
3.00:1.00

	  	  	  
	
December 31, 2016

	  	
3.00:1.00

	  	  	  
	
March 31, 2017

	  	
3.00:1.00

	  	  	  
	
June 30, 2017

	  	
3.00:1.00

	  	  	  
	
September 30, 2017

	  	
3.00:1.00

	  	  	  
	
December 31, 2017

	  	
3.00:1.00

	  	  	  
	
March 31, 2018

	
  

	
3.00:1.00

 

For purposes of this definition,(i) “Consolidated Leverage Ratio” shall mean as at the last day of any period, the ratio of (a) Consolidated Total Debt on such day to (b) Consolidated EBITDA for such period; all calculated for Borrowers on a Consolidated Basis in accordance with GAAP, and (ii) “Consolidated Total Debt” shall mean, at any date, the aggregate principal amount of all Indebtedness (excluding any Earn-Out Indebtedness obligations the payment of which are, as of such date, subject to the satisfaction and/or occurrence of any conditions other than the passage of time or giving of notice) at such date calculated for Borrowers on a Consolidated Basis in accordance with GAAP.

 

“Permitted Discretion” shall mean a determination made in good faith and in the exercise of commercially reasonable (from the perspective of a secured asset-based lender) business judgment.

  

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“Permitted Earn-Out Obligations” shall mean, collectively, obligations under any Earn-Out Indebtedness which are (i) incurred in connection with a Permitted Acquisition, and (ii) are subject to terms pursuant to which payments in respect thereof  may accrue but shall not be payable in cash either (x) during the period of the continuance of any Event of Default or (y) during any period when Borrowers shall have Undrawn Availability and five day average Undrawn Availability of less than the Undrawn Availability Minimum Amount either immediately prior to or after giving effect to any such payment, provided that such payments may be payable in cash if and when all such periods have ended.

 

“Permitted Encumbrances” shall mean (a) Liens in favor of Agent for the benefit of Agent and Lenders; (b) Liens for taxes, assessments or other governmental charges not delinquent or being Properly Contested; (c) [RESERVED]; (d) deposits or pledges to secure obligations under worker’s compensation, social security or similar laws, or under unemployment insurance; (e) deposits or pledges to secure bids, tenders, contracts (other than contracts for the payment of money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of like nature arising in the Ordinary Course of Business; (f) Liens arising by virtue of the rendition, entry or issuance against any Borrower or any Subsidiary, or any property of any Borrower or any Subsidiary, of any judgment, writ, order, or decree to the extent the rendition, entry, issuance or continued existence of such judgment, writ, order or decree (or any event or circumstance relating thereto) has not resulted in the occurrence of an Event of Default under Section 10.6 hereof; (g) mechanics’, workers’, materialmen’s or other like Liens arising in the Ordinary Course of Business with respect to obligations which are not more than 30 days overdue or which are being Properly Contested; (h) Liens placed upon fixed assets hereafter acquired to secure Indebtedness incurred to pay any portion of the purchase price thereof, provided that any such lien shall not encumber any other property of any Borrower and such Indebtedness shall be permitted under the terms of Section 7.8(ii); (i) other Liens incidental to the conduct of any Borrower’s business or the ownership of its property and assets which were not incurred in connection with the borrowing of money or the obtaining of advances or credit, and which do not in the aggregate materially detract from Agent’s or Lenders’ rights in and to the Collateral or the value of any Borrower’s property or assets or which do not materially impair the use thereof in the operation of any Borrower’s business; (j) easements, rights-of-way, zoning restrictions, minor defects or irregularities in title and other charges or encumbrances, in each case, which do not interfere in any material respect with the Ordinary Course of Business of the Borrowers and their Subsidiaries; (k) Liens disclosed on Schedule 1.2 provided that such Liens shall secure only those obligations which they secure on the Closing Date and any refinancing thereof and shall not subsequently apply to any other property or assets of any Borrower other than the property and assets to which they apply as of the Closing Date, (l) Liens on the Collateral securing the Term Debt Indebtedness and any Permitted Refinancing thereof to the extent and only so long as such Liens are subject to and in accordance with the terms and conditions of the Intercreditor Agreement, (m) Liens on the DIRECTV Inventory created under the DIRECTV/DirectSat Contract and (n) Liens on fixed assets of Borrowers securing Indebtedness permitted under Section 7.8(viii) hereof, provided that under no circumstances shall any such Indebtedness be secured by any Liens on any Receivables, Inventory, proceeds of Receivables or Inventory, deposit accounts or any other ABL Priority Collateral belonging to such Person being acquired and/or to any Borrower or Guarantor.

  

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“Permitted Foreign Operating Subsidiaries” shall mean, collectively, WireComm Systems (2008), Inc., a corporation organized under the laws of the province of Ontario, Canada, and UniTek Canada, Inc., a corporation organized under the laws of the province of Ontario, Canada.

 

“Permitted Refinancing” shall mean any refinancing of the Term Debt Indebtedness incurred in accordance with the Intercreditor Agreement and the restrictions of clause (iv) of Section 7.8, provided that, (i) the amendments to the Term Debt Documents pursuant to and in connection with such refinancing shall be in compliance with the provisions of Section 7.22 and (ii) the lenders providing such refinancing and/or agent or representative for such lenders have acknowledged in writing (in form and substance reasonably satisfactory to Agent) that such lenders and such agent/representative and all Liens securing such refinancing shall be bound by and subject to the terms and conditions of the Intercreditor Agreement.

 

“Person” shall mean any individual, sole proprietorship, partnership, corporation, business trust, joint stock company, trust, unincorporated organization, association, limited liability company, limited liability partnership, institution, public benefit corporation, joint venture, entity or Governmental Body (whether federal, state, county, city, municipal or otherwise, including any instrumentality, division, agency, body or department thereof).

 

“Pinnacle Acquisition” shall mean that certain asset acquisition by one or more of the Borrowers pursuant to that certain Asset Purchase Agreement dated as of March 30, 2011 between UniTek Parent as buyer and Pinnacle Wireless, Inc. and certain others as sellers.

 

“Plan” shall mean any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Benefit Plan and a Multiemployer Plan), maintained for employees of any Borrower or any member of the Controlled Group or any such Plan to which any Borrower or any member of the Controlled Group is required to contribute.

 

“Pledge Agreement” shall mean, collectively, (i) that certain Collateral Pledge Agreement executed by UniTek Parent in favor of Agent dated as of the Closing Date, (ii) that certain Collateral Pledge Agreement executed by UniTek Holdings in favor of Agent dated as of the Closing Date, (iii) that certain Collateral Pledge Agreement executed by UniTek MidCo in favor of Agent dated as of the Closing Date, (iv) that certain Collateral Pledge Agreement executed by UniTek Acquisition in favor of Agent dated as of the Closing Date, (v) that certain Collateral Pledge Agreement executed by UniTek USA in favor of Agent dated as of the Closing Date, and (vi) any other pledge agreements executed subsequent to the Closing Date by any other Person to secure the Obligations, as any such agreement may be amended, modified, supplemented, restated or replaced from time to time.

 

“PNC” shall have the meaning set forth in the preamble to this Agreement and shall extend to all of its successors and assigns.

 

“Pro Forma Balance Sheet” shall have the meaning set forth in Section 5.5(a) hereof.

 

“Pro Forma Financial Statements” shall have the meaning set forth in Section 5.5(b) hereof.

  

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“Project Receivables” shall mean all Receivables of Borrowers arising out of the sale of goods and/or provision  of services which represent only a portion or percentage of the goods and/or services to be sold and provided to the applicable Customer pursuant to the applicable purchase order or contract between such Borrower and such Customer and which have not yet been billed and invoiced to the applicable Customer.

 

“Project Receivables Advance Rate” shall have the meaning set forth in Section 2.1(a)(y) hereof.

 

“Properly Contested” shall mean, in the case of any Indebtedness or Lien, as applicable, of any Person (including any taxes) that is not paid as and when due or payable by reason of such Person’s bona fide dispute concerning its liability to pay same or concerning the amount thereof: (i) such Indebtedness or Lien, as applicable, is being properly contested in good faith by appropriate proceedings promptly instituted and diligently conducted; (ii) such Person has established appropriate reserves as shall be required in conformity with GAAP; (iii) the non-payment of such Indebtedness will not have a Material Adverse Effect and will not result in the forfeiture of any assets of such Person; (iv) no Lien is imposed upon any of such Person’s assets with respect to such Indebtedness unless such Lien is at all times junior and subordinate in priority to the Liens in favor of the Agent (except only with respect to property taxes that have priority as a matter of applicable state law) and enforcement of such Lien is stayed during the period prior to the final resolution or disposition of such dispute; (v) if such Indebtedness or Lien, as applicable, results from, or is determined by the entry, rendition or issuance against a Person or any of its assets of a judgment, writ, order or decree, enforcement of such judgment, writ, order or decree is stayed pending a timely appeal or other judicial review; and (vi) if such contest is abandoned, settled or determined adversely (in whole or in part) to such Person, such Person forthwith pays such Indebtedness and all penalties, interest and other amounts due in connection therewith.

 

“Projections” shall have the meaning set forth in Section 5.5(b) hereof.

 

“Published  Rate”  shall mean the rate of interest published each Business Day in the Wall Street Journal “Money Rates” listing under the  caption  “London Interbank Offered Rates” for a one month period (or, if no such rate is published therein for any reason, then the Published Rate shall be the Eurodollar Rate for a one month period as published in another publication selected by the Agent).

 

“Purchasing CLO” shall have the meaning set forth in Section 16.3(d) hereof.

 

“Purchasing Lender” shall have the meaning set forth in Section 16.3(c) hereof.

 

“Ratable Share” shall mean the proportion that a Lender's Revolving Commitment Percentage bears to the Revolving Commitment Percentages, provided that in the case of Section 2.23 when a Defaulting Lender shall exist, "Ratable Share" shall mean the percentage of the aggregate Revolving Commitment Percentages (disregarding any Defaulting Lender's Revolving Commitment Percentages) represented by such Lender's Revolving Commitment Percentage.  If the Revolving Commitment Percentages have terminated or expired, the Ratable Share shall be determined based upon the Revolving Commitment Percentages most recently in effect, giving effect to any assignments.

  

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“RCRA” shall mean the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., as same may be amended from time to time.

 

“Real Property” shall mean all of each Borrower’s right, title and interest in and to the owned and leased premises identified on Schedule 4.5 hereto or which is hereafter owned or leased by any Borrower.

 

“Receivables” shall mean and include, as to each Borrower, all of such Borrower’s accounts, contract rights, instruments (including those evidencing indebtedness owed to such Borrower by its Affiliates), documents, chattel paper (including electronic chattel paper), general intangibles relating to accounts, drafts and acceptances, credit card receivables and all other forms of obligations owing to such Borrower arising out of or in connection with the sale or lease of Inventory or the rendition of services, all supporting obligations, guarantees and other security therefor, whether secured or unsecured, now existing or hereafter created, and whether or not specifically sold or assigned to Agent hereunder.

 

“Reference Period” shall have the meaning set forth in the definition of “Consolidated EBITDA.”

 

“Register” shall have the meaning set forth in Section 16.3(e) hereof.

 

“Reimbursement Obligation” shall have the meaning set forth in Section 2.12(b)hereof.

 

“Release” shall have the meaning set forth in Section 5.7(c)(i) hereof.

 

“Reportable Event” shall mean a reportable event described in Section 4043(c) of ERISA or the regulations promulgated thereunder.

 

“Required Lenders” shall mean Lenders (other than any Defaulting Lender) having more than sixty-six and two-thirds percent (66.66%) of (a) the sum of the aggregate amount of the Revolving Credit Commitments of the Lenders (excluding any Defaulting Lender) or, (b) after the termination of the Revolving Credit Commitments, the sum of (x) the outstanding Revolving Advances and (y) the Maximum Undrawn Amount of all outstanding Letters of Credit multiplied by the Revolving Credit Commitments of all Lenders as most recently in effect excluding any Defaulting Lender; provided, however, if there are fewer than three (3) Lenders, Required Lenders shall mean all Lenders (excluding any Defaulting Lender).

 

“Reserve Percentage” shall mean as of any day the maximum percentage in effect on such day as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including supplemental, marginal and emergency reserve requirements) with respect to eurocurrency funding (currently referred to as “Eurocurrency Liabilities”.

 

“Revolving Advances” shall mean Advances made other than Swing Loans and Letters of Credit.

  

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“Revolving Commitment Percentage” of any Lender shall mean the Revolving Commitment Percentage set forth below such Lender’s name on the signature page hereof as same may be adjusted upon any assignment by or to a Lender pursuant to Section 16.3(c) or (d) hereof or upon any Borrower Revolver Increase pursuant to Section 2.24.

 

“Revolving Commitment Amount” of any Lender shall mean the Revolving Commitment Amount set forth below such Lender’s name on the signature page hereof as same may be adjusted upon any assignment by or to a Lender pursuant to Section 16.3(c) or (d) hereof or upon any Borrower Revolver Increase pursuant to Section 2.24 in which such Lender shall participate.

 

“Revolving Credit Note” shall mean, collectively, the promissory notes referred to in Section 2.1(a) hereof, as any such note may be amended, modified, supplemented, restated or replaced from time to time.

 

“Revolving Lender” shall mean each Lender who has a commitment to make Revolving Advances (or who holds any outstanding Revolving Advances) and shall include each Person which becomes a Transferee, successor or assign of any Revolving Lender.

“Revolving Interest Rate” shall mean, (a) with respect to Revolving Advances that are Domestic Rate Loans, an interest rate per annum equal to the sum of the appropriate Applicable Margin plus the Alternate Base Rate and (b) with respect to Revolving Advances that are Eurodollar Rate Loans, an interest rate per annum equal to the sum of the appropriate Applicable Margin plus the Eurodollar Rate.

“SEC” shall mean the Securities and Exchange Commission or any successor thereto.

 

“Section 2.24 New Lender” shall have the meaning set forth in Section 2.24(a).

 

“Section 20 Subsidiary” shall mean the Subsidiary of the bank holding company controlling PNC, which Subsidiary has been granted authority by the Federal Reserve Board to underwrite and deal in certain Ineligible Securities.

 

“Securities Act” shall mean the Securities Act of 1933, as amended.

 

“Settlement” shall have the meaning set forth in Section 2.4(d).

 

“Settlement Date” shall have the meaning set forth in Section 2.4(d).

 

“Subsidiary” of any Person shall mean a corporation or other entity of whose Equity Interests having ordinary voting power (other than Equity Interests having such power only by reason of the happening of a contingency) to elect a majority of the directors of such corporation, or other Persons performing similar functions for such entity, are owned, directly or indirectly, by such Person.

 

“Subordinated Debt” shall mean, collectively, any and all unsecured Indebtedness for borrowed money incurred by any one or more Borrowers that is subordinated in favor of the payment in full of all Obligations on terms and conditions (including without limitation subordination terms (including any terms regarding the cash payment of interest) and provisions regarding enforcement standstills) acceptable to Agent in its discretion pursuant to a subordination agreement executed and delivered by the holders of such Indebtedness that is satisfactory in both form and substance to Agent in its discretion.

  

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“Subsidiary Stock” shall mean all of the issued and outstanding Equity Interests of any Subsidiary owned by any Borrower; provided that Subsidiary Stock with respect to any Foreign Subsidiary shall be limited to sixty-five percent (65%) of the voting Equity Interest and one hundred percent (100%) of non-voting Equity Interests of such Foreign Subsidiary.

 

“Swing Loan Facility” shall mean PNC's right and option to make Swing Loans to the Borrower pursuant to Section 2.4 hereof in an aggregate principal amount up to the Maximum Swing Loan Amount.

 

“Swing Loan Lender” shall mean PNC, in its capacity as Lender of the Swing Loans.

 

“Swing Loan Note” shall mean, collectively, the promissory notes referred to in Section 2.4(a) hereof, as any such note may be amended, modified, supplemented, restated or replaced from time to time.

 

“Swing Loan Request” shall mean a request for Swing Loans made in accordance with in Section 2.4(a)(i) hereof.

 

Swing Loans shall mean collectively Advances made by PNC to Borrowers pursuant to Section 2.4 and 2.20(c) hereof.

 

Taxes shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Body, including any interest, additions to tax or penalties applicable thereto.

 

“Term” shall have the meaning set forth in Section 13.1 hereof.

 

“Term Debt Agent” shall mean FBR Capital Markets LT, Inc. in its capacity as the “Administrative Agent” under the Term Debt Documents, together with its successors and assigns in such capacity including any and all successor “Administrative Agent(s)” appointed in accordance with the Term Debt Credit Agreement; provided that, upon and after any Permitted Refinancing of the Term Debt Indebtedness, the term “Term Debt Agent” shall mean, collectively (if applicable), the administrative and collateral agent(s) and/or lender representative(s) under such Permitted Refinancing (together with their successors and assigns in such capacity).

 

“Term Debt Credit Agreement” shall mean that certain Credit Agreement between UniTek Parent, Term Debt Agent and Term Debt Lenders, as it may be amended, modified, supplemented, restated or replaced from time to time; provided that, upon and after any Permitted Refinancing of the Term Debt Indebtedness, the term “Term Debt Credit Agreement” shall mean the credit agreement for such refinancing (as it may be amended, modified, supplemented, restated or replaced from time to time).

 

“Term Debt Creditors” shall mean, collectively, the Term Debt Agent and the Term Debt Lenders.

  

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“Term Debt Documents” shall mean, collectively, the Term Debt Credit Agreement and all other material instruments, agreements and documents executed in connection therewith (specifically including the Guarantee and Collateral Agreement (as defined in the Term Debt Credit Agreement)), as each such document may be amended, modified, supplemented, restated or replaced from time to time, but excluding any fee letters, engagement letters and similar agreements; provided that, upon and after any Permitted Refinancing of the Term Debt Indebtedness, the term “Term Debt Documents” shall mean the credit agreement for such refinancing and all such other material instruments, agreements and documents executed in connection therewith (as each such document may be amended, modified, supplemented, restated or replaced from time to time).

 

“Term Debt Lenders” shall mean, collectively, each financial institution or other Person that is a “Lender” under the Term Debt Documents and each other Person to whom any “Obligation” (as defined in the Guarantee and Collateral Agreement referred to in the Term Debt Credit Agreement) is owed, together with the successors and assigns of each of them; provided that, upon and after any Permitted Refinancing of the Term Debt Indebtedness, the term “Term Debt Lenders” shall mean, collectively, the lenders providing such refinancing (together with their successors and assigns in such capacity).

 

“Term Debt Indebtedness” shall mean the Indebtedness and other obligations and liabilities of any Borrower (including guaranty Indebtedness and guarantee obligations, reimbursement obligations, fees, costs, indemnification obligations and post-petition amounts, whether or not allowed) evidenced by and/or arising under the Term Debt Documents; provided that, upon and after any Permitted Refinancing of such Indebtedness and other obligations and liabilities, the term “Term Debt Indebtedness” shall mean such Indebtedness and other obligations and liabilities as so refinanced.

 

“Term Debt Obligations Payment Date” shall have the meaning given to such term in the Intercreditor Agreement.

 

“Term Debt Payments” shall mean and include all cash actually expended to make payments of principal and interest on the Term Debt Indebtedness.

 

“Term Debt Priority Collateral” shall have the meaning given to such term in the Intercreditor Agreement.

 

“Termination Event” shall mean: (i) a Reportable Event with respect to any Plan; (ii) the withdrawal of any Borrower or any member of the Controlled Group from a Plan during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA; (iii) the providing of notice of intent to terminate a Plan in a distress termination described in Section 4041(c) of ERISA; (iv) the institution by the PBGC of proceedings to terminate a Plan; (v) any event or condition (a) which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or (b) that may result in termination of a Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi) the partial or complete withdrawal within the meaning of Section 4203 or 4205 of ERISA, of any Borrower or any member of the Controlled Group from a Multiemployer Plan.

  

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“Toxic Substance” shall mean and include any material present on the Real Property (including the Leasehold Interests) which has been shown to have significant adverse effect on human health or which is subject to regulation under the Toxic Substances Control Act (TSCA), 15 U.S.C. §§ 2601 et seq., applicable state law, or any other applicable Federal or state laws now in force or hereafter enacted relating to toxic substances.  “Toxic Substance” includes but is not limited to asbestos, polychlorinated biphenyls (PCBs) and lead-based paints.

 

“Trading with the Enemy Act” shall mean the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any enabling legislation or executive order relating thereto.

 

“Transactions” shall have the meaning set forth in Section 5.5 hereof.

 

“Transferee” shall have the meaning set forth in Section 16.3(d) hereof.

 

“Unbilled Receivables Advance Rate” shall have the meaning set forth in Section 2.1(a)(y) hereof.

 

“Undrawn Availability” at a particular date shall mean an amount equal to (a) the lesser of (i) the Formula Amount or (ii) the Maximum Revolving Advance Amount, minus (b) the sum of (i) the outstanding amount of Revolving Advances and Swing Loans plus (ii) all amounts due and owing to any Borrower’s trade creditors which are outstanding sixty (60) days past their due date (excluding retentions payable to subcontractors and held pursuant to the terms of the contract or agreement with such subcontractor), plus (iii) fees and expenses for which Borrowers are liable but which have not been paid or charged to Borrowers’ Account.

 

“Undrawn Availability Increased Minimum Amount” shall mean, as of any date, an amount equal to twenty-six and two-thirds percent (26.66%) of the Maximum Revolving Advance Amount as in effect on such date.

 

“Undrawn Availability Minimum Amount” shall mean, as of any date, an amount equal to twenty percent (20%) of the Maximum Revolving Advance Amount as in effect on such date.

 

“Undrawn Collateral Availability” at a particular date shall mean an amount equal to (a) the Formula Amount minus (b) the sum of (i) the outstanding amount of Revolving Advances and Swing Loans plus (ii) all amounts due and owing to any Borrower’s trade creditors which are outstanding sixty (60) days past their due date (excluding retentions payable to subcontractors and held pursuant to the terms of the contract or agreement with such subcontractor), plus (iii) fees and expenses for which Borrowers are liable but which have not been paid or charged to Borrowers’ Account.

 

“Unfunded Capital Expenditures” shall mean Capital Expenditures made through Revolving Advances or out of Borrowers’ own funds other than through equity contributed subsequent to the Closing Date or purchase money or other financing or lease transactions permitted hereunder.

 

“Uniform Commercial Code” shall have the meaning set forth in Section 1.3 hereof.

  

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“USA PATRIOT Act” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.

 

1.3.           Uniform Commercial Code Terms.  All terms used herein and defined in the Uniform Commercial Code as adopted in the State of New York from time to time (the “Uniform Commercial Code”) shall have the meaning given therein unless otherwise defined herein.  Without limiting the foregoing, the terms “accounts”, “chattel paper”, “commercial tort claims”, “instruments”, “general intangibles”, “goods”, “payment intangibles”, “proceeds”, “supporting obligations”, “securities”, “investment property”, “documents”, “deposit accounts”, “software”, “letter of credit rights”, “inventory”, “equipment” and “fixtures”, as and when used in the description of Collateral shall have the meanings given to such terms in Articles 8 or 9 of the Uniform Commercial Code.  To the extent the definition of any category or type of collateral is expanded by any amendment, modification or revision to the Uniform Commercial Code, such expanded definition will apply automatically as of the date of such amendment, modification or revision.

 

1.4.           Certain Matters of Construction.  The terms “herein”, “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision.  All references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement.  Any pronoun used shall be deemed to cover all genders.  Wherever appropriate in the context, terms used herein in the singular also include the plural and vice versa.  All references to statutes and related regulations shall include any amendments of same and any successor statutes and regulations.  Unless otherwise provided, all references to any instruments or agreements to which Agent is a party, including references to any of the Other Documents, shall include any and all modifications, supplements or amendments thereto, any and all restatements or replacements thereof and any and all extensions or renewals thereof.  All references herein to the time of day shall mean the time in New York, New York.  Unless otherwise provided, all financial calculations shall be performed with Inventory valued on a first-in, first-out basis.  Whenever the words “including” or “include” shall be used, such words shall be understood to mean “including, without limitation” or “include, without limitation”.  A Default or Event of Default shall be deemed to exist at all times during the period commencing on the date that such Default or Event of Default occurs to the date on which such Default or Event of Default is waived in writing pursuant to this Agreement or, in the case of a Default, is cured within any period of cure expressly provided for in this Agreement; and an Event of Default shall “continue” or be “continuing” until such Event of Default has been waived in writing by the Required Lenders or all Lenders, as applicable.  Any Lien referred to in this Agreement or any of the Other Documents as having been created in favor of Agent, any agreement entered into by Agent pursuant to this Agreement or any of the Other Documents, any payment made by or to or funds received by Agent pursuant to or as contemplated by this Agreement or any of the Other Documents, or any act taken or omitted to be taken by Agent, shall, unless otherwise expressly provided, be created, entered into, made or received, or taken or omitted, for the benefit or account of Agent and Lenders. Wherever the phrase “to the best of Borrowers’ knowledge” or words of similar import relating to the knowledge or the awareness of any Borrower are used in this Agreement or Other Documents, such phrase shall mean and refer to (i) the actual knowledge of a senior officer of any Borrower or (ii) the knowledge that a senior officer would have obtained if he had engaged in good faith and diligent performance of his duties, including the making of such reasonably specific inquiries as may be necessary of the employees or agents of such Borrower and a good faith attempt to ascertain the existence or accuracy of the matter to which such phrase relates.  All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or otherwise within the limitations of, another covenant shall not avoid the occurrence of a default if such action is taken or condition exists.  In addition, all representations and warranties hereunder shall be given independent effect so that if a particular representation or warranty proves to be incorrect or is breached, the fact that another representation or warranty concerning the same or similar subject matter is correct or is not breached will not affect the incorrectness of a breach of a representation or warranty hereunder.

  

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1.5.        Accounting Change.  In the event that any “Accounting Change” (as defined below) shall occur and such change results in a change in the method of calculation of financial covenants, negative covenants, standards or terms in this Agreement, then Borrowers and the Agent agree to enter into negotiations in order to amend such provisions of this Agreement so as to reflect equitably such Accounting Changes with the desired result that the criteria for evaluating Borrower’s financial condition shall be the same after such Accounting Changes as if such Accounting Changes had not been made.  Until such time as such an amendment shall have been executed and delivered by Borrowers, the Agent and the Required Lenders, all financial covenants, negative covenants, standards and terms in this Agreement shall continue to be calculated or construed as if such Accounting Changes had not occurred.  “Accounting Changes” refers to changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants or, if applicable, the SEC.

 

II.           REVOLVING CREDIT AND SWING LOAN FACILITIES.

 

2.1.        Revolving Advances.

 

(a)         Amount of Revolving Advances.  Subject to the terms and conditions set forth in this Agreement including Sections 2.1(b) and relying on the representations and warranties herein set forth, each Revolving Lender, severally and not jointly, will make Revolving Advances to Borrowers in aggregate amounts outstanding at any time equal to such Revolving Lender’s Revolving Commitment Percentage of the lesser of (x) the Maximum Revolving Advance Amount less the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit and the aggregate principal balance of all outstanding Swing Loans or (y) an amount equal to the sum of:

 

(i)           The sum of (x) up to eighty-five (85%), subject to the provisions of Section 2.1(c) hereof (“Billed Receivables Advance Rate”), of Eligible Receivables, plus (y) the lesser of (A) up to eighty percent (80%), subject to the provisions of Section 2.1(c) hereof (“Project Receivables Advance Rate”) of Eligible Project Receivables or (B) the Eligible Project Receivables Sublimit, plus (z) the lesser of (A) up to eighty percent (80%), subject to the provisions of Section 2.1(c) hereof (“Unbilled Receivables Advance Rate”, and together with the Billed Receivables Advance Rate and the Project Receivables Advance Rate, collectively, the “Advance Rates”), of Eligible Unbilled Receivables or (B) the Eligible Unbilled Receivables Sublimit; provided that, notwithstanding anything to the contrary provided for in the foregoing or in any other provision of this Agreement, the sum of the amount under the foregoing clauses (y) and (z) shall not under any circumstances exceed an amount equal to (I) the Eligible Project Receivables Sublimit plus (II) the Eligible Unbilled Receivables Sublimit, minus

  

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(ii)           the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit, minus

 

(iii)          such reserves as Agent may reasonably deem proper and necessary from time to time.

 

The amount derived from the sum of (x) Sections 2.1(a)(y)(i) minus (y) Section 2.1 (a)(y)(ii) and (iii) at any time and from time to time shall be referred to as the “Formula Amount”.  The Revolving Advances shall be evidenced by one or more secured promissory notes (collectively, the “Revolving Credit Note”) substantially in the form attached hereto as Exhibit 2.1(a).

 

(b)         Discretionary Rights.  The Advance Rates may be increased or decreased by Agent at any time and from time to time in the exercise of its Permitted Discretion; provided that, Agent shall give Borrowing Agent three (3) days prior written notice of its intention to decrease the Advance Rates.  Each Borrower consents to any such increases or decreases and acknowledges that decreasing the Advance Rates or increasing or imposing reserves may limit or restrict Advances requested by Borrowing Agent.  The rights of Agent under this subsection are subject to the provisions of Section 16.2(b).

 

2.2.        Procedure for Requesting Revolving Advances; Procedures for Selection of Applicable Interest Rates.

 

(a)         Borrowing Agent on behalf of any Borrower may notify Agent prior to 10:00 a.m. on a Business Day of a Borrower’s request to incur, on that day, a Revolving Advance hereunder. Should any amount required to be paid as interest hereunder, or as fees or other charges, costs or expenses under this Agreement or any Other Document, or with respect to any other Obligation, become due and payable, this, same shall be deemed a request for a Revolving Advance maintained as a Domestic Rate Loan as of the date such payment is due and payable, in the amount required to pay in full such interest, fee, charge, costs, expenses or Obligation under this Agreement or any other agreement with Agent or Lenders, and such request shall be irrevocable, and such deemed request shall be deemed binding on Borrowers and Revolving Lenders shall be obliged to fund their respective Revolving Commitment Percentages of the same regardless of whether any of the conditions under Sections 8.2 or 2.2 shall not be satisfied at such time or whether the revolving credit commitments of the Revolving Lenders hereunder shall have otherwise been terminated at such time.

  

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(b)           Notwithstanding the provisions of subsection (a) above, in the event any Borrower desires to obtain a Eurodollar Rate Loan for any Advance (other than a Swing Loan), Borrowing Agent shall give Agent written notice by no later than 10:00 a.m. on the day which is three (3) Business Days prior to the date such Eurodollar Rate Loan is to be borrowed, specifying (i) the date of the proposed borrowing (which shall be a Business Day), (ii) the type of borrowing and the amount on the date of such Advance to be borrowed, which amount shall be in a minimum amount of $500,000 and in integral multiples of $100,000 thereafter, and (iii) the duration of the first Interest Period therefor.  Interest Periods for Eurodollar Rate Loans shall be for one, two or three months; provided, if an Interest Period would end on a day that is not a Business Day, it shall end on the next succeeding Business Day unless such day falls in the next succeeding calendar month in which case the Interest Period shall end on the next preceding Business Day.  No Eurodollar Rate Loan shall be made available to any Borrower during the continuance of a Default or an Event of Default.  After giving effect to each requested Eurodollar Rate Loan, including those which are converted from a Domestic Rate Loan under Section 2.2(d), there shall not be outstanding more than five (5) Eurodollar Rate Loans, in the aggregate.

 

(c)           Each Interest Period of a Eurodollar Rate Loan shall commence on the date such Eurodollar Rate Loan is made and shall end on such date as Borrowing Agent may elect as set forth in subsection (b)(iii) above provided that the exact length of each Interest Period shall be determined in accordance with the practice of the interbank market for offshore Dollar deposits and no Interest Period shall end after the last day of the Term.

 

Borrowing Agent shall elect the initial Interest Period applicable to a Eurodollar Rate Loan by its notice of borrowing given to Agent pursuant to Section 2.2(b) or by its notice of conversion given to Agent pursuant to Section 2.2(d), as the case may be.  Borrowing Agent shall elect the duration of each succeeding Interest Period by giving irrevocable written notice to Agent of such duration not later than 10:00 a.m. on the day which is three (3) Business Days prior to the last day of the then current Interest Period applicable to such Eurodollar Rate Loan.  If Agent does not receive timely notice of the Interest Period elected by Borrowing Agent, Borrowing Agent shall be deemed to have elected to convert to a Domestic Rate Loan subject to Section 2.2(d) hereinbelow.

 

(d)           Provided that no Event of Default shall have occurred and be continuing, Borrowing Agent may, on the last Business Day of the then current Interest Period applicable to any outstanding Eurodollar Rate Loan, or on any Business Day with respect to Domestic Rate Loans, convert any such loan into a loan of another type in the same aggregate principal amount provided that any conversion of a Eurodollar Rate Loan shall be made only on the last Business Day of the then current Interest Period applicable to such Eurodollar Rate Loan.  If Borrowing Agent desires to convert a loan, Borrowing Agent shall give Agent written notice by no later than 10:00 a.m. (i) on the day which is three (3) Business Days’ prior to the date on which such conversion is to occur with respect to a conversion from a Domestic Rate Loan to a Eurodollar Rate Loan, or (ii) on the day which is one (1) Business Day prior to the date on which such conversion is to occur with respect to a conversion from a Eurodollar Rate Loan to a Domestic Rate Loan, specifying, in each case, the date of such conversion, the loans to be converted and if the conversion is from a Domestic Rate Loan to any other type of loan, the duration of the first Interest Period therefor.

  

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(e)           At its option and upon written notice given prior to 10:00 a.m. at least three (3) Business Days’ prior to the date of such prepayment, any Borrower may prepay the Eurodollar Rate Loans in whole at any time or in part from time to time with accrued interest on the principal being prepaid to the date of such repayment.  Such Borrower shall specify the date of prepayment of Advances which are Eurodollar Rate Loans and the amount of such prepayment.  In the event that any prepayment of a Eurodollar Rate Loan is required or permitted on a date other than the last Business Day of the then current Interest Period with respect thereto, such Borrower shall indemnify Agent and Lenders therefor in accordance with Section 2.2(f) hereof.

 

(f)           Each Borrower shall indemnify Agent and Lenders and hold Agent and Lenders harmless from and against any and all losses or expenses that Agent and Lenders may sustain or incur as a consequence of any prepayment, conversion of or any default by any Borrower in the payment of the principal of or interest on any Eurodollar Rate Loan or failure by any Borrower to complete a borrowing of, a prepayment of or conversion of or to a Eurodollar Rate Loan after notice thereof has been given, including, but not limited to, any interest payable by Agent or Lenders to lenders of funds obtained by it in order to make or maintain its Eurodollar Rate Loans hereunder.  A certificate as to any additional amounts payable pursuant to the foregoing sentence submitted by Agent or any Lender to Borrowing Agent shall be conclusive absent manifest error.

 

(g)           Notwithstanding any other provision hereof, if any Applicable Law, treaty, regulation or directive, or any change therein or in the interpretation or application thereof, shall make it unlawful for any Lender (for purposes of this subsection (g), the term “Lender” shall include any Lender and the office or branch where any Lender or any corporation or bank controlling such Lender makes or maintains any Eurodollar Rate Loans) to make or maintain its Eurodollar Rate Loans, the obligation of Lenders to make Eurodollar Rate Loans hereunder shall forthwith be cancelled and Borrowers shall, if any affected Eurodollar Rate Loans are then outstanding, promptly upon request from Agent, either pay all such affected Eurodollar Rate Loans or convert such affected Eurodollar Rate Loans into loans of another type.  If any such payment or conversion of any Eurodollar Rate Loan is made on a day that is not the last day of the Interest Period applicable to such Eurodollar Rate Loan, Borrowers shall pay Agent, upon Agent’s request, such amount or amounts as may be necessary to compensate Lenders for any loss or expense sustained or incurred by Lenders in respect of such Eurodollar Rate Loan as a result of such payment or conversion, including (but not limited to) any interest or other amounts payable by Lenders to lenders of funds obtained by Lenders in order to make or maintain such Eurodollar Rate Loan.  A certificate as to any additional amounts payable pursuant to the foregoing sentence submitted by Lenders to Borrowing Agent shall be conclusive absent manifest error.

 

2.3.        Disbursement of Advance Proceeds.  All Advances shall be disbursed from whichever office or other place Agent may designate from time to time and, together with any and all other Obligations of Borrowers to Agent or Lenders, shall be charged to Borrowers’ Account on Agent’s books.  During the Term, Borrowers may use the Revolving Advances and Swing Loans by borrowing, prepaying and reborrowing, all in accordance with the terms and conditions hereof.  The proceeds of each Revolving Advance requested by Borrowing Agent on behalf of any Borrower or deemed to have been requested by any Borrower under Section 2.2(a) hereof shall, with respect to requested Revolving Advances to the extent Revolving Lenders make such Revolving Advances, be made available to the applicable Borrower on the day so requested by way of credit to such Borrower’s operating account at PNC, or such other bank as Borrowing Agent may designate following notification to Agent, in immediately available federal funds or other immediately available funds or, with respect to Revolving Advances deemed to have been requested by any Borrower, be disbursed to Agent to be applied to the outstanding Obligations giving rise to such deemed request.  The proceeds of each Swing Loan advanced by Swing Loan Lender pursuant to Section 2.4 hereof shall be made available to the applicable Borrower on the day so requested by way of credit to such Borrower’s operating account at PNC, or such other bank as Borrowing Agent may designate following notification to Agent, in immediately available federal funds or other immediately available funds.

  

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2.4.        Swing Loans.

 

(a)           Subject to the terms and conditions hereof and relying upon the representations and warranties herein set forth, and in order to minimize the transfer of funds between Lenders and Agent for administrative convenience, Agent, Revolving Lenders and Swing Loan Lender agree that in order to facilitate the administration of this Agreement,  Swing Loan Lender may, at its election and option made in its sole discretion cancelable at any time for any reason whatsoever, make swing loan advances (“Swing Loans”) available to Borrowers as provided for in this Section 2.4 at any time or from time to time after the date hereof to, but not including, the expiration of the Term, in an aggregate principal amount up to but not in excess of the Maximum Swing Loan Advance Amount, provided that the outstanding aggregate principal amount of Swing Loans and the Revolving Advances at any one time outstanding shall not exceed an amount equal to the lesser of (i) the Maximum Revolving Advance Amount less the Maximum Undrawn Amount of all outstanding Letters of Credit or (ii) the Formula Amount.  All Swing Loans shall be Domestic Rate Loans only.  Borrowers may borrow, repay and reborrow Swing Loans and Swing Loan Lender may make Swing Loans as provided in this Section 2.4 during the period between  Settlement Dates.   All Swing Loans shall be evidenced by a secured promissory note (the “Swing Loan Note”) substantially in the form attached hereto as Exhibit 2.4(a).  Swing Loan Lender’s agreement to make Swing Loans under this Agreement is cancelable at any time for any reason whatsoever and the making of Swing Loans by Swing Loan Lender from time to time shall not create any duty or obligation, or establish any course of conduct, pursuant to which Swing Loan Lender shall thereafter be obligated to make Swing Loans in the future.

 

(b)           Upon either (x) any request by Borrowing Agent for a Revolving Advance made pursuant to Section 2.2(a) hereof or (y) the occurrence of any deemed request by Borrowers for a Revolving Advance pursuant to the provisions of the last sentence of Section 2.2(a) hereof, Swing Loan Lender may elect, in its sole discretion, to have such request or deemed request  treated as a request for a Swing Loan, and may advance same day funds to Borrowers as a Swing Loan; provided that notwithstanding anything to the contrary provided for herein, Swing Loan Lender may not make Swing Loan Advances if Swing Loan Lender has been notified by Agent or by Required Lenders that one or more of the applicable conditions set forth in Section 8.2 of this Agreement have not been satisfied or the commitments of Revolving Lenders to make Revolving Advances hereunder have been terminated for any reasons.

  

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(c)           Upon the making of a Swing Loan Advance (whether before or after the occurrence of a Default or Event of Default and regardless of whether a Settlement has been requested with respect to such Swing Loan), each Revolving Lender shall be deemed, without further action by any party hereto, to have unconditionally and irrevocably purchased from Swing Loan Lender, without recourse or warranty, an undivided interest and participation in such Swing Loan in proportion to its Revolving Commitment Percentage.  Swing Loan Lender or Agent may, at any time, require Revolving Lenders to fund their participations.  From and after the date, if any, on which any Revolving Lender is required to fund, and funds, its participation in any Swing Loans purchased hereunder, Agent shall promptly distribute to such Revolving Lender its Revolving Credit Percentage of all payments of principal and interest and all proceeds of Collateral received by Agent in respect of such Swing Loan; provided that no Revolving Lender shall be obligated in any event to make Revolving Advances in an amount in excess of its Revolving Commitment Amount minus its Ratable Share of the Maximum Undrawn Amount of all outstanding Letters of Credit.

 

Agent, on behalf of Swing Loan Lender, shall demand settlement (a “Settlement”) with Revolving Lenders on at least a weekly basis or on any more frequent date that Agent elects or Swing Loans Lender at its option exercisable for any reason whatsoever may request, by notifying Revolving Lenders of such requested Settlement by facsimile, telephone or electronic transmission no later than 12:00 Noon on the date of such requested Settlement (the “Settlement Date”).  Each Revolving Lender shall transfer the amount of such Revolving Lender’s Ratable Share of the outstanding principal amount of the applicable Swing Loan (plus, if Swing Loan Lender so requests, accrued interest thereon) with respect to which Settlement is requested to Agent, to such account of Agent as Agent may designate, not later than 3:00 p.m. on such Settlement Date.  Revolving Advances made pursuant to the preceding sentences shall bear interest at the interest rate applicable to Revolving Advances consisting of Domestic Rate Loans and shall be deemed to have been properly requested in accordance with Section 2.2(a) without regard to any of the requirements of that provision; provided that,  Settlements may occur during the existence of a Default or Event of Default and whether or not the applicable conditions precedent set forth in Section 8.2 have then been satisfied or the revolving credit commitments of the Revolving Lenders hereunder shall have otherwise been terminated at such time.  Such amounts transferred to Agent shall be applied against the Swing Loans and shall constitute Revolving Advances of such Revolving Lenders.  If any such amount is not transferred to Agent by any Revolving Lender on such Settlement Date, Swing Loan Lender shall be entitled to recover such amount on demand together with interest thereon as specified in Section 2.20(c)(ii).

 

2.5.        Maximum Advances.  The aggregate balance of Revolving Advances plus Swing Loans outstanding at any time shall not exceed the lesser of (a) the Maximum Revolving Advance Amount less the aggregate Maximum Undrawn Amount of all issued and outstanding Letters of Credit or (b) the Formula Amount.

 

2.6.        Repayment of Advances.

 

(a)           The Revolving Advances and Swing Loans shall be due and payable in full on the last day of the Term subject to earlier prepayment and to acceleration upon an Event of Default as herein provided and, in the case of Swing Loans, subject to Section 2.20(c)(iv).

  

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(b)           Each Borrower recognizes that the amounts evidenced by checks, notes, drafts or any other items of payment relating to and/or proceeds of Collateral may not be collectible by Agent on the date received.  In consideration of Agent’s agreement to conditionally credit Borrowers’ Account as of the next Business Day following Agent’s receipt of those items of payment, each Borrower agrees that, in computing the charges under this Agreement, all items of payment shall be deemed applied by Agent on account of the Obligations one (1) Business Day after (i) the Business Day following Agent’s receipt of such payments via wire transfer or electronic depository check or (ii) in the case of payments received by Agent in any other form, the Business Day such payment constitutes good funds in Agent’s account.  Agent is not, however, required to credit Borrowers’ Account for the amount of any item of payment which is unsatisfactory to Agent and Agent may charge Borrowers’ Account for the amount of any item of payment which is returned to Agent unpaid.

 

(c)           All payments of principal, interest and other amounts payable hereunder, or under any of the Other Documents shall be made to Agent at the Payment Office for the account of Swing Loan Lender with respect to the Swing Loans and for the ratable accounts of the Lenders with respect to the Revolving Advances not later than 1:00 P.M. on the due date therefor in lawful money of the United States of America in federal funds or other funds immediately available to Agent.  Agent shall have the right to effectuate payment on any and all Obligations due and owing hereunder by charging Borrowers’ Account or by making Advances as provided in Section 2.2 hereof.

 

(d)           Borrowers shall pay principal, interest, and all other amounts payable hereunder, or under any related agreement, without any deduction whatsoever, including, but not limited to, any deduction for any setoff or counterclaim.

 

2.7.        Repayment of Excess Advances.  The aggregate balance of Revolving Advances, Swing Loans and/or Advances taken as a whole outstanding at any time in excess of the maximum amount of Revolving Advances, Swing Loans and/or Advances (as applicable) permitted hereunder shall be immediately due and payable without the necessity of any demand, at the Payment Office, whether or not a Default or Event of Default has occurred.

 

2.8.        Statement of Account.  Agent shall maintain, in accordance with its customary procedures, a loan account (“Borrowers’ Account”) in the name of Borrowers in which shall be recorded the date and amount of each Advance made by Agent and the date and amount of each payment in respect thereof; provided, however, the failure by Agent to record the date and amount of any Advance shall not adversely affect Agent or any Lender.  Each month, Agent shall send to Borrowing Agent a statement showing the accounting for the Advances made, payments made or credited in respect thereof, and other transactions between Agent and Borrowers during such month.  The monthly statements shall be deemed correct and binding upon Borrowers in the absence of manifest error and shall constitute an account stated between Lenders and Borrowers unless Agent receives a written statement of Borrowers’ specific exceptions thereto within thirty (30) days after such statement is received by Borrowing Agent.  The records of Agent with respect to the loan account shall be conclusive evidence absent manifest error of the amounts of Advances and other charges thereto and of payments applicable thereto.

  

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2.9.        Letters of Credit.  Subject to the terms and conditions hereof, Agent shall issue or cause the issuance of standby letters of credit (“Letters of Credit”) for the account of any Borrower except to the extent that the issuance thereof would then cause the sum of (i) the outstanding Revolving Advances and Swing Loans plus (ii) the Maximum Undrawn Amount of all outstanding Letters of Credit to exceed the lesser of (x) the Maximum Revolving Advance Amount or (y) the sum of the Formula Amount (calculated without the deduction otherwise provided for under Section 2.1(a)(y)(iii)).  The Maximum Undrawn Amount of outstanding Letters of Credit shall not exceed in the aggregate at any time the Letter of Credit Sublimit.  All disbursements or payments related to Letters of Credit shall be deemed to be Domestic Rate Loans consisting of Revolving Advances and shall bear interest at the applicable Contract Rate; Letters of Credit that have not been drawn upon shall not bear interest (but fees shall accrue in respect of outstanding Letters of Credit as provided in Section 3.2 hereof).

 

2.10.      Issuance of Letters of Credit.

 

(a)           Borrowing Agent, on behalf of Borrowers, may request Issuer to issue or cause the issuance of a Letter of Credit by delivering to Agent at the Payment Office and to Issuer, prior to 10:00 a.m., at least three (3)  Business Days prior to the proposed date of issuance, Issuer’s form of Letter of Credit Application (the “Letter of Credit Application”) completed to the satisfaction of Agent and Issuer; and, such other certificates, documents and other papers and information as Agent and Issuer may reasonably request.  Borrowing Agent, on behalf of Borrowers, also has the right to give instructions and make agreements with respect to any application, any applicable letter of credit and security agreement, any applicable letter of credit reimbursement agreement and/or any other applicable agreement, any letter of credit and the disposition of documents, disposition of any unutilized funds, and to agree with Agent and Issuer upon any amendment, extension or renewal of any Letter of Credit.  Issuer shall not issue any requested Letter of Credit if such Issuer has received notice from Agent or any Lender that one or more of the applicable conditions set forth in Section 8.2 of this Agreement have not been satisfied or the commitments of Lenders to make Revolving Advances hereunder have been terminated for any reason.

 

(b)           Each Letter of Credit shall, among other things, (i) provide for the payment of sight drafts, other written demands for payment, or acceptances of usance drafts when presented for honor thereunder in accordance with the terms thereof and when accompanied by the documents described therein and (ii) have an expiry date not later than twelve (12) months after such Letter of Credit’s date of issuance and in no event later than the last day of the Term.  Each standby Letter of Credit shall be subject either to the Uniform Customs and Practice for Documentary Credits as most recently published by the International Chamber of Commerce at the time a Letter of Credit is issued (the “UCP”) or the International Standby Practices (ISP98-International Chamber of Commerce Publication Number 590) (the “ISP98 Rules”), and any subsequent revision thereof at the time a standby Letter of Credit is issued, as determined by Issuer, and each trade Letter of Credit shall be subject to the UCP.

 

(c)           Agent shall use its reasonable efforts to notify Revolving Lenders of the request by Borrowing Agent for a Letter of Credit hereunder.

  

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2.11.      Requirements For Issuance of Letters of Credit.

 

(a)           Borrowing Agent shall authorize and direct Issuer to name the applicable Borrower as the “Applicant” or “Account Party” of each Letter of Credit.  If Agent is not the Issuer of any Letter of Credit, Borrowing Agent shall authorize and direct the Issuer to deliver to Agent all instruments, documents, and other writings and property received by the Issuer pursuant to the Letter of Credit and to accept and rely upon Agent’s instructions and agreements with respect to all matters arising in connection with the Letter of Credit, the application therefor or any acceptance thereof.

 

(b)           In connection with all Letters of Credit issued or caused to be issued by Issuer under this Agreement, each Borrower hereby appoints Issuer, or its designee, as its attorney, with full power and authority if an Event of Default shall have occurred and be continuing, (i) to sign and/or endorse such Borrower’s name upon any warehouse or other receipts, letter of credit applications and acceptances, (ii) to sign such Borrower’s name on bills of lading; (iii) to clear Inventory through the United States of America Customs Department (“Customs”) in the name of such Borrower or Issuer or Issuer’s designee, and to sign and deliver to Customs officials powers of attorney in the name of such Borrower for such purpose; and (iv) to complete in such Borrower’s or Issuer’s name, or in the name of Issuer’s designee, any order, sale or transaction, obtain the necessary documents in connection therewith, and collect the proceeds thereof.  Neither Issuer nor its attorneys will be liable for any acts or omissions nor for any error of judgment or mistakes of fact or law, except for Issuer’s or its attorney’s willful misconduct or gross negligence.  This power, being coupled with an interest, is irrevocable as long as any Letters of Credit remain outstanding.

 

2.12.      Disbursements, Reimbursement.

 

(a)           Immediately upon the issuance of each Letter of Credit, each Revolving Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from Issuer a participation in such Letter of Credit and each drawing thereunder in an amount equal to such Revolving Lender’s Revolving Commitment Percentage of the Maximum Face Amount of such Letter of Credit (as in effect from time to time) and the amount of such drawing, respectively.

 

(b)           In the event of any request for a drawing under a Letter of Credit by the beneficiary or transferee thereof, Issuer will promptly notify Borrowing Agent.  Regardless of whether Borrowing Agent shall have received such notice, the Borrowers shall reimburse (such obligation to reimburse Issuer shall sometimes be referred to as a “Reimbursement Obligation”) Issuer prior to 12:00 Noon on each date that an amount is paid by Issuer under any Letter of Credit (each such date, a “Drawing Date”) in an amount equal to the amount so paid by Issuer.  In the event Borrowers fail to reimburse Issuer for the full amount of any drawing under any Letter of Credit by 12:00 Noon on the Drawing Date, Issuer will promptly notify each Revolving Lender thereof, and Borrowers shall be deemed to have requested that a Revolving Advance maintained as a Domestic Rate Loan be made by the Revolving Lenders to be disbursed on the Drawing Date under such Letter of Credit, and Lenders shall be unconditionally obligated to fund such Revolving Advance (whether or not the conditions specified in Section 8.2 are then satisfied or the commitments of Lenders to make Revolving Advances hereunder have been terminated for any reason) as provided for in Section 2.12(c) immediately below.  Any notice given by Issuer pursuant to this Section 2.12(b) may be oral if promptly confirmed in writing; provided that the lack of such a confirmation shall not affect the conclusiveness or binding effect of such notice.

  

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(c)           Each Revolving Lender shall upon any notice pursuant to Section 2.12(b) make available to Issuer an amount in immediately available funds equal to its Revolving Commitment Percentage of the amount of the drawing, whereupon the participating Revolving Lenders shall (subject to Section 2.12(d)) each be deemed to have made a Revolving Advance maintained as a Domestic Rate Loan to Borrowers in that amount.  If any Revolving Lender so notified fails to make available to Issuer the amount of such Revolving Lender’s Revolving Commitment Percentage of such amount by no later than 2:00 p.m. on the Drawing Date, then interest shall accrue on such Revolving Lender’s obligation to make such payment, from the Drawing Date to the date on which such Revolving Lender makes such payment (i) at a rate per annum equal to the Federal Funds Effective Rate during the first three days following the Drawing Date and (ii) at a rate per annum equal to the rate applicable to Revolving Advances maintained as a Domestic Rate Loans on and after the fourth day following the Drawing Date.  Issuer will promptly give notice of the occurrence of the Drawing Date, but failure of Agent to give any such notice on the Drawing Date or in sufficient time to enable any Lender to effect such payment on such date shall not relieve such Revolving Lender from its obligation under this Section 2.12(c), provided that such Revolving Lender shall not be obligated to pay interest as provided in Section 2.12(c) (i) and (ii) until and commencing from the date of receipt of notice from Issuer of a drawing.

 

(d)           With respect to any unreimbursed drawing that is not converted into a Revolving Advance maintained as a Domestic Rate Loan to Borrowers in whole or in part as contemplated by Section 2.12(b), because of Borrowers’ failure to satisfy the conditions set forth in Section 8.2 hereof (other than any notice requirements) or for any other reason, Borrowers shall be deemed to have incurred from Agent a borrowing (each a “Letter of Credit Borrowing”) in the amount of such drawing. Such Letter of Credit Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the rate per annum applicable to a Revolving Advance maintained as a Domestic Rate Loan.  Each Revolving Lender’s payment to Agent pursuant to Section 2.12(c) shall be deemed to be a payment in respect of its participation in such Letter of Credit Borrowing and shall constitute a “Participation Advance” from such Revolving Lender in satisfaction of its Participation Commitment under this Section 2.12.

 

(e)           Each Revolving Lender’s Participation Commitment shall continue until the last to occur of any of the following events: (x) Issuer ceases to be obligated to issue or cause to be issued Letters of Credit hereunder; (y) no Letter of Credit issued or created hereunder remains outstanding and uncancelled; and (z) all Persons (other than the Borrowers) have been fully reimbursed for all payments made under or relating to Letters of Credit.

 

2.13.      Repayment of Participation Advances.

 

(a)           Upon (and only upon) receipt by Agent for its account of immediately available funds from Borrowers (i) in reimbursement of any payment made by the Issuer as Issuer under the Letter of Credit with respect to which any Revolving Lender has made a Participation Advance to Agent, or (ii) in payment of interest on such a payment made by Issuer or Agent under such a Letter of Credit, Agent will pay to each Revolving Lender, in the same funds as those received by Agent, the amount of such Revolving Lender’s Revolving Commitment Percentage of such funds, except Agent shall retain the amount of the Revolving Commitment Percentage of such funds of any Revolving Lender that did not make a Participation Advance in respect of such payment by Agent.

  

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(b)           If Issuer or Agent is required at any time to return to any Borrower, or to a trustee, receiver, liquidator, custodian, or any official in any insolvency proceeding, any portion of the payments made by Borrowers to Issuer or Agent pursuant to Section 2.13(a) in reimbursement of a payment made under the Letter of Credit or interest or fee thereon, each Revolving  Lender shall, on demand of Agent, forthwith return to Issuer or Agent the amount of its Revolving Commitment Percentage of any amounts so returned by Issuer or Agent plus interest at the Federal Funds Effective Rate.

 

2.14.      Documentation.  Each Borrower agrees to be bound by the terms of the Letter of Credit Application and by Issuer’s interpretations of any Letter of Credit issued on behalf of such Borrower and by Issuer’s written regulations and customary practices relating to letters of credit, though Issuer’s interpretations may be different from such Borrower’s own.  In the event of a conflict between the Letter of Credit Application and this Agreement, this Agreement shall govern.  It is understood and agreed that, except in the case of gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment), Issuer shall not be liable for any error, negligence and/or mistakes, whether of omission or commission, in following the Borrowing Agent’s or any Borrower’s instructions or those contained in the Letters of Credit or any modifications, amendments or supplements thereto.

 

2.15.      Determination to Honor Drawing Request.  In determining whether to honor any request for drawing under any Letter of Credit by the beneficiary thereof, Issuer shall be responsible only to determine that the documents and certificates required to be delivered under such Letter of Credit have been delivered and that they comply on their face with the requirements of such Letter of Credit and that any other drawing condition appearing on the face of such Letter of Credit has been satisfied in the manner so set forth.

 

2.16.      Nature of Participation and Reimbursement Obligations.  Each Revolving Lender’s obligation in accordance with this Agreement to make the Revolving Advances or Participation Advances as a result of a drawing under a Letter of Credit, and the obligations of Borrowers to reimburse Issuer upon a draw under a Letter of Credit, shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Section 2.16 under all circumstances, including the following circumstances:

 

(i)           any set-off, counterclaim, recoupment, defense or other right which such Lender may have against Issuer, Agent, any Borrower or any other Person, or which Borrower may have against Agent, any Lender or any other Person, or for any reason whatsoever;

 

(ii)           the failure of any Borrower or any other Person to comply, in connection with a Letter of Credit Borrowing, with the conditions set forth in this Agreement for the making of a Revolving Advance, it being acknowledged that such conditions are not required for the making of a Letter of Credit Borrowing and the obligation of the Revolving Lenders to make Participation Advances under Section 2.12;

  

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(iii)         any lack of validity or enforceability of any Letter of Credit;

 

(iv)         any claim of breach of warranty that might be made by Borrower or any Revolving Lender against the beneficiary of a Letter of Credit, or the existence of any claim, set-off, recoupment, counterclaim, cross-claim, defense or other right which any Borrower or any Revolving Lender may have at any time against a beneficiary, any successor beneficiary or any transferee of any Letter of Credit or the proceeds thereof (or any Persons for whom any such transferee may be acting), Issuer, Agent or any Revolving Lender or any other Person, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between any Borrower or any Subsidiaries of such Borrower and the beneficiary for which any Letter of Credit was procured);

 

(v)          the lack of power or authority of any signer of (or any defect in or forgery of any signature or endorsement on) or the form of or lack of validity, sufficiency, accuracy, enforceability or genuineness of any draft, demand, instrument, certificate or other document presented under or in connection with any Letter of Credit, or any fraud or alleged fraud in connection with any Letter of Credit, or the transport of any property or provisions of services relating to a Letter of Credit, in each case even if Issuer or any of Issuer’s Affiliates has been notified thereof;

 

(vi)         payment by Issuer under any Letter of Credit against presentation of a demand, draft or certificate or other document which is forged or does not fully comply with the terms of such Letter of Credit (provided that the foregoing shall not excuse Issuer from any obligation under the terms of any applicable Letter of Credit to require the presentation of documents that on their face appear to satisfy any applicable requirements for drawing under such Letter of Credit prior to honoring or paying any such draw);

 

(vii)        the solvency of, or any acts or omissions by, any beneficiary of any Letter of Credit, or any other Person having a role in any transaction or obligation relating to a Letter of Credit, or the existence, nature, quality, quantity, condition, value or other characteristic of any property or services relating to a Letter of Credit;

 

(viii)       any failure by the Issuer or any of Issuer’s Affiliates to issue any Letter of Credit in the form requested by Borrowing Agent, unless the Issuer has received written notice from Borrowing Agent of such failure within three (3) Business Days after the Issuer shall have furnished Borrowing Agent a copy of such Letter of Credit and such error is material and no drawing has been made thereon prior to receipt of such notice;

 

(ix)          any Material Adverse Effect;

 

(x)           any breach of this Agreement or any Other Document by any party thereto;

 

(xi)          the occurrence or continuance of an insolvency proceeding with respect to any Borrower or any Guarantor;

 

(xii)         the fact that a Default or Event of Default shall have occurred and be continuing;

  

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(xiii)        the fact that the Term shall have expired or this Agreement or the Obligations hereunder shall have been terminated; and

 

(xiv)       any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.

 

2.17.      Indemnity.  In addition to amounts payable as provided in Section 16.5, each Borrower hereby agrees to protect, indemnify, pay and save harmless Agent and any of Agent’s Affiliates that have issued a Letter of Credit from and against any and all claims, demands, liabilities, damages, taxes, penalties, interest, judgments, losses, costs, charges and expenses (including reasonable fees, expenses and disbursements of counsel and allocated costs of internal counsel) which the Agent or any of Agent’s Affiliates may incur or be subject to as a consequence, direct or indirect, of the issuance of any Letter of Credit, other than as a result of (a) the gross negligence or willful misconduct of the Agent as determined by a final and non-appealable judgment of a court of competent jurisdiction or (b) the wrongful dishonor by the Agent or any of Agent’s Affiliates of a proper demand for payment made under any Letter of Credit, except if such dishonor resulted from any act or omission, whether rightful or wrongful, of any present or future de jure or de facto Governmental Body (all such acts or omissions herein called “Governmental Acts”).

 

2.18.      Liability for Acts and Omissions.  As between Borrowers and Issuer, Agent and Lenders, each Borrower assumes all risks of the acts and omissions of, or misuse of the Letters of Credit by, the respective beneficiaries of such Letters of Credit.  In furtherance and not in limitation of the respective foregoing, Issuer shall not be responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for an issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged (even if Issuer shall have been notified thereof); (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) the failure of the beneficiary of any such Letter of Credit, or any other party to which such Letter of Credit may be transferred, to comply fully with any conditions required in order to draw upon such Letter of Credit or any other claim of any Borrower against any beneficiary of such Letter of Credit, or any such transferee, or any dispute between or among any Borrower and any beneficiary of any Letter of Credit or any such transferee; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, facsimile, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond the control of Issuer, including any governmental acts, and none of the above shall affect or impair, or prevent the vesting of, any of Issuer’s rights or powers hereunder. Nothing in the preceding sentence shall relieve Issuer from liability for Issuer’s gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment) in connection with actions or omissions described in such clauses (i) through (viii) of such sentence.  In no event shall Issuer or Issuer’s Affiliates be liable to any Borrower for any indirect, consequential, incidental, punitive, exemplary or special damages or expenses (including without limitation attorneys’ fees), or for any damages resulting from any change in the value of any property, relating to a Letter of Credit.

  

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Without limiting the generality of the foregoing, Issuer and each of its Affiliates: (i) may rely on any oral or other communication believed in good faith by Issuer or  such Affiliate to have been authorized or given by or on behalf of the applicant for a Letter of Credit; (ii) may honor any presentation if the documents presented appear on their face substantially to comply with the terms and conditions of the relevant Letter of Credit; (iii) may honor a previously dishonored presentation under a Letter of Credit, whether such dishonor was pursuant to a court order, to settle or compromise any claim of wrongful dishonor, or otherwise, and shall be entitled to reimbursement to the same extent as if such presentation had initially been honored, together with any interest paid by Issuer or its Affiliates; (iv) may honor any drawing that is payable upon presentation of a statement advising negotiation or payment, upon receipt of such statement (even if such statement indicates that a draft or other document is being delivered separately), and shall not be liable for any failure of any such draft or other document to arrive, or to conform in any way with the relevant Letter of Credit; (v) may pay any paying or negotiating bank claiming that it rightfully honored under the laws or practices of the place where such bank is located; and (vi) may settle or adjust any claim or demand made on Issuer or its Affiliate in any way related to any order issued at the applicant’s request to an air carrier, a letter of guarantee or of indemnity issued to a carrier or any similar document (each an “Order”) and honor any drawing in connection with any Letter of Credit that is the subject of such Order, notwithstanding that any drafts or other documents presented in connection with such Letter of Credit fail to conform in any way with such Letter of Credit.

 

In furtherance and extension and not in limitation of the specific provisions set forth above, any action taken or omitted by Issuer under or in connection with the Letters of Credit issued by it or any documents and certificates delivered thereunder, if taken or omitted in good faith and without willful misconduct or gross negligence (as determined by a court of competent jurisdiction in a final non-appealable judgment), shall not put Issuer under any resulting liability to any Borrower or any Lender.

 

2.19.      Additional Payments.  Any sums expended by Agent or any Lender due to any Borrower’s failure to perform or comply with its obligations under this Agreement or any Other Document including any Borrower’s obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 4.15(e) hereof, may be charged to Borrowers’ Account as a Revolving Advance and added to the Obligations, and Borrowers shall be deemed to have authorized such charge and Lenders shall be obliged to fund their respective Revolving Commitment Percentages of the same regardless of whether any of the conditions under Sections 8.2 or 2.2 shall not be satisfied at the time such sum is expended or whether the revolving credit commitments of the Lenders hereunder shall have otherwise been terminated at such time.

 

2.20.      Manner of Borrowing and Payment.

 

(a)           Each borrowing of Revolving Advances shall be advanced according to the applicable Ratable Shares of Revolving Lenders (subject to the express provisions of Section 2.23).  Each borrowing of a Swing Loan shall be advanced by the Swing Loan Lender alone.

  

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(b)          Each payment (including each prepayment) by any Borrower on account of the principal of and interest on the Revolving Advances, shall be applied to the Revolving Advances according to the applicable Ratable Shares of Revolving Lenders (subject to the express provisions of Section 2.23).  Each payment by Borrowers on account of the principal and interest on Swing Loans shall be applied to Swing Loans for the account of the Swing Loan Lender.   Except as expressly provided herein, all payments (including prepayments) to be made by any Borrower on account of principal, interest and fees shall be made without set off or counterclaim and shall be made to Agent on behalf of the Lenders to the Payment Office, in each case on or prior to 1:00 P.M.  in Dollars and in immediately available funds.

 

(c)          Funding of Revolving Advances.

 

(i)           Subject to Swing Loan Lender’s option to fund all or any portion of any Revolving Advance as a Swing Loan under Section 2.4, promptly after receipt by Agent of a request for a Revolving Advance pursuant to Section 2.2(a), Agent shall notify Revolving Lenders of its receipt of such request specifying the information provided by Borrowing Agent and the apportionment among Revolving Lenders of the requested Revolving Advance as determined by Agent.  Each Revolving Lender shall remit the principal amount of each Revolving Advance to Agent such that Agent is able to, and Agent shall, to the extent Revolving Lenders have made funds available to it for such purpose and subject to Section 8.2, fund such Revolving Advance to Borrower in U.S. Dollars and immediately available funds in accordance with Section 2.3 prior to 1:00 p.m., on the applicable borrowing date; provided that if any Revolving Lender fails to remit such funds to Agent in a timely manner, Agent may elect in its sole discretion to fund with its own funds the Revolving Advance of such Revolving Lender on such borrowing date, and such Lender shall be subject to the repayment obligation in Section 2.20(c)(ii).

 

(ii)           Unless Agent shall have received notice from a Revolving Lender prior to the proposed date of any Revolving Advance that such Revolving Lender will not make available to Agent such Lender’s Revolving Commitment Percentage of such Revolving Advance, Agent may assume that such Revolving Lender has made such share available on such date in accordance with Section 2.20(c)(i) and may, in reliance upon such assumption, make available to Borrower a corresponding amount.  In such event, if a Revolving Lender has not in fact made its share of the applicable Revolving Advance available to Agent, then the applicable Revolving Lender and Borrowers severally agree to pay to Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to Borrowers to but excluding the date of payment to Agent, at (i) in the case of a payment to be made by such Revolving Lender, the greater of the Federal Funds Effective Rate and a rate determined by Agent in accordance with banking industry rules on interbank compensation, and (ii) in the case of a payment to be made by Borrower, the interest rate applicable to Revolving Advances consisting of Domestic Rate Loans.  If such Revolving Lender pays its share of the applicable Revolving Advance to Agent, then the amount so paid shall constitute such Revolving Lender’s Revolving Advance.  Any payment by Borrowers shall be without prejudice to any claim the Borrowers may have against a Revolving Lender that shall have failed to make such payment to Agent.

  

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 (d)           If any Lender or Participant (a “Benefited Lender”) shall at any time receive any payment of all or part of its Advances, or interest thereon, or receive any Collateral in respect thereof (whether voluntarily or involuntarily or by set-off) in a greater proportion than any such payment to and Collateral received by any other Lender, if any, in respect of such other Lender’s Advances, or interest thereon, and such greater proportionate payment or receipt of Collateral is not expressly permitted hereunder, such Benefited Lender shall purchase for cash from the other Lenders a participation in such portion of each such other Lender’s Advances, or shall provide such other Lender with the benefits of any such Collateral, or the proceeds thereof, as shall be necessary to cause such Benefited Lender to share the excess payment or benefits of such Collateral or proceeds ratably with each of the other Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such Benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest.  Each Borrower consents to the foregoing and agrees, to the extent it may effectively do so under Applicable Law, that each Lender so purchasing a portion of another Lender’s Advances may exercise all rights of payment (including rights of set-off and counterclaim) with respect to such portion as fully as if such Lender were the direct holder of such portion, and the obligations owing to each such purchasing Lender in respect of such participation and such purchased portion of any other Lender’s Advances shall be part of the Obligations secured by the Collateral.

 

2.21.      Voluntary Prepayments, Voluntary Commitment Reductions, Mandatory Prepayments.

 

(a)           Borrowers shall have the right at its option from time to time to prepay the Advances in whole or part without premium or penalty (except if and to the extent applicable under Section 2.2(f)).  Whenever Borrowers desire to prepay any part of the Advances, it shall provide a written prepayment notice to the Agent by 1:00 p.m. at least one (1) Business Day prior to the date of prepayment of the Revolving Advances or no later than 1:00 p.m. on the date of prepayment of Swing Loans, setting forth the following information:  (i) the date, which shall be a Business Day, on which the proposed prepayment is to be made; (ii) a statement indicating the application of the prepayment between the Revolving Advances and Swing Loans; and (iii) a statement indicating the application of the prepayment between Advances which are Domestic Rate Loans and Advances which are Eurodollar Rate Loans.  All prepayment notices shall be irrevocable.  The principal amount of the Advances for which a prepayment notice is given, together with interest on such principal amount except with respect to Advances which are Domestic Rate Loans, shall be due and payable on the date specified in such prepayment notice as the date on which the proposed prepayment is to be made.  If Borrowers prepay Advances that are Eurodollar Rate Loans, the prepayment shall be applied to the Interest Periods in direct order of maturity.

  

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(b)           Borrowers shall have the right at its option from time to time to reduce the Maximum Revolving Advance Amount without premium or penalty (except, with respect to any voluntary prepayment of the Advances made in connection with such reduction, if and to the extent applicable under Section 2.2(f)), provided that (i) whenever Borrowers desire to effectuate any such reduction, it shall provide a written notice to Agent of the effective date and amount of such reduction by 1:00 p.m. at least three (3) Business Day prior to such effective date, (ii) each such reduction must be in a minimum amount of $10,000,000 and an integral multiple of $5,000,000, (iii) no such reduction may reduce the Maximum Revolving Advance Amount to less than the Minimum Revolving Commitment Amount and (iv) in the event the sum of the aggregate principal balance of all outstanding Revolving Advances and Swing Loans plus the aggregate Maximum Undrawn Amounts of all outstanding Letters of Credit on such effective date shall exceed the Maximum Revolving Advance Amount as so reduced, Borrowers shall make voluntary prepayments of the Revolving Advances and/or Swing Loans on such effective date in at least the amount of such excess in accordance with the provisions of Section 2.21(a).  Each such reduction of the Maximum Revolving Advance Amount shall be made by reducing the Revolving Commitment Amount of each Revolving Lender on a pro rata basis according to their respective Revolving Commitment Percentages prior to such reduction and without any resultant change to such Revolving Commitment Percentages.  All notices of a reduction to the Maximum Revolving Advance Amount shall be irrevocable.

 

(c)           Subject to Section 4.3 hereof, when any Borrower sells or otherwise disposes of any Collateral other than Inventory in the Ordinary Course of Business, including receipt of the proceeds of any condemnation or governmental taking with respect to any of the Collateral or any proceeds of any property or casualty insurance upon any loss or destruction of any of the Collateral, Borrowers shall repay the Advances in an amount equal to one hundred percent (100%) of the net cash proceeds of such sale or disposition (i.e., gross proceeds less the reasonable costs of such sales or other dispositions), such repayments to be made without premium or penalty (except if and to the extent applicable under Section 2.2(f)) and promptly but in no event more than one (1) Business Day following receipt of such net cash proceeds, and until the date of payment, such proceeds shall be held in trust for Agent.  The foregoing shall not be deemed to be implied consent to any such sale otherwise prohibited by the terms and conditions hereof.  Such repayments shall be applied  first, to the outstanding principal balance of the outstanding Swing Loans and second, to the remaining Advances (including cash collateralization of all Obligations relating to any outstanding Letters of Credit in accordance with the provisions of Section 3.2(b)) in such order as Agent may determine, subject to Borrowers’ ability to reborrow Revolving Advances in accordance with the terms hereof and without any permanent reduction of the Maximum Revolving Advance Amount.  Any such prepayment applied to the Revolver Advances shall be applied first to Domestic Rate Loans, then to Eurodollar Rate Loans (subject to the provisions of Section 2.2(f)), and to the extent so applied to any Eurodollar Rate Loans, the prepayment shall be applied to the Interest Periods in direct order of maturity.  Notwithstanding anything to the contrary provided for in the foregoing, prior to the Term Debt Obligations Payment Date, Borrowers shall not be required to make any prepayment of the Obligations under this Section 2.21(c) with the net cash proceeds of any such sale or disposition of any Collateral that is Term Debt Priority Collateral that is permitted under the Term Debt Documents as in effect on the date hereof; but further provided that, in the event that Borrowers shall be required under the provisions of the Term Debt Documents to use some or all of such net cash proceeds either (x) to make a mandatory prepayment of the Term Debt Indebtedness or (y) as a reinvestment to acquire or repair assets useful in Borrower’s business, any failure of Borrowers to make such required prepayment of the Term Debt Indebtedness and/or such a reinvestment, in either such case in accordance with such terms and conditions of the Term Debt Documents, shall be deemed to be an Event of Default under Section 10.11.

  

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(d)           If any Capital Stock or Indebtedness shall be issued or incurred by any Group Member (excluding any Indebtedness incurred in accordance with Section 7.8), Borrowers shall repay the Advances in an amount equal to one hundred percent (100%) of the net cash proceeds of such issuance or incurrence (i.e., gross proceeds less the reasonable costs of such issuance or incurrence), excluding any net cash proceeds of a Capital Stock issuance used to pay any part of the consideration or transaction costs in connection with a Permitted Acquisition, such repayments to be made without premium or penalty (except if and to the extent applicable under Section 2.2(f)) and promptly but in no event more than one (1) Business Day following receipt of such net cash proceeds, and until the date of payment, such proceeds shall be held in trust for Agent.  The foregoing shall not be deemed to be implied consent to any such issuance or incurrence otherwise prohibited by the terms and conditions hereof.  Such repayments shall be applied first, to the outstanding principal balance of the outstanding Swing Loans and second, to the remaining Advances (including cash collateralization of all Obligations relating to any outstanding Letters of Credit in accordance with the provisions of Section 3.2(b)) in such order as Agent may determine, subject to Borrowers’ ability to reborrow Revolving Advances in accordance with the terms hereof and without any permanent reduction of the Maximum Revolving Advance Amount.  Any such prepayment applied to the Revolver Advances shall be applied first to Domestic Rate Loans, then to Eurodollar Rate Loans (subject to the provisions of Section 2.2(f)), and to the extent so applied to any Eurodollar Rate Loans, the prepayment shall be applied to the Interest Periods in direct order of maturity.  Notwithstanding anything to the contrary provided for in the foregoing, prior to the Term Debt Obligations Payment Date, to the extent all or any portion of such net cash proceeds of any such issuance or incurrence are required to be applied as a mandatory prepayment of the Term Debt Indebtedness under the terms and conditions of the Term Debt Documents, Borrowers may, and shall be deemed to be in compliance with the provision of this Section 2.21(d) if Borrowers shall, make such required prepayment of the Term Debt Indebtedness in accordance with such terms and conditions of the Term Debt Documents.

 

2.22.      Use of Proceeds.

 

(a)           Borrowers shall apply the proceeds of Advances, along with the proceeds of the Term Debt Indebtedness, to (i) repay existing Indebtedness, (ii) pay fees and expenses relating to the Transactions, and (iii) provide ongoing working capital financing for Borrowers (including to reimburse drawings under Letters of Credit) and general corporate purposes.

 

(b)           Without limiting the generality of Section 2.22(a) above, neither the Borrowers, any Guarantors nor any other Person which may in the future become party to this Agreement or the Other Documents as a Borrower or Guarantor, intends to use nor shall they use any portion of the proceeds of the Advances, directly or indirectly, for any purpose in violation of the Trading with the Enemy Act.

 

2.23.      Defaulting Lender.  Notwithstanding any provision of this Agreement to the contrary, if any Revolving Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

  

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(a)          except as otherwise expressly provided for in this Section 2.23, Revolving Advances shall be incurred pro rata from the Non-Defaulting Lenders based on their respective Revolving Commitment Percentages, and no Revolving Commitment Percentage of any Lender or any pro rata share of any Revolving Advances required to be advanced by any Lender shall be increased as a result of any Lender becoming a Defaulting Lender.  Amounts received in respect of principal of any Revolving Advances shall be applied to reduce the Revolving Advances of each Revolving Lender (other than any Defaulting Lender) in accordance with their Revolving Commitment Percentages; provided, that, Agent shall not be obligated to transfer to a Defaulting Lender any payments received by Agent for the Defaulting Lender’s benefit, nor shall a Defaulting Lender be entitled to the sharing of any payments hereunder (including any principal, interest or fees).  Amounts payable to a Defaulting Lender shall instead be paid to or retained by Agent.  Agent may hold and, in its discretion, re-lend to a Borrower the amount of such payments received or retained by it for the account of such Defaulting Lender;

 

(b)          Commitment Fees shall cease to accrue in favor of such Defaulting Lender pursuant to Section 3.3;

 

(c)          the Revolving Commitment Percentage and outstanding Advances of such Defaulting Lender shall not be included in determining whether the Required Lenders have taken or may take any action hereunder (including any consent to any amendment, waiver or other modification pursuant to Section 16.2); provided, that this clause (c) shall not apply to the vote of a Defaulting Lender in the case of an amendment, waiver or other modification requiring the consent of such particular Lender and/or each Lender directly affected thereby;

 

(d)          if any Swing Loans or Letters of Credit (or drawings under any Letter of Credit for which the Issuer has not been reimbursed) are outstanding or any exist at the time such Lender becomes a Defaulting Lender, then:

 

(i)           all or any part of the obligations of such Defaulting Lenders to fund Revolving Advances in respect of Swing Loans and the obligations of such Defaulting Lenders under its Participation Commitments in respect of Letters of Credit (such Defaulting Lender’s “Letter of Credit Obligations”) shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Ratable Shares but only to the extent that (x)  the aggregate sum of outstanding Revolving Advances plus outstanding Swing Loans plus the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit shall not exceed the aggregate of the Revolving Commitment Amount of all Non-Defaulting Lenders, and (y) no Potential Default or Event of Default has occurred and is continuing at such time;

 

(ii)           if the reallocation described in clause (i) above cannot, or can only partially, be effected, the Borrower shall within one Business Day following notice by the Administrative Agent (x) first, prepay such outstanding Swing Loans, and (y) second, cash collateralize for the benefit of the Issuer Borrowers’ obligations corresponding to such Defaulting Lender's Participation Commitments with respect to outstanding Letters of Credit (after giving effect to any partial reallocation pursuant to clause (i) above) in accordance with Section 3.2(b) for so long as any Letters of Credit are outstanding;

 

(iii)          if the Borrower cash collateralizes any portion of such Defaulting Lender's Letter of Credit Obligations (after giving effect to any partial reallocation pursuant to clause (i) above) pursuant to clause (ii) above, the Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section 3.2 with respect to such Defaulting Lender's Letter of Credit Obligations during the period such Defaulting Lender's Participation Commitments are cash collateralized;

  

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(iv)         if any portion of the Non-Defaulting Lender’s Letter of Credit Obligations are reallocated pursuant to clause (i) above, then the fees payable to the Revolving Lenders pursuant to Section 3.2 shall be adjusted in accordance with such Non-Defaulting Lenders' Ratable Share; and

 

(v)          if all or any portion of such Defaulting Lender's Letter of Credit Obligations are neither reallocated nor cash collateralized pursuant to clause (i) or (ii) above, then, without prejudice to any rights or remedies of Issuer or any other Lender hereunder, all Letter of Credit Fees payable under Section 3.2 with respect to such Defaulting Lender's Letter of Credit Obligations shall be payable to Issuer (and not to such Defaulting Lender) until and to the extent that such Letter of Credit Obligations are reallocated and/or cash collateralized; and

 

(e)          so long as such Lender is a Defaulting Lender, Swing Loan Lender shall not be required to fund any Swing Loans and Issuer shall not be required to issue, amend or increase any Letter of Credit, unless Issuer is satisfied that the related exposure and the Defaulting Lender's then outstanding Letter of Credit Obligations will be 100% covered by the Revolving Credit Commitments of the Non-Defaulting Lenders and/or cash collateral will be provided by the Borrower in accordance with Section 2.23(d)(iii), and participating interests in any newly made Swing Loan or any newly issued or increased Letter of Credit shall be allocated among Non-Defaulting Lenders in a manner consistent with Section 2.23(d)(i) (and such Defaulting Lender shall not participate therein).

 

If (i) a Bankruptcy Event with respect to a parent company of any Revolving Lender shall occur following the date hereof and for so long as such event shall continue, or (ii) Swing Loan Lender or Issuer has a good faith belief that any Revolving Lender has defaulted in fulfilling its obligations under one or more other agreements in which such Lender commits to extend credit, Swing Loan Lender shall not be required to fund any Swing Loan and Issuer shall not be required to issue, amend or increase any Letter of Credit, unless Swing Loan Lender or Issuer, as the case may be, shall have entered into arrangements with the Borrower or such Lender, satisfactory to Swing Loan Lender or Issuer, as the case may be, to defease any risk to it in respect of such Lender hereunder.

 

In the event that Agent, Borrowers, Swing Loan Lender and Issuer agree in writing that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then Agent will so notify the parties hereto, and the Ratable Share of the Swing Loans and Letter of Credit Obligations of the Lenders shall be readjusted to reflect the inclusion of such Lender's Revolving Commitment Percentages and Revolving Commitment Amounts, and on such date such Lender shall purchase at par such of the Revolving Advances of the other Lenders (other than Swing Loans) as Agent shall determine may be necessary in order for such Lender to hold such Revolving Advances in accordance with its Ratable Share.

  

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Other than as expressly set forth in this Section 2.23, the rights and obligations of a Defaulting Lender (including the obligation to indemnify Agent) and the other parties hereto shall remain unchanged.  Nothing in this Section 2.23 shall be deemed to release any Defaulting Lender from its obligations under this Agreement and the Other Documents, shall alter such obligations, shall operate as a waiver of any default by such Defaulting Lender hereunder, or shall prejudice any rights which any Borrower, Agent or any Lender may have against any Defaulting Lender as a result of any default by such Defaulting Lender hereunder.

 

2.24.      Increase of the Maximum Revolving Advance Amount by Borrowers.

 

(a)            Borrowers may, by written notice to Agent, request that Agent increase the Maximum Revolving Advance Amount (each a “Borrower Revolver Increase”) by (i) adding one or more new lenders to the revolving credit facility under this Agreement (each a “Section 2.24 New Lender”) who wish to participate in such Borrower Revolver Increase and/or (ii) increasing the Commitment Amount of one or more Revolving Lenders party to this Agreement who wish to participate in such Borrower Revolver Increase; provided, however, that (w) Borrowers may only add a Section 2.24 New Lender if, and only to the extent, there is insufficient participation on behalf of the existing Revolving Lenders, (x) no Default or Event of Default shall have occurred and be continuing as of the date of such request or as of the effective date of such Borrower Revolver Increase (each a “Borrower Increase Date”) or shall occur as a result thereof, (y) any Section 2.24 New Lender that becomes party to this Agreement pursuant to this Section 2.24 shall satisfy the requirements of Section 16.3 hereof and shall be acceptable to Agent and consented to by Borrowers and (z) the other conditions set forth in this Section 2.24 are satisfied.  Agent shall use commercially reasonable efforts to arrange for the syndication of any Borrower Revolver Increase.  Agent shall promptly inform the Revolving Lenders of any such request made by Borrowers.  The aggregate amount of Borrower Revolver Increases hereunder shall not exceed $25,000,000 and no single Borrower Revolver Increase shall be for an amount less than $10,000,000.

  

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(b)           On a Borrower Increase Date, (i) each Section 2.24 New Lender that has chosen to participate in such Borrower Revolver Increase shall, subject to the conditions set forth in Section 2.24(a), become a Revolving Lender party to this Agreement as of such Borrower Increase Date and shall have a Commitment Amount in an amount equal to its share of such Borrower Revolver Increase (and its Revolving Commitment Percentage shall be equal to the percentage equivalent of a fraction the numerator of which shall be the Commitment Amount of such Section 2.24 New Lender and the denominator of which shall be the Maximum Revolving Advance Amount after giving effect to such Borrower Revolver Increase) and (ii) each Revolving Lender that has chosen to increase its Commitment Amount pursuant to this Section 2.24 will have its Commitment Amount increased by the amount of its share of the Borrower Revolver Increase as of such Borrower Increase Date (and its Revolving Commitment Percentage shall be adjusted as appropriate); provided, however, that (x) Agent and each Lender participating in such Borrower Revolver Increase shall have received from Borrowers payment of any fees and/or expenses then due with respect to such Borrower Revolver Increase and Agent shall have received from Borrowers payment of all out-of-pocket costs and expenses incurred by Agent in connection with such Borrower Revolver Increase, and (y) Agent shall have received on or before such Borrower Increase Date the following, each dated such date: (i) an assumption agreement from each Section 2.24 New Lender participating in such Borrower Revolver Increase, if any, in form and substance satisfactory to Agent, duly executed by such Section 2.24 New Lender, Agent and Borrowers; (ii) confirmation from each Revolving Lender participating in such Borrower Revolver Increase of the increase in the amount of its Commitment Amount and of any change in its Revolving Commitment Percentage, in form and substance satisfactory to the Agent; (iii) a certificate of Borrowing Agent certifying that no Default or Event of Default shall have occurred and be continuing or shall occur as a result of such Borrower Revolver Increase; (iv) a certificate of Borrowing Agent certifying that the representations and warranties made by each Borrower herein and in the Other Documents are true and complete in all respects with the same force and effect as if made on and as of such date (or, to the extent any such representation or warranty specifically relates to an earlier date, such representation or warranty is true and complete in all respects as of such earlier date); (v) supplements or modifications to this Agreement and the Other Documents and such additional Other Documents, including any new Revolving Credit Notes to Section 2.24 New Lenders and replacement Revolving Credit Notes to Revolving Lenders that agree to participate in such Borrower Revolver Increase, that Agent reasonably deems necessary in order to document such Borrower Revolver Increase and otherwise assure and give effect to the rights of Agent and Revolving Lenders in this Agreement and the Other Documents; (vi) such other documents, instruments and information as Agent or its counsel shall reasonably deem necessary in connection with such Borrower Revolver Increase; and (vii) additional fees calculated on the amount of the Borrower Revolver Increase and payable to Agent for the benefit of Lenders (including the Section 2.24 New Lenders) participating therein, and to Agent, the amount of which shall be determined at the time of the Borrower Revolver Increase based upon the market at such time for similar transactions, which shall be mutually agreeable to Borrower and Agent.  On such Borrower Increase Date, upon fulfillment of the conditions set forth in this Section 2.24, Agent shall (i) effect a settlement of all outstanding Advances among the Revolving Lenders that will reflect the adjustments to the Revolving Commitment Percentages of the Revolving Lenders as a result of such Borrower Revolver Increase and (ii) notify Revolving Lenders (including any Section 2.24 New Lenders) participating in such Borrower Revolver Increase and the Borrowers, on or before 12:00 noon, by telecopier or e-mail, of the occurrence of such Borrower Revolver Increase to be effected on such Borrower Increase Date.

 

III.         INTEREST AND FEES.

 

3.1.        Interest.  Interest on Advances shall be payable in arrears on the first day of each month with respect to Domestic Rate Loans and, with respect to Eurodollar Rate Loans, at each of (a) the end of each Interest Period and (b) for Eurodollar Rate Loans with an Interest Period in excess of three months, also at the end of each successive three month period from the commencement of such Interest Period, provided further that all accrued and unpaid interest shall be due and payable at the end of the term.  Interest charges shall be computed on  the actual principal amount of Advances outstanding during the month at a rate per annum equal to (i) with respect to Revolving Advances, the applicable Revolving Interest Rate and (ii) with respect to the Swing Loans, the Revolving Interest Rate for Domestic Rate Loans (as applicable, the “Contract Rate”).  Except as expressly provided otherwise in this Agreement, any Obligations other than the Advances that are not paid when due shall accrue interest at the Revolving Interest Rate for Domestic Rate Loans, subject to the provision of the final sentence of this Section 3.1 regarding the Default Rate.  Whenever, subsequent to the date of this Agreement, the Alternate Base Rate is increased or decreased, any applicable Contract Rate shall be similarly changed without notice or demand of any kind by an amount equal to the amount of such change in the Alternate Base Rate during the time such change or changes remain in effect.  The Eurodollar Rate shall be adjusted with respect to Eurodollar Rate Loans without notice or demand of any kind on the effective date of any change in the Reserve Percentage as of such effective date.  Upon and after the occurrence of an Event of Default, and during the continuation thereof, at the option of Agent or at the direction of Required Lenders and with written notice from Agent to Borrowers of the exercise of such option or direction (or, in the case of any Event of Default under Section 10.7, immediately and automatically upon the occurrence of any such Event of Default without the requirement of any affirmative action by any party), the Obligations shall bear interest at the applicable Contract Rate plus two (2.00%) percent per annum (as applicable, the “Default Rate”).

  

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3.2.        Letter of Credit Fees.

 

(a)           Borrowers shall pay (x) to Agent, for the ratable benefit of Revolving Lenders, fees for each Letter of Credit for the period from and excluding the date of issuance of same to and including the date of expiration or termination, equal to the average daily face amount of each outstanding Letter of Credit multiplied by the Applicable Margin per annum, and (y) to the Issuer for its own account, a fronting fee equal to the average daily face amount of each outstanding Letter of Credit multiplied by one quarter of one percent (0.25%) per annum (all of the foregoing fees, the “Letter of Credit Fees”), such fees to be calculated on the basis of a 360-day year for the actual number of days elapsed and to be payable quarterly in arrears on the first day of each quarter and on the last day of the Term.  In addition, Borrowers shall pay to Agent any and all administrative, issuance, amendment, payment and negotiation charges with respect to Letters of Credit and all fees and expenses as agreed upon by the Issuer and the Borrowing Agent in connection with any Letter of Credit, including in connection with the opening, amendment or renewal of any such Letter of Credit and any acceptances created thereunder, all such charges, fees and expenses, if any, to be payable on demand.  All such charges shall be deemed earned in full on the date when the same are due and payable hereunder and shall not be subject to rebate or pro-ration upon the termination of this Agreement for any reason.  Any such charge in effect at the time of a particular transaction shall be the charge for that transaction, notwithstanding any subsequent change in the Issuer’s prevailing charges for that type of transaction.  All Letter of Credit Fees payable hereunder shall be deemed earned in full on the date when the same are due and payable hereunder and shall not be subject to rebate or pro-ration upon the termination of this Agreement for any reason.  Upon and after the occurrence of an Event of Default, and during the continuation thereof, at the option of Agent or at the direction of Required Lenders and with written notice from Agent to Borrowers of the exercise of such option or direction (or, in the case of any Event of Default under Section 10.7, immediately and automatically upon the occurrence of any such Event of Default without the requirement of any notice or any other affirmative action by any party), the Letter of Credit Fees described in clause (x) of this Section 3.2(a) shall be increased by an additional two percent (2.00%) per annum.

  

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(b)           At any time following the occurrence of an Event of Default at the option of Agent or at the direction of Required Lenders (or, in the case of any Event of Default under Section 10.7, immediately and automatically upon the occurrence of such Event of Default, without the requirement of any affirmative action by any party), and upon the expiration of the Term or any other termination of this Agreement (and also, if applicable, in connection with any mandatory prepayment under Section 2.21), Borrowers will cause cash to be deposited and maintained in an account with Agent, as cash collateral, in an amount equal to one hundred and five percent (105%) of the Maximum Undrawn Amount of all outstanding Letters of Credit, and each Borrower hereby irrevocably authorizes Agent, in its discretion, on such Borrower’s behalf and in such Borrower’s name, to open such an account and to make and maintain deposits therein, or in an account opened by such Borrower, in the amounts required to be made by such Borrower, out of the proceeds of Receivables or other Collateral or out of any other funds of such Borrower coming into any Lender’s possession at any time.  Agent may, in its discretion, invest such cash collateral (less applicable reserves) in such short-term money-market items as to which Agent and such Borrower mutually agree (or, in the absence of such agreement, as Agent may reasonably select) and the net return on such investments shall be credited to such account and constitute additional cash collateral, or Agent may (notwithstanding the foregoing) establish the account provided for under this Section 3.2(b) as a non-interest bearing account and/or hold such cash collateral in a general ledger account of Agent and in such case Agent shall have no obligation (and Borrowers hereby waive any claim) under Article 9 of the UCC to pay interest on such cash collateral being held by Agent.  No Borrower may withdraw amounts credited to any such account except upon the occurrence of all of the following: (x) payment and performance in full of all Obligations; (y) expiration of all Letters of Credit; and (z) termination of this Agreement; provided that upon the expiration or termination of any particular Letter of Credit, the Borrowers may withdraw and Agent shall release to Borrowers an amount equal to one hundred and five percent (105%) of the Maximum Undrawn Amount of such Letter of Credit at the time of such expiration or termination.  Borrowers hereby grant to Agent a Lien and security interest in any such cash collateral and any right, title and interest of Borrowers in any deposit account or investment account into which such cash collateral may be deposited from time to time.  Borrowers agree that upon the coming due of any Reimbursement Obligations (or any other Obligations, including Obligations for Letter of Credit Fees) with respect to the Letters of Credit, Agent may use such cash collateral to pay and satisfy such Obligations.  However, notwithstanding anything to the contrary provided for in the foregoing, prior to the Term Debt Obligations Payment Date: (x) in the absence of an Event of Default under Section 10.7, the expiration of the Term or any other termination of this Agreement or any mandatory prepayment under Section 2.21, Agent and Lenders shall not exercise their rights to require cash collateralization of the Letters of Credit under this Section 3.2(b) except in connection with either (I) acceleration of the Obligations pursuant to Section 11.1(a) hereof or (II) commencement of the exercise of rights and remedies against a significant portion of the ABL Collateral, and (y) Borrowers shall not use any cash proceeds of any Term Debt Priority Collateral when fulfilling its obligations to provide cash collateral under this Section 3.2(b).

 

3.3.        Facility Fee.  If, for any calendar quarter during the Term, the average daily unpaid balance of the Revolving Advances plus the Maximum Undrawn Amount of all outstanding Letters of Credit for each day of such calendar quarter does not equal the Maximum Revolving Advance Amount, then Borrowers shall pay to Agent for the ratable benefit of Revolving Lenders a fee (the “Commitment Fee”) at a rate equal to three-eighths of one percent (0.375%) per annum on the amount by which the Maximum Revolving Advance Amount exceeds such average daily unpaid balance; provided, however, that any Commitment Fee accrued with respect to the Revolving Commitment Amount of a Defaulting Lender during the period prior to the time such Lender became a Defaulting Lender and unpaid at such time shall not be payable by Borrowers so long as such Lender shall be a Defaulting Lender except to the extent that such Commitment Fee shall otherwise have been due and payable by the Borrower prior to such time; and provided further that no Commitment Fee shall accrue with respect to the Revolving Commitment of a Defaulting Lender so long as such Lender shall be a Defaulting Lender.  Subject to the provisos in the directly preceding sentence, all Commitment Fees shall be payable to Agent in arrears on the first day of each calendar quarter  with respect to the previous calendar quarter.

  

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3.4.        Collateral Evaluation Fee and Fee Letter.

 

(a)           Borrowers shall pay to Agent on the first day of each month following any month in which Agent performs any collateral evaluation - namely any field examination, collateral analysis or other business analysis, the need for which is to be determined by Agent and which evaluation is undertaken by Agent or for Agent’s benefit – a per diem collateral evaluation fee in the amount specified in the Fee Letter for each person employed to perform such evaluation, plus all costs and disbursements incurred by Agent in the performance of such examination or analysis.  Without in any way limiting Agent’s rights under Section 4.10 to inspect and evaluate the Collateral and Borrowers’ business records, the parties hereto hereby agree that Borrowers shall not be liable to pay collateral evaluation fees and other costs and disbursements pursuant to this Section 3.4 either (i) for more than four (4) such collateral evaluations/field exams/analyses per calendar year or (ii) in any event in an aggregate amount for any calendar year (exclusive any collateral evaluation fees and costs and disbursements paid by Borrowers in connection with Agent’s initial collateral evaluations/field exams/analyses conducted prior to the Collateral) not to exceed an amount equal to $51,000 plus actual out-of-pocket expenses; provided that (x) after the occurrence and during the continuance of any Event of Default, Borrower shall be liable for the collateral evaluation fees and other costs and disbursements for any and all collateral evaluations/field exams/analyses that Agent shall elect in its sole discretion to conduct (and no such collateral evaluations/field exams/analyses conducted after the occurrence and during the continuance of any Event of Default shall be counted against the number of collateral evaluations/field exams/analyses or aggregate yearly amounts for which Borrowers shall otherwise be liable in the absence of any Event of Default under the provisions of this Section 3.4(a)) and (y) nothing in this Section 3.4(a) shall be construed under any circumstances to limit the number of collateral evaluations/field exams/analyses which Agent may conduct at its own expense in accordance with its rights under Section 4.10.

 

(b)           Borrowers shall pay the amounts required to be paid in the Fee Letter in the manner and at the times required by the Fee Letter.

 

3.5.        Computation of Interest and Fees.  Interest and fees hereunder shall be computed on the basis of a year of 360 days and for the actual number of days elapsed.  If any payment to be made hereunder becomes due and payable on a day other than a Business Day, the due date thereof shall be extended to the next succeeding Business Day and interest thereon shall be payable at the applicable Contract Rate during such extension.

 

3.6.        Maximum Charges.  In no event whatsoever shall interest and other charges charged hereunder exceed the highest rate permissible under law. In the event interest and other charges as computed hereunder would otherwise exceed the highest rate permitted under law, such excess amount shall be first applied to any unpaid principal balance owed by Borrowers, and if the then remaining excess amount is greater than the previously unpaid principal balance, Lenders shall promptly refund such excess amount to Borrowers and the provisions hereof shall be deemed amended to provide for such permissible rate.

  

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3.7.        Increased Costs.  In the event that any Applicable Law, treaty or governmental regulation, or any Change in Law or in the interpretation or application thereof, or compliance by any Lender (for purposes of this Section 3.7, the term “Lender” shall include Agent or any Lender and any corporation or bank controlling Agent or any Lender and the office or branch where Agent or any Lender (as so defined) makes or maintains any Eurodollar Rate Loans) with any request or directive (whether or not having the force of law) from any central bank or other Governmental Body or financial, monetary or other authority, shall:

 

(a)           subject Agent or any Lender to any tax of any kind whatsoever with respect to this Agreement or any Other Document or change the basis of taxation of payments to Agent or any Lender of principal, fees, interest or any other amount payable hereunder or under any Other Documents (except for Indemnified Taxes or Other Taxes covered by Section 3.10 and the imposition of, or any change in the rate of, any Excluded Tax payable by such Lender or the Issuing Lender);

 

(b)           impose, modify or hold applicable any reserve, special deposit, assessment or similar requirement against assets held by, or deposits in or for the account of, advances or loans by, or other credit extended by, any office of Agent or any Lender, including pursuant to Regulation D of the Board of Governors of the Federal Reserve System; or

 

(c)           impose on Agent or any Lender or the London interbank Eurodollar market any other condition with respect to this Agreement or any Other Document;

 

and the result of any of the foregoing is to increase the cost to Agent or any Lender of making, renewing or maintaining its Advances hereunder by an amount that Agent or such Lender deems to be material or to reduce the amount of any payment (whether of principal, interest or otherwise) in respect of any of the Advances by an amount that Agent or such Lender deems to be material, then, in any case Borrowers shall promptly pay Agent or such Lender, upon its demand, such additional amount as will compensate Agent or such Lender for such additional cost or such reduction, as the case may be, provided that the foregoing shall not apply to increased costs which are reflected in the Eurodollar Rate, as the case may be.  Agent or such Lender shall certify the amount of such additional cost or reduced amount to Borrowing Agent, and such certification shall be conclusive absent manifest error.

 

3.8.        Basis For Determining Interest Rate Inadequate or Unfair.  In the event that Agent or any Lender shall have determined that:

 

(a)           reasonable means do not exist for ascertaining the Eurodollar Rate applicable pursuant to Section 2.2 hereof for any Interest Period; or

  

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(b)           Dollar deposits in the relevant amount and for the relevant maturity are not available in the London interbank Eurodollar market, with respect to an outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate Loan, or a proposed conversion of a Domestic Rate Loan into a Eurodollar Rate Loan, then Agent shall give Borrowing Agent prompt written or telephonic notice of such determination.  If such notice is given, (i) any such requested Eurodollar Rate Loan shall be made as a Domestic Rate Loan, unless Borrowing Agent shall notify Agent no later than 10:00 a.m. two (2) Business Days prior to the date of such proposed borrowing, that its request for such borrowing shall be cancelled or made as an unaffected type of Eurodollar Rate Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which was to have been converted to an affected type of Eurodollar Rate Loan shall be continued as or converted into a Domestic Rate Loan, or, if Borrowing Agent shall notify Agent, no later than 10:00 a.m. two (2) Business Days prior to the proposed conversion, shall be maintained as an unaffected type of Eurodollar Rate Loan, and (iii) any outstanding affected Eurodollar Rate Loans shall be converted into a Domestic Rate Loan, or, if Borrowing Agent shall notify Agent, no later than 10:00 a.m. two (2) Business Days prior to the last Business Day of the then current Interest Period applicable to such affected Eurodollar Rate Loan, shall be converted into an unaffected type of Eurodollar Rate Loan, on the last Business Day of the then current Interest Period for such affected Eurodollar Rate Loans.  Until such notice has been withdrawn, Lenders shall have no obligation to make an affected type of Eurodollar Rate Loan or maintain outstanding affected Eurodollar Rate Loans and no Borrower shall have the right to convert a Domestic Rate Loan or an unaffected type of Eurodollar Rate Loan into an affected type of Eurodollar Rate Loan.

 

3.9.        Capital Adequacy.

 

(a)           In the event that Agent or any Lender shall have determined that any Change in Law, or any change in the interpretation or administration thereof by any Governmental Body, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by Agent or any Lender (for purposes of this Section 3.9, the term “Lender” shall include Agent or any Lender and any corporation or bank controlling Agent or any Lender and the office or branch where Agent or any Lender (as so defined) makes or maintains any Eurodollar Rate Loans) with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on Agent or any Lender’s capital as a consequence of its obligations hereunder to a level below that which Agent or such Lender could have achieved but for such adoption, change or compliance (taking into consideration Agent’s and each Lender’s policies with respect to capital adequacy) by an amount deemed by Agent or any Lender to be material, then, from time to time, Borrowers shall pay upon demand to Agent or such Lender such additional amount or amounts as will compensate Agent or such Lender for such reduction.  In determining such amount or amounts, Agent or such Lender may use any reasonable averaging or attribution methods.  The protection of this Section 3.9 shall be available to Agent and each Lender regardless of any possible contention of invalidity or inapplicability with respect to the Applicable Law, regulation or condition.

 

(b)           A certificate of Agent or such Lender setting forth such amount or amounts as shall be necessary to compensate Agent or such Lender with respect to Section 3.9(a) hereof when delivered to Borrowing Agent shall be conclusive absent manifest error.

  

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3.10.      Gross Up for Taxes.  Any and all payments by or on account of any obligation of Borrowers hereunder or under any Other Document shall be made free and clear of and without reduction or withholding for any Indemnified Taxes or Other Taxes; provided that if the Borrower shall be required by Applicable Law to deduct any Indemnified Taxes (including any Other Taxes) from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) Agent, Lender or Issuer, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) Borrowers shall make such deductions and (iii) Borrowers shall timely pay the full amount deducted to the relevant Governmental Body in accordance with Applicable Law.  Without limiting the provisions of the foregoing, Borrowers shall timely pay any Other Taxes to the relevant Governmental Body in accordance with applicable Law.

 

3.11.      Withholding Tax Exemption.

 

(a)           Each Payee that is not incorporated under the Laws of the United States of America or a state thereof (and, upon the written request of Agent, each other Payee) agrees that it will deliver to Borrowing Agent and Agent two (2) duly completed appropriate valid Withholding Certificates (as defined under §1.1441-1(c)(16) of the Income Tax Regulations (“Regulations”)) certifying its status (i.e., U.S. or foreign person) and, if appropriate, making a claim of reduced, or exemption from, U.S. withholding tax on the basis of an income tax treaty or an exemption provided by the Code.  The term “Withholding Certificate” means a Form W-9; a Form W-8BEN; a Form W-8ECI; a Form W-8IMY and the related statements and certifications as required under §1.1441-1(e)(2) and/or (3) of the Regulations; a statement described in §1.871-14(c)(2)(v) of the Regulations; or any other certificates under the Code or Regulations that certify or establish the status of a payee or beneficial owner as a U.S. or foreign person.

 

(b)           Each Payee required to deliver to Borrowing Agent and Agent a valid Withholding Certificate pursuant to Section 3.11(a) hereof shall deliver such valid Withholding Certificate as follows:  (i) each Payee which is a party hereto on the Closing Date shall deliver such valid Withholding Certificate at least five (5) Business Days prior to the first date on which any interest or fees are payable by any Borrower hereunder for the account of such Payee; (ii) each Payee shall deliver such valid Withholding Certificate at least five (5) Business Days before the effective date of such assignment or participation (unless Agent in its sole discretion shall permit such Payee to deliver such Withholding Certificate less than five (5) Business Days before such date in which case it shall be due on the date specified by Agent).  Each Payee which so delivers a valid Withholding Certificate further undertakes to deliver to Borrowing Agent and Agent two (2) additional copies of such Withholding Certificate (or a successor form) on or before the date that such Withholding Certificate expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent Withholding Certificate so delivered by it, and such amendments thereto or extensions or renewals thereof as may be reasonably requested by Borrowing Agent or Agent.

 

(c)           Notwithstanding the submission of a Withholding Certificate claiming a reduced rate of or exemption from U.S. withholding tax required under Section 3.11(b) hereof, Agent shall be entitled to withhold United States federal income taxes at the full 30% withholding rate if in its reasonable judgment it is required to do so under the due diligence requirements imposed upon a withholding agent under §1.1441-7(b) of the Regulations.  Further, Agent is indemnified under §1.1461-1(e) of the Regulations against any claims and demands of any Payee for the amount of any tax it deducts and withholds in accordance with regulations under §1441 of the Code.

  

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IV.         COLLATERAL:   GENERAL TERMS

 

4.1.        Security Interest in the Collateral.  To secure the prompt payment and performance of the Obligations to Agent and each Lender and each other holder of any of the Obligations, each Borrower hereby assigns, pledges and grants to Agent for its benefit and for the ratable benefit of each Lender, Issuer and each other holder of any of the Obligations a continuing security interest in and to and Lien on all of its Collateral, whether now owned or existing or hereafter acquired or arising and wheresoever located.  Each Borrower shall mark its books and records as may be necessary or appropriate to evidence, protect and perfect Agent’s security interest and shall cause its financial statements to reflect such security interest.  Each Borrower shall provide Agent with written notice of all commercial tort claims promptly upon the occurrence of any events giving rise to any such claim(s) (regardless of whether legal proceedings have yet been commenced), such notice to contain a brief description of the claim(s), the events out of which such claim(s) arose and the parties against which such claims may be asserted and, if applicable in any case where legal proceedings regarding such claim(s) have been commenced, the case title together with the applicable court.  Upon delivery of each such notice, such Borrower shall be deemed to hereby grant to Agent a security interest and lien in and to such commercial tort claims described therein and all proceeds thereof. Each Borrower shall provide Agent with written notice promptly upon becoming the beneficiary under any letter of credit or otherwise obtaining any right, title or interest in any letter of credit rights, and at Agent’s request shall take such actions as Agent may reasonably request for the perfection of Agent’s security interest therein.

 

4.2.        Perfection of Security Interest.  Each Borrower shall take all action that may be necessary or desirable, or that Agent may request, so as at all times to maintain the validity, perfection, enforceability and priority of Agent’s security interest in and Lien on the Collateral or to enable Agent to protect, exercise or enforce its rights hereunder and in the Collateral, including, but not limited to, (i) immediately discharging all Liens other than Permitted Encumbrances, (ii) obtaining Lien Waiver Agreements for Borrowers’ chief executive offices, locations where books and records regarding Receivables are kept or other business locations of Borrowers at which a material portion of the Collateral is located, (iii) delivering to Agent, endorsed or accompanied by such instruments of assignment as Agent may specify, and stamping or marking, in such manner as Agent may specify, any and all chattel paper, instruments, letters of credits and advices thereof and documents evidencing or forming a part of the Collateral (provided that, prior to the Term Debt Obligations Payment Date, Borrowers may, and shall be deemed to be in compliance with the provision of this clause (iii) if Borrowers shall, deliver any such Collateral consisting of Term Debt Priority Collateral otherwise covered by this clause (iii) to Term Debt Agent to the extent required by and in accordance with such terms and conditions of the Term Debt Documents), (iv) entering into warehousing, lockbox and other custodial arrangements satisfactory to Agent, and (v) executing and delivering financing statements, control agreements, instruments of pledge, mortgages, notices and assignments, in each case in form and substance satisfactory to Agent, relating to the creation, validity, perfection, maintenance or continuation of Agent’s security interest and Lien under the Uniform Commercial Code or other Applicable Law.  By its signature hereto, each Borrower hereby authorizes Agent to file against such Borrower, one or more financing, continuation or amendment statements pursuant to the Uniform Commercial Code in form and substance satisfactory to Agent (which statements may have a description of collateral which is broader than that set forth herein, including without limitation a description of collateral as “all assets’ and/or “all personal property” of any Borrower).  All charges, expenses and fees Agent may incur in doing any of the foregoing, and any local taxes relating thereto, shall be charged to Borrowers’ Account as a Revolving Advance of a Domestic Rate Loan and added to the Obligations, or, at Agent’s option, shall be paid to Agent for its benefit and for the ratable benefit of Lenders immediately upon demand.

  

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4.3.        Disposition of Collateral.  Each Borrower will safeguard and protect all Collateral and make no disposition of any Collateral or any other property or assets of any Borrower whether by sale, lease or otherwise except (a) the sale of Inventory in the Ordinary Course of Business, (b) the disposition or transfer of obsolete and worn-out Equipment in the Ordinary Course of Business during any fiscal year, and (c) prior to the Term Debt Obligations Payment Date, other sales or dispositions of Collateral that is part of the Term Debt Priority Collateral if and to the extent such sale or disposition is permitted under the terms and conditions of the Term Debt Documents, provided that any such sale or disposition under clauses (b) and (c) shall be subject to the provisions of Section 2.21(c).

 

4.4.        Preservation of Collateral.  Following the occurrence and during the continuance of a Default or Event of Default, in addition to the rights and remedies set forth in Section 11.1 hereof, Agent: (a) may at any time take such steps as Agent deems necessary to protect Agent’s interest in and to preserve the Collateral, including the hiring of such security guards or the placing of other security protection measures as Agent may deem appropriate; (b) may employ and maintain at any of any Borrower’s premises a custodian who shall have full authority to do all acts necessary to protect Agent’s interests in the Collateral; (c) may lease warehouse facilities to which Agent may move all or part of the Collateral; (d) may use any Borrower’s owned or leased lifts, hoists, trucks and other facilities or equipment for handling or removing the Collateral; and (e) shall have, and is hereby granted, a right of ingress and egress to the places where the Collateral is located, and may proceed over and through any of Borrowers’ owned or leased property.  Each Borrower shall cooperate fully with all of Agent’s efforts to preserve the Collateral and will take such actions to preserve the Collateral as Agent may direct.  All of Agent’s expenses of preserving the Collateral, including any expenses relating to the bonding of a custodian, shall be charged to Borrowers’ Account as a Revolving Advance maintained as a Domestic Rate Loan and added to the Obligations, and such charge shall be deemed authorized by Borrowers and Lenders shall be obliged to fund their respective Revolving Commitment Percentages of the same regardless of whether any of the conditions under Sections 8.2 or 2.2 shall not be satisfied at such time or whether the revolving credit commitments of the Lenders hereunder shall have otherwise been terminated at such time.

  

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4.5.        Ownership of Collateral and Assets.

 

(a)           With respect to the Collateral, at the time the Collateral becomes subject to Agent’s security interest:  (i) each Borrower shall be the sole owner of and fully authorized and able to sell, transfer, pledge and/or grant a first priority (subject only to Permitted Encumbrances in favor of Term Debt Agent subject to the Intercreditor Agreement in the case of any Term Debt Priority Collateral and to any other Permitted Encumbrances which by operation of law (including the priority granted under the Uniform Commercial Code to any purchase money security interests that are Permitted Encumbrances) have senior priority) security interest in each and every item of its respective Collateral to Agent; and, except for Permitted Encumbrances the Collateral shall be free and clear of all Liens and encumbrances whatsoever; (ii) each document and agreement executed by each Borrower or delivered to Agent or any Lender in connection with this Agreement shall be true and correct in all respects; and (iii) all signatures and endorsements of each Borrower that appear on such documents and agreements shall be genuine and each Borrower shall have full capacity to execute same.  Each Borrower’s Equipment and Inventory shall be located as set forth on Schedule 4.5 (as such Schedule 4.5 may be updated at any time upon at least thirty (30) days written notice to Agent) and shall not be removed from such location(s) without the prior written consent of Agent except with respect to the sale of Inventory in the Ordinary Course of Business and other sales and dispositions to the extent permitted in Section 4.3 hereof.

 

(b)           (i) There is no location at which any Borrower has any Inventory (except for Inventory in transit) other than those locations listed on Schedule 4.5 (as such Schedule 4.5 may be updated at any time upon at least thirty (30) days written notice to Agent); (ii) Schedule 4.5 hereto (as such Schedule 4.5 may be updated at any time upon at least thirty (30) days written notice to Agent) contains a correct and complete list of the legal names and addresses of each warehouse at which Inventory of any Borrower is stored; none of the receipts received by any Borrower from any warehouse states that the goods covered thereby are to be delivered to bearer or to the order of a named Person or to a named Person and such named Person’s assigns;  (iii) Schedule 4.5 hereto (as such Schedule 4.5 may be updated at any time upon at least thirty (30) days written notice to Agent) sets forth a correct and complete list of (A) each place of business of each Borrower and (B) the chief executive office of each Borrower; and (iv) Schedule 4.5 hereto (as such Schedule 4.5 may be updated at any time upon at least thirty (30) days written notice to Agent) sets forth a correct and complete list as of the Closing Date of the location, by state and street address, of all Real Property owned or leased by each Borrower, together with the names and addresses of any landlords.

 

4.6.        Defense of Agent’s and Lenders’ Interests.

 

(a)           Until (a) payment and performance in full of all of the Obligations and (b) termination of this Agreement, Agent’s interests in the Collateral shall continue in full force and effect.  During such period no Borrower shall, without Agent’s prior written consent, pledge, sell (except for sales of Inventory in the Ordinary Course of Business and other sales and dispositions to the extent permitted in Section 4.3 hereof), assign, transfer, create or suffer to exist a Lien upon or encumber or allow or suffer to be encumbered in any way except for Permitted Encumbrances, any part of the Collateral or any other property or assets of any Borrower.  Each Borrower shall defend Agent’s interests in the Collateral against any and all Persons whatsoever.

  

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(b)           At any time following demand by Agent for payment of all Obligations pursuant to Section 11.1(a) following the occurrence and during the existence of an Event of Default, Agent shall have the right to take possession of the indicia of the Collateral and the Collateral in whatever physical form contained, including:  labels, stationery, documents, instruments and advertising materials.  If Agent exercises this right to take possession of the Collateral following the occurrence and during the existence of an Event of Default, Borrowers shall, upon demand, assemble it in the best manner possible and make it available to Agent at a place reasonably convenient to Agent.  In addition, with respect to all Collateral, Agent and Lenders shall be entitled to all of the rights and remedies set forth herein and further provided by the Uniform Commercial Code or other Applicable Law.  Each Borrower shall, and Agent may, at its option, instruct all suppliers, carriers, forwarders, warehousers or others receiving or holding cash, checks, Inventory (if and to the extent included in the Collateral), documents or instruments in which Agent holds a security interest to deliver same to Agent and/or subject to Agent’s order and if they shall come into any Borrower’s possession, they, and each of them, shall be held by such Borrower in trust as Agent’s trustee, and such Borrower will immediately deliver them to Agent in their original form together with any necessary endorsement.  Notwithstanding anything to the contrary provided for in the foregoing, until the Term Debt Payment Obligations Date, Agent shall not take any actions nor require or request Borrowers to take any actions under this Section 4.6(b) with respect to the Term Debt Priority Collateral except as may be consented to in writing by Term Debt Agent.

 

4.7.        Books and Records.  Each Borrower shall (a) keep proper books of record and account in which full, true and correct entries will be made of all dealings or transactions of or in relation to its business and affairs; (b) set up on its books accruals with respect to all taxes, assessments, charges, levies and claims; and (c) on a reasonably current basis set up on its books, from its earnings, allowances against doubtful Receivables, advances and investments and all other proper accruals (including by reason of enumeration, accruals for premiums, if any, due on required payments and accruals for depreciation, obsolescence, or amortization of properties), which should be set aside from such earnings in connection with its business.  All determinations pursuant to this subsection shall be made in accordance with, or as required by, GAAP consistently applied in the opinion of such independent public accountant as shall then be regularly engaged by Borrowers.

 

4.8.        Financial Disclosure.  Each Borrower hereby irrevocably authorizes and directs all accountants and auditors employed by such Borrower at any time during the Term to exhibit and deliver to Agent and each Lender copies of any of such Borrower’s financial statements, trial balances or other accounting records of any sort in the accountant’s or auditor’s possession, and to disclose to Agent and each Lender any information such accountants may have concerning such Borrower’s financial status and business operations.  Each Borrower hereby authorizes all Governmental Bodies to furnish to Agent and each Lender copies of reports or examinations relating to such Borrower, whether made by such Borrower or otherwise; however, Agent and each Lender will attempt to obtain such information or materials directly from such Borrower prior to obtaining such information or materials from such accountants or Governmental Bodies.

 

4.9.        Compliance with Laws.  Subject to any other provisions of this Agreement or any Other Document which shall expressly require more strict compliance by any Borrower with respect to any particular Applicable Law, each Borrower shall comply in all material respects with all Applicable Laws with respect to the Collateral and Borrowers’ other property and assets or any part thereof or to the operation of such Borrower’s business the non-compliance with which could reasonably be expected to have a Material Adverse Effect.

  

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4.10.      Inspection of Premises and Inspections/Evaluation of Collateral.  At all reasonable times and from time to time as often as Agent as elect in its sole discretion, Agent and each Lender shall have full access to and the right to audit, check, inspect and make abstracts and copies from each Borrower’s books, records, audits, correspondence and all other papers relating to the Collateral and Borrowers’ other property and assets and the operation of each Borrower’s business.  Agent, any Lender and their agents may enter upon any premises of any Borrower at any time during business hours and at any other reasonable time, and from time to time as often as Agent may elect in its sole discretion, for the purpose of inspecting , auditing and evaluating the Collateral and Borrowers’ other property and assets and any and all records pertaining thereto and the operation of such Borrower’s business.

 

4.11.      Insurance.  The assets and properties of each Borrower at all times shall be maintained in accordance with the requirements of all insurance carriers which provide insurance with respect to the assets and properties of such Borrower so that such insurance shall remain in full force and effect.  Each Borrower shall bear the full risk of any loss of any nature whatsoever with respect to the Collateral and Borrowers’ other property and assets.  At each Borrower’s own cost and expense in amounts and with carriers acceptable to Agent, each Borrower shall (a) keep all its insurable properties and properties in which such Borrower has an interest insured against the hazards of fire, flood, sprinkler leakage, those hazards covered by extended coverage insurance and such other hazards, and for such amounts, as is customary in the case of companies engaged in businesses similar to such Borrower’s; (b) maintain a bond in such amounts as is customary in the case of companies engaged in businesses similar to such Borrower insuring against larceny, embezzlement or other criminal misappropriation of insured’s officers and employees who may either singly or jointly with others at any time have access to the assets or funds of such Borrower either directly or through authority to draw upon such funds or to direct generally the disposition of such assets; (c) maintain business interruption insurance for such amounts, as is customary in the case of companies engaged in businesses similar to such Borrower’s and public and product liability insurance against claims for personal injury, death or property damage suffered by others; (d) maintain all such worker’s compensation or similar insurance as may be required under the laws of any state or jurisdiction in which such Borrower is engaged in business; (e) [RESERVED]; (f) furnish Agent with (i) copies of all policies and evidence of the maintenance of such policies by the renewal thereof at least thirty (30) days before any expiration date, and (ii) appropriate loss payable endorsements in form and substance satisfactory to Agent, naming Agent as a co-insured and lender loss payee as its interests may appear with respect to all insurance coverage referred to in clauses (a) and (c) above, and with respect to the insurance coverage referred to in clause (a), providing (A) that all proceeds of the insurance coverage referred to in clause (a) above shall be payable to Agent to the extent of its interest in the applicable Collateral (and subject to the interests of the Term Debt Agent with respect to any Term Debt Priority Collateral and the interests of any holder of any other Permitted Encumbrances as to any particular Collateral which by operation of law (including the priority granted under the Uniform Commercial Code to any purchase money security interests that are Permitted Encumbrances) have senior priority), (B) no such insurance shall be affected by any act or neglect of the insured or owner of the property described in such policy, and (C) that such policy and loss payable clauses may not be cancelled, amended or terminated unless at least thirty (30) days’ prior written notice is given to Agent.  In the event of any loss under the insurance coverage referred to in clause (a) above, the carriers named therein hereby are directed by Agent and the applicable Borrower to make payment for such loss to Agent as its interest may appear (and subject to the interests of the Term Debt Agent with respect to any Term Debt Priority Collateral and the interests of any holder of any other Permitted Encumbrances as to any particular Collateral which by operation of law (including the priority granted under the Uniform Commercial Code to any purchase money security interests that are Permitted Encumbrances) have senior priority) and not to such Borrower and Agent jointly.  If any insurance losses are paid by check, draft or other instrument payable to any Borrower and Agent (and, if applicable, to Term Debt Agent and/or the holder of any other Permitted Encumbrances which by operation of law (including the priority granted under the Uniform Commercial Code to any purchase money security interests that are Permitted Encumbrances) have senior priority) jointly, Agent and Term Debt Agent (if applicable) may endorse such Borrower’s name thereon and do such other things as Agent and Term Debt Agent (if applicable) may deem advisable to reduce the same to cash, and are hereby appointed as the attorney of each Borrower with the full power and authority to do the same.  Agent is hereby authorized to adjust and compromise claims under insurance coverage referred to in clause (a) above, provided that, prior to the Term Debt Obligations Payment Date, Agent shall not exercise any of its rights under this sentence with respect to any claims with respect to any the Term Debt Priority Collateral without the written consent of the Term Debt Agent.  All loss recoveries received by Agent upon any such insurance shall be applied to the Obligations as a prepayment made and applied in accordance with Section 2.21(c) (subject to the provisions of the last sentence of such Section 2.21(c), and for the avoidance of doubt, prior to the occurrence of the Term Debt Obligations Payment Date, to the extent Agent shall receive loss recoveries with respect to any Term Debt Priority Collateral, Agent shall promptly remit such loss receivables to the Term Debt Agent).  Any surplus shall be paid by Agent to Borrowers or applied as may be otherwise required by law.  Any deficiency thereon shall be paid by Borrowers to Agent, on demand.  For the avoidance of doubt, the rights and remedies of Agent with respect to the insurance coverage referred to in clauses (a), (b) and (c) shall be subject to the provisions of the Intercreditor Agreement.

  

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4.12.      Failure to Pay Insurance.  If any Borrower fails to obtain insurance as hereinabove provided, or to keep the same in force, Agent, if Agent so elects, may obtain such insurance and pay the premium therefor on behalf of such Borrower, and charge Borrowers’ Account therefor as a Revolving Advance of a Domestic Rate Loan and such expenses so paid shall be part of the Obligations, and such charge shall be deemed authorized by Borrowers and Lenders shall be obliged to fund their respective Revolving Commitment Percentages of the same regardless of whether any of the conditions under Sections 8.2 or 2.2 shall not be satisfied at such time or whether the revolving credit commitments of the Lenders hereunder shall have otherwise been terminated at such time.

 

4.13.      Payment of Taxes.  Each Borrower will pay, when due, all material taxes, assessments and other Charges lawfully levied or assessed upon such Borrower or any of the Collateral and Borrowers’ other property and assets including real and personal property taxes, assessments and charges and all franchise, income, employment, social security benefits, withholding, and sales taxes.  If any tax by any Governmental Body is or may be imposed on or as a result of any transaction between any Borrower and Agent or any Lender which Agent or any Lender may be required to withhold or pay or if any taxes, assessments, or other Charges remain unpaid after the date fixed for their payment, or if any claim shall be made which, in Agent’s or any Lender’s opinion, may possibly create a valid Lien on the Collateral or any of Borrowers’ other property and assets, Agent may without notice to Borrowers pay the taxes, assessments or other Charges and each Borrower hereby indemnifies and holds Agent and each Lender harmless in respect thereof.  Agent will not pay any taxes, assessments or Charges to the extent that any applicable Borrower has Properly Contested those taxes, assessments or Charges.  The amount of any payment by Agent under this Section 4.13 shall be charged to Borrowers’ Account as a Revolving Advance maintained as a Domestic Rate Loan and added to the Obligations (and such charge shall be deemed authorized by Borrowers and Lenders shall be obliged to fund their respective Revolving Commitment Percentages of the same regardless of whether any of the conditions under Sections 8.2 or 2.2 shall not be satisfied at such time or whether the revolving credit commitments of the Lenders hereunder shall have otherwise been terminated at such time)  and, until Borrowers shall furnish Agent with an indemnity therefor (or supply Agent with evidence satisfactory to Agent that due provision for the payment thereof has been made), Agent may hold without interest any balance standing to Borrowers’ credit and Agent shall retain its security interest in and Lien on any and all Collateral held by Agent.

  

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4.14.      Payment of Leasehold Obligations.  Each Borrower shall at all times pay, when and as due, its rental obligations under all material leases under which it is a tenant, and shall otherwise comply, in all material respects, with all other terms of such leases and keep them in full force and effect and, at Agent’s request will provide evidence of having done so.

 

4.15.      Receivables.

 

(a)           Nature of Receivables.  Each of the Receivables shall be a bona fide and valid account representing a bona fide indebtedness incurred by the Customer therein named, for a fixed sum as set forth in the invoice relating thereto (provided immaterial or unintentional invoice errors shall not be deemed to be a breach hereof) with respect to an absolute sale or lease and delivery of goods upon stated terms of a Borrower, or work, labor or services theretofore rendered by a Borrower as of the date each Receivable is created.  Same shall be due and owing in accordance with the applicable Borrower’s standard terms of sale without dispute, setoff or counterclaim except as may be stated on the accounts receivable schedules delivered by Borrowers to Agent.

 

(b)           Solvency of Customers.  Each Customer, to the actual knowledge of each Borrower, as of the date each Receivable is created, is and will be solvent and able to pay all Receivables on which the Customer is obligated in full when due or with respect to such Customers of any Borrower, to the actual knowledge of such Borrower, who are not solvent such Borrower has set up on its books and in its financial records bad debt reserves adequate to cover such Receivables.

 

(c)           Location of Borrowers.  Each Borrower’s chief executive office is located at the location specified on Schedule 4.5.  Until written notice is given to Agent by Borrowing Agent of any other office at which any Borrower keeps its records pertaining to Receivables, all such records shall be kept at such executive office.

  

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(d)           Collection of Receivables.  Borrowers shall instruct their Customers to deliver all remittances upon Receivables to such Blocked Accounts or Depository Accounts (and/or lockboxes associated therewith) as Agent shall designate from time to time as contemplated by Section 4.15(h) or as otherwise agreed to from time to time by Agent.   Notwithstanding the foregoing, to the extent any Borrower directly receives any remittances upon Receivables, as between Borrowers on the one hand and Agent on the other (and without derogation of any rights (if any) of any third parties including the Term Debt Creditors as between Borrowers on the one hand and such third parties on the other, or as between Agent and/or Lenders on the one hand and such third parties on the other): (i) such Borrower will, at such Borrower’s sole cost and expense, but on Agent’s behalf and for Agent’s account, collect in trust for Agent (pursuant to an express trust created hereby) all amounts received on Receivables, and shall not commingle such collections with any Borrower’s funds or use the same except to pay Obligations, and (ii) each Borrower shall deposit as soon as reasonably possible and in any event within one (1) Business Day of receipt thereof deposit any such amounts and collections in such Blocked Accounts or Depository Accounts provided for in this Agreement or the Other Documents or, upon request by Agent, deliver to Agent, in original form and on the date of receipt thereof, all checks, drafts, notes, money orders, acceptances, cash and other evidences of Indebtedness.

 

(e)           Notification of Assignment of Receivables.  At any time, Agent shall have the right to send notice of the assignment of, and Agent’s security interest in and Lien on, the Receivables to any and all Customers or any third party holding or otherwise concerned with any of the Collateral.  At any time after the occurrence and during the continuance of an Event of Default, Agent shall have the sole right to collect the Receivables, take possession of the Collateral, or both (provided that, notwithstanding anything to the contrary provided for in the foregoing, until the Term Debt Payment Obligations Date, Agent shall not take any actions nor require or request Borrowers to take any actions under this Section 4.15(e) with respect to the Term Debt Priority Collateral except as may be consented to in writing by Term Debt Agent).  Agent’s actual collection expenses, including, but not limited to, stationery and postage, telephone and telegraph, secretarial and clerical expenses and the salaries of any collection personnel used for collection, may be charged to Borrowers’ Account and added to the Obligations, and such charge shall be deemed authorized by Borrowers and Lenders shall be obliged to fund their respective Revolving Commitment Percentages of the same regardless of whether any of the conditions under Sections 8.2 or 2.2 shall not be satisfied at such time or whether the revolving credit commitments of the Lenders hereunder shall have otherwise been terminated at such time.

  

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(f)            Power of Agent to Act on Borrowers’ Behalf.  Agent shall have the right to receive, endorse, assign and/or deliver in the name of Agent or any Borrower any and all checks, drafts and other instruments for the payment of money relating to the Receivables, and each Borrower hereby waives notice of presentment, protest and non-payment of any instrument so endorsed.  Each Borrower hereby constitutes Agent or Agent’s designee as such Borrower’s attorney with power (i) at any time: (A) to endorse such Borrower’s name upon any notes, acceptances, checks, drafts, money orders or other evidences of payment or Receivables; (B) to sign such Borrower’s name on any invoice or bill of lading relating to any of the Receivables, drafts against Customers, assignments and verifications of Receivables; (C) to send verifications of Receivables to any Customer; and (D) to sign such Borrower’s name on all financing statements or any other documents or instruments deemed necessary or appropriate by Agent to preserve, protect, or perfect Agent’s interest in the Collateral and to file same; and (ii) at any time following the occurrence and during the continuance of an Event of Default: (A) to demand payment of the Receivables; (B) to enforce payment of the Receivables by legal proceedings or otherwise; (C) to exercise all of such Borrower’s rights and remedies with respect to the collection of the Receivables and any other Collateral; (D) to settle, adjust, compromise, extend or renew the Receivables; (E) to settle, adjust or compromise any legal proceedings brought to collect Receivables; (F) to prepare, file and sign such Borrower’s name on a proof of claim in bankruptcy or similar document against any Customer; (G) to prepare, file and sign such Borrower’s name on any notice of Lien, assignment or satisfaction of Lien or similar document in connection with the Receivables; (H) to receive, open and dispose of all mail addressed to any Borrower; (I) to do all other acts and things necessary to carry out this Agreement.  All acts of said attorney or designee are hereby ratified and approved, and said attorney or designee shall not be liable for any acts of omission or commission nor for any error of judgment or mistake of fact or of law, unless done maliciously or with gross (not mere) negligence (as determined by a court of competent jurisdiction in a final non-appealable judgment); this power being coupled with an interest is irrevocable while any of the Obligations remain unpaid.  Agent shall have the right at any time following the occurrence and during the continuance of an Event of Default to change the address for delivery of mail addressed to any Borrower.

 

(g)           No Liability.  Neither Agent nor any Lender shall, under any circumstances or in any event whatsoever, have any liability for any error or omission or delay of any kind occurring in the settlement, collection or payment of any of the Receivables or any instrument received in payment thereof, or for any damage resulting therefrom.  Following the occurrence and during the continuance of an Event of Default, Agent may, without notice or consent from any Borrower, sue upon or otherwise collect, extend the time of payment of, compromise or settle for cash, credit or upon any terms any of the Receivables or any Supporting Obligations therefor and/or release any obligor thereof.  Agent is authorized and empowered to accept following the occurrence and during the continuance of an Event of Default the return of the goods represented by any of the Receivables, without notice to or consent by any Borrower, all without discharging or in any way affecting any Borrower’s liability hereunder.

 

(h)           Establishment of a Lockbox Account, Dominion Account.  All proceeds of the ABL Priority Collateral shall be deposited by Borrowers into either (i) a lockbox account, dominion account or such other “blocked account” (“Blocked Accounts”) established at a bank or banks (including, if applicable, PNC) (each such bank, a “Blocked Account Bank”) pursuant to an arrangement with such Blocked Account Bank as may be selected by Borrowing Agent and be acceptable to Agent or (ii) depository accounts (“Depository Accounts”) established at the Agent for the deposit of such proceeds.  Each applicable Borrower, Agent and each Blocked Account Bank shall enter into a deposit account control agreement in form and substance satisfactory to Agent directing such Blocked Account Bank to transfer such funds so deposited to Agent, either to any account maintained by Agent at said Blocked Account Bank or by wire transfer to appropriate account(s) of Agent.  As between Borrowers on the one hand and Agent on the other (and without derogation of any rights (if any) of any third parties including the Term Debt Creditors as between Borrowers on the one hand and such third parties on the other, or as between Agent and/or Lenders on the one hand and such third parties on the other), Borrowing Agent shall obtain the agreement by such Blocked Account Bank to waive any offset rights against the funds so deposited.  Neither Agent nor any Lender assumes any responsibility for such blocked account arrangement, including any claim of accord and satisfaction or release with respect to deposits accepted by any Blocked Account Bank thereunder.  Agent shall apply all funds received by it from the Blocked Accounts and Depository Accounts to the satisfaction of the Obligations (including the cash collateralization of the Letters of Credit) in such order as Agent shall determine in its sole discretion, provided that, in the absence of any Event of Default, Agent shall apply all such funds first to the prepayment of the principal amount of the Revolving Advances and the Swing Loans in accordance with the provisions of Section 2.20(e).

  

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Notwithstanding anything to the contrary provided for in this Agreement, (i) no later than two (2) Business Days following the Closing Date, Borrowers shall give all Account Debtors that remit payments and collections on Receivables by wire transfer, ACH or other electronic transactions notice to remit such payments and collections to the collection account(s) of Borrowers established with Agent, (ii) promptly upon notice to Borrowers from Agent that the lockbox services for the collection account(s) of Borrowers established with Agent are fully operational, Borrowers shall give all Account Debtors that remit payments and collections other than by wire transfer, ACH or other electronic transactions to remit such payments and collections to such lockboxes and (iii) within forty-five (45) days after the Closing Date, Borrowers shall cause all collections and lockbox accounts and all other material deposit accounts with any banks or financial institutions other than Agent to be closed and shall comply fully with the provisions of Section 4.15(d) hereof.

 

(i)            All deposit accounts (including all Blocked Accounts and Depository Accounts), securities accounts and investment accounts of each Borrower and its Subsidiaries as of the Closing Date are set forth on Schedule 4.15(i).  No Borrower shall open any new deposit account, securities account or investment account unless (i) Borrowers shall have given at least thirty (30) days prior written notice to Agent and (ii) subject to the provisions of the last sentence of Section 4.21 hereof, if such account is to be maintained with a bank, depository institution or securities intermediary that is not the Agent, that bank, depository institution or securities intermediary, each applicable Borrower and Agent shall first have entered into an account control agreement in form and substance satisfactory to Agent sufficient to give Agent “control” (for purposes of Articles 8 and 9 of the Uniform Commercial Code) over such account.

 

(j)            Notwithstanding anything to the contrary provided for in this Agreement, no later than forty-five (45) days after the Closing Date, with respect to any deposit account of any Borrower that is maintained with a bank or financial institution other than Agent, Borrowers shall either (x) cause such deposit account to be subject to an account control agreement among such bank or financial institution, the applicable Borrowers and Agent that is sufficient to give Agent “control” (for purposes of Articles 8 and 9 of the Uniform Commercial Code) over such account and is otherwise satisfactory in form and substance to Agent or (y) close such deposit account, provided that, Borrowers need not comply with the foregoing requirements of this Section 4.15(j) with respect to (1) any deposit accounts in which the total amount of funds on deposit therein or credited thereto do not exceed at any one time either $100,000 as to any one such deposit account or $250,000 as to all such deposit accounts taken together or (2) any deposit accounts used exclusively for payroll purposes so long as Borrowers shall not maintain funds on deposit therein or credited thereto at any time in excess of the amounts necessary to fund payroll obligations and any related payroll processing expenses routinely paid from such accounts on a current basis.

  

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(k)           Adjustments.  No Borrower will, without Agent’s consent, compromise or adjust any Receivables (or extend the time for payment thereof) or accept any returns of merchandise or grant any additional discounts, allowances or credits thereon except for those compromises, adjustments, returns, discounts, credits and allowances as have been heretofore customary in the Ordinary Course of Business of such Borrower.

 

4.16.      Inventory.  To the extent Inventory held for sale or lease has been produced by any Borrower, it has been and will be produced by such Borrower in accordance with the Federal Fair Labor Standards Act of 1938, as amended, and all rules, regulations and orders thereunder.

 

4.17.      Maintenance of Equipment.  The Equipment shall be maintained in good operating condition and repair (reasonable wear and tear excepted) and all necessary replacements of and repairs thereto shall be made so that the value and operating efficiency of the Equipment shall be maintained and preserved in all material respects.  No Borrower shall use or operate the Equipment in material violation of any law, statute, ordinance, code, rule or regulation.  Each Borrower shall have the right to sell Equipment to the extent set forth in Section 4.3 hereof.

 

4.18.      Exculpation of Liability.  Nothing herein contained shall be construed to constitute Agent or any Lender as any Borrower’s agent for any purpose whatsoever, nor shall Agent or any Lender be responsible or liable for any shortage, discrepancy, damage, loss or destruction of any part of the Collateral wherever the same may be located and regardless of the cause thereof.  Neither Agent nor any Lender, whether by anything herein or in any assignment or otherwise, assume any of any Borrower’s obligations under any contract or agreement assigned to Agent or such Lender, and neither Agent nor any Lender shall be responsible in any way for the performance by any Borrower of any of the terms and conditions thereof.

 

4.19.      Environmental Matters.

 

(a)           Borrowers shall ensure that the Real Property and all operations and businesses conducted thereon remains in compliance in all material respects with all Environmental Laws and they shall not place or permit to be placed any Hazardous Substances on any Real Property except in compliance in all material respects with Applicable Law or appropriate governmental authorities.

 

(b)           Borrowers shall establish and maintain a system to assure and monitor continued compliance with all applicable Environmental Laws which system shall include periodic reviews of such compliance.

 

(c)           Borrowers shall (i) employ in connection with the use of the Real Property appropriate technology necessary to maintain compliance with any applicable Environmental Laws and (ii) dispose of any and all Hazardous Waste generated at the Real Property only at facilities and with carriers that maintain valid permits under RCRA and any other applicable Environmental Laws.  Borrowers shall use their good faith efforts to obtain certificates of disposal, such as hazardous waste manifest receipts, from all treatment, transport, storage or disposal facilities or operators employed by Borrowers in connection with the transport or disposal of any Hazardous Waste generated at the Real Property.

  

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(d)           In the event any Borrower obtains, gives or receives notice of any Release or threat of Release of a reportable quantity of any Hazardous Substances at the Real Property (any such event being hereinafter referred to as a “Hazardous Discharge”) or receives any notice of violation, request for information or notification that it is potentially responsible for investigation or cleanup of environmental conditions at the Real Property, demand letter or any complaint, order, citation, or other written notice with regard to any Hazardous Discharge or violation of Environmental Laws affecting the Real Property or any Borrower’s interest therein (any of the foregoing is referred to herein as an “Environmental Complaint”) from any Person, including any state agency responsible in whole or in part for environmental matters in the state in which the Real Property is located or the United States Environmental Protection Agency (any such person or entity hereinafter the “Authority”), and the liabilities of such Borrower in connection therewith could reasonably be expected to have a Material Adverse Effect, then Borrowing Agent shall, within five (5) Business Days, give written notice of same to Agent detailing facts and circumstances of which any Borrower is aware giving rise to the Hazardous Discharge or Environmental Complaint.  Such information is to be provided to allow Agent to protect its security interest in and Lien on the Real Property and the Collateral and is not intended to create nor shall it create any obligation upon Agent or any Lender with respect thereto.

 

(e)           Borrowing Agent shall promptly forward to Agent copies of any request for information, notification of potential liability, demand letter relating to potential responsibility with respect to the investigation or cleanup of Hazardous Substances at any other site owned, operated or used by any Borrower to dispose of Hazardous Substances that could reasonably be expected to have a Material Adverse Effect and shall continue to forward copies of correspondence between any Borrower and the Authority regarding such claims to Agent until the claim is settled.  Borrowing Agent shall promptly forward to Agent copies of all documents and reports concerning a Hazardous Discharge at the Real Property that any Borrower is required to file under any Environmental Laws.  Such information is to be provided solely to allow Agent to protect Agent’s security interest in and Lien on the Real Property and the Collateral.

 

(f)            Borrowers shall respond promptly to any Hazardous Discharge or Environmental Complaint and take all necessary action in order to safeguard the health of any Person and to avoid subjecting the Collateral or Real Property to any Lien.  If any Borrower shall fail to respond promptly to any Hazardous Discharge or Environmental Complaint or any Borrower shall fail to comply in all material respects with any of the requirements of any Environmental Laws, Agent on behalf of Lenders may, but without the obligation to do so, for the sole purpose of protecting Agent’s interest in the Collateral:  (i) give such notices or (ii) enter onto the Real Property (or authorize third parties to enter onto the Real Property) and take such actions as Agent (or such third parties as directed by Agent) deem reasonably necessary or advisable, to clean up, remove, mitigate or otherwise deal with any such Hazardous Discharge or Environmental Complaint.  All reasonable costs and expenses incurred by Agent and Lenders (or such third parties) in the exercise of any such rights, including any sums paid in connection with any judicial or administrative investigation or proceedings, fines and penalties, together with interest thereon from the date expended at the Default Rate for Domestic Rate Loans constituting Revolving Advances shall be paid upon demand by Borrowers, and until paid shall be added to and become a part of the Obligations secured by the Liens created by the terms of this Agreement or any other agreement between Agent, any Lender and any Borrower.

  

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(g)           Borrowers shall defend and indemnify Agent and Lenders and hold Agent, Lenders and their respective employees, agents, directors and officers harmless from and against all loss, liability, damage and expense, claims, costs, fines and penalties, including attorney’s fees, suffered or incurred by Agent or Lenders under or on account of any Environmental Laws, including the assertion of any Lien thereunder, with respect to any Hazardous Discharge, the presence of any Hazardous Substances affecting the Real Property, whether or not the same originates or emerges from the Real Property or any contiguous real estate, including any loss of value of the Real Property as a result of the foregoing except to the extent such loss, liability, damage and expense is attributable to any Hazardous Discharge resulting from actions on the part of Agent or any Lender.  Borrowers’ obligations under this Section 4.19 shall arise upon the discovery of the presence of any Hazardous Substances at the Real Property, whether or not any federal, state, or local environmental agency has taken or threatened any action in connection with the presence of any Hazardous Substances.  Borrowers’ obligation and the indemnifications hereunder shall survive the termination of this Agreement.

 

(h)           For purposes of Section 4.19 and 5.7, all references to Real Property shall be deemed to include all of each Borrower’s right, title and interest in and to its owned and leased premises.

 

4.20.      Financing Statements.  Except as respects the financing statements filed by Agent and the financing statements described on Schedule 1.2 or allowed as a Permitted Encumbrance, no financing statement covering any of the Collateral or any proceeds thereof is on file in any public office.

 

4.21.      Special Provisions Regarding Term Debt Priority Collateral.  Until the Term Debt Obligations Payment Date, any obligation of Borrowers hereunder or under any Other Document with respect to (i) the delivery, possession or “control” (as defined in Articles 8 and 9 of the Uniform Commercial Code) of any Term Debt Priority Collateral, (ii) the notation of any lien on or endorsement (or negotiation) of any bill of lading or other document (except to the extent such bill of lading or other document constitutes ABL Priority Collateral), (iii) the notation of any Lien on any certificate of title, (iv) the giving of any notice to any bailee or other Person (except with respect to any ABL Priority Collateral), or (v) the provision of voting rights or the obtaining of any consent of any Person, in any case under the foregoing clauses (i) through (v) in connection with the Term Debt Priority Collateral, shall be deemed to be satisfied if the Borrowers comply with the requirements of the similar provision of the applicable Term Debt Document, but, with respect to clauses (i) and (ii), only to the extent that the requirements of the applicable Term Debt Documents are sufficient to protect the priority and perfection of the Liens of Term Debt Creditors in and to the applicable Term Debt Priority Collateral.  Until the Term Debt Obligations Payment Date, delivery of possession or “control” of any Term Debt Priority Collateral to the Term Debt Agent pursuant to the Term Debt Documents shall satisfy any requirement hereunder or under any Other Document to deliver such possession or “control” to Agent; provided that, nothing in the foregoing provisions of this sentence or this Section 4.21 shall be deemed to limit Borrowers’ obligations to comply fully with the requirements of Section 4.15(i), except that, to the extent Borrowers wish to establish any deposit account for the sole purpose of depositing and holding the cash proceeds of any Term Debt Priority Collateral, or any securities account or investment account, Borrowers need not comply with the provisions of clause (ii) of the last sentence of Section 4.15(i) if and to the extent that the applicable bank or depository institution, financial institution or securities intermediary, each applicable Borrower and Term Debt Agent shall have entered into an account control agreement sufficient to give Term Debt Agent “control” over such account.  To the extent that either Agent or Term Debt Agent shall have possession of or “control” over any Collateral, then Borrowers hereby agree that Agent or Term Debt Agent (as applicable) may (to the extent provided for in the Intercreditor Agreement) hold possession of or “control” over such Collateral for the benefit of Agent and Lenders (and all other holders of the Obligations) and of the Term Debt Creditors for the purpose of perfecting and/or protecting the priority of any Liens granted to Agent under this Agreement and the Other Documents and to Term Debt Agent under the Term Debt Documents.

  

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V.          REPRESENTATIONS AND WARRANTIES.

 

Each Borrower represents and warrants as follows:

 

5.1.        Authority.  Each Borrower has full power, authority and legal right to enter into this Agreement and the Other Documents and to perform all its respective Obligations hereunder and thereunder.  This Agreement and the Other Documents have been duly executed and delivered by each Borrower, and this Agreement and the Other Documents constitute the legal, valid and binding obligation of such Borrower enforceable in accordance with their terms, except as such enforceability may be limited by any applicable bankruptcy, insolvency, moratorium or similar laws affecting creditors’ rights generally.  The execution, delivery and performance of this Agreement and of the Other Documents (a) are within such Borrower’s corporate or limited liability company powers, as applicable, have been duly authorized by all necessary corporate or limited liability company powers action, as applicable, are not in contravention of law or the terms of such Borrower’s Organizational Documents or to the conduct of such Borrower’s business or of any material agreement or undertaking to which such Borrower is a party or by which such Borrower is bound, including the Term Debt Documents, (b) will not conflict with or violate any law or regulation, or any judgment, order or decree of any Governmental Body, (c) will not require the Consent of any Governmental Body, any party to a Material Contract or any other Person, except those Consents set forth on Schedule 5.1 hereto, all of which will have been duly obtained, made or compiled prior to the Closing Date and which are in full force and effect and (d) will not conflict with, nor result in any breach in any of the provisions of or constitute a default under or result in the creation of any Lien except Permitted Encumbrances upon any asset of such Borrower under the provisions of any Organizational Documents, agreement, instrument, or other instrument to which such Borrower is a party or by which it or its property is a party or by which it may be bound, including under the provisions of the Term Debt Documents.

 

5.2.        Formation and Qualification; Inactive Subsidiaries; Foreign Subsidiaries.

 

(a)           Each Borrower is duly incorporated or formed and in good standing under the laws of the state listed on Schedule 5.2(a) and is qualified to do business and is in good standing in the states listed on Schedule 5.2(a) which constitute all states in which qualification and good standing are necessary for such Borrower to conduct its business and own its property and where the failure to so qualify could reasonably be expected to have a Material Adverse Effect on such Borrower.  Each Borrower has delivered to Agent true and complete copies of its Organizational Documents and will promptly notify Agent of any amendment or changes thereto.

  

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(b)           Schedule 5.2(b) sets forth, as of the Closing Date, (i) a complete list of all Subsidiaries of each Borrower, (ii) a complete list of all such Subsidiaries which are Inactive Subsidiaries and (iii) a complete list of all such Subsidiaries which are Foreign Subsidiaries.

 

(c)           No Subsidiary of any Borrower that has been designated as an Inactive Subsidiary (either on the Closing Date or on the date such Subsidiary was acquired by any Borrower) (i) conducts any active business operations (including the operations of a holding company), (ii) has assets with a fair market value of $500,000 or more or (iii) owns any capital stock of any Borrower or any other Subsidiary (except another Inactive Subsidiary) of any Borrower, and no entity that was originally designated as an Inactive Subsidiary (either on the Closing Date or on the date such Subsidiary was acquired by any Borrower) has ceased to satisfy all the requirements for an Inactive Subsidiary (excluding any such Subsidiaries which have complied with the requirements of Section 7.12 hereof and are no longer designated as Inactive Subsidiaries).  The fair market value of all assets of all Inactive Subsidiaries does not exceed $1,000,000 at any one time in the aggregate.

 

5.3.        Survival of Representations and Warranties.  All representations and warranties of such Borrower contained in this Agreement and the Other Documents shall be true at the time of such Borrower’s execution of this Agreement and the Other Documents, and shall survive the execution, delivery and acceptance thereof by the parties thereto and the closing of the transactions described therein or related thereto.

 

5.4.        Tax Returns.  Each Borrower’s federal tax identification number is set forth on Schedule 5.4.  Each Borrower has filed all material federal, state and local tax returns and other reports each is required by law to file and has paid all material taxes, assessments, fees and other governmental charges that are due and payable.  The provision for taxes on the books of each Borrower is adequate for all years not closed by applicable statutes, and for its current fiscal year, and no Borrower has any knowledge of any deficiency or additional assessment in connection therewith not provided for on its books.

 

5.5.        Financial Statements.

 

(a)           The pro forma balance sheet of Borrowers on a Consolidated Basis (the “Pro Forma Balance Sheet”) furnished to Agent on the Closing Date was prepared as of February 26, 2011, but reflects the consummation of the transactions contemplated this Agreement and the Other Documents and the Term Debt Documents, including the funding of the initial Advances hereunder, the funding of the initial term loans under the Term Debt Documents, and repayment of all Indebtedness of Borrowers outstanding on the Closing Date other than the Indebtedness permitted under Section 7.8 (specifically including the repayment of Borrowers’ existing revolving credit and term loan facilities with Royal Bank of Canada, as agent, and Borrower’s existing second lien term facility with Royal Bank of Canada, as agent) (collectively, the “Transactions”) and is accurate, complete and correct in all material respects and fairly reflects the financial condition of Borrowers on a Consolidated Basis as of the Closing Date after giving effect to the Transactions, and has been prepared in accordance with GAAP, applied consistently with Borrowers’ audited annual financial statements for the fiscal year ended December 31, 2010.  The Pro Forma Balance Sheet has been certified as accurate, complete and correct in all material respects by the Chief Financial Officer of Borrowers.  All financial statements referred to in this subsection 5.5(a), including the related schedules and notes thereto, have been prepared, in accordance with GAAP, except as may be disclosed in such financial statements and subject to year-end adjustments and the absence of footnotes.

  

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(b)           The five year cash flow projections and projected balance sheets of Borrowers on a Consolidated Basis (prepared on a quarterly basis for the first twelve months), copies of which are annexed hereto as Exhibit 5.5(b) (the “Projections”) were prepared by the Chief Financial Officer of Borrowers are based on underlying assumptions which provide a reasonable basis for the projections contained therein and reflect Borrowers’ judgment based on present circumstances of the most likely set of conditions and course of action for the projected period.  The cash flow Projections together with the Pro Forma Balance Sheet, are referred to as the “Pro Forma Financial Statements”.

 

(c)           The audited consolidated balance sheets of UniTek Holdings and its consolidated Subsidiaries as at December 31, 2008 and December 31, 2009 and of UniTek Parent and its consolidated Subsidiaries as at December 31, 2010, and the related consolidated statements of income and of cash flows for the fiscal years ended on such dates, reported on by and accompanied by an unqualified report from Ernst & Young LLP, copies of which have been delivered to Agent, have been prepared in accordance with GAAP, consistently applied (except for changes in application in which such accountants concur), are accurate, complete and correct in all material respects and present fairly the financial position of Borrowers and their Subsidiaries and such other Persons at such dates and the results of their operations for such periods.  The unaudited consolidated balance sheet of Borrowers and their consolidated Subsidiaries as at February 26, 2011, and the related unaudited consolidated statements of income and cash flows for the two-month period ended on such date, have been prepared in accordance with GAAP, consistently applied (except for changes in application in which such accountants concur), are accurate, complete and correct in all material respects and present fairly the financial position of Borrowers and their Subsidiaries and such other Persons at such dates and the results of their operations for such period (subject to normal year-end audit adjustments and the absence of footnotes).  Since December 31, 2010, there has been no change in the condition, financial or otherwise, of Borrowers or their Subsidiaries as shown on the consolidated balance sheet as of such date and no change in the aggregate value of machinery, equipment and Real Property owned by Borrowers and their respective Subsidiaries, except changes in the Ordinary Course of Business, none of which individually or in the aggregate could reasonably be expected to have a Material Adverse Effect.

 

5.6.        Entity Names.  As of the date hereof, no Borrower has been known by any other corporate name in the past five years and does not sell Inventory under any other name except as set forth on Schedule 5.6, nor has any Borrower been the surviving entity of a merger or consolidation or acquired all or substantially all of the assets of any Person during the preceding five (5) years.

 

5.7.        OSHA and Environmental Compliance.

 

(a)           Except as could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, each Borrower has duly complied with, and its facilities, business, assets, property, leaseholds, Real Property and Equipment are in compliance in all material respects with, the provisions of the Federal Occupational Safety and Health Act, the Environmental Protection Act, RCRA and all other Environmental Laws; there have been no outstanding citations, notices or orders of non-compliance issued to any Borrower or relating to its business, assets, property, leaseholds or Equipment under any such laws, rules or regulations.

  

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(b)           Except as could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, each Borrower has been issued all required federal, state and local licenses, certificates or permits relating to all applicable Environmental Laws.

 

(c)           (i) There are no visible signs of material releases, spills, discharges, leaks or disposal (collectively referred to as “Releases”) of Hazardous Substances at, upon, under or within any Real Property including any premises leased by any Borrower; (ii) to the best knowledge of Borrowers, there are no underground storage tanks or polychlorinated biphenyls on the Real Property including any premises leased by any Borrower, (iii) to the best knowledge of Borrowers, the Real Property including any premises leased by any Borrower has never been used as a treatment, storage or disposal facility of Hazardous Waste; and (iv) to the best knowledge of Borrowers, no Hazardous Substances are present on the Real Property including any premises leased by any Borrower, excepting such quantities as are handled in accordance with all applicable manufacturer’s instructions and governmental regulations and in proper storage containers and as are necessary for the operation of the commercial business of any Borrower or of its tenants.

 

5.8.        Solvency; No Litigation, Violation, Indebtedness or Default; ERISA Compliance.

 

(a)           Both before and after giving effect to the Transactions, each Borrower is and will be solvent, able to pay its debts as they mature, has and will have capital sufficient to carry on its business and all businesses in which it is about to engage, and (i) as of the Closing Date, the fair present saleable value of its assets, calculated on a going concern basis, is and will be in excess of the amount of its liabilities and (ii) subsequent to the Closing Date, the fair saleable value of its assets (calculated on a going concern basis) will be in excess of the amount of its liabilities.

 

(b)           Except as disclosed in Schedule 5.8(b), no Borrower has (i) any pending or, to the best knowledge of any Borrower, threatened litigation, arbitration, actions or proceedings which could reasonably be expected to have a Material Adverse Effect, and (ii) any liabilities or Indebtedness for borrowed money other than the Obligations or any other Indebtedness permitted by Section 7.8.

 

(c)           No Borrower is in violation of any applicable statute, law, rule, regulation or ordinance in any respect which could reasonably be expected to have a Material Adverse Effect, nor is any Borrower in violation of any order of any court, Governmental Body or arbitration board or tribunal naming such Borrower which could reasonably be expected to have a Material Adverse Effect.

  

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(d)           No Borrower nor any member of the Controlled Group maintains or is required to contribute to any Plan other than those listed on Schedule 5.8(d) hereto.  (i) No Plan has incurred any “accumulated funding deficiency,” as defined in Section 302(a)(2) of ERISA and Section 412(a) of the Code, whether or not waived, each Borrower and each member of the Controlled Group has met all applicable minimum funding requirements under Section 302 of ERISA and Section 412 of the Code in respect of each Plan, and each Plan is in compliance with Sections 412, 430 and 436 of the Code and Sections 206(g), 302 and 303 of ERISA, without regard to waivers and variances; (ii) each Plan which is intended to be a qualified plan under Section 401(a) of the Code as currently in effect has been determined by the Internal Revenue Service to be qualified under Section 401(a) of the Code and the trust related thereto is exempt from federal income tax under Section 501(a) of the Code; (iii) neither any Borrower nor any member of the Controlled Group has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due which are unpaid; (iv) no Plan has been terminated by the plan administrator thereof nor by the PBGC, and there is no occurrence which would cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Plan; (v) at this time, the current value of the assets of each Plan exceeds the present value of the accrued benefits and other liabilities of such Plan and neither any Borrower nor any member of the Controlled Group knows of any facts or circumstances which would materially change the value of such assets and accrued benefits and other liabilities; (vi) neither any Borrower nor any member of the Controlled Group has breached any of the responsibilities, obligations or duties imposed on it by ERISA with respect to any Plan; (vii) neither any Borrower nor any member of a Controlled Group has incurred any liability for any excise tax arising under Section 4971, 4972 or 4980B of the Code, and no fact exists which could give rise to any such liability; (viii) neither any Borrower nor any member of the Controlled Group nor any fiduciary of, nor any trustee to, any Plan, has engaged in a “prohibited transaction” described in Section 406 of the ERISA or Section 4975 of the Code nor taken any action which would constitute or result in a Termination Event with respect to any such Plan which is subject to ERISA; (ix) each Borrower and each member of the Controlled Group has made all contributions due and payable with respect to each Plan; (x) there exists no event described in Section 4043(b) of ERISA, for which the thirty (30) day notice period has not been waived; (xi) neither any Borrower nor any member of the Controlled Group has any fiduciary responsibility for investments with respect to any plan existing for the benefit of persons other than employees or former employees of any Borrower or any member of the Controlled Group; (xii) neither any Borrower nor any member of the Controlled Group maintains or is required to contribute to any Plan which provides health, accident or life insurance benefits to former employees, their spouses or dependents, other than in accordance with Section 4980B of the Code; (xiii) neither any Borrower nor any member of the Controlled Group has withdrawn, completely or partially, within the meaning of Section 4203 or 4205 of ERISA, from any Multiemployer Plan so as to incur liability under the Multiemployer Pension Plan Amendments Act of 1980 and there exists no fact which would reasonably be expected to result in any such liability; and (xiv) no Plan fiduciary (as defined in Section 3(21) of ERISA) has any liability for breach of fiduciary duty or for any failure in connection with the administration or investment of the assets of a Plan.

  

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5.9.        Patents, Trademarks, Copyrights and Licenses.  All registered patents, patent applications, trademarks, trademark applications, service marks, service mark applications, copyrights, copyright applications and tradenames owned or utilized by any Borrower are set forth on Schedule 5.9 (as such Schedule 5.9 may be updated at any time upon written notice to Agent to reflect any such Intellectual Property acquired after the Closing Date).  There is no objection to or pending challenge to the validity of any such patent, trademark, copyright or tradename, and no Borrower is aware of any grounds for any challenge, except as set forth in Schedule 5.9 hereto.  Each patent, patent application, patent license, trademark, trademark application, trademark license, service mark, service mark application, service mark license, design rights, copyright, copyright application and copyright license owned or held by any Borrower and material to its business and all trade secrets used by any Borrower and material to its business consist of original material or property developed by such Borrower or was lawfully acquired by such Borrower from the proper and lawful owner thereof.  Each of such items has been maintained so as to materially preserve the value thereof from the date of creation or acquisition thereof.

 

5.10.      Licenses and Permits.  Except as set forth in Schedule 5.10, each Borrower (a) is in compliance with and (b) has procured and is now in possession of, all material licenses or permits required by any applicable federal, state, provincial or local law, rule or regulation for the operation of its business in each jurisdiction wherein it is now conducting or proposes to conduct business and where the failure to procure such licenses or permits could have a Material Adverse Effect.

 

5.11.      [RESERVED].

 

5.12.      No Default.  No Default or Event of Default has occurred.

 

5.13.      No Burdensome Restrictions.  No Borrower is party to any contract or agreement the performance of which could have a Material Adverse Effect.  Each Borrower has heretofore delivered to Agent true and complete copies of all Material Contracts to which it is a party or to which it or any of its properties is subject.  No Borrower has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien which is not a Permitted Encumbrance.

 

5.14.      No Labor Disputes.  As of the Closing Date, no Borrower is involved in any material labor dispute; there are no strikes or walkouts or union organization of any Borrower’s employees threatened (to the best knowledge of Borrowers) or in existence and no labor contract is scheduled to expire during the Term other than as set forth on Schedule 5.14 hereto.

 

5.15.      Margin Regulations.  No Borrower is engaged, nor will it engage, principally or as one of its important activities, in the business of extending credit for the purpose of “purchasing” or “carrying” any “margin stock” within the respective meanings of each of the quoted terms under Regulation U of the Board of Governors of the Federal Reserve System as now and from time to time hereafter in effect.  No part of the proceeds of any Advance will be used for “purchasing” or “carrying” “margin stock” as defined in Regulation U of such Board of Governors.

 

5.16.      Investment Company Act.  No Borrower is an “investment company” registered or required to be registered under the Investment Company Act of 1940, as amended, nor is it controlled by such a company.

  

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5.17.      Disclosure.  No representation or warranty made by any Borrower in  this Agreement, any Other Documents, the Term Debt Documents, the Confidential Information Memorandum or in any financial statement, report, certificate or any other document furnished in connection herewith or therewith contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements herein or therein not misleading.  There is no fact known to any Borrower or which reasonably should be known to such Borrower which such Borrower has not disclosed to Agent in writing with respect to the Transactions which could reasonably be expected to have a Material Adverse Effect.

 

5.18.      Delivery of Term Debt Documents.  Agent has received complete copies of the Term Debt Documents (including all exhibits, schedules and disclosure letters referred to therein or delivered pursuant thereto, if any) and all amendments thereto, waivers relating thereto and other side letters or agreements affecting the terms thereof.  None of such documents and agreements has been amended or supplemented, nor have any of the provisions thereof been waived, except pursuant to a written agreement or instrument which was entered into in accordance with the Intercreditor Agreement and has heretofore been delivered to Agent.

 

5.19.      Swaps.  No Borrower is a party to, nor will it be a party to, any swap agreement whereby such Borrower has agreed or will agree to swap interest rates or currencies unless same provides that damages upon termination following an event of default thereunder are payable on an unlimited “two-way basis” without regard to fault on the part of either party.

 

5.20.      Conflicting Agreements.  No provision of any mortgage, indenture, contract, agreement, judgment, decree or order binding on any Borrower or affecting the Collateral conflicts with, or requires any Consent which has not already been obtained to, or would in any way prevent the execution, delivery or performance of, the terms of this Agreement or the Other Documents.

 

5.21.      Application of Certain Laws and Regulations.  Neither any Borrower nor any Affiliate of any Borrower is subject to any law, statute, rule or regulation which regulates the incurrence of any Indebtedness, including laws, statutes, rules or regulations relative to common or interstate carriers or to the sale of electricity, gas, steam, water, telephone, telegraph or other public utility services.

 

5.22.      Business and Property of Borrowers.  Upon and after the Closing Date, Borrowers do not propose to engage in any business other than those business in which the Borrowers are engaged on the date of this Agreement or that are reasonably related thereto and activities necessary to conduct the foregoing.  On the Closing Date, each Borrower will own all the property and possess all of the rights and Consents necessary for the conduct of the business of such Borrower.

 

5.23.      Section 20 Subsidiaries.  Borrowers do not intend to use and shall not use any portion of the proceeds of the Advances, directly or indirectly, to purchase during the underwriting period, or for 30 days thereafter, Ineligible Securities being underwritten by a Section 20 Subsidiary.

 

5.24.      Anti-Terrorism Laws.

 

(a)           General.  Neither any Borrower nor any Affiliate of any Borrower is in violation of any Anti-Terrorism Law or engages in or conspires to engage in any transaction  that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.

  

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(b)           Executive Order No. 13224.  Neither any Borrower nor any Affiliate of any Borrower or their respective agents acting or benefiting in any capacity in connection with the Advances or other transactions hereunder, is any of the following (each a “Blocked Person”):

 

(i)           a Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order No. 13224;

 

(ii)          a Person owned or  controlled  by, or acting for or on behalf  of,  any  Person  that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order No. 13224;

 

(iii)         a Person or entity with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;

 

(iv)         a Person or entity that commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order No. 13224;

 

(v)          a Person or entity that is named as a “specially designated national” on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list, or

 

(vi)         a Person or entity who is affiliated or associated with a Person or entity listed above.

 

Neither any Borrower nor to the knowledge of any Borrower, any of its agents acting in any capacity in connection with the Advances or other transactions hereunder (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, or (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property  blocked  pursuant to the Executive Order No. 13224.

 

5.25.      Trading with the Enemy.  No Borrower has engaged, nor does it intend to engage, in any business or activity prohibited by the Trading with the Enemy Act.

 

5.26.      [RESERVED].

 

5.27.      Equity Interests. The authorized and outstanding Equity Interests of each Borrower, and each legal and beneficial holder thereof as of the Closing Date, is as set forth on Schedule 5.27 hereto (provided that for any Borrower that is a publicly traded company, such Schedule 5.27 shall list only the five largest shareholders thereof).  All of the Equity Interests of each Borrower have been duly and validly authorized and issued and are fully paid and non-assessable and have been sold and delivered to the holders hereof in compliance with, or under valid exemption from, all federal and state laws and the rules and regulations of each Governmental Body governing the sale and delivery of securities.  Except for the rights and obligations set forth on Schedule 5.27, there are no subscriptions, warrants, options, calls, commitments, rights or agreement by which any Borrower or any of the shareholders of any Borrower is bound relating to the issuance, transfer, voting or redemption of shares of its Equity Interests or any pre-emptive rights held by any Person with respect to the Equity Interests of Borrowers.  Except as set forth on Schedule 5.27, Borrowers have not issued any securities convertible into or exchangeable for shares of its Equity Interests or any options, warrants or other rights to acquire such shares or securities convertible into or exchangeable for such shares.

  

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5.28.      Commercial Tort Claims.  No Borrower is a party to any commercial tort claims except as set forth on Schedule 5.28 hereto (which Schedule 5.28 may be updated at any time upon written notice to Agent).

 

5.29.      Letter of Credit Rights.  No Borrower has any letter of credit rights, except as set forth on Schedule 5.29 hereto (which Schedule 5.29 may be updated at any time upon written notice to Agent).

 

5.30.      Material Contracts.  Schedule 5.30 sets forth all Material Contracts of the Borrowers (which Schedule 5.30 may be updated at any time upon written notice to Agent). All Material Contracts are in full force and effect and no material defaults currently exist thereunder.

 

VI.         AFFIRMATIVE COVENANTS.

 

Each Borrower shall, until payment in full of the Obligations and termination of this Agreement:

 

6.1.        Payment of Fees.  Pay to Agent on demand all usual and customary fees and expenses which Agent incurs in connection with (a) the forwarding of Advance proceeds and (b) the establishment and maintenance of any Blocked Accounts or Depository Accounts as provided for in Section 4.15(h).  Agent may, without making demand, charge Borrowers’ Account for all such fees and expenses.

 

6.2.        Conduct of Business and Maintenance of Existence and Assets.  (a) Conduct continuously and operate actively its business according to good business practices and maintain all of its properties useful or necessary in its business in good working order and condition (reasonable wear and tear excepted and except as may be disposed of in accordance with the terms of this Agreement), including all licenses, patents, copyrights, design rights, tradenames, trade secrets and trademarks and take all actions necessary to enforce and protect the validity of any intellectual property right or other right included in the Collateral, expect to the extent that the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect; (b) keep in full force and effect its existence and comply in all material respects with the laws and regulations governing the conduct of its business where the failure to do so could reasonably be expected to have a Material Adverse Effect; and (c) make all such reports and pay all such franchise and other taxes and license fees and do all such other acts and things as may be lawfully required to maintain its rights, licenses, leases, powers and franchises under the laws of the United States or any political subdivision thereof where the failure to do so could reasonably be expected to have a Material Adverse Effect.

  

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6.3.        Violations.  Promptly notify Agent in writing of any violation of any law, statute, regulation or ordinance of any Governmental Body, or of any agency thereof, applicable to any Borrower which could reasonably be expected to have a Material Adverse Effect.

 

6.4.        Government Receivables.  Take all steps necessary to protect Agent’s interest in the Collateral under the Federal Assignment of Claims Act, the Uniform Commercial Code and all other applicable state or local statutes or ordinances and deliver to Agent appropriately endorsed, any instrument or chattel paper connected with any Receivable arising out of contracts between any Borrower and the United States, any state or any department, agency or instrumentality of any of them.

 

6.5.        Financial Covenants.

 

(a)           Fixed Charge Coverage Ratio.  Cause to be maintained a Fixed Charge Coverage Ratio, measured as of the end of each fiscal quarter for the trailing twelve (12) fiscal month period, (i) of not less than 1.10 to 1.0 for any fiscal quarter ending in 2011 and (ii) of not less than 1.20 to 1.0 for any fiscal quarter ending thereafter.

 

6.6.        Execution of Supplemental Instruments.  Execute and deliver to Agent from time to time, upon demand, such supplemental agreements, statements, assignments and transfers, or instructions or documents relating to the Collateral, and such other instruments as Agent may request, in order that the full intent of this Agreement may be carried into effect.

 

6.7.        Payment of Indebtedness.  Pay, discharge or otherwise satisfy at or before maturity (subject, where applicable, to specified grace periods and, in the case of the trade payables, to normal payment practices) all its obligations and liabilities of whatever nature, except when the failure to do so could not reasonably be expected to have a Material Adverse Effect or when the amount or validity thereof is currently being Properly Contested, subject at all times to any applicable subordination arrangement in favor of Lenders.

 

6.8.        Standards of Financial Statements.  Cause all financial statements referred to in Sections 9.7, 9.8, 9.9 and 9.10 as to which GAAP is applicable to be complete and correct in all material respects (subject, in the case of interim financial statements, to normal year-end audit adjustments and the absence of footnotes) and to be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein (except as concurred in by such reporting accountants or officer, as the case may be, and disclosed therein).

VII.        NEGATIVE COVENANTS.

 

No Borrower shall, until satisfaction in full of the Obligations and termination of this Agreement:

 

7.1.        Merger, Consolidation, Acquisition and Sale of Assets.

 

(a)           Enter into any merger, consolidation or other reorganization with or into any other Person or permit any other Person to consolidate with or merge with it; provided that, any Borrower entity may (i) merge into any other Borrower entity (but provided further that in any such merger involving UniTek Parent, UniTek Parent shall be the surviving entity of such merger) and (ii) enter into any Permitted Acquisition.

  

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(b)           Acquire all or a substantial portion of the assets or Equity Interests of any Person (or any division or business line of any Person) except for any Permitted Acquisition; provided that if any Borrower shall acquire any new Subsidiary as a result of any Permitted Acquisition, Borrowers shall comply with the requirements of Section 7.12.  Notwithstanding anything to the contrary contained in any provision of this Agreement, no Borrower shall purchase any Equity Interests in or become or agree to become party to a Joint Venture except as an Investment permitted under Section 7.4(i) hereof.

 

(c)           Sell, lease, transfer or otherwise dispose of any of its properties or assets, except dispositions of Inventory and Equipment, and dispositions of other property or assets that is Term Debt Priority Collateral, to the extent expressly permitted by Section 4.3.

 

7.2.        Creation of Liens.  Create or suffer to exist any Lien or transfer upon or against any of its property or assets now owned or hereafter acquired, except Permitted Encumbrances.  Without limiting the generality of the foregoing, no Borrower shall create or suffer to exist any Lien or transfer upon or against any of its DIRECTV Inventory in favor of any Person other than DIRECTV (other than Permitted Encumbrances arising under clauses (b), (f), (g) or (l) to the extent such Permitted Encumbrances would not violate the provisions of the DIRECTV/DirectSat Contract).

 

7.3.        Guarantees.  Become liable upon the obligations or liabilities of any Person by assumption, endorsement or guaranty thereof or otherwise (other than to Lenders) except (a) as disclosed on Schedule 7.3, (b) guarantees by one or more Borrower(s) of the Indebtedness or obligations of any other Borrower(s) to the extent such Indebtedness or obligations are permitted to be incurred and/or outstanding pursuant to the provisions of this Agreement, (c) the endorsement of checks in the Ordinary Course of Business and (d) guarantee obligations with respect to the Term Debt Obligations owing to the Term Debt Creditors.

 

7.4.        Investments.  Purchase or acquire obligations or Equity Interests of, or any other interest in, any Person, except (a) obligations issued or guaranteed by the United States of America or any agency thereof, (b) commercial paper with maturities of not more than 180 days and a published rating of not less than A-1 or P-1 (or the equivalent rating), (c) certificates of time deposit and bankers’ acceptances having maturities of not more than 180 days and repurchase agreements backed by United States government securities of a commercial bank if (i) such bank has a combined capital and surplus of at least $500,000,000, or (ii) its debt obligations, or those of a holding company of which it is a Subsidiary, are rated not less than A (or the equivalent rating) by a nationally recognized investment rating agency, (d) U.S. money market funds that invest solely in obligations issued or guaranteed by the United States of America or an agency thereof, (e) investments in cash and Cash Equivalents, (f) Permitted Acquisitions, (g) intercompany investments by any Borrower in another Borrower, (h) investments in any Subsidiary (valued at cost) that is not a Borrower hereunder (excluding any Inactive Subsidiary) in an aggregate amount not to exceed (x) $2,700,000 at any time outstanding minus (y)  the then-outstanding principal balance of all intercompany loans and advances to Permitted Foreign Operating Subsidiaries made pursuant to Section 7.10 hereof and (i) additional investments in an aggregate amount (valued at cost) not to exceed $800,000 during the term hereof.

  

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7.5.        Loans.  Make advances, loans or extensions of credit to any Person, including any Parent, Subsidiary or Affiliate except with respect to (a) loans or extension of credit in connection with the extension of commercial trade credit in connection with the sale of Inventory in the Ordinary Course of Business, (b) intercompany loans between and among Borrowers, so long as each such intercompany loan is evidenced by a promissory note (including, if applicable, any master intercompany note executed by Borrowers) on terms and conditions (including terms subordinating payment of the indebtedness evidenced by such note to the prior payment in full of all Obligations) acceptable to Agent in its sole discretion that has been delivered to Agent either endorsed in blank or together with an undated instrument of transfer executed in blank by the applicable Borrower(s) that are the payee(s) on such note, (c) loans and advances to employees of any Borrower in the Ordinary Course of Business (including payroll advances and advances for travel, entertainment and relocation expenses) in an aggregate amount for all Borrowers not to exceed $250,000 at any one time outstanding, (d) promissory notes and other non-cash consideration received by any Borrower pursuant to any sale or disposition permitted by Section 7.1(c) hereof (provided that all payments received in respect of such are immediately remitted by Borrowers to Agent to be applied as a mandatory prepayment of the Obligations pursuant to Section 2.21(c) hereof (subject to the provisions of the last sentence thereof)), (e) advances, loans and extensions existing on the date hereof and described on Schedule 7.5(e) hereto with any modifications, replacements, renewals or extensions thereof; provided that the amount of the original Investment is not increased except by the terms of such Investment or as otherwise permitted by this Section 7.5(e), and (f) in addition to advances, loans and extensions otherwise expressly permitted by this Section 7.5, advances, loans or extensions by Borrowers in an aggregate amount (valued at cost) not to exceed $250,000 during the Term

 

7.6.        [RESERVED].

 

7.7.        Dividends.  (i) Declare, pay or make any dividend or distribution on any Equity Interests of any Borrower (other than dividends or distributions payable in its stock, or split-ups or reclassifications of its stock), or (ii) apply any of its funds, property or assets to the purchase, redemption or other retirement of any Equity Interest, or of any options to purchase or acquire any Equity Interest of any Borrower or (iii) make any payments of management fees except that:  so long as (a) a notice of termination with regard to this Agreement shall not be outstanding, and (b) no Event of Default or Default shall have occurred after giving pro forma effect to such dividends, (a) Borrowers other than UniTek Parent shall be permitted to pay dividends to any other Borrower; (b) UniTek Parent may purchase the common stock or common stock options of UniTek Parent from present or former officers or employees of any Borrower or any Subsidiary of Borrowers upon the death, disability or termination of employment of such officer or employee; provided that the aggregate amount of payments under this paragraph (b) in any fiscal year (net of any proceeds received by the Borrower after the date hereof in connection with resales of any common stock or common stock options so purchased) shall not exceed $1,000,000; and (y) UniTek Parent may make a cashless repurchase of its Equity Interests which is deemed to occur upon the exercise of options, rights or warrants to the extent such Equity Interests represents a portion of the exercise price of those options, rights or warrants.

  

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7.8.        Indebtedness.  Create, incur, assume or suffer to exist any Indebtedness (exclusive of trade debt) except in respect of (i) Indebtedness to Lenders and the other Obligations; (ii) Indebtedness of Borrowers consisting of Capitalized Lease Obligations and purchase money indebtedness for the Capital Expenditures in an aggregate outstanding principal amount not to exceed $30,000,000 at any one time, so long as such Indebtedness is not secured by any Collateral or other assets or property of Borrowers other than the assets purchased with the initial proceeds of such Indebtedness; (iii) any guarantees constituting Indebtedness that are permitted under Section 7.3 above, (iv) Term Debt Indebtedness (including any Permitted Refinancing thereof) in an aggregate principal amount not to exceed $100,000,000, provided that, Borrowers may incur (and may refinance pursuant to the Permitted Refinancing) additional Term Debt Indebtedness in excess of such limitation not to exceed an additional aggregate principal amount of not more than $50,000,000 either pursuant to a Permitted Refinancing or under the “Incremental Term Facility” (as defined and provided for in the Term Debt Credit Agreement as in effect on the date hereof) but only to the extent that no later than five (5) Business Days prior to the incurrence of any such additional Term Debt Indebtedness, Borrowers shall have delivered to Agent a pro forma balance sheet and pro forma financial statements and a Compliance Certificate demonstrating that the Borrowers would be in compliance with the financial covenants set forth in Section 6.5 on a pro forma basis after giving effect to such incurrence as if such incurrence had occurred on the first day of the most recent period of four consecutive fiscal quarters in respect of which the financial covenants have been tested in accordance with Section 6.5, (v) Indebtedness consisting of intercompany loans made by one or more Borrower(s) to any other Borrower(s) in accordance with the provisions of Section 7.5(c); (vi) Subordinated Debt incurred in connection with Permitted Acquisitions in an aggregate outstanding principal amount not to exceed $5,000,000 at any one time; (vii) Interest Rate Hedges that are entered into by Borrowers to hedge their risks with respect to outstanding Indebtedness of Borrowers and not for speculative or investment purposes; (viii) Indebtedness of a Person or Indebtedness secured by assets of a Person that, in either case, becomes a Subsidiary or Indebtedness attaching to assets that are acquired by the Borrowers, in each case after the Closing Date, provided that (A) such Indebtedness existed at the time such Person became a Subsidiary or at the time such assets were acquired and, in each case, was not created in anticipation thereof, (B) such Indebtedness is not guaranteed in any respect by any Borrower (other than by any such Person that so becomes a Subsidiary and existing Subsidiaries of such Person), (C) the aggregate principal amount of all such Indebtedness does not exceed $3,000,000 at any one time outstanding and (D) under no circumstances shall any such Indebtedness be secured by any Liens on any Receivables, Inventory, proceeds of Receivables or Inventory, deposit accounts or any other ABL Priority Collateral belonging to such Person being acquired and/or to any Borrower or Guarantor; and any refinancing thereof (provided that no such refinancing shall increase the principal balance outstanding under such Indebtedness as of the date of such refinancing or shorten the maturity date thereof or expand the collateral pledged to secure such Indebtedness at the time of such Permitted Acquisition), but only so long as Borrowers would be in compliance with the financial covenants set forth in Section 6.5 on a pro forma basis after giving effect to such acquisition as if such acquisition had occurred on the first day of the most recent period of four consecutive fiscal quarters in respect of which the Fixed Charge Coverage Ratio has been tested in accordance with Section 6.5, (ix) Indebtedness in respect of performance, surety, bid, appeal bonds, completion guarantees or other similar obligations provided in the ordinary course of business, including guarantees or obligations of the Borrower and its Subsidiaries with respect to letters of credit supporting such performance, surety, bid, appeal bonds, completion guarantees or other similar obligations but excluding Indebtedness incurred through the borrowing of money, Capitalized Lease Obligations and purchase money obligations; (x) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; (xi) the incurrence by any Borrower of contingent obligations in respect of purchase price adjustments or indemnification obligations set forth in agreements providing for the Permitted Acquisition or disposition of any asset of the Borrowers so long as all such contingent obligations are discharged within 30 days of the date the amount thereof becomes due under the terms of such Permitted Acquisition and the Permitted Acquisition or subject disposition is otherwise permitted hereby; (xii) cash management obligations and other Indebtedness in respect of netting services, overdraft protections and similar arrangements in each case in connection with cash management and deposit accounts in the ordinary course of business; (xiii) Indebtedness consisting of the financing of insurance premiums, so long as the aggregate amount payable pursuant to such Indebtedness does not materially exceed the amount of the premium for such insurance; (xiv) Indebtedness arising in connection with endorsement of instruments for deposit in the Ordinary Course of Business; (xv) Indebtedness consisting of Permitted Earn-Out Obligations; (xvi) any other Indebtedness not otherwise permitted under the preceding clauses (i) through (xiv) that is existing on the Closing Date and listed on Schedule 7.8 hereto and any refinancing thereof (provided that no such refinancing shall increase the principal balance outstanding under such Indebtedness as of the date of such refinancing or shorten the maturity date thereof); and (xvii) additional unsecured Indebtedness of the Borrowers in an aggregate principal amount not to exceed $1,500,000 at any one time outstanding.

  

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7.9.        Nature of Business.  Substantially change the nature of the business in which it is presently engaged, except as may be reasonably related thereto, nor except as otherwise specifically permitted hereby purchase or invest, directly or indirectly, in any assets or property other than in the Ordinary Course of Business for assets or property which are useful in, necessary for and are to be used in its business as presently conducted.

 

7.10.      Transactions with Affiliates.  Directly or indirectly, purchase, acquire or lease any property from, or sell, transfer or lease any property to, or otherwise enter into any transaction or deal with, any Affiliate, except for (i) transactions among Borrowers which are not expressly prohibited by the terms of this Agreement, (ii) payment by Borrowers of dividends and distributions permitted under Section 7.7 hereof, and (iii) transactions disclosed to the Agent in writing, which are in the Ordinary Course of Business, on an arm’s-length basis on terms and conditions no less favorable than terms and conditions which would have been obtainable from a Person other than an Affiliate.  Notwithstanding anything to the contrary provided for in the foregoing or in any other provision of this Agreement, no Borrower shall, directly or indirectly, purchase, acquire or lease any property from, or sell, transfer or lease any property to, or otherwise enter into any transaction or deal with, any Subsidiary of any Borrower that is not a Borrower under this Agreement or a Guarantor of the Obligations, specifically including any Inactive Subsidiary or any Foreign Subsidiary, except that, Borrowers may make intercompany loans and advances to Permitted Foreign Operating Subsidiaries in an aggregate amount not to exceed (x) $2,700,000 at any time outstanding minus (y) the then-outstanding amount (valued at cost) of all Investments in non-Borrower Subsidiaries made pursuant to Section 7.4(h) hereof; so long as each such intercompany loan or advance is evidenced by a promissory note (including, if applicable, any master intercompany note executed by the Permitted Foreign Operating Subsidiaries) on terms and conditions (including terms subordinating payment of the indebtedness evidenced by such note to the prior payment in full of all Obligations) acceptable to Agent in its sole discretion that has been delivered to Agent either endorsed in blank or together with an undated instrument of transfer executed in blank by the applicable Borrower(s) that are the payee(s) on such note.

  

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7.11.      Leases.  Enter as lessee into any lease arrangement for real or personal property (unless capitalized and permitted under Section 7.6 hereof) if after giving effect thereto, aggregate annual rental payments for all leased property would exceed $30,000,000 in any one fiscal year in the aggregate for all Borrowers.

 

7.12.      Subsidiaries.

 

(a)           Subject to the provisions of Sections  7.12(b) and 7.12(c), hold any Equity Interests in or form or acquire any Subsidiary unless (i) such Subsidiary either (x) expressly joins in this Agreement and the Other Document as a borrower and becomes jointly and severally liable for the Obligations or (y) if Agent shall agree in its sole discretion, becomes a Guarantor of the Obligations and executes a Guarantor Security Agreement, and in either case (x) or (y), such Subsidiary shall grant first priority (subject only to Permitted Encumbrances in favor of Term Debt Agent subject to the Intercreditor Agreement in the case of any Term Debt Priority Collateral of such Subsidiary and to any other Permitted Encumbrances which by operation of law (including the priority granted under the Uniform Commercial Code to any purchase money security interests that are Permitted Encumbrances) have senior priority) Liens on substantially all of its assets to secure its liabilities for the Obligations, (ii) both prior to and after giving effect to such acquisition or formation, (x) no Default or Event of Default shall exist and (y) each of the representations and warranties made by any Borrower in or pursuant to this Agreement, any Other Document and any related agreements to which it is a party, or each of the representations and warranties contained in any certificate, document or financial or other statement furnished at any time under or in connection with this Agreement, any Other Document or any related agreement shall be true and correct in all respects on and as of such date as if made on and as of such date (except to the extent any such representation or warranty was expressly made only as of a specified date, in which case such representation or warranty was true and correct as of such date) and (iii) Agent shall have received all documents, including legal opinions, it may reasonably require to establish compliance with each of the foregoing conditions.

 

(b)           Notwithstanding anything to the contrary provided for in paragraph (a) above, if any Subsidiary shall constitute an Inactive Subsidiary as of the Closing Date and be designated by Borrowers as an Inactive Subsidiary (either by listing such Subsidiary as an Inactive Subsidiary on Schedule 5.2(b) on the Closing Date or by designating any Subsidiary acquired in a Permitted Acquisition as an Inactive Subsidiary in writing to Agent at the time of such Permitted Acquisition), Borrowers shall be deemed to be in compliance with the provisions of this Section 7.12 without otherwise satisfying the requirements set forth in paragraph (a) above so long as Borrower shall take all actions requested by Agent to create a first priority (subject only to Permitted Encumbrances in favor of Term Debt Agent subject to the Intercreditor Agreement) pledge and Lien over one hundred percent of the Equity Interests of such Inactive Subsidiary.  If at any time any Subsidiary that has previously been designated as an Inactive Subsidiary in accordance with this Section 7.12(b) shall cease to satisfy any of the requirements for an Inactive Subsidiary, Borrowers shall promptly give written notice of such occurrence to Agent and promptly take all steps necessary to comply fully with all the requirements of paragraph (a) above with respect to such Subsidiary.

  

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(c)           Notwithstanding anything to the contrary provided for in paragraph (a) above, with respect to any Foreign Subsidiary, Borrowers shall be deemed to be in compliance with the provisions of this Section 7.12 without otherwise satisfying the requirements set forth in paragraph (a) above so long as Borrower shall take all actions requested by Agent to create a first priority (subject only to Permitted Encumbrances in favor of Term Debt Agent subject to the Intercreditor Agreement) pledge and Lien over at least sixty-five percent (65%) of the voting Equity Interest and one hundred percent of non-voting Equity Interests of such Foreign Subsidiary under the laws of New York and/or the laws of the foreign jurisdiction in which such Foreign Subsidiary is organized (including delivery of any applicable foreign law legal opinions requested by Agent).

 

(d)           Enter into any partnership, Joint Venture or similar arrangement, except as permitted by Section 7.1(b) and 7.4(i) above.

 

7.13.      Fiscal Year and Accounting Changes.  Change its fiscal year ending date from December 31st or make any significant change (i) in accounting treatment and reporting practices except as required by GAAP or (ii) in tax reporting treatment except as required by law.

 

7.14.      Pledge of Credit.  Now or hereafter pledge Agent’s or any Lender’s credit on any purchases or for any purpose whatsoever or use any portion of any Advance in or for any business other than such Borrower’s business as conducted on the date of this Agreement.

 

7.15.      Amendment of Organizational Documents.  (i) Change its legal name, (ii) change its form of legal entity (e.g., converting from a corporation to a limited liability company or vice versa), (iii) change its jurisdiction of organization or become (or attempt or purport to become) organized in more than one jurisdiction, or (iv) otherwise amend, modify or waive any term or material provision of its Organizational Documents, in any such case without (x) giving at least thirty (30) days prior written notice of such intended change to Agent, (y) having received from Agent confirmation that Agent shall have taken all steps necessary for Agent to continue the perfections of and protect the enforceability and priority of its Liens in the Collateral belonging to such Borrower and in the Equity Interests of such Borrower and (z) in any case under clause (iv), such amendment, modification or waiver could not reasonably be expected to have a materially adverse effect on the rights or interests of Agent, Issuer and Lenders.

 

7.16.      Compliance with ERISA.  (i) (x) Maintain, or permit any member of the Controlled Group to maintain, or (y) become obligated to contribute, or permit any member of the Controlled Group to become obligated to contribute, to any Plan, other than those Plans disclosed on Schedule 5.8(d), (ii) engage, or permit any member of the Controlled Group to engage, in any non-exempt “prohibited transaction”, as that term is defined in Section 406 of ERISA or Section 4975 of the Code, (iii) incur, or permit any Plan to incur, any “accumulated funding deficiency”, as that term is defined in Section 302 of ERISA or Section 412 of the Code, (iv) terminate, or permit any member of the Controlled Group to terminate, any Plan where such event could result in any liability of any Borrower or any member of the Controlled Group or the imposition of a lien on the property of any Borrower or any member of the Controlled Group pursuant to Section 4068 of ERISA, (v) assume, or permit any member of the Controlled Group to assume, any obligation to contribute to any Multiemployer Plan not disclosed on Schedule 5.8(d), (vi) incur, or permit any member of the Controlled Group to incur, any withdrawal liability to any Multiemployer Plan; (vii) fail promptly to notify Agent of the occurrence of any Termination Event, (viii) fail to comply, or permit a member of the Controlled Group to fail to comply, with the requirements of ERISA or the Code or other Applicable Laws in respect of any Plan, (ix) fail to meet, or permit any member of the Controlled Group to fail to meet, all minimum funding requirements under ERISA and the Code, without regard to any waivers or variances, or postpone or delay or allow any member of the Controlled Group to postpone or delay any funding requirement with respect of any Plan, or (x) cause, or permit any member of the Controlled Group to cause, a representation or warranty in Section 5.8(d) to cease to be true and correct.

  

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7.17.      Prepayment of Indebtedness; Earn-Outs.

 

(a)           At any time, directly or indirectly, prepay or repurchase, redeem, retire or otherwise acquire prior to the scheduled maturity thereof (i) any Subordinated Debt or (ii) any other Indebtedness of any Borrower except for: (x) prepayments of the Obligations, (y) mandatory prepayment of the Term Debt Obligations under the terms and conditions of the Term Debt Documents as in effect on the date hereof or as amended in accordance with the provisions of Section 7.22 hereof and (z) voluntary prepayments of any such Indebtedness other than Subordinated Debt (including but not limited to trade debt and the Term Debt Indebtedness) to the extent that and only so long as any such voluntary prepayment under this clause (z) is made by Borrowers in the Ordinary Course of Business and no Default or Event or Default shall exist either before or after giving effect to such voluntary prepayment; provided that, nothing contained in the foregoing shall prohibit any Permitted Refinancing of the Term Debt Indebtedness.  However, notwithstanding anything to the contrary contained in the foregoing or in any other provision of this Agreement or any Other Document, in the event that, after giving effect to any mandatory prepayment of the Term Debt Indebtedness required under the Term Debt Documents in respect of the “Excess Cash Flow” (as defined in the Term Debt Documents) of Borrowers and their consolidated Subsidiaries that would otherwise be permitted under the provisions of this Section 7.17, Borrowers would have Undrawn Availability and five day average Undrawn Availability of less than $5,000,000, then the maximum amount of the prepayment of the Term Debt Indebtedness which Borrowers shall be permitted to make under this Section 7.17 shall not exceed the maximum amount which, if paid by Borrowers, would leave Borrowers with an Undrawn Availability of at least $5,000,000.

 

(b)           Make any payment in respect of any Earn-Out Indebtedness; provided that payments in respect of Permitted Earn-Out Obligations may be made so long as, both immediately prior to and after giving effect to the making of such payment, (x) no Event of Default shall have occurred and remain continuing and (y) Borrowers shall have Undrawn Availability and five day average Undrawn Availability of at least the Undrawn Availability Minimum Amount either immediately prior to or after giving effect to any such payment.

  

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7.18.      Anti-Terrorism Laws.  No Borrower shall, until satisfaction in full of the Obligations and termination of this Agreement, nor shall it permit any Affiliate or agent to:

 

(a)           Conduct any business or engage in any transaction or dealing with any Blocked Person, including the making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person.

 

(b)           Deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order No. 13224.

 

(c)           Engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in the Executive Order No. 13224, the USA PATRIOT Act or any other Anti-Terrorism Law.  Borrower shall deliver to Lenders any certification or other evidence requested from time to time by any Lender in its sole discretion, confirming Borrower’s compliance with this Section.

 

7.19.      Restrictive Agreements.  Enter into or otherwise permit itself or its assets to be come bound by any contract, instrument or other agreement (other than the Term Debt Documents) which would prohibit or limit the ability of any Borrower other than UniTek Parent to make any dividend or other distribution of any nature (whether in cash, property, securities or otherwise) on account of or in respect of its Equity Interests.

 

7.20.      Trading with the Enemy Act.  Engage in any business or activity in violation of the Trading with the Enemy Act.

 

7.21.      Subordinated Debt.  At any time, directly or indirectly, pay, prepay, repurchase, redeem, retire or otherwise acquire, or make any payment on account of any principal of, interest on or premium payable in connection with the repayment or redemption of any Subordinated Debt, except as expressly permitted in applicable subordination agreement.

 

7.22.      Amendments to Term Debt Documents.  Enter into any amendment, waiver or modification of the Term Debt Documents the effect of which is (i) to increase any applicable interest rate on the Term Debt Indebtedness by more than 300 basis points, except in connection with (1) the imposition of a default rate of interest in accordance with the terms of the Term Debt Documents (provided that the incremental increase resulting solely from the imposition of such default rate of interest shall not at any time exceed the greater of (x) 200 basis points and (y) the difference between “LIBOR”, the “Eurodollar Rate”, the “Adjusted Eurodollar Rate” (in each case, or any equivalent term) at such time, on the one hand, and the “Alternate Base Rate” or the “Base Rate” (in each case, or any equivalent term) at such time, on the other hand, plus 200 basis points), (2) the imposition of fees for forbearance, amendments, waivers and other modifications and supplements or (3) any increase in “LIBOR”, the “Eurodollar Rate”, the “Adjusted Eurodollar Rate”, the “Alternate Base Rate” or the “Base Rate” (in each case, or any equivalent term) (it being understood that, in the case of a pricing matrix or grid based upon a measure of financial performance provided for in the Term Debt Documents as in effect on the date hereof, (x) any change in rate due to the operation thereof shall not constitute an increase and (y) each of the interest rates specified in such matrix or grid may be increased by an amount up to 300 basis points), (ii) to provide for any incurrence of additional or increased Term Debt Indebtedness after the Closing Date, except for any such incurrence and increase of the Term Debt Indebtedness, whether pursuant to “Incremental Term Facility” (as defined and provided for in the Term Debt Credit Agreement as in effect on the date hereof) or otherwise, permitted under the provisions of Section 7.8(iv) hereof and which does not otherwise violate the provisions of this Section 7.22, (iii) to change the final maturity date (except in connection with an acceleration of the Term Debt Indebtedness following an event of default) for any of the Term Debt Indebtedness to a date that is earlier than the expiration of the Term as in effect hereunder on the Closing Date, or (iv) to increase or accelerate any amortization payments or mandatory prepayments provided for under the Term Debt Documents as in effect on the date hereof (except for any amendments to provide for amortization with respect to any exercise by Borrowers of their rights to incur additional Term Debt Indebtedness pursuant to the “Incremental Term Facility” (as defined and provided for in the Term Debt Credit Agreement as in effect on the date hereof), in which case the amortization terms and final maturity date of any applicable “Incremental Term Loans” (as defined and provided for in the Term Debt Credit Agreement as in effect on the date hereof) shall not be materially less favorable to Borrowers as compared to such amortization and maturity terms of the term loans under the Term Debt Credit Agreement as in effect on the date hereof) or otherwise make a change to the terms and conditions of the amortization payments or mandatory prepayments under the Term Debt Documents as in effect on the date hereof in a manner that is materially adverse to the interests of Borrowers and/or Agent and Lenders; provided that, Borrowers shall deliver to Agent a copy of any amendment, waiver or modification of the Term Debt Documents entered into in compliance with this Section 7.22 within five (5) Business Days of the execution thereof.  For the avoidance of doubt, Borrowers may enter into Permitted Refinancings of the Term Debt Indebtedness that are consistent with the provisions of this Section 7.22.

  

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VIII.      CONDITIONS PRECEDENT.

 

8.1.        Conditions to Initial Advances.  The agreement of Lenders to make the initial Advances requested to be made on the Closing Date is subject to the satisfaction, or waiver by Agent, immediately prior to or concurrently with the making of such Advances, of the following conditions precedent:

 

(a)           Agreement and Note.  Agent shall have received this Agreement and the Notes  duly executed and delivered by an authorized officer of each Borrower;

 

(b)           Filings, Registrations and Recordings.  Each document (including any Uniform Commercial Code financing statement) required by this Agreement, any related agreement or under law or reasonably requested by the Agent to be filed, registered or recorded in order to create, in favor of Agent, a perfected security interest in or lien upon the Collateral shall have been properly filed, registered or recorded in each jurisdiction in which the filing, registration or recordation thereof is so required  or requested;

 

(c)           Leasehold Agreements.  Agent shall have received landlord, mortgagee or warehouseman agreements satisfactory to Agent with respect to all premises leased by Borrowers where the chief executive office of any Borrower and/or the books and records of any Borrower regarding Receivables are located;

  

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(d)           Pledge Agreements and Other Documents.  Agent shall have received (i) the Pledge Agreements, along with certificates evidencing all of the Equity Interests pledged pursuant thereto together with appropriate undated instruments of transfer executed in blank, and (iii) the executed Other Documents, all in form and substance satisfactory to Agent and all duly executed and delivered by an authorized officer of each applicable Borrower;

 

(e)           Term Debt Documents.  Agent shall have received final executed copies of the Term Debt Credit Agreement and all other material Term Debt Documents as in effect on the Closing Date, all of which shall be satisfactory in form and substance to Agent and the transactions contemplated by such documentation shall be consummated prior to or simultaneously with the making of the initial Advance;

 

(f)            Intercreditor Agreement.  Agent and Term Debt Agent shall have entered into the Intercreditor Agreement, which shall set forth the rights and Lien priorities of Agent, Issuer and Lenders (on the one hand) and Term Debt Creditors (on the other hand) with respect to the Term Debt Priority Collateral, and the ABL Priority Collateral, which terms shall be satisfactory in form and substance to Agent in its sole discretion;

 

(g)           [RESERVED];

 

(h)           [RESERVED];

 

(i)            [RESERVED];

 

(j)            Financial Condition Certificates.  Agent shall have received an executed Financial Condition Certificate in the form of Exhibit 8.1(j).

 

(k)           Closing Certificate.  Agent shall have received a closing certificate signed by the Chief Financial Officer of each Borrower dated as of the date hereof, stating that (i) all representations and warranties set forth in this Agreement and the Other Documents are true and correct on and as of such date, (ii) Borrowers are on such date in compliance with all the terms and provisions set forth in this Agreement and the Other Documents and (iii) on such date no Default or Event of Default has occurred and is continuing;

 

(l)            Borrowing Base.  Agent shall have received evidence from Borrowers including delivery of any initial Borrowing Base Certificate, that (i) the aggregate amount of Eligible Receivables, Eligible Unbilled Receivables and Eligible Project Receivables are sufficient in value and amount to support Advances in the amount requested by Borrowers on the Closing Date and (ii) after giving effect to the Transactions on the Closing Date (including the initial Advances to be made hereunder), Borrower shall have (i) Undrawn Collateral Availability plus (ii) unrestricted cash of at least $15,000,000;

 

(m)          Blocked Accounts.  Agent shall have received duly executed agreements establishing the Blocked Accounts or Depository Accounts with financial institutions acceptable to Agent for the collection or servicing of the Receivables and proceeds of the Collateral;

  

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(n)           Secretary’s Certificates, Authorizing Resolutions and Good Standings of Borrowers.  Agent shall have received a certificate of the Secretary or Assistant Secretary (or other equivalent officer, partner or manager) of each Borrower in form and substance satisfactory to Agent dated as of the Closing Date which shall certify (i) copies of resolutions in form and substance reasonably satisfactory to Agent, of the board of directors (or other equivalent governing body, member or partner) of such Borrower authorizing (x) the execution, delivery and performance of this Agreement, the Notes and each Other Loan Document to which such Borrower is a party (including authorization of the incurrence of indebtedness, borrowing of Revolving Advances and Swing Loans and requesting of Letters of Credit on a joint and several basis with all Borrowers as provided for herein), and (y) the granting by such Borrower of the security interests in and liens upon the Collateral to secure all of the joint and several Obligations of the Borrowers (and such certificate shall state that such resolutions have not been amended, modified, revoked or rescinded as of the date of such certificate), (ii) the incumbency and signature of the officers of such Borrower authorized to execute this Agreement and the other Loan Documents, (iii) copies of the Organizational Documents of such Borrower as in effect on such date, complete with all amendments thereto, and (iv) the good standing (or equivalent status) of such Borrower in its jurisdiction of organization and each applicable jurisdiction where the conduct of such Borrower’s  business activities or the ownership of its properties necessitates qualification, as evidenced by good standing certificate(s) (or the equivalent thereof issued by any applicable jurisdiction) dated not more than thirty (30) days prior to the Closing Date, issued by the Secretary of State or other appropriate official of each such jurisdiction as attached to such certificate;

 

(o)           Legal Opinion.  Agent shall have received an executed legal opinion of  Morgan, Lewis & Bockius LLP, each in form and substance satisfactory to Agent which shall cover such matters incident to the transactions contemplated by this Agreement and the Other Documents as Agent may reasonably require and each Borrower hereby authorizes and directs such counsel to deliver such opinions to Agent and Lenders;

 

(p)           No Litigation.  (i) No litigation, investigation or proceeding before or by any arbitrator or Governmental Body shall be continuing or threatened against any Borrower or against the officers or directors of any Borrower (A) in connection with this Agreement, the Other Documents, the Term Debt Documents or any of the Transactions or (B) which could, in the reasonable opinion of Agent, reasonably be expected to have a Material Adverse Effect; and (ii) no injunction, writ, restraining order or other order of any nature either materially adverse to any Borrower or the conduct of its business or inconsistent with the due consummation of the Transactions shall have been issued by any Governmental Body;

 

(q)           Collateral Examination.  Agent shall have completed Collateral examinations and received appraisals, the results of which shall be satisfactory in form and substance to Lenders, of the Receivables, Inventory, General Intangibles and Equipment of each Borrower and all books and records in connection therewith;

 

(r)            Fees and Expenses.  Agent shall have received (i) all fees payable to Agent and Lenders and any other applicable Persons on or prior to the Closing Date hereunder, including pursuant to Article III hereof and (ii) all costs and expenses of Agent payable under Section 11.9 hereof;

  

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(s)           Pro Forma Financial Statements.  Agent shall have received a copy of the Pro Forma Financial Statements which shall be satisfactory in all respects to Lenders;

 

(t)           Insurance.  Agent shall have received in form and substance satisfactory to Agent, (i) certified copies of Borrowers’ casualty insurance policies, together with (x) lender loss payable endorsements on the applicable insurers’ standard form of loss payee endorsement reasonably acceptable to Agent naming Agent as a lenders’ loss payee and (y) certificates of insurance on appropriate ACORD insurance industry forms naming Agent as a certificate holder, and (ii) certified copies of Borrowers’ liability insurance policies, together with (x) endorsements naming Agent as a co-insured on the applicable insurers’ standard form of additional endorsement reasonably acceptable to Agent and (y) certificates of insurance on appropriate ACORD insurance industry forms naming Agent as a certificate holder;

 

(u)          Payment Instructions.  Agent shall have received written instructions from Borrowing Agent directing the application of proceeds of the initial Advances made pursuant to this Agreement;

 

(v)          Consents.  Agent shall have received any and all Consents necessary to permit the effectuation of the transactions contemplated by this Agreement and the Other Documents; and, Agent shall have received such Consents and waivers of such third parties as might assert claims with respect to the Collateral, as Agent and its counsel shall deem necessary;

 

(w)          No Adverse Material Change.  (i) since December 31, 2010, there shall not have occurred any event, condition or state of facts which could reasonably be expected to have a Material Adverse Effect and (ii) no representations made or information supplied to Agent or Lenders shall have been proven to be inaccurate or misleading in any material respect;

 

(x)          Contract Review.  Agent shall have reviewed all Material Contracts of Borrowers including leases, union contracts, labor contracts, vendor supply contracts, license agreements and distributorship agreements and such contracts and agreements shall be satisfactory in all respects to Agent;

 

(y)          Compliance with Laws.  Agent shall be reasonably satisfied that each Borrower is in compliance with all pertinent federal, state, local or territorial regulations with respect to which the failure to comply could reasonably be expected to have a Material Adverse Effect, including those with respect to the Federal Occupational Safety and Health Act, the Environmental Protection Act, ERISA and the Trading with the Enemy Act; and

 

(z)           Other.  All corporate and other proceedings, and all documents, instruments and other legal matters in connection with the Transactions shall be satisfactory in form and substance to Agent and its counsel.

 

8.2.        Conditions to Each Advance.  The agreement of Lenders to make any Advance requested to be made on any date (including the initial Advance), is subject to the satisfaction of the following conditions precedent as of the date such Advance is made:

  

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(a)           Representations and Warranties.  Each of the representations and warranties made by any Borrower in or pursuant to this Agreement, the Other Documents and any related agreements to which it is a party, and each of the representations and warranties contained in any certificate, document or financial or other statement furnished at any time under or in connection with this Agreement, the Other Documents or any related agreement shall be true and correct in all respects on and as of such date as if made on and as of such date (except to the extent any such representation or warranty expressly relates only to any earlier and/or specified date, in which case such representation or warranty shall have been true and correct in all respects on such date);

 

(b)           No Default.  No Event of Default or Default shall have occurred and be continuing on such date, or would exist after giving effect to the Advances requested to be made, on such date and, in the case of the initial Advances, after giving effect to the consummation of the Transactions; provided, however that Agent, in its sole discretion, may continue to make Advances notwithstanding the existence of an Event of Default or Default as otherwise provided for in this Agreement and that any Advances so made shall not be deemed a waiver of any such Event of Default or Default; and

 

(c)           Maximum Advances.  In the case of any type of Advance requested to be made, after giving effect thereto, the aggregate amount of such type of Advance shall not exceed the maximum amount of such type of Advance permitted under this Agreement.

 

Each request for an Advance by any Borrower hereunder shall constitute a representation and warranty by each Borrower as of the date of such Advance that the conditions contained in this subsection shall have been satisfied.

 

IX.         INFORMATION AS TO BORROWERS.

 

Each Borrower shall, or (except with respect to Section 9.11) shall cause Borrowing Agent on its behalf to, until satisfaction in full of the Obligations and the termination of this Agreement:

 

9.1.        Disclosure of Material Matters.  Immediately upon learning thereof, report to Agent all matters materially affecting the value, enforceability or collectability of any portion of the Collateral, including any Borrower’s reclamation or repossession of, or the return to any Borrower of, a material amount of goods or claims or disputes asserted by any Customer or other obligor.

  

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9.2.        Schedules.  Subject to the provisions of the following sentence, deliver to Agent on or before the fifteenth (15th) day of each fiscal month as and for the prior month (a) accounts receivable ageings inclusive of reconciliations to the general ledger, (b) accounts payable schedules inclusive of reconciliations to the general ledger, (c) Inventory reports and (d) a Borrowing Base Certificate in form and substance satisfactory to Agent (which shall be calculated as of the last day of the prior fiscal month); provided that, (x) if so requested by Agent in its discretion, Borrowers shall deliver Borrowing Base Certificates at more frequent intervals calculated as of such interim dates as Agent may require and (y) regardless of whether Agent shall have exercised its rights under the preceding clause (x), Borrowers shall deliver to Agent on the first Business Day of each week a weekly report update to the Borrowing Base Certificate reflecting sales, receipts of cash and collections during the preceding week.  Notwithstanding anything to the contrary contained in the foregoing sentence, Borrowers shall deliver to Agent on or before the twentieth (20th) day of each fiscal month as and for the prior month (I) accounts receivable ageing inclusive of reconciliations to the general ledger for all Eligible Project Receivables and other Project Receivables and (II) to the extent the Borrowing Base Certificate delivered under clause (d) of the preceding sentence did not include reporting of Eligible Project Receivables of Borrowers for the applicable fiscal month, an updated Borrowing Base Certificate providing such information (subject to Agent’s rights under clause (x) of the preceding sentence to require more frequent delivery of Borrowing Base Certificates with complete information).  In addition, each Borrower will deliver to Agent at such intervals as Agent may require: (i) confirmatory assignment schedules; (ii) copies of Customer’s invoices; (iii) evidence of shipment or delivery; and (iv) such further schedules, documents and/or information regarding the Collateral as Agent may require including trial balances and test verifications.  Agent shall have the right to confirm and verify all Receivables by any manner and through any medium it considers advisable and do whatever it may deem reasonably necessary to protect its interests hereunder.  The items to be provided under this Section are to be in form satisfactory to Agent and executed by each Borrower and delivered to Agent from time to time solely for Agent’s convenience in maintaining records of the Collateral, and any Borrower’s failure to deliver any of such items to Agent shall not affect, terminate, modify or otherwise limit Agent’s Lien with respect to the Collateral.  Without limiting the generality of the foregoing, Borrowers shall deliver such additional information at such intervals as may be required by Agent from time to time in its sole credit judgment exercised in its Permitted Discretion with respect to any and/or all Eligible Project Receivables.

 

9.3.        Environmental Reports.  Furnish Agent, concurrently with the delivery of the financial statements referred to in Sections 9.7 and 9.8, with a certificate signed by the President of Borrowing Agent stating, to the best of his knowledge, that each Borrower is in compliance in all material respects with all federal, state and local Environmental Laws.  To the extent any Borrower is not in compliance with the foregoing laws, the certificate shall set forth with specificity all areas of non-compliance and the proposed action such Borrower will implement in order to achieve full compliance.

 

9.4.        Litigation.  Promptly notify Agent in writing of any claim, litigation, suit or administrative proceeding affecting any Borrower or any Guarantor, whether or not the claim is covered by insurance, and of any litigation, suit or administrative proceeding, which in any such case affects a material portion of the Collateral or which could reasonably be expected to have a Material Adverse Effect.

  

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9.5.        Material Occurrences.  Promptly notify Agent in writing upon the occurrence of: (a) any Event of Default or Default, including the occurrence of any “Default” or “Event of Default under the Term Debt Documents (or the receipt of any notice from Term Debt Creditors alleging the occurrence of any such event), (b) any event of default under any Subordinated Debt (or the receipt of any notice from the holder of any such Subordinated Debt alleging the occurrence of any such event); (c) any event, development or circumstance whereby any financial statements or other reports furnished to Agent fail in any material respect to present fairly, in accordance with GAAP consistently applied, the financial condition or operating results of any Borrower as of the date of such statements; (d) any accumulated retirement plan funding deficiency which, if such deficiency continued for two plan years and was not corrected as provided in Section 4971 of the Code, could subject any Borrower to a tax imposed by Section 4971 of the Code; (e) each and every default by any Borrower which might result in the acceleration of the maturity of any Indebtedness, if such acceleration could reasonably be expected to have a Material Adverse Effect, including the names and addresses of the holders of such Indebtedness with respect to which there is a default existing or with respect to which the maturity has been or could be accelerated, and the amount of such Indebtedness; (f) any Borrower becomes involved in any material labor dispute, or any strikes or walkouts or union organization of any Borrower’s employees is threatened (to the best knowledge of Borrowers) or occurs or any labor contract is entered into which is scheduled to expire during the Term, and (g) any other development in the business or affairs of any Borrower or any Guarantor, which could reasonably be expected to have a Material Adverse Effect; in each case describing the nature thereof and the action Borrowers propose to take with respect thereto.

 

9.6.        Government Receivables.  Notify Agent immediately if any of its Receivables arise out of contracts between any Borrower and the United States, any state, or any department, agency or instrumentality of any of them.

 

9.7.        Annual Financial Statements.  Furnish Agent within ninety (90) days after the end of each fiscal year of Borrowers, (i) financial statements of Borrowers on a consolidated basis including, but not limited to, statements of income and stockholders’ equity and cash flow from the beginning of the current fiscal year to the end of such fiscal year and the balance sheet as at the end of such fiscal year, all prepared in accordance with GAAP applied on a basis consistent with prior practices, and in reasonable detail and complete and correct in all material respects, and reported upon without qualification by an independent certified public accounting firm selected by Borrowers and satisfactory to Agent (the “Accountants”) and (ii) management-prepared financial statements of Borrowers on a consolidating basis, including, but not limited to, statements of income and stockholders’ equity from the beginning of the current fiscal year to the end of such fiscal year and the balance sheet as at the end of such fiscal year, all prepared in accordance with GAAP applied on a basis consistent with prior practices, and in reasonable detail and complete and correct in all material respects.  The report of the Accountants with respect to the audited financial statements described in clause (i) of the foregoing sentence shall be accompanied by a statement of the Accountants certifying that (x) they have caused this Agreement to be reviewed, and (y) in making the examination upon which such report was based either no information came to their attention which to their knowledge constituted an Event of Default or a Default under Sections 6.5 hereof or, if such information came to their attention, specifying any such Default or Event of Default, its nature, when it occurred and whether it is continuing, and such report shall contain or have appended thereto calculations which set forth Borrowers’ compliance with the requirements or restrictions imposed by Sections 6.5 hereof.  In addition, the reports shall be accompanied by a Compliance Certificate.

 

9.8.        Quarterly Financial Statements.  Furnish Agent  within forty-five (45) days after the end of each fiscal quarter, (i) an unaudited balance sheet of Borrowers on a consolidated basis as at the end of such quarter and unaudited statements of income and stockholders’ equity and cash flow of Borrowers on a consolidated basis reflecting results of operations from the beginning of the fiscal year to the end of such quarter and for such quarter, all prepared in accordance with GAAP applied on a basis consistent with prior practices, and in reasonable detail and complete and correct in all material respects, subject to normal and recurring year end adjustments that individually and in the aggregate are not material to Borrowers’ business and (ii) management-prepared financial statements on a consolidating basis (exclusive of cash flows) for the business divisions of Borrowers as have been prepared by Borrowers consistent with past practice.  The reports shall be accompanied by a Compliance Certificate.

  

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9.9.        Monthly Financial Statements.  Furnish Agent within thirty (30) days after the end of each fiscal month, an unaudited balance sheet of Borrowers on a consolidated basis as at the end of such month and unaudited statements of income of Borrowers on a consolidated reflecting results of operations from the beginning of the fiscal year to the end of such month and for such month, all prepared in accordance with GAAP applied on a basis consistent with prior practices, and in reasonable detail and complete and correct in all material respects, subject to normal and recurring year end adjustments that individually and in the aggregate are not material to Borrowers’ business.  The reports shall be accompanied by a Compliance Certificate.

 

9.10.      Other Reports.  Furnish Agent (i) as soon as available, but in any event within ten (10) days after the issuance thereof, (x) with copies of such financial statements, reports and returns as UniTek Parent shall send to its stockholders and (y) copies of all notices, reports, financial statements and other materials sent pursuant to the Term Debt Documents and (ii) as soon as available, but in any event within three (3) Business Days after the filing thereof, any and all reports , including Forms 10-K, 10-Q and 8-K, registration statements and prospectuses and other shareholder communications, filed by any Borrower with the SEC.

 

9.11.      Additional Information.  Furnish Agent with such additional information as Agent shall reasonably request in order to enable Agent to determine whether the terms, covenants, provisions and conditions of this Agreement and the Other Documents have been complied with by Borrowers including, without the necessity of any request by Agent, (a) copies of all environmental audits and reviews, (b) at least thirty (30) days prior thereto, notice of any Borrower’s opening of any new office or place of business or any Borrower’s closing of any existing office or place of business, and (c) promptly upon any Borrower’s learning thereof, notice of any labor dispute to which any Borrower may become a party, any strikes or walkouts relating to any of its plants or other facilities, and the expiration of any labor contract to which any Borrower is a party or by which any Borrower is bound, in each case which could reasonably be expected to have a Material Adverse Effect.

 

9.12.      Projected Operating Budget.  Furnish Agent, no later than sixty (60) days following the beginning of each Borrower’s fiscal years, commencing with fiscal year 2012, a month by month projected operating budget and cash flow of Borrowers on a consolidated basis for such fiscal year (including an income statement for each month and a balance sheet as at the end of the last month in each fiscal quarter), such projections to be accompanied by a certificate signed by the Chief Financial Officer of each Borrower to the effect that such projections have been prepared on the basis of sound financial planning practice consistent with past budgets and financial statements and that such officer has no reason to question the reasonableness of any material assumptions on which such projections were prepared.

 

9.13.      [RESERVED].

  

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9.14.      Notice of Suits, Adverse Events.  Furnish Agent with prompt written notice of (i) any lapse or other termination of any material Consent issued to any Borrower by any Governmental Body or any other Person that is material to the operation of any Borrower’s business, (ii) any refusal by any Governmental Body or any other Person to renew or extend any such material Consent; and (iii) copies of any periodic or special reports filed by any Borrower or any Guarantor with any Governmental Body or Person, if such reports indicate any material change in the business, operations, affairs or condition of any Borrower or any Guarantor, or if copies thereof are requested by Lender, and (iv) copies of any material notices and other communications from any Governmental Body or Person which specifically relate to any Borrower or any Guarantor.

 

9.15.      ERISA Notices and Requests.  Furnish Agent with immediate written notice in the event that (i) any Borrower or any member of the Controlled Group knows or has reason to know that a Termination Event has occurred, together with a written statement describing such Termination Event and the action, if any, which such Borrower or any member of the Controlled Group has taken, is taking, or proposes to take with respect thereto and, when known, any action taken or threatened by the Internal Revenue Service, Department of Labor or PBGC with respect thereto, (ii) any  Borrower or any member of the Controlled Group knows or has reason to know that a prohibited transaction (as defined in Sections 406 of ERISA and 4975 of the Code) has occurred together with a written statement describing such transaction and the action which such Borrower or any member of the Controlled Group has taken, is taking or proposes to take with respect thereto, (iii) a funding waiver request has been filed with respect to any Plan together with all communications received by any Borrower or any member of the Controlled Group with respect to such request, (iv) any increase in the benefits of any existing Plan or the establishment of any new Plan or the commencement of contributions to any Plan to which any Borrower or any member of the Controlled Group was not previously contributing shall occur, (v) any Borrower or any member of the Controlled Group shall receive from the PBGC a notice of intention to terminate a Plan or to have a trustee appointed to administer a Plan, together with copies of each such notice, (vi) any Borrower or any member of the Controlled Group shall receive any favorable or unfavorable determination letter from the Internal Revenue Service regarding the qualification of a Plan under Section 401(a) of the Code, together with copies of each such letter; (vii) any Borrower or any member of the Controlled Group shall receive a notice regarding the imposition of withdrawal liability, together with copies of each such notice; (viii) any Borrower or any member of the Controlled Group shall fail to make a required installment or any other required payment under Section 412 of the Code on or before the due date for such installment or payment; or (ix) any Borrower or any member of the Controlled Group knows that (a) a Multiemployer Plan has been terminated, (b) the administrator or plan sponsor of a Multiemployer Plan intends to terminate a Multiemployer Plan, or (c) the PBGC has instituted or will institute proceedings under Section 4042 of ERISA to terminate a Multiemployer Plan.

 

9.16.      Additional Documents.  Execute and deliver to Agent, upon request, such documents and agreements as Agent may, from time to time, reasonably request regarding Borrowers, their Subsidiaries, their businesses and assets and properties and/or to carry out the purposes, terms or conditions of this Agreement.

  

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X.          EVENTS OF DEFAULT.

 

The occurrence of any one or more of the following events shall constitute an “Event of Default”:

 

10.1.      Nonpayment.  Failure by any Borrower to pay any principal on the Obligations when due or within the period of grace, if any, provided in the instrument or agreement under which such Obligation was created, whether at maturity or by reason of acceleration pursuant to the terms of this Agreement or by notice of intention to prepay, or by required prepayment (including pursuant to Section 2.7), or failure to pay when due any interest on the Obligations or other liabilities or make any other payment, fee or charge provided for herein or in any Other Document when due, which failure continues for a period of three (3) Business Days (but further provided that such grace period under this Section 10.1 may not be exercised more than three (3) times during the Term);

 

10.2.      Breach of Representation.  Any representation or warranty made or deemed made by any Borrower or any Guarantor in this Agreement, any Other Document or any related agreement or in any certificate, document or financial or other statement furnished at any time in connection herewith or therewith shall prove to have been misleading in any material respect on the date when made or deemed to have been made;

 

10.3.      Financial Information.  Failure by any Borrower to (i) furnish financial information when due or when requested which is unremedied for a period of fifteen (15) days, or (ii) permit the inspection of its books or records or access for appraisals in accordance with the terms hereof;

 

10.4.      Judicial Actions.  Issuance of a notice of Lien, levy, assessment, injunction or attachment against any Borrower’s Inventory or Receivables or against a material portion of any Borrower’s other property which is not stayed or lifted within thirty (30) days;

 

10.5.      Noncompliance.  Except as otherwise provided for in Sections 10.1, 10.3 and 10.5(ii), (i) failure or neglect of any Borrower or any Guarantor or any Person to perform, keep or observe any term, provision, condition, covenant herein contained, or contained in any Other Document or any other agreement or arrangement, now or hereafter entered into between any Borrower or any Guarantor or such Person, and Agent or any Lender, or (ii) failure or neglect of any Borrower to perform, keep or observe any term, provision, condition or covenant, contained in Sections 4.6, 4.7, 4.9, 4.13, 4.14, 6.3, 6.4, 9.4 or 9.6 hereof which is not cured within twenty (20) days from the occurrence of such failure or neglect;

 

10.6.      Judgments.  Any judgment or judgments , writ(s), order(s) or decree(s) for the payment of money are rendered against any Borrower or any Guarantor for an aggregate amount in excess of $1,000,000 or against all Borrowers or Guarantors for an aggregate amount in excess of $1,000,000 and (i) action shall be legally taken by any judgment creditor to levy upon assets or properties of any Borrower or any Guarantor to enforce any such judgment, or, (ii) there shall be any period of thirty (30) consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, shall not be in effect, or (iii) any Liens arising by virtue of the rendition, entry or issuance of such judgment upon assets or properties of any Borrower or any Guarantor shall be senior to any Liens in favor of Agent on such assets or properties;

  

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10.7.      Bankruptcy.  Any Borrower shall (i) apply for, consent to or suffer the appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator or similar fiduciary of itself or of all or a substantial part of its property, (ii) admit in writing its inability, or be generally unable, to pay its debts as they become due or cease operations of its present business, (iii) make a general assignment for the benefit of creditors, (iv) commence a voluntary case under any state or federal bankruptcy or receivership laws (as now or hereafter in effect), (v) be adjudicated a bankrupt or insolvent (including by entry of any order for relief in any involuntary bankruptcy or insolvency proceeding commenced against it), (vi) file a petition seeking to take advantage of any other law providing for the relief of debtors, (vii) acquiesce to, or fail to have dismissed, within sixty (60) days, any petition filed against it in any involuntary case under such bankruptcy laws, or (viii) take any action for the purpose of effecting any of the foregoing;

 

10.8.      Affiliate or Guarantor Bankruptcy.  Any Affiliate or any Subsidiary of any Borrower, or any Guarantor, shall (i) apply for, consent to or suffer the appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator or similar fiduciary of itself or of all or a substantial part of its property, (ii) admit in writing its inability, or be generally unable, to pay its debts as they become due or cease operations of its present business, (iii) make a general assignment for the benefit of creditors, (iv) commence a voluntary case under any state or federal bankruptcy or receivership laws (as now or hereafter in effect), (v) be adjudicated a bankrupt or insolvent (including by entry of any order for relief in any involuntary bankruptcy or insolvency proceeding commenced against it), (vi) file a petition seeking to take advantage of any other law providing for the relief of debtors, (vii) acquiesce to, or fail to have dismissed, within sixty (60) days, any petition filed against it in any involuntary case under such bankruptcy laws, or (viii) take any action for the purpose of effecting any of the foregoing;

 

10.9.      Material Adverse Effect. The occurrence of any Material Adverse Effect;

 

10.10.    Lien Priority.  Any Lien created hereunder or provided for hereby or under any related agreement for any reason ceases to be or is not a valid and perfected Lien having a first priority interest (subject only to Permitted Encumbrances in favor of Term Debt Agent subject to the Intercreditor Agreement in the case of any Term Debt Priority Collateral and to any other Permitted Encumbrances which by operation of law (including the priority granted under the Uniform Commercial Code to any purchase money security interests that are Permitted Encumbrances) have senior priority;

 

10.11.    Term Debt Indebtedness Default.  An “Event of Default” (as defined in the Term Debt Credit Agreement) has occurred under the Term Debt Documents, which “Event of Default” shall not have been cured or waived within any applicable grace period;

  

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10.12.    Cross Default.  Either (x) any specified “event of default” under any other Indebtedness of any Borrower with a then-outstanding principal balance (or, in the case of any Indebtedness not so denominated, with a then-outstanding total obligation amount or total amount potentially due and payable by any Borrower(s)) of $1,500,000 or more, or any other event or circumstance which would permit the holder of any such Indebtedness of any Borrower to accelerate such Indebtedness (and/or the obligations of Borrower thereunder) prior to the scheduled maturity or termination thereof, shall occur (regardless of whether the holder of such Indebtedness shall actually accelerate, terminate or otherwise exercise any rights or remedies with respect to such Indebtedness), in any such case after giving effect to any applicable notice, grace or cure periods, or (y) a default of the obligations of any Borrower under any other agreement to which it is a party shall occur which causes a Material Adverse Effect which default is not cured within any applicable grace period;

 

10.13.    Breach of Guaranty or Pledge Agreement.  Termination or breach of any Guaranty, Guaranty Security Agreement, Pledge Agreement or similar agreement executed and delivered to Agent in connection with the Obligations of any Borrower, or if any Guarantor attempts to terminate, challenges the validity of, or its liability under, any such Guaranty, Guaranty Security Agreement, Pledge Agreement or similar agreement;

 

10.14.    Change of Control.  Any Change of Control shall occur;

 

10.15.    Invalidity.  Any material provision of this Agreement or any Other Document shall, for any reason, cease to be valid and binding on any Borrower or any Guarantor, or any Borrower or any Guarantor shall so claim in writing to Agent or any Lender;

 

10.16.    Licenses.  To the extent it could reasonably be expected to have a Material Adverse Effect:  (i) Any Governmental Body shall (a) revoke, terminate, suspend or adversely modify any license, permit, patent trademark or tradename of any Borrower or any Guarantor, the continuation of which is material to the continuation of any Borrower’s or Guarantor’s business, or (b) commence proceedings to suspend, revoke, terminate or adversely modify any such license, permit, trademark, tradename or patent and such proceedings shall not be dismissed or discharged within sixty (60) days, or (c) schedule or conduct a hearing on the renewal of any license, permit, trademark, tradename or patent necessary for the continuation of any Borrower’s or Guarantor’s business and the staff of such Governmental Body issues a report recommending the termination, revocation, suspension or material, adverse modification of such license, permit, trademark, tradename or patent; (ii) any agreement which is necessary or material to the operation of any Borrower’s or any Guarantor’s business shall be revoked or terminated and not replaced by a substitute acceptable to Agent within thirty (30) days after the date of such revocation or termination, and such revocation or termination and non-replacement would reasonably be expected to have a Material Adverse Effect;

 

10.17.    Seizures.  Other than with respect to de minimis items of Collateral not exceeding $250,000 in the aggregate, any portion of the Collateral shall be seized or taken by a Governmental Body, or any Borrower or any Guarantor or the title and rights of any Borrower, any Guarantor or any Original Owner which is the owner of any material portion of the Collateral shall have become the subject matter of claim, litigation, suit or other proceeding which could reasonably be expected to, in the opinion of Agent, upon final determination, result in impairment or loss of the security provided by this Agreement or the Other Documents;

  

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10.18.    Operations.  The business operations of any Borrowers are interrupted at any time for more than 7 consecutive calendar days, unless such Borrower or Guarantor shall (i) be entitled to receive for such period of interruption, proceeds of business interruption insurance sufficient to assure that its per diem cash needs during such period is at least equal to its average per diem cash needs for the consecutive three month period immediately preceding the initial date of interruption and (ii) receive such proceeds in the amount described in clause (i) preceding not later than thirty (30) days following the initial date of any such interruption; provided, however, that notwithstanding the provisions of clauses (i) and (ii) of this section, an Event of Default shall be deemed to have occurred if such Borrower shall be receiving the proceeds of business interruption insurance for a period of thirty (30) consecutive days; or

 

10.19.    Pension Plans.  An event or condition specified in Sections 7.16 or 9.15 hereof shall occur or exist with respect to any Plan and, as a result of such event or condition, together with all other such events or conditions, any Borrower or any member of the Controlled Group shall incur, or in the opinion of Agent be reasonably likely to incur, a liability to a Plan or the PBGC (or both) which, in the reasonable judgment of Agent, would have a Material Adverse Effect.

 

XI.         LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT.

 

11.1.      Rights and Remedies.

 

(a)           Upon the occurrence of: (i) an Event of Default pursuant to Section 10.7 all Obligations shall be immediately due and payable and this Agreement and the obligation of Lenders to make Advances shall be deemed terminated; and, (ii) any of the other Events of Default and at any time thereafter, at the option of Required Lenders all Obligations shall be immediately due and payable and Lenders shall have the right to terminate this Agreement and to terminate the obligation of Lenders to make Advances; and (iii) without limiting Section 8.2 hereof, any Default under Sections 10.7(vii) hereof arising from a filing of a petition against any Borrower in any involuntary case under any state or federal bankruptcy laws, the obligation of Lenders to make Advances hereunder shall be suspended until such time as such involuntary petition shall be dismissed or an Event of Default under Section 10.7(vii) shall occur.  Upon the occurrence of any Event of Default, Agent shall have the right to exercise any and all rights and remedies provided for herein, under the Other Documents, under the Uniform Commercial Code and at law or equity generally, including the right to foreclose the security interests granted herein and to realize upon any Collateral by any available judicial procedure and/or to take possession of and sell any or all of the Collateral with or without judicial process.  Agent may enter any of any Borrower’s premises or other premises without legal process and without incurring liability to any Borrower therefor, and Agent may thereupon, or at any time thereafter, in its discretion without notice or demand, take the Collateral and remove the same to such place as Agent may deem advisable and Agent may require Borrowers to make the Collateral available to Agent at a convenient place.  With or without having the Collateral at the time or place of sale, Agent may sell the Collateral, or any part thereof, at public or private sale, at any time or place, in one or more sales, at such price or prices, and upon such terms, either for cash, credit or future delivery, as Agent may elect.  Except as to that part of the Collateral which is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Agent shall give Borrowers reasonable notification of such sale or sales, it being agreed that in all events written notice mailed to Borrowing Agent at least ten (10) days prior to such sale or sales is reasonable notification.  At any public sale Agent or any Lender may bid for and become the purchaser, and Agent, any Lender or any other purchaser at any such sale thereafter shall hold the Collateral sold absolutely free from any claim or right of whatsoever kind, including any equity of redemption and all such claims, rights and equities are hereby expressly waived and released by each Borrower.  In connection with the exercise of the foregoing remedies, including the sale of Inventory, Agent is granted a perpetual nonrevocable, royalty free, nonexclusive license and Agent is granted permission to use all of each Borrower’s (a) trademarks, trademark applications, trade styles, trade names, patents, patent applications, copyrights, copyright applications, service marks, licenses, franchises and other proprietary rights which are used or useful in connection with Inventory for the purpose of marketing, advertising for sale and selling or otherwise disposing of such Inventory and (b) Equipment for the purpose of completing the manufacture of unfinished goods.  The cash proceeds realized from the sale of any Collateral shall be applied to the Obligations in the order set forth in Section 11.5 hereof.  Noncash proceeds will only be applied to the Obligations as they are converted into cash.  If any deficiency shall arise, Borrowers shall remain liable to Agent and Lenders therefor.

  

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(b)           To the extent that Applicable Law imposes duties on the Agent to exercise remedies in a commercially reasonable manner, each Borrower acknowledges and agrees that it is not commercially unreasonable for the Agent: (i) to fail to incur expenses reasonably deemed significant by the Agent to prepare Collateral for disposition or otherwise to complete raw material or work in process into finished goods or other finished products for disposition; (ii) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of; (iii) to fail to exercise collection remedies against Customers or other Persons obligated on Collateral or to remove Liens on or any adverse claims against Collateral; (iv) to exercise collection remedies against Customers and other Persons obligated on Collateral directly or through the use of collection agencies and other collection specialists; (v) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature; (vi) to contact other Persons, whether or not in the same business as any Borrower, for expressions of interest in acquiring all or any portion of such Collateral; (vii) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature; (viii) to dispose of Collateral by utilizing internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capacity of doing so, or that match buyers and sellers of assets; (ix) to dispose of assets in wholesale rather than retail markets; (x) to disclaim disposition warranties, such as title, possession or quiet enjoyment, (xi) to purchase insurance or credit enhancements to insure the Agent against risks of loss, collection or disposition of Collateral or to provide to the Agent a guaranteed return from the collection or disposition of Collateral; or (xii) to the extent deemed appropriate by the Agent, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist the Agent in the collection or disposition of any of the Collateral.  Each Borrower acknowledges that the purpose of this Section 11.1(b) is to provide non-exhaustive indications of what actions or omissions by the Agent would not be commercially unreasonable in the Agent’s exercise of remedies against the Collateral and that other actions or omissions by the Agent shall not be deemed commercially unreasonable solely on account of not being indicated in this Section 11.1(b).  Without limitation upon the foregoing, nothing contained in this Section 11.1(b) shall be construed to grant any rights to any Borrower or to impose any duties on Agent that would not have been granted or imposed by this Agreement or by Applicable Law in the absence of this Section 11.1(b).

  

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11.2.      Agent’s Discretion.  Agent shall have the right in its sole discretion to determine which rights, Liens, security interests or remedies Agent may at any time pursue, relinquish, subordinate, or modify or to take any other action with respect thereto and such determination will not in any way modify or affect any of Agent’s or Lenders’ rights hereunder.

 

11.3.      Setoff.  Subject to Section 14.12, in addition to any other rights which Agent or any Lender may have under Applicable Law, upon the occurrence of an Event of Default hereunder, Agent and such Lender shall have a right, immediately and without notice of any kind, to apply any Borrower’s property held by Agent and such Lender to reduce the Obligations and to exercise any and all rights of setoff which may be available to Agent and such Lender with respect to any deposits held by Agent or such Lender.

 

11.4.      Rights and Remedies not Exclusive.  The enumeration of the foregoing rights and remedies is not intended to be exhaustive and the exercise of any rights or remedy shall not preclude the exercise of any other right or remedies provided for herein or otherwise provided by law, all of which shall be cumulative and not alternative.

 

11.5.      Allocation of Payments After Event of Default.  Notwithstanding any other provisions of this Agreement to the contrary, after the occurrence and during the continuance of an Event of Default, all amounts collected or received by the Agent on account of the Obligations (including without limitation any amounts outstanding under any of the Other Documents ), or in respect of the Collateral may, at Agent’s discretion, be paid over or delivered as follows:

 

FIRST, to the payment of all reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees) of the Agent in connection with enforcing its rights and the rights of the Lenders under this Agreement and the Other Documents and any protective advances made by the Agent with respect to the Collateral under or pursuant to the terms of this Agreement;

 

SECOND, to payment of any fees owed to the Agent;

 

THIRD, to the payment of all reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees) of each of the Lenders to the extent owing to such Lender pursuant to the terms of this Agreement;

 

FOURTH, to the payment of all of the Obligations consisting of accrued interest on account of the Swing Loans;

 

FIFTH, to the payment of the outstanding principal amount of the Obligations consisting of Swing Loans;

 

SIXTH, to the payment of all of the Obligations consisting of accrued fees and interest with respect to the Advances (other than interest on the Swing Loans) or otherwise provided for in this Agreement or the Other Documents;

  

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SEVENTH, to the payment of the outstanding principal amount of the Advances (other than the Swing Loans), including the payment or cash collateralization of any outstanding Letters of Credit in accordance with Section 3.2(b) hereof, and all Hedge Liabilities;

 

EIGHTH, to all other Obligations provided for in this Agreement or the Other Documents or otherwise which shall have become due and payable and not repaid pursuant to clauses “FIRST” through “SEVENTH” above, and

 

NINTH, to the payment of the surplus, if any, to whoever may be lawfully entitled to receive such surplus.

 

In carrying out the foregoing, (i) amounts received shall be applied in the numerical order provided until exhausted prior to application to the next succeeding category; (ii) each of the Lenders shall receive an amount equal to its Ratable Share of amounts available to be applied pursuant to clauses “SIXTH”, “SEVENTH” and “EIGHTH” above; and (iii) to the extent that any amounts available for distribution pursuant to clause “SEVENTH” above are attributable to the issued but undrawn amount of outstanding Letters of Credit, such amounts shall be held by the Agent as cash collateral as provided for in Section 3.2(b) hereof and applied (A) first, to reimburse the Issuer from time to time for any drawings under such Letters of Credit and (B) then, following the expiration of all Letters of Credit, to all other obligations of the types described in clauses “SEVENTH” and “EIGHTH” above in the manner provided in this Section 11.5.

 

XII.       WAIVERS AND JUDICIAL PROCEEDINGS.

 

12.1.      Waiver of Notice.  Each Borrower hereby waives notice of non-payment of any of the Receivables, demand, presentment, protest and notice thereof with respect to any and all instruments, notice of acceptance hereof, notice of loans or advances made, credit extended, Collateral received or delivered, or any other action taken in reliance hereon, and all other demands and notices of any description, except such as are expressly provided for herein.

 

12.2.      Delay.  No delay or omission on Agent’s or any Lender’s part in exercising any right, remedy or option shall operate as a waiver of such or any other right, remedy or option or of any Default or Event of Default.

 

12.3.      Jury Waiver.  EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT, ANY OTHER DOCUMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT, ANY OTHER DOCUMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

  

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XIII.      EFFECTIVE DATE AND TERMINATION.

 

13.1.      Term.  This Agreement, which shall inure to the benefit of and shall be binding upon the respective successors and permitted assigns of each Borrower, Agent and each Lender, shall become effective on the date hereof and shall continue in full force and effect until April 15, 2016 (the “Term”) unless sooner terminated as herein provided.  Borrowers may terminate this Agreement at any time upon thirty (30) days’ prior written notice (which notice shall be revocable) upon payment in full of the Obligations.

 

13.2.      Termination.  The termination of the Agreement shall not affect Agent’s, Issuer’s or any Lender’s rights, or any of the Obligations having their inception prior to the effective date of such termination or any Obligations which pursuant to the terms hereof continue to accrue after, and the provisions hereof shall continue to be fully operative until all transactions entered into, rights or interests created or Obligations have been fully and indefeasibly paid, disposed of, concluded or liquidated.  The security interests, Liens and rights granted to Agent and Lenders hereunder and the financing statements filed hereunder shall continue in full force and effect, notwithstanding the termination of this Agreement or the fact that Borrowers’ Account may from time to time be temporarily in a zero or credit position, until all of the Obligations of each Borrower have been indefeasibly paid and performed in full after the termination of this Agreement or each Borrower has furnished Agent and Lenders with an indemnification satisfactory to Agent and Lenders with respect thereto.  Accordingly, each Borrower waives any rights which it may have under the Uniform Commercial Code to demand the filing of termination statements with respect to the Collateral, and Agent shall not be required to send such termination statements to each Borrower, or to file them with any filing office, unless and until this Agreement shall have been terminated in accordance with its terms and all Obligations have been indefeasibly paid in full in immediately available funds. All representations, warranties, covenants, waivers and agreements contained herein shall survive termination hereof until all Obligations are indefeasibly paid and performed in full.

 

XIV.      REGARDING AGENT.

 

14.1.      Appointment.  Each Lender hereby designates PNC to act as Agent for such Lender under this Agreement and the Other Documents.  Each Lender hereby irrevocably authorizes Agent to take such action on its behalf under the provisions of this Agreement and the Other Documents and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to or required of Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto and Agent shall hold all Collateral, payments of principal and interest, fees (except the fees set forth in 3.4(a) and the Fee Letter), charges and collections (without giving effect to any collection days) received pursuant to this Agreement, for the ratable benefit of Lenders.  Agent may perform any of its duties hereunder by or through its agents or employees.  As to any matters not expressly provided for by this Agreement (including collection of the Note) Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions shall be binding; provided, however, that Agent shall not be required to take any action which exposes Agent to liability or which is contrary to this Agreement or the Other Documents or Applicable Law unless Agent is furnished with an indemnification reasonably satisfactory to Agent with respect thereto.

  

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14.2.      Nature of Duties.  Agent shall have no duties or responsibilities except those expressly set forth in this Agreement and the Other Documents.  Neither Agent nor any of its officers, directors, employees or agents shall be (i) liable for any action taken or omitted by them as such hereunder or in connection herewith, unless caused by their gross (not mere) negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment), or (ii) responsible in any manner for any recitals, statements, representations or warranties made by any Borrower or any officer thereof contained in this Agreement, or in any of the Other Documents or in any certificate, report, statement or other document referred to or provided for in, or received by Agent under or in connection with, this Agreement or any of the Other Documents or for the value, validity, effectiveness, genuineness, due execution, enforceability or sufficiency of this Agreement, or any of the Other Documents or for any failure of any Borrower to perform its obligations hereunder.  Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any of the Other Documents, or to inspect the properties, books or records of any Borrower.  The duties of Agent as respects the Advances to Borrowers shall be mechanical and administrative in nature; Agent shall not have by reason of this Agreement a fiduciary relationship in respect of any Lender; and nothing in this Agreement, expressed or implied, is intended to or shall be so construed as to impose upon Agent any obligations in respect of this Agreement except as expressly set forth herein.

 

14.3.      Lack of Reliance on Agent and Resignation.  Independently and without reliance upon Agent or any other Lender, each Lender has made and shall continue to make (i) its own independent investigation of the financial condition and affairs of each Borrower and each Guarantor in connection with the making and the continuance of the Advances hereunder and the taking or not taking of any action in connection herewith, and (ii) its own appraisal of the creditworthiness of each Borrower and each Guarantor.  Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before making of the Advances or at any time or times thereafter except as shall be provided by any Borrower pursuant to the terms hereof.  Agent shall not be responsible to any Lender for any recitals, statements, information, representations or warranties herein or in any agreement, document, certificate or a statement delivered in connection with or for the execution, effectiveness, genuineness, validity, enforceability, collectability or sufficiency of this Agreement or any Other Document, or of the financial condition of any Borrower or any Guarantor, or be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement, the Note, the Other Documents or the financial condition of any Borrower, or the existence of any Event of Default or any Default.

  

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Agent may resign on sixty (60) days’ written notice to each of Lenders and Borrowing Agent and upon such resignation, the Required Lenders will promptly designate a successor Agent reasonably satisfactory to Borrowers (provided that no such approval by Borrowers shall be required (i) in any case where the successor Agent is one of the Lenders or (ii) after the occurrence and during the continuance of any Event of Default).  Any such successor Agent shall succeed to the rights, powers and duties of Agent, and shall in particular to succeed to all of Agent’s right, title and interest in and to all of the Liens in the Collateral securing the Obligations created hereunder or any Other Document (including Pledge Agreement and all account control agreements), and the term “Agent” shall mean such successor agent effective upon its appointment, and the former Agent’s rights, powers and duties as Agent shall be terminated, without any other or further act or deed on the part of such former Agent.  However, notwithstanding the foregoing, if at the time of the effectiveness of the new Agent’s appointment, any further actions need to be taken in order to provide for the legally binding and valid transfer of any Liens in the Collateral from former Agent to new Agent and/or for the perfection of any Liens in the Collateral as held by new Agent or it is otherwise not then possible for new Agent to become the holder of a fully valid, enforceable and perfected Lien as to any of the Collateral, former Agent shall continue to hold such Liens solely as agent for perfection of such Liens on behalf of new Agent until such time as new Agent can obtain a fully valid, enforceable and perfected Lien on all Collateral, provided that Agent shall not be required to or have any liability or responsibility to take any further actions after such date as such agent for perfection to continue the perfection of any such Liens (other than to forego from taking any affirmative action to release any such Liens).  After any Agent’s resignation as Agent, the provisions of this Article XIV shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement (and in the event resigning Agent continues to hold any Liens pursuant to the provisions of the immediately preceding sentence, the provisions of this Article XIV shall inure to its benefit a to any actions taken or omitted to be taken by it in connection with such Liens).

 

14.4.      Certain Rights of Agent.  If Agent shall request instructions from Lenders with respect to any act or action (including failure to act) in connection with this Agreement or any Other Document, Agent shall be entitled to refrain from such act or taking such action unless and until Agent shall have received instructions from the Required Lenders; and Agent shall not incur liability to any Person by reason of so refraining.  Without limiting the foregoing, Lenders shall not have any right of action whatsoever against Agent as a result of its acting or refraining from acting hereunder in accordance with the instructions of the Required Lenders.

 

14.5.      Reliance.  Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, statement, certificate, telex, teletype or telecopier message, cablegram, order or other document or telephone message believed by it to be genuine and correct and to have been signed, sent or made by the proper person or entity, and, with respect to all legal matters pertaining to this Agreement and the Other Documents and its duties hereunder, upon advice of counsel selected by it.  Agent may employ agents and attorneys-in-fact and shall not be liable for the default or misconduct of any such agents or attorneys-in-fact selected by Agent with reasonable care.

  

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14.6.      Notice of Default.  Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder or under the Other Documents, unless Agent has received notice from a Lender or Borrowing Agent referring to this Agreement or the Other Documents, describing such Default or Event of Default and stating that such notice is a “notice of default”.  In the event that Agent receives such a notice, Agent shall give notice thereof to Lenders.  Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders; provided, that, unless and until Agent shall have received such directions, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of Lenders.

 

14.7.      Indemnification.  To the extent Agent is not reimbursed and indemnified by Borrowers, each Lender will reimburse and indemnify Agent in proportion to its respective portion of the Advances (or, if no Advances are outstanding, according to its Revolving Commitment Percentage), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against Agent in performing its duties hereunder, or in any way relating to or arising out of this Agreement or any Other Document; provided that, Lenders shall not be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from Agent’s gross (not mere) negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment).

 

14.8.      Agent in its Individual Capacity.  With respect to the obligation of Agent to lend under this Agreement, the Advances made by it shall have the same rights and powers hereunder as any other Lender and as if it were not performing the duties as Agent specified herein; and the term “Lender” or any similar term shall, unless the context clearly otherwise indicates, include Agent in its individual capacity as a Lender.  Agent may engage in business with any Borrower as if it were not performing the duties specified herein, and may accept fees and other consideration from any Borrower for services in connection with this Agreement or otherwise without having to account for the same to Lenders.

 

14.9.      Delivery of Documents.  To the extent Agent receives financial statements required under Sections 9.7, 9.8, 9.9, 9.12 and 9.13 or Borrowing Base Certificates from any Borrower pursuant to the terms of this Agreement which any Borrower is not obligated to deliver to each Lender, Agent will promptly furnish such documents and information to Lenders.

 

14.10.    Borrowers’ Undertaking to Agent.  Without prejudice to their respective obligations to Lenders under the other provisions of this Agreement, each Borrower hereby undertakes with Agent to pay to Agent from time to time on demand all amounts from time to time due and payable by it for the account of Agent or Lenders or any of them pursuant to this Agreement to the extent not already paid.  Any payment made pursuant to any such demand shall pro tanto satisfy the relevant Borrower’s obligations to make payments for the account of Lenders or the relevant one or more of them pursuant to this Agreement.

  

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14.11.    No Reliance on Agent’s Customer Identification Program.  Each Lender acknowledges and agrees that neither such Lender, nor any of its Affiliates, participants or assignees, may rely on the Agent to carry out such Lender’s, Affiliate’s, participant’s or assignee’s customer identification program, or other obligations required or imposed under or pursuant to the USA PATRIOT Act or the regulations thereunder, including the regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the “CIP Regulations”), or any other Anti-Terrorism Law, including any programs involving any of the following items relating to or in connection with any Borrower, its Affiliates or its agents, this Agreement, the Other Documents or the transactions hereunder or contemplated hereby: (1) any identity verification procedures, (2) any record-keeping, (3) comparisons with government lists, (4) customer notices or (5) other procedures required under the CIP Regulations or such other laws.

 

14.12.    Other Agreements.  Each of the Lenders agrees that it shall not, without the express consent of Agent, and that it shall, to the extent it is lawfully entitled to do so, upon the request of Agent, set off against the Obligations, any amounts owing by such Lender to any Borrower or any deposit accounts of any Borrower now or hereafter maintained with such Lender.  Anything in this Agreement to the contrary notwithstanding, each of the Lenders further agrees that it shall not, unless specifically requested to do so by Agent, take any action to protect or enforce its rights arising out of this Agreement or the Other Documents, it being the intent of Lenders that any such action to protect or enforce rights under this Agreement and the Other Documents shall be taken in concert and at the direction or with the consent of Agent or Required Lenders.

 

14.13.    Lenders’ Agreements Regarding Intercreditor Agreement.  As between Agent on the one hand and Lenders on the other (and without creating any third party beneficiary rights in favor of any Borrower or any Subsidiary of any Borrower), (i) each Lender hereby acknowledges that it has received and reviewed the Intercreditor Agreement and agrees to be bound by the terms thereof, (ii) each Lender (and each Person that becomes a Lender hereunder pursuant to Section 16.3) hereby authorizes and directs Agent to enter into the Intercreditor Agreement on behalf of such Lender and agrees that Agent may take such action on its behalf as is contemplated by the terms of the Intercreditor Agreement, (iii) each Lender hereby agrees that, notwithstanding anything herein to the contrary, prior to the Term Debt Obligations Payment Date, all rights and remedies of the Agent and the Lenders with respect to the Collateral including the Term Debt Priority Collateral shall be subject to the terms of the Intercreditor Agreement

 

XV.       BORROWING AGENCY.

 

15.1.      Borrowing Agency Provisions.

 

(a)           Each Borrower hereby irrevocably designates Borrowing Agent to be its attorney and agent and in such capacity to (i) borrow, (ii) request advances, (iii) request the issuance of Letters of Credit, (iv) sign and endorse notes, (v) execute and deliver all instruments, documents, applications, security agreements, reimbursement agreements and letter of credit agreements for Letters of Credit and all other certificates, notice, writings and further assurances now or hereafter required hereunder, (vi) make elections regarding interest rates, (vii) give instructions regarding Letters of Credit and agree with Issuer upon any amendment, extension or renewal of any Letter of Credit and (viii) otherwise take action under and in connection with this Agreement and the Other Documents, all on behalf of and in the name such Borrower or Borrowers, and hereby authorizes Agent to pay over or credit all loan proceeds hereunder in accordance with the request of Borrowing Agent.

  

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(b)           The handling of this credit facility as a co-borrowing facility with a borrowing agent in the manner set forth in this Agreement is solely as an accommodation to Borrowers and at their request.  Neither Agent nor any Lender shall incur liability to Borrowers as a result thereof.  To induce Agent and Lenders to do so and in consideration thereof, each Borrower hereby indemnifies Agent and each Lender and holds Agent and each Lender harmless from and against any and all liabilities, expenses, losses, damages and claims of damage or injury asserted against Agent or any Lender by any Person arising from or incurred by reason of the handling of the financing arrangements of Borrowers as provided herein, reliance by Agent or any Lender on any request or instruction from Borrowing Agent or any other action taken by Agent or any Lender with respect to this Section 15.1 except due to willful misconduct or gross (not mere) negligence by the indemnified party (as determined by a court of competent jurisdiction in a final and non-appealable judgment).

 

(c)           All Obligations shall be joint and several, and each Borrower shall make payment upon the maturity of the Obligations by acceleration or otherwise, and such obligation and liability on the part of each Borrower shall in no way be affected by any extensions, renewals and forbearance granted to Agent or any Lender to any Borrower, failure of Agent or any Lender to give any Borrower notice of borrowing or any other notice, any failure of Agent or any Lender to pursue or preserve its rights against any Borrower, the release by Agent or any Lender of any Collateral now or thereafter acquired from any Borrower, and such agreement by each Borrower to pay upon any notice issued pursuant thereto is unconditional and unaffected by prior recourse by Agent or any Lender to the other Borrowers or any Collateral for such Borrower’s Obligations or the lack thereof.  Each Borrower waives all suretyship defenses.

 

15.2.      Waiver of Subrogation.  Each Borrower expressly waives any and all rights of subrogation, reimbursement, indemnity, exoneration, contribution of any other claim which such Borrower may now or hereafter have against the other Borrowers or other Person directly or contingently liable for the Obligations hereunder, or against or with respect to the other Borrowers’ property (including, without limitation, any property which is Collateral for the Obligations), arising from the existence or performance of this Agreement, until termination of this Agreement and repayment in full of the Obligations.

 

XVI.      MISCELLANEOUS.

 

16.1.      Governing Law.  This Agreement and each Other Document (unless and except to the extent expressly provided otherwise in any such Other Document), and all matters relating hereto or thereto or arising herefrom or therefrom (whether arising under contract law, tort law or otherwise) shall be governed by and construed in accordance with the laws of the State of New York applied to contracts to be performed wholly within the State of New York.  Any judicial proceeding brought by or against any Borrower with respect to any of the Obligations, this Agreement, the Other Documents or any related agreement may be brought in any court of competent jurisdiction in the State of New York, United States of America, and, by execution and delivery of this Agreement, each Borrower accepts for itself and in connection with its properties, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement.  Each Borrower hereby waives personal service of any and all process upon it and consents that all such service of process may be made by certified or registered mail (return receipt requested) directed to Borrowing Agent at its address set forth in Section 16.6 and service so made shall be deemed completed five (5) days after the same shall have been so deposited in the mails of the United States of America, or, at the Agent’s option, by service upon Borrowing Agent which each Borrower irrevocably appoints as such Borrower’s Agent for the purpose of accepting service within the State of New York.  Nothing herein shall affect the right to serve process in any manner permitted by law or shall limit the right of Agent or any Lender to bring proceedings against any Borrower in the courts of any other jurisdiction.  Each Borrower waives any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens.  Each Borrower waives the right to remove any judicial proceeding brought against such Borrower in any state court to any federal court.  Any judicial proceeding by any Borrower against Agent or any Lender involving, directly or indirectly, any matter or claim in any way arising out of, related to or connected with this Agreement or any related agreement, shall be brought only in a federal or state court located in the County of New York, State of New York.

  

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16.2.      Entire Understanding.

 

(a)           This Agreement and the documents executed concurrently herewith contain the entire understanding between each Borrower, Agent and each Lender and supersedes all prior agreements and understandings, if any, relating to the subject matter hereof.  Any promises, representations, warranties or guarantees not herein contained and hereinafter made shall have no force and effect unless in writing, signed by each Borrower’s, Agent’s and each Lender’s respective officers.  Neither this Agreement nor any portion or provisions hereof may be changed, modified, amended, waived, supplemented, discharged, cancelled or terminated orally or by any course of dealing, or in any manner other than by an agreement in writing, signed by the party to be charged.  Each Borrower acknowledges that it has been advised by counsel in connection with the execution of this Agreement and Other Documents and is not relying upon oral representations or statements inconsistent with the terms and provisions of this Agreement.

 

(b)           The Required Lenders (or Agent with the consent in writing of the Required Lenders) and Borrowers may, subject to the provisions of this Section 16.2 (b), from time to time enter into written supplemental agreements to this Agreement or the Other Documents executed by Borrowers, for the purpose of adding or deleting any provisions or otherwise changing, varying or waiving in any manner the rights of Lenders, Agent or Borrowers thereunder or the conditions, provisions or terms thereof or waiving any Event of Default thereunder, but only to the extent specified in such written agreements; provided, however, that no such supplemental agreement shall:

 

(i)           increase the Revolving Commitment Percentage or Revolving Credit Commitment Amount of any Lender without the consent of such Lender or, except in connection with any Borrower Revolver Increase, increase the Maximum Revolving Advance Amount without the consent of all Lenders (other than Defaulting Lenders);

 

(ii)          extend the Term or the maturity of any Note or the due date for any amount payable hereunder, or decrease the rate of interest or reduce any fee payable by Borrowers to Lenders pursuant to this Agreement without the consent of each Lender directly affected thereby other than any waiver of the application of the Default Rate hereunder;

  

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(iii)         alter, amend or modify the definition of the term Required Lenders, Section 2.20(a), Section 2.20(b), any provision regarding the pro rata treatment of or sharing of payments by the Lenders or requiring all Lenders to authorize the taking of any action or this Section 16.2(b);

 

(iv)         release any Collateral during any calendar year (other than in accordance with the provisions of this Agreement) having an aggregate value in excess of $1,000,000 without the consent of all of the Lenders (other than Defaulting Lenders) (except for any release of Liens with respect to Collateral that is part of the Term Debt Priority Collateral if and to the extent required under the Intercreditor Agreement);

 

(v)          change the rights and duties of Agent or Issuer without the consent of Agent or each Issuer (as applicable);

 

(vi)         permit any Revolving Advance or Swing Loan to be made if after giving effect thereto the total of Revolving Advances and Swing Loans outstanding hereunder would exceed the Formula Amount for more than thirty (30) consecutive Business Days or exceed one hundred five percent (105%) of the Formula Amount without the consent of all of the Lenders (other than Defaulting Lenders);

 

(vii)        either (x) increase the Advance Rates above the Advance Rates in effect on the Closing Date, or (y) make any modification to the definitions of Eligible Receivable, Eligible Unbilled Receivables Sublimit or Eligible Project Receivables, in any such case without the consent of all of the Lenders (other than Defaulting Lenders); or

 

(viii)       release any Borrower or Guarantor without the consent of all of the Lenders (other than Defaulting Lenders).

 

Any such supplemental agreement shall apply equally to each Lender and shall be binding upon Borrowers, Lenders and Agent and all future holders of the Obligations.  In the case of any waiver, Borrowers, Agent and Lenders shall be restored to their former positions and rights, and any Event of Default waived shall be deemed to be cured and not continuing, but no waiver of a specific Event of Default shall extend to any subsequent Event of Default (whether or not the subsequent Event of Default is the same as the Event of Default which was waived), or impair any right consequent thereon.

 

Notwithstanding (a) the existence of a Default or an Event of Default, (b) that any of the other applicable conditions precedent set forth in Section 8.2 hereof have not been satisfied or (c) any other provision of this Agreement, Agent may at its discretion and without the consent of the Required Lenders, voluntarily permit the outstanding Revolving Advances and Swing Loans at any time to exceed the Formula Amount by up to five percent (5%) of the Formula Amount for up to thirty (30) consecutive Business Days (the “Out-of-Formula Loans”).  If Agent is willing in its sole and absolute discretion to make such Out-of-Formula Loans, such Out-of-Formula Loans shall be payable on demand and shall bear interest at the Default Rate for Revolving Advances consisting of Domestic Rate Loans; provided that, if Agent and/or Lenders do make Out-of-Formula Loans, neither Agent nor Lenders shall be deemed thereby to have changed the limits of Section 2.1(a) or 2.4.  For purposes of this paragraph, the discretion granted to Agent hereunder shall not preclude involuntary overadvances that may result from time to time due to the fact that the Formula Amount was unintentionally exceeded for any reason, including, but not limited to, Collateral previously deemed to be “Eligible Receivables” becomes ineligible, collections of Receivables applied to reduce outstanding Revolving Advances are thereafter returned for insufficient funds.  In the event Agent involuntarily permits the outstanding Revolving Advances to exceed the Formula Amount by more than five percent (5%), Agent shall use its efforts to have Borrowers decrease such excess in as expeditious a manner as is practicable under the circumstances and not inconsistent with the reason for such excess.  Revolving Advances made after Agent has determined the existence of involuntary overadvances shall be deemed to be involuntary overadvances and shall be decreased in accordance with the preceding sentence.

  

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In addition to (and not in substitution of) the discretionary Revolving Advances permitted above in this Section 16.2, the Agent is hereby authorized by Borrowers and the Lenders, from time to time in the Agent’s sole discretion, (A) after the occurrence and during the continuation of a Default or an Event of Default, or (B) at any time that any of the other applicable conditions precedent set forth in Section 8.2 hereof have not been satisfied, to make Revolving Advances to Borrowers on behalf of the Lenders which the Agent, in its reasonable business judgment, deems necessary or desirable (a) to preserve or protect the Collateral, or any portion thereof, (b) to enhance the likelihood of, or maximize the amount of, repayment of the Advances and other Obligations, or (c) to pay any other amount chargeable to Borrowers pursuant to the terms of this Agreement; provided, that at any time after giving effect to any such Revolving Advances the outstanding Revolving Advances do not exceed one hundred and five percent (105%) of the Formula Amount.

 

16.3.      Successors and Assigns; Participations; New Lenders.

 

(a)           This Agreement shall be binding upon and inure to the benefit of Borrowers, Agent, each Lender, all future holders of the Obligations and their respective successors and assigns, except that no Borrower may assign or transfer any of its rights or obligations under this Agreement without the prior written consent of Agent and each Lender.

 

(b)           Each Borrower acknowledges that in the regular course of commercial banking business one or more Lenders may at any time and from time to time sell participating interests in the Advances to other financial institutions (each such transferee or purchaser of a participating interest, a “Participant”); provided that no Lender may grant any such Participant any rights to consent with respect to any amendments, supplement, modification or waiver with respect to this Agreement or any Other Documents except that such Participant may be granted consent rights with respect to any amendments, supplement, modification or waiver requiring the consent of such Lender or of all Lenders under Section 16.2(b)(i), (ii) or (iv) (but provided further that if the Lender granting such participation is or at any time becomes a Defaulting Lender, no such Participant of any such Lender shall have any rights to consent greater than the voting rights of such Lender under such circumstances).  Each Participant may exercise all rights of payment (including rights of set-off) with respect to the portion of such Advances held by it or other Obligations payable hereunder as fully as if such Participant were the direct holder thereof provided that Borrowers shall not be required to pay to any Participant more than the amount which it would have been required to pay to Lender which granted an interest in its Advances or other Obligations payable hereunder to such Participant had such Lender retained such interest in the Advances hereunder or other Obligations payable hereunder and in no event shall Borrowers be required to pay any such amount arising from the same circumstances and with respect to the same Advances or other Obligations payable hereunder to both such Lender and such Participant.  Each Borrower hereby grants to any Participant a continuing security interest in any deposits, moneys or other property actually or constructively held by such Participant as security for the Participant’s interest in the Advances.

  

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(c)           Any Lender, with the consent of Agent which shall not be unreasonably withheld or delayed, and with the consent of Borrowing Agent which shall not be unreasonably withheld or delayed (provided that no consent of the Borrowers shall be required for an assignment to a Lender, an affiliate of a Lender, an Approved Fund (as defined below) or, if an Event of Default has occurred and is continuing, any other Person; and provided, further, that the Borrowing Agent shall be deemed to have consented to any such assignment unless the Borrowing Agent shall object thereto by written notice to Agent within five Business Days after having received notice thereof) may sell, assign or transfer all or any part of its rights and obligations under or relating to Advances under this Agreement and the Other Documents to one or more additional banks or financial institutions and one or more additional banks or financial institutions may commit to make Advances hereunder (each a “Purchasing Lender”), in minimum amounts of not less than $5,000,000, pursuant to a Commitment Transfer Supplement, executed by a Purchasing Lender, the transferor Lender, and Agent and delivered to Agent for recording.  Upon such execution, delivery, acceptance and recording, from and after the transfer effective date determined pursuant to such Commitment Transfer Supplement, (i) Purchasing Lender thereunder shall be a party hereto and, to the extent provided in such Commitment Transfer Supplement, have the rights and obligations of a Lender thereunder with a Revolving Commitment Percentage as set forth therein, and (ii) the transferor Lender thereunder shall, to the extent provided in such Commitment Transfer Supplement, be released from its obligations under this Agreement, the Commitment Transfer Supplement creating a novation for that purpose.  Such Commitment Transfer Supplement shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of such Purchasing Lender and the resulting adjustment of the Revolving Commitment Percentages arising from the purchase by such Purchasing Lender of all or a portion of the rights and obligations of such transferor Lender under this Agreement and the Other Documents.  Each Borrower hereby consents to the addition of such Purchasing Lender and the resulting adjustment of the Revolving Commitment Percentages arising from the purchase by such Purchasing Lender of all or a portion of the rights and obligations of such transferor Lender under this Agreement and the Other Documents.  Borrowers shall execute and deliver such further documents and do such further acts and things in order to effectuate the foregoing.  For the purposes of this Section 16.3(c), “Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an affiliate of a Lender or (c) an entity or an affiliate of an entity that administers or manages a Lender

  

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(d)           Any Lender, with the consent of Agent which shall not be unreasonably withheld or delayed, may directly or indirectly sell, assign or transfer all or any portion of its rights and obligations under or relating to Revolving Advances under this Agreement and the Other Documents to an entity, whether a corporation, partnership, trust, limited liability company or other entity that (i) is engaged in making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and (ii) is administered, serviced or managed by the assigning Lender or an Affiliate of such Lender (a “Purchasing CLO” and together with each Participant and Purchasing Lender, each a “Transferee” and collectively the “Transferees”), pursuant to a Commitment Transfer Supplement modified as appropriate to reflect the interest being assigned (“Modified Commitment Transfer Supplement”), executed by any intermediate purchaser, the Purchasing CLO, the transferor Lender, and Agent as appropriate and delivered to Agent for recording.  Upon such execution and delivery, from and after the transfer effective date determined pursuant to such Modified Commitment Transfer Supplement, (i) Purchasing CLO thereunder shall be a party hereto and, to the extent provided in such Modified Commitment Transfer Supplement, have the rights and obligations of a Lender thereunder and (ii) the transferor Lender thereunder shall, to the extent provided in such Modified Commitment Transfer Supplement, be released from its obligations under this Agreement, the Modified Commitment Transfer Supplement creating a novation for that purpose.  Such Modified Commitment Transfer Supplement shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of such Purchasing CLO.  Each Borrower hereby consents to the addition of such Purchasing CLO.  Borrowers shall execute and deliver such further documents and do such further acts and things in order to effectuate the foregoing.

 

(e)           Agent shall maintain at its address a copy of each Commitment Transfer Supplement and Modified Commitment Transfer Supplement delivered to it and a register (the “Register”) for the recordation of the names and addresses of each Lender and the outstanding principal, accrued and unpaid interest and other fees due hereunder.  The entries in the Register shall be conclusive, in the absence of manifest error, and each Borrower, Agent and Lenders may treat each Person whose name is recorded in the Register as the owner of the Advance recorded therein for the purposes of this Agreement.  The Register shall be available for inspection by Borrowing Agent or any Lender at any reasonable time and from time to time upon reasonable prior notice.  Agent shall receive a fee in the amount of $3,500 payable by the applicable Purchasing Lender and/or Purchasing CLO upon the effective date of each transfer or assignment (other than to an intermediate purchaser) to such Purchasing Lender and/or Purchasing CLO.

 

(f)            Each Borrower authorizes each Lender to disclose to any Transferee and any prospective Transferee any and all financial information in such Lender’s possession concerning such Borrower which has been delivered to such Lender by or on behalf of such Borrower pursuant to this Agreement or in connection with such Lender’s credit evaluation of such Borrower.

  

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(g)           In the event that any Lender (i) gives notice under Section 3.8, (ii) requests compensation under Section 3.7, or requires the Borrower to pay any additional amount to any Lender or any Official Body for the account of any Lender pursuant to Section 3.10, (iii) is a Defaulting Lender, (iv) becomes subject to the control of an Governmental Body (other than normal and customary supervision), or (v) Agent requests the consent of a Lender pursuant to Section 16.2 and such consent is denied, then either Borrower, at its sole expense upon notice to such Lender and the Administrative Agent, or Agent, at its option, may require such Lender to assign, without recourse (in accordance with the otherwise applicable requirements of this Section 16.3), its Revolving Commitment and interest in the Advances to Agent or to another Lender or to any other Person designated by the Agent (the “Designated Lender”), for a price equal to (i) the then outstanding principal amount thereof plus (ii) accrued and unpaid interest and fees due such Lender, which interest and fees shall be paid when collected from Borrowers; provided that in the case of any assignment resulting from a claim for increased compensation or amounts payable under Section 3.7 or 3.10, the assignment to the Designated Lenders must result in a reduction in such compensation or amounts payable.  In the event Borrower or Agent elects to require any Lender to assign its interest to Agent or to the Designated Lender in accordance with this paragraph, Agent will so notify such Lender and such Lender will assign its interest to Agent or the Designated Lender no later than five (5) days following receipt of such notice pursuant to a Commitment Transfer Supplement executed by such Lender, Agent or the Designated Lender, as appropriate, and Agent; provided that a Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling Borrower or Agent to require such assignment and delegation cease to apply.

 

16.4.      Application of Payments.  Agent shall have the continuing and exclusive right to apply or reverse and re-apply any payment and any and all proceeds of Collateral to any portion of the Obligations.  To the extent that any Borrower makes a payment or Agent or any Lender receives any payment or proceeds of the Collateral for any Borrower’s benefit, which are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, debtor in possession, receiver, custodian or any other party under any bankruptcy law, common law or equitable cause, then, to such extent, the Obligations or part thereof intended to be satisfied shall be revived and continue as if such payment or proceeds had not been received by Agent or such Lender.

 

16.5.      Indemnity.  Each Borrower shall indemnify Agent, Issuer, each Lender and each of their respective officers, directors, Affiliates, attorneys, employees and agents from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any kind or nature whatsoever (including fees and disbursements of counsel) which may be imposed on, incurred by, or asserted against Agent, Issuer or any Lender in any claim, litigation, proceeding or investigation instituted or conducted by any Governmental Body or instrumentality or any other Person with respect to any aspect of, or any transaction contemplated by, or referred to in, or any matter related to, this Agreement or the Other Documents, whether or not Agent, Issuer or any Lender is a party thereto, except to the extent that any of the foregoing arises out of the willful misconduct or gross negligence of the party being indemnified (as determined by a court of competent jurisdiction in a final and non-appealable judgment).  Without limiting the generality of the foregoing, this indemnity shall extend to any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any kind or nature whatsoever (including fees and disbursements of counsel) asserted against or incurred by any of the indemnitees described above in this Section 16.5 by any Person under any Environmental Laws or similar laws by reason of any Borrower’s or any other Person’s failure to comply with laws applicable to solid or hazardous waste materials, including Hazardous Substances and Hazardous Waste, or other Toxic Substances.  Additionally, if any Taxes (other than Excluded Taxes but including any Other Taxes) shall be payable by Agent, Lenders or Borrowers on account of the execution or delivery of this Agreement, or the execution, delivery, issuance or recording of any of the Other Documents, or the creation or repayment of any of the Obligations hereunder, by reason of any Applicable Law now or hereafter in effect, Borrowers will pay (or will promptly reimburse Agent and Lenders for payment of) all such taxes, including interest and penalties thereon, and will indemnify and hold the indemnitees described above in this Section 16.5 harmless from and against all liability in connection therewith.

  

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16.6.      Notice.  Any notice or request hereunder may be given to Borrowing Agent or any Borrower or to Agent or any Lender at their respective addresses set forth below or at such other address as may hereafter be specified in a notice designated as a notice of change of address under this Section.  Any notice, request, demand, direction or other communication (for purposes of this Section 16.6 only, a “Notice”) to be given to or made upon any party hereto under any provision of this Loan Agreement shall be given or made by telephone or in writing (which includes by means of electronic transmission (i.e., “e-mail”) or facsimile transmission or by setting forth such Notice on a site on the World Wide Web (a “Website Posting”) if Notice of such Website Posting (including the information necessary to access such site) has previously been delivered to the applicable parties hereto by another means set forth in this Section 16.6) in accordance with this Section 16.6.  Any such Notice must be delivered to the applicable parties hereto at the addresses and numbers set forth under their respective names on Section 16.6 hereof or in accordance with any subsequent unrevoked Notice from any such party that is given in accordance with this Section 16.6.  Any Notice shall be effective:

 

(a)           In the case of hand-delivery, when delivered;

 

(b)           If given by mail, four days after such Notice is deposited with the United States Postal Service, with first-class postage prepaid, return receipt requested;

 

(c)           In the case of a telephonic Notice, when a party is contacted by telephone, if delivery of such telephonic Notice is confirmed no later than the next Business Day by hand delivery, a facsimile or electronic transmission, a Website Posting or an overnight courier delivery of a confirmatory Notice (received at or before noon on such next Business Day);

 

(d)           In the case of a facsimile transmission, when sent to the applicable party’s facsimile machine’s telephone number, if the party sending such Notice receives confirmation of the delivery thereof from its own facsimile machine;

 

(e)           In the case of electronic transmission, when actually received;

 

(f)            In the case of a Website Posting, upon delivery of a Notice of such posting (including the information necessary to access such site) by another means set forth in this Section 16.6; and

 

(g)           If given by any other means (including by overnight courier), when actually received.

 

Any Lender giving a Notice to Borrowing Agent or any Borrower shall concurrently send a copy thereof to the Agent, and the Agent shall promptly notify the other Lenders of its receipt of such Notice.

  

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(A)        If to Agent, Swing Loan Lender or PNC at:

 

PNC Bank, National Association

340 Madison Avenue

11th Floor

New York NY 10017

Attention:        John Trott

Telephone:      (212) 759-6079

Facsimile:       (212) 303-0067

 

with a copy to:

 

PNC Bank, National Association

PNC Agency Services

PNC Firstside Center

500 First Avenue

P7-PFSC-05-W

Pittsburgh, Pennsylvania 15219

Attention:        Trina Barkley

Telephone:      (412) 768-0423

Facsimile:        (412) 705-2006

 

with an additional copy to:

 

Blank Rome LLP

The Chrysler Building

405 Lexington Avenue

New York, New York 10174

Attn:                 Robert B. Stein

Telephone:       (212) 885-5206

Facsimile:        (212) 885-5001

 

(B)         If to a Lender other than Agent, as specified on the signature pages hereof

 

(C)         If to Borrowing Agent or any Borrower:

UniTek Global Services, Inc.

1777 Sentry Parkway West

Gwynedd Hall, Suite 202

Blue Bell, Pennsylvania 19422

Attention:        Ronald J. Lejman, Chief Financial Officer

Telephone:      267-464-1700

Facsimile:       484-493-1613

with a copy to:

Morgan, Lewis & Bockius LLP

1701 Market Street

Philadelphia, PA 19103-2921

Attention:        Michael J. Pedrick

Telephone:      (215) 963-4808

Facsimile:       (215) 963-5001

  

127

  

16.7.      Survival.  The obligations of Borrowers under Sections 2.2(f), 3.7, 3.8, 3.9, 4.19(h), 16.5 and 16.9 and the obligations of Lenders under Section 2.2, 2.16, 2.20(c) and 14.7, shall survive termination of this Agreement and the Other Documents and payment in full of the Obligations.

 

16.8.      Severability.  If any part of this Agreement is contrary to, prohibited by, or deemed invalid under Applicable Laws or regulations, such provision shall be inapplicable and deemed omitted to the extent so contrary, prohibited or invalid, but the remainder hereof shall not be invalidated thereby and shall be given effect so far as possible.

 

16.9.      Expenses.  All costs and expenses including attorneys’ fees (including the allocated costs of in house counsel) and disbursements incurred by Agent on its behalf or on behalf of Issuer, Lenders and the other holders of the Obligations (a) in all efforts made to enforce payment of any Obligation or effect collection of any Collateral or enforcement of this Agreement or any of the Other Documents, or (b) in connection with the preparation, negotiation, execution, delivery, entering into, syndication, modification, amendment and administration of this Agreement or any of the Other Documents or any consents or waivers hereunder or thereunder and all related agreements, documents and instruments, or (c) in instituting, maintaining, preserving, enforcing and foreclosing on Agent’s security interest in or Lien on any of the Collateral, or maintaining, preserving or enforcing any of Agent’s or any Lender’s rights hereunder or under any of the Other Documents and under all related agreements, documents and instruments, whether through judicial proceedings or otherwise, or (d) in defending or prosecuting any actions or proceedings arising out of or relating to Agent’s or any Lender’s transactions with any Borrower or any Guarantor or (e) in connection with any advice given to Agent or any Lender with respect to its rights and obligations under this Agreement or any of the Other Documents and all related agreements, documents and instruments, may be charged to Borrowers’ Account and shall be part of the Obligations.

 

16.10.    Injunctive Relief.  Each Borrower recognizes that, in the event any Borrower fails to perform, observe or discharge any of its obligations or liabilities under this Agreement, or threatens to fail to perform, observe or discharge such obligations or liabilities, any remedy at law may prove to be inadequate relief to Lenders; therefore, Agent, if Agent so requests, shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving that actual damages are not an adequate remedy.

 

16.11.    Consequential Damages.  Neither Agent nor any Lender, nor any agent or attorney for any of them, shall be liable to any Borrower or any Guarantor (or any Affiliate of any such Person) for indirect, punitive, exemplary or consequential damages arising from any breach of contract, tort or other wrong relating to the establishment, administration or collection of the Obligations or as a result of any transaction contemplated under this Agreement or any Other Document.

  

128

  

 

16.12.    Captions.  The captions at various places in this Agreement are intended for convenience only and do not constitute and shall not be interpreted as part of this Agreement.

 

16.13.    Counterparts; Facsimile Signatures.  This Agreement may be executed in any number of and by different parties hereto on separate counterparts, all of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the same agreement.  Any signature delivered by a party by facsimile or electronic transmission (including email transmission of a PDF copy)  shall be deemed to be an original signature hereto.

 

16.14.    Construction.  The parties acknowledge that each party and its counsel have reviewed this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments, schedules or exhibits thereto.

 

16.15.    Confidentiality; Sharing Information.   Agent, each Lender and each Transferee shall hold all non-public information obtained by Agent, such Lender or such Transferee pursuant to the requirements of this Agreement in accordance with Agent’s, such Lender’s and such Transferee’s customary procedures for handling confidential information of this nature; provided, however, Agent, each Lender and each Transferee may disclose such confidential information (a) to its examiners, Affiliates, outside auditors, counsel and other professional advisors, (b) to Agent, any Lender or to any prospective Transferees, and (c) as required or requested by any Governmental Body or representative thereof or pursuant to legal process; provided, further that (i) unless specifically prohibited by Applicable Law, Agent, each Lender and each Transferee shall use its reasonable best efforts prior to disclosure thereof, to notify the applicable Borrower of the applicable request for disclosure of such non-public information (A) by a Governmental Body or representative thereof (other than any such request in connection with an examination of the financial condition of a Lender or a Transferee by such Governmental Body) or (B) pursuant to legal process and (ii) in no event shall Agent, any Lender or any Transferee be obligated to return any materials furnished by any Borrower other than those documents and instruments in possession of Agent or any Lender in order to perfect its Lien on the Collateral once the Obligations have been paid in full and this Agreement has been terminated.  Each Borrower acknowledges that from time to time financial advisory, investment banking and other services may be offered or provided to such Borrower or one or more of its Affiliates (in connection with this Agreement or otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such Lender and each Borrower hereby authorizes each Lender to share any information delivered to such Lender by such Borrower and its Subsidiaries pursuant to this Agreement, or in connection with the decision of such Lender to enter into this Agreement, to any such Subsidiary or Affiliate of such Lender, it being understood that any such Subsidiary or Affiliate of any Lender receiving such information shall be bound by the provisions of this Section 16.15 as if it were a Lender hereunder.  Such authorization shall survive the repayment of the other Obligations and the termination of this Agreement.

 

16.16.    Publicity.  Each Borrower and each Lender hereby authorizes Agent to make appropriate announcements of the financial arrangement entered into among Borrowers, Agent and Lenders, including announcements which are commonly known as tombstones, in such publications and to such selected parties as Agent shall in its sole and absolute discretion deem appropriate.

  

129

  

 

16.17.    Certifications From Banks and Participants; USA PATRIOT Act.  Each Lender or assignee or participant of a Lender that is not incorporated under the Laws of the United States of America or a state thereof (and is not excepted from the certification requirement contained in Section 313 of the USA PATRIOT Act and the applicable regulations because it is both (i) an affiliate of a depository institution or foreign bank that maintains a physical presence in the United States or foreign country, and (ii) subject to supervision by a banking authority regulating such affiliated depository institution or foreign bank) shall deliver to the Agent the certification, or, if applicable, recertification, certifying that such Lender is not a “shell” and certifying to other matters as required by Section 313 of the USA PATRIOT Act and the applicable regulations: (1) within 10 days after the Closing Date, and (2) as such other times as are required under the USA PATRIOT Act.

  

130

  

Each of the parties has signed this Agreement as of the day and year first above written.

 

	 	  	

UNITEK GLOBAL SERVICES, INC.

	  	  	  
	
  

	  	
By:

	
/s/ Ronald J. Lejman

	  	  	
Name:

	
Ronald J. Lejman

	  	  	
Title:

	

Chirf Financial Officer

	  	  	  
	 	  	

UNITEK ACQUISITION, INC.

BCI COMMUNICATIONS, INC.

UNITEK USA, LLC

ADVANCED COMMUNICATIONS USA, INC.

DIRECTSAT USA, LLC

FTS USA, LLC

	  	  	  
	
  

	  	
By:

	
/s/ Ronald J. Lejman

	
 

	  	
Name:

	
Ronald J. Lejman

	  	  	
Title:

	
Treasurer

	  	  	  
	  	  	
PNC BANK, NATIONAL ASSOCIATION,

as Revolving Lender, Swing Loan Lender and as Agent

	  	  	  
	  	  	
By:

	
/s/ Charles F.Garoklanian

	  	  	
Name:

	
Charles F.Garoklanian

	  	  	
Title:

	
Senior Vice President

	  	  	  
	  	  	

PNC Bank, National Association

340 Madison Avenue, 11th Floor

New York, NY 10017

	  	  	  
	  	  	
Revolving Commitment Percentage:  100%

	  	  	
Revolving Commitment Amount:  $75,000,000

	  	  	  
	  	  	
Swing Loan Commitment Percentage:  100%

	  	  	  

  

 

  

 

EXHIBIT 1.2

 

BORROWING BASE CERTIFICATE

[*]

 

 

 

* The confidential material contained herein has been omitted and has been separately filed with the Staff of the Securities and Exchange Commission.

 

 

  

  

  

 

EXHIBIT 1.2(a)

 

COMPLIANCE CERTIFICATE

 

TO:        PNC BANK, NATIONAL ASSOCIATION, as Agent

 

The undersigned, as the [Chief Financial Officer] [Controller] of UNITEK GLOBAL SERVICES, INC., a corporation organized under the laws of the State of Delaware (“Borrowing Agent”), certifies, in such capacity and not in my individual capacity, that, under the terms and conditions of that certain Revolving Credit and Security Agreement of even date herewith (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among UNITEK GLOBAL SERVICES, INC., a corporation organized under the laws of the State of Delaware (“UniTek Parent”), UNITEK ACQUISITION, INC., a corporation organized under the laws of the State of Delaware (“UniTek Acquisition”) BCI COMMUNICATIONS, INC., a corporation organized under the laws of the State of Delaware (“BCI”), UNITEK USA, LLC, a limited liability company organized under the laws of the State of Delaware (“UniTek USA”), ADVANCED COMMUNICATIONS USA, INC., a corporation organized under the laws of the State of Delaware (“Advanced Communications”), DIRECTSAT USA, LLC, a limited liability company organized under the laws of the State of Delaware (“DirectSat”) and FTS USA, LLC, a limited liability company organized under the laws of the State of Delaware (“FTS”; UniTek Parent, UniTek Acquisition, BCI, UniTek USA, Advanced Communications, DirectSat and FTS collectively, the “Borrowers”, and each a “Borrower”), each other Person hereafter joined thereto as a borrower from time to time, the financial institutions which are now or which hereafter become a party thereto as lenders (collectively, together with their successors and assigns, the “Lenders”) and PNC Bank, National Association, as agent for the Lenders (in such capacity, together with its successors and assigns in such capacity (including any success “Agent” appointed under the Credit Agreement), the “Agent”): 

 

	
  

	
(1)

	
no Default or Event of Default has occurred and/or is continuing under the Credit Agreement [except as specified below under “Comments Regarding Exceptions”] [(if any Default or Event of Default exists, in the “Comments Regarding Exceptions” section below, specify the Default or Event of Default, its nature, when it occurred, whether it is continuing and the steps being taken by Borrowers with respect to such Default or Event of Default]. Without limiting the foregoing, the undersigned certifies that Borrowers are in compliance with the requirements or restrictions imposed by Sections 6.5, 7.4, 7.5, 7.7, 7.8, 7.10 and 7.11, except as may be set forth below, and attached hereto as Schedule A are covenant calculations with respect to Section 6.5 which show such compliance (or non-compliance).  (Capitalized terms used in this Certificate which are not defined herein shall have the meanings set forth in the Credit Agreement.)  Nothing herein limits or modifies any of the terms or provisions of the Credit Agreement.

 

Compliance status is indicated by circling Yes/No under “Complies” column.

 

	
Financial Covenants

	 	
Required

	 	
Actual

	 	
Complies

	
Section 6.5—Fixed Charge Coverage Ratio at least

	 	
1.10 to 1.00

	 	
__________

	 	
Yes

	
No

 

	
Other Covenants

	 	
Complies

	  	 	  
	Section 7.4 —–    Investments	 	
Yes

	
No

	  	 	  	  
	Section 7.5 —–    Loans	 	
Yes

	
No

	  	 	  	  
	Section 7.7 —–    Dividends	 	
Yes

	
No

	  	 	  	  
	Section 7.8 —–    Indebtedness	 	
Yes

	
No

	  	 	  	  
	Section 7.10 ––    Transactions with Affiliates	 	
Yes

	
No

	  	 	  	  
	Section 7.11 ––    Leases	 	
Yes

	
No

 

  

  

  

 

Other than as listed in the Schedules to the Credit Agreement or in a prior Compliance Certificate, Borrowers have only the following additional operating and other deposit accounts, securities accounts, commodities accounts, and other accounts at which Borrower maintains funds or investments, at the following institutions:  [_______________________][None].

 

Without limiting the generality of the foregoing, in accordance with Section 9.3 of the Credit Agreement, the undersigned hereby certifies that, to the best of his knowledge, each Borrower is in compliance in all material respects with all federal, state and local Environmental Laws (or, if Borrowers are not in compliance with the foregoing laws, the “Comments Regarding Exceptions” portion of this Compliance Certificate sets forth with specificity all areas of non-compliance and the proposed action Borrowers will implement in order to achieve full compliance).

 

Since the date of the last Compliance Certificate delivered by Borrowers to Agent, [no Borrower has acquired any new US Registered Intellectual Property Collateral (as defined in the Intellectual Property Security Agreement).][Borrowers have acquired certain new US Registered Intellectual Property Collateral (as defined in the Intellectual Property Security Agreement) as listed on the Supplement to the Intellectual Property Security Agreement and the Schedule attached thereto being delivered to Agent by Borrowers in connection with this Compliance Certificate.]

 

The [annual][quarterly][monthly] financial statements of Borrowers and their Subsidiaries being delivered by Borrowers to Agent in connection with this Compliance Certificate comply with all the requirements of Section  [9.7][9.8][9.9] of the Credit Agreement, are true, complete and correct in all material respects and fairly present the financial position of Borrowers and their Subsidiaries as of the date thereof and the results of operations for Borrowers and their Subsidiaries for the financial period(s) described therein then ended and have been prepared in accordance with GAAP applied on a basis consistent with prior practices and in reasonable detail [, subject to normal and recurring year end adjustments that individually and in the aggregate are not material to Borrowers’ business].

 

Comments Regarding Exceptions: ________________________________________.

 

Sincerely,

 

UNITEK GLOBAL SERVICES, INC., as Borrowing Agent

 

	
By:

	    	 	
Date

	    
	 	 	 	 	 
	
Name:

	    	 	  	  
	 	 	 	 	 
	Title:	[Chief Financial Officer] [Controller]	 	 	 

 

  

  

  

EXHIBIT 2.1(a)

 

REVOLVING CREDIT NOTE

 

	
$75,000,000

	
April 15, 2011

 

FOR VALUE RECEIVED, UNITEK GLOBAL SERVICES, INC., a corporation organized under the laws of the State of Delaware (“UniTek Parent”), UniTek Acquisition, Inc., a corporation organized under the laws of the State of Delaware (“UniTek Acquisition”) BCI Communications, Inc., a corporation organized under the laws of the State of Delaware (“BCI”), UniTek USA, LLC, a limited liability company organized under the laws of the State of Delaware (“UniTek USA”), Advanced Communications USA, Inc., a corporation organized under the laws of the State of Delaware (“Advanced Communications”), DirectSat USA, LLC, a limited liability company organized under the laws of the State of Delaware (“DirectSat”) and FTS USA, LLC, a limited liability company organized under the laws of the State of Delaware (“FTS”; UniTek Parent, UniTek Acquisition, BCI, UniTek USA, Advanced Communications, DirectSat and FTS collectively, the “Borrowers”, and each a “Borrower”), hereby promise, jointly and severally, to pay, to the order of PNC BANK, NATIONAL ASSOCIATION (“Revolving Lender”), at the Payment Office of Agent at the address set forth in the Credit Agreement referenced below or at such other place as Agent may from time to time designate to Borrowers in writing: (i) at the end of the Term and/or (ii) earlier as provided in the Credit Agreement, the principal sum of SEVENTY-FIVE MILLION DOLLARS ($75,000,000) or such greater or lesser sum which then represents Revolving Lender’s Revolving Commitment Percentage of the aggregate unpaid principal amount of all Revolving Advances made or extended to any Borrower by Revolving Lenders pursuant to Section 2.1(a) (or any other applicable provision) of the Credit Agreement, in lawful money of the United States of America in immediately available funds, together with interest on the principal hereunder remaining unpaid from time to time at the rate or rates from time to time in effect, as calculated as provided for in, and due and payable on the dates provided for under, the Credit Agreement.

 

THIS REVOLVING CREDIT NOTE is executed and delivered under and pursuant to the terms of that certain Revolving Credit and Security Agreement, dated as of April 15, 2011 (as the same may be amended, modified, supplemented, restated or replaced from time to time, the “Credit Agreement”), by and among the Borrowers named herein, each other Person hereafter joined thereto as a borrower from time to time, the various financial institutions named therein or which hereafter become a party thereto as lenders (collectively, the “Lenders”), and PNC Bank, National Association, as agent for the Lenders (in such capacity, together with its successors and assigns in such capacity (including any success “Agent” appointed under the Credit Agreement), the “Agent”).  Capitalized terms used herein and not otherwise defined herein shall have the meanings provided in the Credit Agreement.

 

Borrower hereby waives diligence, presentment, demand, protest and notice of any kind whatsoever as further set forth in the Credit Agreement.

  

  

  

This Revolving Credit Note is one of the Notes referred to in the Credit Agreement, which among other things, contains provisions for the acceleration of the maturity hereof upon the happening of certain events, for optional and mandatory prepayments of the principal hereof prior to the maturity hereof and for the amendment or waiver of certain terms and conditions therein specified.  Such provisions, and all other provisions of the Credit Agreement, are hereby incorporated by reference.  This Revolving Credit Note is secured by certain Liens in the property and assets of Borrowers granted by Borrowers pursuant to the Credit Agreement and the Other Documents in favor of Agent, for its benefit and for the ratable benefit of each Lender, Issuer and each other holder of the Obligations, which such Liens are subject to the provisions of the Intercreditor Agreement.

 

THIS REVOLVING CREDIT NOTE, AND ALL MATTERS RELATING HERETO AND ARISING HEREFROM (WHETHER ARISING UNDER CONTRACT LAW, TORT LAW OR OTHERWISE) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF  THE STATE OF NEW YORK APPLIED TO CONTRACTS TO BE PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK.  This Revolving Credit Note shall be binding upon and inure to the benefit of Borrowers, Agent and Revolving Lender and their respective successors and assigns, except that no Borrower may assign or transfer any of its rights or obligations under this Revolving Credit Note without the prior written consent of Agent and each Lender.  Without limiting the generality of the general incorporation of the Credit Agreement herein provided for above, the provisions of Section 16.1 of the Credit Agreement regarding consents to and waivers regarding jurisdiction and venue, Section 16.5 of the Credit Agreement regarding indemnities, Section 16.6 of the Credit Agreement regarding notices, Section 16.7 of the Credit Agreement regarding survival of certain provisions and obligations, Section 16.9 of the Credit Agreement regarding expenses, Section 16.10 of the Credit Agreement regarding injunctive relief and Article XII of the Credit Agreement regarding certain waivers including waivers of the rights of jury trial are hereby specifically incorporated by reference.  If any part of this Revolving Credit Note is contrary to, prohibited by, or deemed invalid under Applicable Laws or regulations, such provision shall be inapplicable and deemed omitted to the extent so contrary, prohibited or invalid, but the remainder hereof shall not be invalidated thereby and shall be given effect so far as possible.

 

[Remainder of Page Intentionally Left Blank]

  

  

  

 

IN WITNESS WHEREOF, the undersigned have executed this Revolving Credit Note the day and year first written above intending to be legally bound hereby.

 

	
UNITEK GLOBAL SERVICES, INC.

	 
	
UNITEK ACQUISITION, INC.

	 
	
BCI COMMUNICATIONS, INC.

	 
	
UNITEK USA, LLC

	 
	
ADVANCED COMMUNICATIONS USA, INC.

	 
	
DIRECTSAT USA, LLC

	 
	
FTS USA, LLC

	  
	
BY:

	
   

	 
	
Name:

	 
	
Title:

 

[Signature Page to Revolving Credit Note – PNC - $75MM]

 

  

  

  

EXHIBIT 2.4(a)

 

SWING LOAN NOTE

 

	
$7,500,000

	
April 15, 2011

 

FOR VALUE RECEIVED, UNITEK GLOBAL SERVICES, INC., a corporation organized under the laws of the State of Delaware (“UniTek Parent”), UNITEK ACQUISITION, INC., a corporation organized under the laws of the State of Delaware (“UniTek Acquisition”) BCI COMMUNICATIONS, INC., a corporation organized under the laws of the State of Delaware (“BCI”), UNITEK USA, LLC, a limited liability company organized under the laws of the State of Delaware (“UniTek USA”), ADVANCED COMMUNICATIONS USA, INC., a corporation organized under the laws of the State of Delaware (“Advanced Communications”), DIRECTSAT USA, LLC, a limited liability company organized under the laws of the State of Delaware (“DirectSat”) and FTS USA, LLC, a limited liability company organized under the laws of the State of Delaware (“FTS”; UniTek Parent, UniTek Acquisition, BCI, UniTek USA, Advanced Communications, DirectSat and FTS collectively, the “Borrowers”, and each a “Borrower”), hereby promise, jointly and severally, to pay, to the order of PNC BANK, NATIONAL ASSOCIATION (“Swing Loan Lender”), at the Payment Office of Agent at the address set forth in the Credit Agreement referenced below or at such other place as Agent may from time to time designate to Borrowers in writing: (i) at the end of the Term and/or (ii) earlier as provided in the Credit Agreement, the principal sum of SEVEN MILLION, FIVE HUNDRED THOUSAND DOLLARS ($7,500,000) or such greater or lesser sum which then represents the aggregate unpaid principal amount of all Swing Loans made or extended to any Borrower by Swing Loan Lender pursuant to Section 2.4 (or any other applicable provision) of the Credit Agreement, in lawful money of the United States of America in immediately available funds, together with interest on the principal hereunder remaining unpaid from time to time at the rate or rates from time to time in effect, as calculated as provided for in, and due and payable on the dates provided for under, the Credit Agreement.

 

THIS SWING LOAN NOTE is executed and delivered under and pursuant to the terms of that certain Revolving Credit and Security Agreement, dated as of April 15, 2011 (as the same may be amended, modified, supplemented, restated or replaced from time to time, the “Credit Agreement”), by and among the Borrowers named herein, each other Person hereafter joined thereto as a borrower from time to time, the various financial institutions named therein or which hereafter become a party thereto as lenders (collectively, the “Lenders”), and PNC Bank, National Association, as agent for the Lenders (in such capacity, together with its successors and assigns in such capacity (including any success “Agent” appointed under the Credit Agreement), the “Agent”).  Capitalized terms used herein and not otherwise defined herein shall have the meanings provided in the Credit Agreement.

 

Borrower hereby waives diligence, presentment, demand, protest and notice of any kind whatsoever as further set forth in the Credit Agreement.

  

  

  

This Swing Loan Note is one of the Notes referred to in the Credit Agreement, which among other things, contains provisions for the acceleration of the maturity hereof upon the happening of certain events, for optional and mandatory prepayments of the principal hereof prior to the maturity hereof and for the amendment or waiver of certain terms and conditions therein specified.  Such provisions, and all other provisions of the Credit Agreement, are hereby incorporated by reference.  This Swing Loan Note is secured by certain Liens in the property and assets of Borrowers granted by Borrowers pursuant to the Credit Agreement and the Other Documents in favor of Agent, for its benefit and for the ratable benefit of each Lender, Issuer and each other holder of the Obligations, which such Liens are subject to the provisions of the Intercreditor Agreement.

 

THIS SWING LOAN NOTE, AND ALL MATTERS RELATING HERETO AND ARISING HEREFROM (WHETHER ARISING UNDER CONTRACT LAW, TORT LAW OR OTHERWISE) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF  THE STATE OF NEW YORK APPLIED TO CONTRACTS TO BE PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK.  This Swing Loan Note shall be binding upon and inure to the benefit of Borrowers, Agent and Swing Loan Lender and their respective successors and assigns, except that no Borrower may assign or transfer any of its rights or obligations under this Swing Loan Note without the prior written consent of Agent and each Lender.  Without limiting the generality of the general incorporation of the Credit Agreement herein provided for above, the provisions of Section 16.1 of the Credit Agreement regarding consents to and waivers regarding jurisdiction and venue, Section 16.5 of the Credit Agreement regarding indemnities, Section 16.6 of the Credit Agreement regarding notices, Section 16.7 of the Credit Agreement regarding survival of certain provisions and obligations, Section 16.9 of the Credit Agreement regarding expenses, Section 16.10 of the Credit Agreement regarding injunctive relief and Article XII of the Credit Agreement regarding certain waivers including waivers of the rights of jury trial are hereby specifically incorporated by reference.  If any part of this Swing Loan Note is contrary to, prohibited by, or deemed invalid under Applicable Laws or regulations, such provision shall be inapplicable and deemed omitted to the extent so contrary, prohibited or invalid, but the remainder hereof shall not be invalidated thereby and shall be given effect so far as possible.

 

[Remainder of Page Intentionally Left Blank]

  

  

  

 

IN WITNESS WHEREOF, the undersigned have executed this Swing Loan Note the day and year first written above intending to be legally bound hereby.

 

	
UNITEK GLOBAL SERVICES, INC.

	  
	
UNITEK ACQUISITION, INC.

	  
	
BCI COMMUNICATIONS, INC.

	  
	
UNITEK USA, LLC

	  
	
ADVANCED COMMUNICATIONS USA, INC.

	  
	
DIRECTSAT USA, LLC

	  
	
FTS USA, LLC

	  
	
BY:

	
  

	  
	
Name:

	  
	
Title:

 

[Signature Page to Swing Loan Note – PNC - $7.5 MM]

 

  

  

  

 

EXHIBIT 5.5(b)

 

FINANCIAL PROJECTIONS 

[*]

 

 

 

* The confidential material contained herein has been omitted and has been separately filed with the Staff of the Securities and Exchange Commission.

 

  

  

  

 

EXHIBIT 8.1(j)

 

FINANCIAL CONDITION CERTIFICATE

 

This FINANCIAL CONDITION CERTIFICATE is given as of April 15, 2011 in connection with that certain Revolving Credit and Security Agreement of even date herewith (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among UNITEK GLOBAL SERVICES, INC., a corporation organized under the laws of the State of Delaware (“UniTek Parent”), UNITEK ACQUISITION, INC., a corporation organized under the laws of the State of Delaware (“UniTek Acquisition”) BCI COMMUNICATIONS, INC., a corporation organized under the laws of the State of Delaware (“BCI”), UNITEK USA, LLC, a limited liability company organized under the laws of the State of Delaware (“UniTek USA”), ADVANCED COMMUNICATIONS USA, INC., a corporation organized under the laws of the State of Delaware (“Advanced Communications”), DIRECTSAT USA, LLC, a limited liability company organized under the laws of the State of Delaware (“DirectSat”) and FTS USA, LLC, a limited liability company organized under the laws of the State of Delaware (“FTS”; UniTek Parent, UniTek Acquisition, BCI, UniTek USA, Advanced Communications, DirectSat, and FTS collectively, the “Borrowers”, and each a “Borrower”), each other Person hereafter joined thereto as a borrower from time to time, the financial institutions which are now or which hereafter become a party thereto as lenders (collectively, together with their successors and assigns, the “Lenders”) and PNC Bank, National Association, as agent for the Lenders (in such capacity, together with its successors and assigns in such capacity (including any success “Agent” appointed under the Credit Agreement), the “Agent”).  Capitalized terms used but not defined herein shall have the respective meanings given thereto in the Credit Agreement,.

 

In connection with the Credit Agreement and the Other Documents, I hereby certify as of the date hereof that I am the duly appointed, qualified and acting (i) Chief Financial Officer of UniTek Parent and (ii) treasurer of each of the other Borrowers, and that, in such capacities and not in my individual capacity, I hereby conclude to my knowledge that:

 

	
1.

	
          The execution and delivery of the Credit Agreement and each of the Other Documents and the granting of any security interests or liens pursuant to the Credit Agreement and any of the Other Documents by Borrowers will not render any Borrower insolvent.  I understand that, in this context, “insolvent” with respect to any Borrower means that the present fair valuation of such Borrower’s assets are less than the present fair valuation of its probable liabilities.

 

	
2.

	
          I conclude that the execution and delivery of the Credit Agreement and each of the Other Documents and the granting of the security interests and liens pursuant to the Credit Agreement and any of the Other Documents by Borrowers will not leave any Borrower with property remaining in its hands which would constitute unreasonably small capital for such Borrower’s business.  In reaching this conclusion, I understand that “unreasonably small capital” depends upon the nature of each Borrower’s’ business as presently conducted, and I have reached my conclusion based on the actual and reasonably anticipated needs for capital of the business anticipated to be conducted by such Borrower and consistent with the Projections and other information described herein.

 

  

  

  

	
3.

	
          I conclude that no Borrower will likely incur debts beyond its ability to pay as such debts mature.  This conclusion is based, in part, upon my review of the Projections, which project that each Borrower will have positive cash flow after paying all of its scheduled and anticipated indebtedness as it matures; provided that such Projections are not to be viewed as facts and the actual results during the period or periods covered thereby may differ from such projections and the differences may be material.  I have concluded that the realization from each Borrower’s assets in the ordinary and usual course of business will be sufficient to pay its recurring current debt, short term debt, and the current portion of long term debt as such debts require, provided that the repayment of the Obligations under the Credit Agreement and Other Documents in accordance with their terms is expected to occur from a refinance, sale of assets or other repayment event.

 

	
4.

	
          The execution, delivery and performance of the Credit Agreement and each of the Other Documents by Borrowers: (a) will not require the Consent of any Governmental Body, any party to a Material Contract or any other Person, except those Consents set forth on Schedule 5.1 to the Credit Agreement, all of which will have been duly obtained, made or compiled prior to the Closing Date and which are in full force and effect; and (b) will not conflict with, nor result in any breach in any of the provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) of any Lien except Permitted Encumbrances upon any asset of such Borrower under, the provisions of any Material Contract or other agreement, indenture, undertaking or other instrument to which such Borrower is a party or by which it or its property is a party or by which it may be bound, including under the provisions of the Term Loan Documents.

 

	
5.

	
          As of the date hereof, except as set forth on Schedule 5.8(b) of the Credit Agreement: (a) Borrowers have not been served with any summons or other notice in respect of any litigation or other proceeding pending or threatened against or affecting any one of them or any of their properties or assets, which, if determined adversely to Borrowers would have a materially adverse effect on the businesses, operations, properties, assets, or condition (financial or otherwise) of Borrowers; and (b) Borrowers are not in default with respect to any order, writ, injunction, decree, or demand of any court or other governmental or regulatory authority by which any Borrower is currently bound.

 

	
6.

	
          Borrowers have not executed the Credit Agreement or any of the Other Documents or made any transfer or incurred any obligations thereunder with actual intent to hinder, delay, or defraud either present or future creditors.

 

I understand that the Agent and the Lenders are relying on the truth and accuracy of the foregoing in connection with the extensions of credit under the Credit Agreement and that no one else shall be entitled to rely on this Certificate.  Unless the context of this Certificate clearly requires otherwise, the term “or” includes the inclusive meaning represented by the phrase “and/or.”

  

2

  

I hereby represent and certify, in my capacity as set forth below for each Borrower that the foregoing information is true and correct and execute this certificate as of the date first set forth above.

 

	
UNITEK GLOBAL SERVICES, INC.

	  	  
	
By:

	
   

	
Name: Ronald J. Lejman

	
Title:   Chief Financial Officer

	  
	
UNITEK ACQUISITION, INC.

	
BCI COMMUNICATIONS, INC.

	
UNITEK USA, LLC

	
ADVANCED COMMUNICATIONS USA, INC.

	
DIRECTSAT USA, LLC

	
FTS USA, LLC

	  
	
By:

	
   

	
Name: Ronald J. Lejman

	
Title:   Treasurer

 

[Signature Page to Financial Condition Certificate]

 

  

  

  

EXHIBIT 16.3

 

	
FORM OF COMMITMENT TRANSFER SUPPLEMENT

COMMITMENT TRANSFER SUPPLEMENT

 

COMMITMENT TRANSFER SUPPLEMENT, dated as of [________________], 20[___], by and among [________________] (“Transferor Lender”), [________________], (“Purchasing Lender”), and PNC Bank, National Association, as agent for the Lenders under the Credit Agreement described below (in such capacity, together with its successors and assigns in such capacity (including any successor “Agent(s)” appointed under the Credit Agreement, “Agent”).

 

W I T N E S S E T H

 

WHEREAS, this Commitment Transfer Supplement is being executed and delivered in accordance with Section 16.3 of that certain Revolving Credit and Security Agreement of even date herewith (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among UniTek Global Services, Inc., a corporation organized under the laws of the State of Delaware (“UniTek Parent”), UniTek Acquisition, Inc., a corporation organized under the laws of the State of Delaware (“UniTek Acquisition”) BCI Communications, Inc., a corporation organized under the laws of the State of Delaware (“BCI”), UniTek USA, LLC, a limited liability company organized under the laws of the State of Delaware (“UniTek USA”), Advanced Communications USA, Inc., a corporation organized under the laws of the State of Delaware (“Advanced Communications”), DirectSat USA, LLC, a limited liability company organized under the laws of the State of Delaware (“DirectSat”) and FTS USA, LLC, a limited liability company organized under the laws of the State of Delaware (“FTS”; UniTek Parent, UniTek Acquisition, BCI, UniTek USA, Advanced Communications, DirectSat and FTS collectively, the “Borrowers”, and each a “Borrower”), each other Person hereafter joined thereto as a borrower from time to time, the financial institutions which are now or which hereafter become a party thereto as lenders (collectively, together with their successors and assigns, the “Lenders”) and Agent.  As of the date hereof, Transferor Lender is one of the Lenders under the Credit Agreement with an interest therein as a Revolving Lender and/or Swing Loan Lender as indicated on Schedule I hereto.

 

WHEREAS, Purchasing Lender wishes to become a Lender party to the Credit Agreement; and

 

WHEREAS, Transferor Lender is selling and assigning to Purchasing Lender that portion of Transferor Lender’s rights, obligations and commitments under the Credit Agreement as indicated on Schedule I hereto;

 

NOW, THEREFORE, the parties hereto hereby agree as follows:

 

1.           All capitalized terms used herein which are not defined shall have the respective meanings ascribed to them in the Credit Agreement.

  

  

  

2.           Upon receipt by Agent of four (4) counterparts of this Commitment Transfer Supplement executed by Transferor Lender and Purchasing Lender, to each of which is attached a fully completed Schedule I, and payment of any administrative processing fee required under Section 16.3 of the Credit Agreement, Agent, upon its consent to the transfer from Transferor Lender to Purchasing Lender provided for herein, shall transmit to Transferor Lender and Purchasing Lender a Transfer Effective Notice, substantially in the form of Schedule II to this Commitment Transfer Supplement (a “Transfer Effective Notice”).  Such Transfer Effective Notice shall set forth, inter alia, the date on which the transfer effected by this Commitment Transfer Supplement shall become effective (the “Transfer Effective Date”), which date unless otherwise noted therein at the joint request of Transferor Lender and Purchasing Lender in Schedule I and approved by Agent in its discretion, shall not be earlier than the first Business Day following the date such Transfer Effective Notice is delivered by Agent.  From and after the Transfer Effective Date, Purchasing Lender shall be party to the Credit Agreement as a Lender for all purposes thereof.

 

3.           At or before 12:00 p.m. (New York time) on the Transfer Effective Date, Purchasing Lender shall pay to Transferor Lender, in immediately available funds, an amount equal to the purchase price, as agreed between Transferor Lender and such Purchasing Lender (the “Purchase Price”) as consideration for that portion of Transferor Lender’s commitments under and interests (and, in the case of any transfer by Transferor Lender that is a Revolving Lender, participation obligations) in the Credit Agreement, the Other Documents and the applicable outstanding Advances (and, in the case of any transfer by Transferor Lender that is a Revolving Lender, any applicable outstanding Letter of Credit participations and Swing Loan participations) being transferred by Transferor Lender to Purchasing Lender hereunder as indicated on Schedule I hereto (all collectively, as indicated on such Schedule I attached hereto, the “Transferred Interests”).  Effective upon receipt by Transferor Lender of the Purchase Price from Purchasing Lender, Transferor Lender hereby irrevocably sells, assigns and transfers to such Purchasing Lender, without recourse, representation or warranty, and Purchasing Lender hereby irrevocably purchases, takes and assumes from Transferor Lender, the Transferred Interests, together with all instruments, documents and collateral security pertaining thereto.

 

4.           Transferor Lender has made arrangements with Purchasing Lender with respect to (i) the amounts, if any, to be paid, and the date or dates for payment, by Transferor Lender to such Purchasing Lender of any fees or interest with respect to the Transferred Interests heretofore received by Transferor Lender pursuant to the Credit Agreement prior to the Transfer Effective Date and (ii) the amounts, if any, to be paid, and the date or dates of payment, by such Purchasing Lender to Transferor Lender of fees or interest with respect to the Transferred Interests received by such Purchasing Lender pursuant to the Credit Agreement from and after the Transfer Effective Date.

 

5.           (a)           All principal payments that would otherwise be payable from and after the Transfer Effective Date with respect to the Transferred Interests to or for the account of Transferor Lender pursuant to the Credit Agreement and the Notes shall, instead, be payable to or for the account of Purchasing Lender.

 

(b)           All interest, fees and other amounts that would otherwise accrue for the account of Transferor Lender with respect to the Transferred Interests from and after the Transfer Effective Date pursuant to the Credit Agreement and the Notes shall, instead, accrue for the account of, and be payable to, Purchasing Lender.  In the event that any amount of interest, fees or other amounts accruing with respect to the Transferred Interests prior to the Transfer Effective Date was included in the Purchase Price paid by any Purchasing Lender, Transferor Lender and Purchasing Lender will make appropriate arrangements for payment by Transferor Lender to such Purchasing Lender of such amount upon receipt thereof from Borrowers.

  

2

  

6.           Concurrently with the execution and delivery hereof, Transferor Lender will provide to Purchasing Lender conformed copies of the Credit Agreement and all related documents delivered to Transferor Lender.

 

7.           Each of the parties to this Commitment Transfer Supplement agrees that at any time and from time to time upon the written request of any other party, it will execute and deliver such further documents and do such further acts and things as such other party may reasonably request in order to effect the purposes of this Commitment Transfer Supplement.

 

8.           By executing and delivering this Commitment Transfer Supplement, Transferor Lender and Purchasing Lender confirm to and agree with each other and Agent and the Lenders as follows:  (i) other than the representation and warranty that it is the legal and beneficial owner of the interest being assigned hereby free and clear of any adverse claim and that it has taken all action necessary to execute and deliver this Commitment Transfer Supplement, Transferor Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement, the Notes or any other instrument or document furnished pursuant thereto;  (ii) Transferor Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of Borrowers and any Guarantors or the performance or observance by Borrowers and any Guarantors of any of their Obligations under the Credit Agreement, the Notes or any other instrument or document furnished pursuant hereto;  (iii)  Purchasing Lender confirms that it has received a copy of the Credit Agreement, together with copies of such financial statements and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Commitment Transfer Supplement; (iv) Purchasing Lender will, independently and without reliance upon Agent, Transferor Lender or any other Lenders and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement;  (v)  Purchasing Lender appoints and authorizes Agent on its behalf to take such action as agent and to exercise such powers under the Credit Agreement and Other Documents as are delegated to Agent by the terms thereof; (vi) Purchasing Lender agrees that it will perform all of its respective obligations as set forth in the Credit Agreement and Other Documents to be performed as a Lender and as a Revolving Lender and/or Swing Loan Lender (as applicable) and be bound by the provisions of the Credit Agreement as a Lender and as a Revolving Lender and/or Swing Loan Lender (as applicable) thereunder; (vii) Purchasing Lender represents and warrants to Transferor Lender, the Lenders, Agent and Borrowers and Guarantors that it is either (x) incorporated or organized under the Laws of the United States of America or a state thereof or (y) entitled to an exemption from, U.S. withholding tax on the basis of an income tax treaty or an exemption provided by the Code, in which such case Purchasing Lender is delivering to Agent and Borrowers in connection with the delivery of this Commitment Transfer Supplement copies of appropriate and applicable Withholding Certificates as required under Section 3.11 of the Credit Agreement; and (viii) Purchasing Lender agrees and confirms that it has taken all action necessary to execute and deliver this Commitment Transfer Supplement.

  

3

  

9.           Schedule I hereto sets forth (i) the revised Revolving Commitment Percentage of Transferor Lender and the Revolving Commitment Percentage of Purchasing Lender, if applicable, and (ii) administrative information with respect to Purchasing Lender.

 

10.           This Commitment Transfer Supplement, and all matters arising herefrom or therefrom or related hereto or thereto (whether sounding in contract, tort or otherwise) shall be governed by and construed in accordance with the laws of the State of New York applied to contracts to be performed wholly within the State of New York without reference to its otherwise applicable conflicts of law.

 

[SIGNATURE PAGE FOLLOWS]

  

4

  

IN WITNESS WHEREOF, the parties hereto have caused this Commitment Transfer Supplement to be executed by their respective duly authorized officers on the date set forth above.

 

	  
	
[______________________________],

	
as Transferor Lender

	  
	
By:

	
   

	
Name:

	
 

	
Title:

	
 

	  
	
[______________________________],

	
as Purchasing Lender

	  
	
By:

	
   

	
Name:

	
 

	
Title:

	
 

Signature Page To Commitment Transfer Supplement

  

  

  

SCHEDULE I TO COMMITMENT TRANSFER SUPPLEMENT

DESCRIPTION OF TRANSFERRED INTEREST AND ADDRESS FOR NOTICES

	
[______________________________]

(“Transferor Lender”)

	
Pre-Transfer Revolving Commitment Percentage

	
$[_______________]

	  	  	  
	  	
Pre-Transfer Outstanding Revolving Advances of Transferor Lender

	
[_______________]%

	  	  	  
	  	
Pre-Transfer Outstanding Letter of Credit Participations of Transferor Lender

	
$[_______________]

	  	  	  
	  	
Pre-Transfer Outstanding Swing Loan Participations of Transferor Lender

	
$[_______________]

	  	  	  
	  	
Pre-Transfer Swing Loan Commitment Percentage

	
[0%]/[100%]

	  	  	  
	  	
Post-Transfer Revolving Commitment Percentage

	
$[_______________]

	  	  	  
	  	
Post—Transfer Outstanding Revolving Advances of Transferor Lender

	
[_______________]%

	  	  	  
	  	
Post- Transfer Outstanding Letter of Credit Participations of Transferor Lender

	
$[_______________]

	  	  	  
	  	
Post- Transfer Outstanding Swing Loan Participations of Transferor Lender

	
$[_______________]

	  	  	  
	  	
Post-Transfer Swing Loan Commitment Percentage

	
[0%]/[100%]

	  	  	  
	
[______________________________]

 (“Purchasing Lender”)

	
Post-Transfer Revolving Commitment Percentage

	
$[_______________]

	  	  	  
	  	
Post -Transfer Outstanding Revolving Advances of Transferee Lender

	
[_______________]%

	  	  	  
	  	
Post- Transfer Outstanding Letter of Credit Participations of Transferee Lender

	
$[_______________]

	  	  	  
	  	
Post-Transfer Outstanding Swing Loan Participations of Transferor Lender

	
$[_______________]

	  	  	  
	  	
Post-Transfer Swing Loan Commitment Percentage

	
[0%]/[100%]

 

  

  

  

	  	  	  
	
Address for Notices for Purchasing Lender:

	  	  
	
[________________]

	  	  
	
Telephone:  [________________]

	  	  
	
Facsimile:  [________________]

	  	  
	  	  	  
	
Requested Transfer Effective Date:

	  	  

 

  

  

  

SCHEDULE II TO COMMITMENT TRANSFER SUPPLEMENT

 

Transfer Effective Notice

 

To:           [______________________________], as Transferor Lender,

 

and

 

[______________________________], as Purchasing Lender:

 

The undersigned, as Agent (as defined below) under that certain Revolving Credit and Security Agreement of even date herewith (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among UNITEK GLOBAL SERVICES, INC., a corporation organized under the laws of the State of Delaware (“UniTek Parent”), UniTek Acquisition, Inc., a corporation organized under the laws of the State of Delaware (“UniTek Acquisition”) BCI Communications, Inc., a corporation organized under the laws of the State of Delaware (“BCI”), UniTek USA, LLC, a limited liability company organized under the laws of the State of Delaware (“UniTek USA”), Advanced Communications USA, Inc., a corporation organized under the laws of the State of Delaware (“Advanced Communications”), DirectSat USA, LLC, a limited liability company organized under the laws of the State of Delaware (“DirectSat”) and FTS USA, LLC, a limited liability company organized under the laws of the State of Delaware (“FTS”; UniTek Parent, UniTek Acquisition, BCI, UniTek USA, Advanced Communications, DirectSat, and FTS collectively, the “Borrowers”, and each a “Borrower”), each other Person hereafter joined thereto as a borrower from time to time, the financial institutions which are now or which hereafter become a party thereto as lenders (collectively, together with their successors and assigns, the “Lenders”), and the undersigned, as agent for the Lenders (the undersigned, in such capacity, together with its successors and assigns in such capacity (including any successor “Agent(s)” appointed under the Credit Agreement, “Agent”), acknowledges receipt of four (4) executed counterparts of a completed Commitment Transfer Supplement dated as of [______________________________] between Transferor Lender and Purchasing Lender (the “Commitment Transfer Supplement”).  Terms defined in such Commitment Transfer Supplement are used herein as therein defined.

 

Agent hereby consents to the sale and transfer by Transferor Lender to Purchasing Lender, and the purchase and acquisition by Purchasing Lender from Transferor Lender, of the Transferred Interests as described in the Commitment Transfer Supplement.

 

Pursuant to such Commitment Transfer Supplement, you are advised that the Transfer Effective Date will be [______________________________].

	
PNC BANK, NATIONAL ASSOCIATION,

as Agent

	  
	
By:

	
    

	
Name:

	
 

	
Title:

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