Document:

ex_213674.htm

Exhibit 4.1

 

THE PURCHASE RIGHTS EVIDENCED BY THIS WARRANT AGREEMENT AND THE SHARES OF CAPITAL STOCK ISSUABLE UPON EXERCISE OF SUCH PURCHASE RIGHTS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY STATE SECURITIES LAWS.  SUCH SECURITIES CANNOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF WITHOUT REGISTRATION OF SUCH SECURITIES UNDER ALL APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR COMPLIANCE WITH AN APPLICABLE EXEMPTION THEREFROM. 

 

GENPREX, INC. 

WARRANT AGREEMENT

August 10, 2020

 

No. 2020W-2

 

THIS CERTIFIES THAT, for value received, Capital City Technical Consulting, Inc. or its successors and permitted assigns pursuant to the terms hereof (the “Warrantholder”), is entitled to purchase from Genprex, Inc., a Delaware corporation (the “Company”), subject to the terms set forth below, fifty thousand (50,000) fully paid and non-assessable shares (subject to adjustment as provided herein) (the “Warrant Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”), at a purchase price of $[3.81] in cash per Warrant Share (the “Exercise Price”), subject to the provisions and upon the terms and conditions hereinafter set forth.  The term “Warrant Agreement” as used herein shall refer to this Warrant Agreement, as the same may be amended or amended and restated. 

 

	 	
			1.

				
			Exercise Period.  Subject to the terms and conditions of this Warrant Agreement, the purchase rights evidenced by this Warrant Agreement may be exercised as follows:

			

 

	 	
			a.

				
			With respect to 16,667 Warrant Shares, in whole or in part, at any time and from time to time after August 10, 2021, provided certain Consulting Agreement dated June 2, 2020, by and between the Company and the Warrantholder (as amended by that Amendment No. 1 dated as of August 3, 2020, by and between the Company and the Warrantholder, the “Consulting Agreement”) has not expired or terminated, for any reason or no reason, before that date, and before the earliest to occur of  (i) 5:00 p.m. (Central Time) on the fifth year following the termination of the Consulting Agreement for any reason or no reason, (ii) the consummation of an Extraordinary Transaction (as defined herein) and (iii) 5:00 p.m. (Central Time) on the ten-year anniversary of the date of this Warrant Agreement (the earliest to occur of (i), (ii) and (iii), the “Expiration Date”);

			

 

	 	
			b.

				
			With respect to an additional 16,667 Warrant Shares, in whole or in part, at any time and from time to time after August 10, 2022, provided the Consulting Agreement has not expired or terminated, for any reason or no reason, before that date, and before the Expiration Date; and

			

 

	 	
			c.

				
			With respect to an additional 16,666 Warrant Shares, in whole or in part, at any time and from time to time after August 10, 2023, provided the Consulting Agreement has not terminated, for any reason or no reason, before that date, and before the Expiration Date.

			

 

 

 

 

	 	
			2.

				
			Exercise. 

			

 

	 	
			a.

				
			Cash Exercise.  The purchase rights evidenced by this Warrant Agreement may be exercised by the Warrantholder, in whole or in part, by the surrender of this Warrant Agreement (with a duly completed and executed notice of exercise in the form attached hereto as Exhibit A (the “Notice of Exercise”)) at the principal office of the Company, accompanied by the payment to the Company, in cash, by wire transfer or by certified check payable to the Company, of an amount equal to the product of (i) the Exercise Price times (ii) the number of Warrant Shares as to which the purchase rights evidenced by this Warrant Agreement are being exercised (which number of Warrant Shares shall be stated in the duly executed Notice of Exercise).  Upon receipt by the Company at such office of this Warrant Agreement and a duly executed Notice of Exercise in proper form for exercise, together with the aggregate Exercise Price due to the Company, the Warrantholder shall be deemed to have become, and shall be treated for all purposes as, the record holder of the number of the Warrant Shares as to which the purchase rights set forth in this Warrant Agreement have been so exercised (and such Warrant Shares shall be deemed, to the fullest extent permitted by law, to have been issued) immediately prior to the close of business on the date upon which the purchase rights evidenced by this Warrant Agreement are exercised as aforesaid.

			

 

	 	
			b.

				
			Cashless Exercise. In lieu of exercising the purchase rights evidenced by this Warrant Agreement by payment in cash by wire transfer or certified check pursuant to Section 2(a) above, the Warrantholder may elect to receive the number of Warrant Shares equal to the value of the purchase rights evidenced by this Warrant Agreement (or the portion thereof being exercised), by surrender of this Warrant Agreement to the Company, together with a duly completed and executed Notice of Exercise, in which event the Company shall issue to the Warrantholder Warrant Shares in accordance with the following formula:

			

 

X = Y(A-B)/A

 

where

 

X = The number of Warrant Shares to be issued to the Warrantholder;

 

Y = The number of Warrant Shares for which the purchase rights evidenced by this Warrant Agreement are being exercised;

 

A = The Fair Market Value of one share of the Company’s common stock (a “Share”); and

 

B = The Exercise Price.

 

For purposes of this Section 2, the “Fair Market Value” of a Share is defined as follows:

 

	 	
			i.

				
			if the Company’s Common Stock is traded on a securities exchange, the value shall be deemed to be the average of the closing prices of the Shares on such exchange for the five (5) trading day period prior to the date the Notice of Exercise is submitted in connection with the exercise of the purchase rights evidenced by this Warrant Agreement;

			

 

	 	
			ii.

				
			if the Company’s Common Stock is actively traded over-the-counter, the value shall be deemed to be the average of the closing bid prices of the Shares for the five (5) trading day period prior to the date the Notice of Exercise is submitted in connection with the exercise of the purchase rights evidenced by this Warrant Agreement; or

			

 

	 	
			iii.

				
			if there is no active public market, the value shall be the fair market value thereof, as determined in good faith by the Company’s Board of Directors.

			

 

 

 

 

	 	
			c.

				
			Certificates; Partial Exercise. In the event of any exercise of the purchase rights evidenced by this Warrant Agreement pursuant to this Section 2, the Company will use commercially reasonable efforts to execute and deliver a certificate or certificates evidencing the Warrant Shares so purchased to the Warrantholder within five (5) Business Days (as defined below) after the Company’s receipt of the Notice of Exercise and payment as described in this Section 2.  If the purchase rights evidenced by this Warrant Agreement are exercised in part only, unless the purchase rights evidenced by this Warrant Agreement have been fully exercised or expired, the Company shall use commercially reasonable efforts to deliver within such five (5) Business Day period to the Warrantholder a new Warrant Agreement evidencing the rights of the Warrantholder to purchase the balance of the Warrant Shares purchasable hereunder.  For purposes of this Warrant Agreement, “Business Day” means any day, except a Saturday, Sunday or legal holiday, on which banking institutions in New York, New York, are required to be open. 

			

 

	 	
			d.

				
			Fractions of a Warrant Share.  The Company shall not be required to issue any fraction of a Warrant Share in connection with the exercise of the purchase rights evidenced by this Warrant Agreement pursuant to this Section 2.  At its option, the Company may pay to the Warrantholder, in lieu of any fraction of a Warrant Share resulting from the exercise of the purchase rights evidenced by this Warrant Agreement, an amount of cash equal to the product of (a) the applicable fraction of a Warrant Share multiplied by (b) the Fair Market Value of a share of Common Stock. 

			

 

	 	
			3.

				
			Exercise in Connection with an Extraordinary Transaction. 

			

 

	 	
			a.

				
			Definitions.  For purposes of this Section 3, “Extraordinary Transaction” shall mean (i) a merger or consolidation in which the Company is a constituent corporation and the shares of Common Stock are converted, exchanged or cancelled, (ii) a conversion, reorganization or reclassification of the capital stock of the Company in which the shares of Common Stock are converted, exchanged or cancelled (other than a merger or consolidation provided in clause (i) hereof), (iii) a transaction or series of related transactions which constitute(s) a sale, lease or exchange of all or substantially all of the property and assets of the Company, including its goodwill and its corporate franchises, or (iv) a transaction or series of related transactions which constitute(s) a dissolution or liquidation of the Company.

			

 

	 	
			b.

				
			Early Termination.  If there shall occur any Extraordinary Transaction, then, to the extent not previously exercised, the purchase rights evidenced by this Warrant Agreement shall expire and terminate upon the consummation of such Extraordinary Transaction.

			

 

	 	
			c.

				
			Conditional Exercise.  Notwithstanding any other provision of this Warrant Agreement, if an exercise of all or any portion of the purchase rights evidenced by this Warrant Agreement is to be made in connection with an Extraordinary Transaction, the exercise of all or any portion of the purchase rights evidenced by this Warrant Agreement may, at the election of the Warrantholder, be conditioned upon the consummation of such Extraordinary Transaction, in which case, such exercise shall not be deemed to be effective until immediately prior to the consummation of such Extraordinary Transaction.

			

 

	 	
			4.

				
			Stock Fully Paid; Reservation of Warrant Shares.  The Company covenants and agrees that all Warrant Shares from time to time issuable upon exercise of the purchase rights evidenced by this Warrant Agreement have been duly authorized and, when issued upon such exercise, shall be validly issued, fully paid and non-assessable, and free from all taxes, liens and charges with respect to the issuance thereof.  The Company hereby covenants and agrees that the Company will, at all times through the Expiration Date, reserve and keep available out of its aggregate authorized but unissued shares of Common Stock, the number of Warrant Shares deliverable upon the exercise of the purchase rights evidenced by this Warrant Agreement. 

			

 

 

 

 

	 	
			5.

				
			Adjustment.  The number of Warrant Shares purchasable upon the exercise of the purchase rights evidenced by this Warrant Agreement shall be subject to adjustment from time to time upon the occurrence of certain events, as follows:

			

 

	 	
			a.

				
			In case the outstanding shares of Common Stock shall be subdivided into a greater number of shares or combined into a smaller number of shares, the number of Warrant Shares to be received by the Warrantholder upon exercise of the purchase rights evidenced by this Warrant Agreement shall be appropriately adjusted such that the proportion of the number of Warrant Shares issuable upon exercise of the purchase rights evidenced by this Warrant Agreement to the total number of outstanding shares of Common Stock immediately prior to such subdivision or combination is equal to the proportion of the number of Warrant Shares issuable upon exercise of the purchase rights evidenced by this Warrant Agreement to the total number of outstanding shares of Common Stock immediately after such subdivision or combination, and the Exercise Price shall be proportionately adjusted such that the aggregate Exercise Price of all the purchase rights then evidenced by this Warrant Agreement shall remain unchanged.

			

 

	 	
			b.

				
			In the case the Company shall hereafter declare a dividend or distribution to all holders of the outstanding shares of Common Stock in shares of Common Stock, the number of Warrant Shares issuable upon exercise of the purchase rights evidenced by this Warrant Agreement shall be increased by dividing such number by a fraction, (i) the numerator of which shall be the number of shares of Common Stock outstanding at the close of business on such record date, and (ii) the denominator of which shall be the sum of (x) the number of shares of Common Stock outstanding at the close of business on such record date and (y) the total number of shares of Common Stock constituting such dividend or distribution.  If any dividend or distribution of the type described in this Section 5(b) is declared but not so paid or made, the number of Warrant Shares issuable upon exercise of the purchase rights evidenced by this Warrant Agreement shall again be adjusted to the number of Warrant Shares that would be issuable upon exercise of the purchase rights evidenced by this Warrant Agreement if such dividend or distribution had not been declared. 

			

 

	 	
			c.

				
			The Company will not, by amendment of its certificate of incorporation or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at times in good faith assist in the carrying out of all the provisions of this Section 5 and in the taking of all such lawful action as may be necessary or appropriate in order to protect the rights of the Warrantholder under this Section 5 against impairment.

			

 

	 	
			6.

				
			Notices of Record Dates and Adjustments. 

			

 

	 	
			a.

				
			If at any time prior to the full exercise or expiration of the purchase rights evidenced by this Warrant Agreement, (i) an Extraordinary Transaction shall occur or (ii) the Company shall make or issue, or fix a record date for the determination of holders of shares of Common Stock entitled to receive, a dividend or other distribution payable in any securities of the Company other than shares of Common Stock (including, but not limited to, any other class of capital stock or debt securities), then in each such event, the Company shall give written notice of such event at least fifteen (15) days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the stockholders entitled to such dividend, distribution, conversion or exchange of securities or subscription rights, or entitled to vote on such proposed dissolution, liquidation, winding up, sale or Extraordinary Transaction. Such notice shall specify such record date or the date of the closing of the transfer books, as the case may be.

			

 

	 	
			b.

				
			Whenever an adjustment is required pursuant to Section 5, the Company shall, within thirty (30) days after such adjustment, deliver a certificate signed by its chief executive officer or chief financial officer to the Warrantholder setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated and number of Warrant Shares (or other securities) purchasable upon exercise of the purchase rights evidenced by this Warrant Agreement after giving effect to such adjustment.

			

 

 

 

 

	 	
			7.

				
			Legend.  Each certificate evidencing Warrant Shares issued upon exercise of this Warrant Agreement shall bear the following legend substantially in the form set forth below:

			

 

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.  SUCH SECURITIES CANNOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF WITHOUT REGISTRATION OF SUCH SECURITIES UNDER ALL APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR COMPLIANCE WITH AN APPLICABLE EXEMPTION THEREFROM.”

 

	 	
			8.

				
			Rights as Stockholder.  Notwithstanding any other provision of this Warrant Agreement, prior to the proper exercise of the purchase rights evidenced by this Warrant Agreement by the Warrantholder in accordance with the terms of this Warrant Agreement, no Warrantholder, as such, shall be entitled to vote or receive dividends or distributions or be deemed the holder of Warrant Shares, nor shall anything contained herein be construed to confer upon the Warrantholder, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof (or by written consent in lieu of any such meeting), or to receive notice of meetings, or to receive dividends or distributions or otherwise.  Upon the proper exercise of the purchase rights evidenced by this Warrant Agreement in accordance with the terms of this Warrant Agreement, the Warrantholder shall for all purposes be deemed to have become the holder of record of the Warrant Shares represented thereby on, and such certificate shall be dated as of, the date upon which the purchase rights evidenced by this Warrant Agreement are exercised with respect to such Warrant Shares in accordance with the terms hereof. 

			

 

	 	
			9.

				
			Modification and Waiver.  The Company may change, waive, discharge, terminate or amend any provision of this Warrant Agreement with the consent of Warrantholder. 

			

 

	 	
			10.

				
			Termination.  The purchase rights evidenced by this Warrant Agreement shall terminate on the Expiration Date.  Notwithstanding the foregoing, the purchase rights evidenced by this Warrant Agreement will terminate on any earlier date when all of the purchase rights evidenced by this Warrant Agreement have been exercised or pursuant to Section 3(b). 

			

 

	 	
			11.

				
			Notices.  Any notice required to be given or delivered to the Warrantholder or the Company shall be sent by certified or registered mail, postage prepaid, or by overnight courier, to such Warrantholder at its address indicated on the signature page of this Agreement or as shown on the books and records of the Company or to the Company at the address indicated on the signature page of this Warrant Agreement.  All such notices shall be effective on the day following the date such notice is deposited in the mails or with such overnight courier, as the case may be, in each case addressed as aforesaid, unless otherwise provided herein. 

			

 

	 	
			12.

				
			Restrictions on Assignment; Transfer of Shares. 

			

 

	 	
			a.

				
			This Warrant Agreement, the purchase rights evidenced by this Warrant Agreement and the Warrant Shares issued upon the exercise of the purchase rights evidenced by this Warrant Agreement (collectively, the “Securities”) shall not be assigned, sold, pledged, transferred or otherwise disposed of except in compliance with the Securities Act of 1933, as amended, and applicable state securities laws.  None of the Securities shall be transferred unless and until: (i) the Company has received the opinion of counsel for the Warrantholder that the Securities may be transferred pursuant to an exemption from registration under the Securities Act and applicable state securities laws, the availability of which is established to the reasonable satisfaction of the Company, or (ii) a registration statement relating to the offer and sale of the Securities has been filed by the Company and declared effective by the Commission and compliance with applicable state securities law has been established.

			

 

	 	
			b.

				
			In addition to the requirements set forth in Section 12(a), in order to make any permitted assignment, the Warrantholder must deliver to the Company the assignment form attached hereto duly executed and completed, together with this Warrant Agreement and payment of all transfer taxes, if any, and upon compliance with the requirements of Section 12(a), payable in connection therewith. The Company shall within ten (10) business days after receipt of such assignment form and payment, if any, transfer this Warrant Agreement on the books of the Company and shall execute and deliver a new Warrant Agreement or Warrant Agreements of like tenor to the appropriate assignee(s) expressly evidencing the right to purchase the aggregate number of Warrant Shares purchasable hereunder or such portion of such number as shall be contemplated by any such assignment.

			

 

 

 

 

	 	
			13.

				
			Binding Effect on Successors.  To the fullest extent permitted by law, and except as otherwise provided in this Warrant Agreement, this Warrant Agreement shall be binding upon any entity succeeding the Company by merger, consolidation or acquisition of all or substantially all of the Company’s assets, and all of the covenants and agreements of the Company shall inure to the benefit of the successors and permitted assigns of the Warrantholder.  This Warrant Agreement shall be binding upon and inure to the benefit of the Company and the Warrantholder and their respective successors and permitted assigns. 

			

 

	 	
			14.

				
			Lost Warrant Agreement.  The Company covenants to the Warrantholder that upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation of this Warrant Agreement and, in the case of any such loss, theft or destruction, upon receipt of the Warrantholder’s unsecured indemnification agreement, or in the case of any such mutilation upon surrender and cancellation of this Warrant Agreement, the Company will make and deliver a new Warrant Agreement in lieu of the lost, stolen, destroyed or mutilated Warrant Agreement. 

			

 

	 	
			15.

				
			Governing Law.  This Warrant Agreement shall be governed in all respects by and construed in accordance with the laws of the State of Delaware (without regard to any conflict of laws principle that would apply the law of another jurisdiction), whether as to its validity, construction, capacity, performance or otherwise. 

			

 

	 	
			16.

				
			Consent to Jurisdiction.  ANY LEGAL ACTION, SUIT OR PROCEEDING ARISING OUT OF OR BASED UPON THIS WARRANT AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY MAY BE INSTITUTED IN THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA OR THE COURTS OF THE STATE OF TEXAS, IN EACH CASE, LOCATED IN THE CITY OF AUSTIN, TEXAS, AND TO THE FULLEST EXTENT PERMITTED BY LAW, EACH PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS.  TO THE FULLEST EXTENT PERMITTED BY LAW, IN ANY SUCH ACTION, SUIT OR PROCEEDING, SERVICE OF PROCESS, SUMMONS, NOTICE OR OTHER DOCUMENT BY MAIL TO SUCH PARTY’S ADDRESS SET FORTH HEREIN SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN ANY SUCH COURT.  TO THE FULLEST EXTENT PERMITTED BY LAW, THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF ANY ACTION, SUIT OR PROCEEDING IN SUCH COURTS AND IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. 

			

 

	 	
			17.

				
			Waiver of Jury Trial.  EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS WARRANT AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS WARRANT AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.  EACH PARTY TO THIS WARRANT AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (ii) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 17. 

			

 

[Signature Page Follows]

 

 

 

 

 

IN WITNESS WHEREOF, this Warrant Agreement is executed as of the date first written above.

 

COMPANY:

 

GENPREX, INC.                                                       

 

                                                            

 

Name: Rodney Varner

 

Title: Chief Executive Officer

 

Address:

 

Dell Medical Center, Health Discovery Building

 

1601 Trinity Street, Bldg. B, Suite 3.312.09

 

Austin, TX 78712

 

ACCEPTED AND AGREED:

WARRANTHOLDER:

                                               

CAPITAL CITY TECHNICAL CONSULTING, INC.

By:                                                      

                                               

Name:                                                 

Title:                                                   

Address:exhibit101creditagreemen

                                                 EXHIBIT 10.1                                                                                               CREDIT AGREEMENT             Dated as of November 10, 2020                      among               CASPER SLEEP INC.,                as the Lead Borrower                       For             The Borrowers Named Herein             The Guarantors Named Herein   WELLS FARGO BANK, NATIONAL ASSOCIATION,       as Agent, L/C Issuer and Swing Line Lender,                       and             The Other Lenders Party Hereto   WELLS FARGO BANK, NATIONAL ASSOCIATION,       as Sole Lead Arranger and Sole Bookrunner                 

 

                                      TABLE OF CONTENTS         Section .................................................................................................................................. Page   ARTICLE I DEFINITIONS AND ACCOUNTING TERMS .............................................................. 1        1.01 Defined Terms ................................................................................................................ 1        1.02 Other Interpretive Provisions ...................................................................................... 53        1.03 Accounting Terms ........................................................................................................ 54        1.04 Rounding ...................................................................................................................... 54        1.05 Times of Day ................................................................................................................. 54        1.06 Letter of Credit Amounts ............................................................................................. 54        1.07 Currency Equivalents Generally ................................................................................. 55        1.08 Divisions ....................................................................................................................... 55        1.09 LIBOR Replacement .................................................................................................... 55  ARTICLE II THE COMMITMENTS AND CREDIT EXTENSIONS ............................................. 58        2.01 Committed Loans; Reserves ........................................................................................ 58        2.02 Borrowings, Conversions and Continuations of Committed Loans ........................... 59        2.03 Letters of Credit ........................................................................................................... 61        2.04 Swing Line Loans ......................................................................................................... 69        2.05 Prepayments ................................................................................................................. 72        2.06 Termination or Reduction of Commitments ............................................................... 72        2.07 Repayment of Loans..................................................................................................... 73        2.08 Interest.......................................................................................................................... 73        2.09 Fees ............................................................................................................................... 74        2.10 Computation of Interest and Fees................................................................................ 74        2.11 Evidence of Debt........................................................................................................... 75        2.12 Payments Generally; Agent’s Clawback ..................................................................... 75        2.13 Sharing of Payments by Lenders ................................................................................. 76        2.14 Settlement Amongst Lenders ....................................................................................... 77        2.15 Uncommitted Increase in Commitments ..................................................................... 78  ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY; APPOINTMENT OF              LEAD BORROWER .................................................................................................. 79        3.01 Taxes ............................................................................................................................. 79        3.02 Illegality ........................................................................................................................ 82        3.03 Inability to Determine Rates ........................................................................................ 82        3.04 Increased Costs; Reserves on LIBOR Rate Loans ...................................................... 83        3.05 Compensation for Losses ............................................................................................. 84        3.06 Mitigation Obligations; Replacement of Lenders ....................................................... 85        3.07 Survival ........................................................................................................................ 85        3.08 Designation of Lead Borrower as Borrowers’ Agent .................................................. 85  ARTICLE IV CONDITIONS PRECEDENT TO CREDIT EXTENSIONS ..................................... 86        4.01 Conditions of Initial Credit Extension ......................................................................... 86        4.02 Conditions to all Credit Extensions ............................................................................. 89  ARTICLE V REPRESENTATIONS AND WARRANTIES .............................................................. 90        5.01 Existence, Qualification and Power ............................................................................. 90                                            (i) 

 

               5.02 Authorization; No Contravention ................................................................................ 90        5.03 Governmental Authorization; Other Consents ........................................................... 91        5.04 Binding Effect ............................................................................................................... 91        5.05 Financial Statements; No Material Adverse Effect ..................................................... 91        5.06 Litigation ...................................................................................................................... 92        5.07 No Default..................................................................................................................... 92        5.08 Ownership of Property; Liens ..................................................................................... 92        5.09 Environmental Compliance ......................................................................................... 93        5.10 Insurance ...................................................................................................................... 93        5.11 Taxes ............................................................................................................................. 93        5.12 ERISA Compliance ...................................................................................................... 94        5.13 Subsidiaries; Equity Interests ...................................................................................... 94        5.14 Margin Regulations; Investment Company Act; ........................................................ 95        5.15 Disclosure ..................................................................................................................... 95        5.16 Compliance with Laws ................................................................................................. 95        5.17 Intellectual Property; Licenses, Etc ............................................................................. 95        5.18 Labor Matters .............................................................................................................. 96        5.19 Security Documents...................................................................................................... 96        5.20 Solvency ........................................................................................................................ 97        5.21 Deposit Accounts; Credit Card Arrangements ........................................................... 97        5.22 Brokers ......................................................................................................................... 97        5.23 Customer and Trade Relations .................................................................................... 97        5.24 Material Contracts ....................................................................................................... 97        5.25 Casualty ........................................................................................................................ 98        5.26 OFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws ............... 98        5.27 Patriot Act .................................................................................................................... 98  ARTICLE VI AFFIRMATIVE COVENANTS .................................................................................. 98        6.01 Financial Statements .................................................................................................... 98        6.02 Certificates; Other Information................................................................................... 99        6.03 Notices ........................................................................................................................ 101        6.04 Payment of Obligations .............................................................................................. 102        6.05 Preservation of Existence, Etc.................................................................................... 103        6.06 Maintenance of Properties ......................................................................................... 103        6.07 Maintenance of Insurance .......................................................................................... 103        6.08 Compliance with Laws ............................................................................................... 104        6.09 Books and Records; Accountants .............................................................................. 104        6.10 Inspection Rights ........................................................................................................ 105        6.11 Use of Proceeds ........................................................................................................... 105        6.12 Additional Loan Parties ............................................................................................. 105        6.13 Cash Management ...................................................................................................... 106        6.14 Information Regarding the Collateral ....................................................................... 107        6.15 Physical Inventories. .................................................................................................. 108        6.16 Environmental Laws .................................................................................................. 108        6.17 Further Assurances .................................................................................................... 108        6.18 Compliance with Terms of Leaseholds ...................................................................... 109        6.19 Material Contracts ..................................................................................................... 109        6.20 OFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws ............. 109  ARTICLE VII NEGATIVE COVENANTS ..................................................................................... 109        7.01 Liens ........................................................................................................................... 109                                           (ii) 

 

               7.02 Investments................................................................................................................. 109        7.03 Indebtedness; Disqualified Stock ............................................................................... 109        7.04 Fundamental Changes ............................................................................................... 109        7.05 Dispositions................................................................................................................. 110        7.06 Restricted Payments ................................................................................................... 110        7.07 Prepayments of Indebtedness .................................................................................... 111        7.08 Change in Nature of Business .................................................................................... 113        7.09 Transactions with Affiliates ....................................................................................... 113        7.10 Burdensome Agreements ........................................................................................... 113        7.11 Use of Proceeds ........................................................................................................... 114        7.12 Amendment of Material Documents .......................................................................... 114        7.13 Fiscal Year .................................................................................................................. 114        7.14 Deposit Accounts; Credit Card Processors ............................................................... 114        7.15 Financial Covenants ................................................................................................... 114  ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES .......................................................... 114        8.01 Events of Default ........................................................................................................ 114        8.02 Remedies Upon Event of Default ............................................................................... 117        8.03 Application of Funds .................................................................................................. 118  ARTICLE IX THE AGENT .............................................................................................................. 120        9.01 Appointment and Authority ...................................................................................... 120        9.02 Rights as a Lender ...................................................................................................... 120        9.03 Exculpatory Provisions .............................................................................................. 120        9.04 Reliance by Agent ....................................................................................................... 121        9.05 Delegation of Duties ................................................................................................... 121        9.06 Resignation of Agent .................................................................................................. 122        9.07 Non-Reliance on Agent and Other Lenders .............................................................. 122        9.08 No Other Duties, Etc .................................................................................................. 123        9.09 Agent May File Proofs of Claim ................................................................................ 123        9.10 Collateral and Guaranty Matters .............................................................................. 123        9.11 Notice of Transfer ...................................................................................................... 124        9.12 Reports and Financial Statements ............................................................................. 124        9.13 Agency for Perfection ................................................................................................. 125        9.14 Indemnification of Agent ........................................................................................... 125        9.15 Relation among Lenders ............................................................................................ 125        9.16 Defaulting Lenders ..................................................................................................... 125        9.17 Lender Press Releases ................................................................................................ 128        9.18 Providers .................................................................................................................... 128  ARTICLE X MISCELLANEOUS .................................................................................................... 128        10.01 Amendments, Etc ....................................................................................................... 128        10.02 Notices; Effectiveness; Electronic Communications ................................................. 130        10.03 No Waiver; Cumulative Remedies ............................................................................. 132        10.04 Expenses; Indemnity; Damage Waiver ..................................................................... 132        10.05 Payments Set Aside .................................................................................................... 134        10.06 Successors and Assigns............................................................................................... 134        10.07 Treatment of Certain Information; Confidentiality.................................................. 137        10.08 Right of Setoff............................................................................................................. 138        10.09 Interest Rate Limitation ............................................................................................. 139        10.10 Counterparts; Integration; Effectiveness .................................................................. 139                                           (iii) 

 

   10.11 Survival ...................................................................................................................... 139  10.12 Severability ................................................................................................................. 140  10.13 Replacement of Lenders ............................................................................................. 140  10.14 Governing Law; Jurisdiction; Etc ............................................................................. 140  10.15 Waiver of Jury Trial .................................................................................................. 141  10.16 No Advisory or Fiduciary Responsibility .................................................................. 142  10.17 Patriot Act Notice ....................................................................................................... 142  10.18 Foreign Asset Control Regulations ............................................................................ 143  10.19 Time of the Essence .................................................................................................... 143  10.20 Reserved. .................................................................................................................... 143  10.21 Tombstone; Press Releases. ....................................................................................... 143  10.22 Additional Waivers .................................................................................................... 143  10.23 No Strict Construction ............................................................................................... 145  10.24 Attachments................................................................................................................ 145  10.25 Keepwell ..................................................................................................................... 145  10.26 Acknowledgment and Consent to Bail-In of Affected Financial Institutions ........... 145  10.27 Acknowledgement Regarding Any Supported QFCs ................................................ 146   SIGNATURES..........................................................................................S-1                                      (iv) 

 

         SCHEDULES         1.01        Borrowers        1.02        Guarantors        1.03        PacWest Cash Collateralized Letters of Credit        2.01        Commitments and Applicable Percentages        5.01        Loan Parties Organizational Information         5.06        Litigation        5.08(b)(1)  Owned Real Estate        5.08(b)(2)  Leased Real Estate        5.09        Environmental Matters        5.10        Insurance        5.13        Subsidiaries; Other Equity Investments        5.17        Intellectual Property Matters        5.18        Collective Bargaining Agreements        5.21(a)     DDAs        5.21(b)     Credit Card Arrangements        5.24        Material Contracts        6.02        Financial and Collateral Reporting        7.01        Existing Liens        7.02        Existing Investments        7.03        Existing Indebtedness        7.09        Affiliate Transactions        10.02       Agent’s Office; Certain Addresses for Notices      EXHIBITS               Form of         A     LIBOR Rate Loan Notice        B     Swing Line Loan Notice        C-1   Note        C-2   Swing Line Note        D     Compliance Certificate        E     Assignment and Assumption        F     Borrowing Base Certificate        G     Credit Card Notification        H     Facility Guaranty        I-1   U.S.  Tax  Compliance  Certificate  (For  Foreign  Lenders  That  Are  Not  Partnerships  For              U.S. Federal Income Tax Purposes)        I-2   U.S. Tax Compliance Certificate (For Foreign Participants That Are Not Partnerships For              U.S. Federal Income Tax Purposes)        I-3   U.S. Tax  Compliance  Certificate  (For  Foreign  Participants  That  Are  Partnerships  For              U.S. Federal Income Tax Purposes)        I-4   U.S.  Tax  Compliance Certificate  (For  Foreign  Lenders  That  Are Partnerships  For  U.S.              Federal Income Tax Purposes)                                            (v) 

 

                             CREDIT AGREEMENT         This CREDIT AGREEMENT (“Agreement”) is entered into as of November 10, 2020, among          CASPER SLEEP INC., a Delaware corporation (the “Lead Borrower”),          the Persons named on Schedule 1.01 hereto (collectively, the “Borrowers”),         the Persons named on Schedule 1.02 hereto (collectively, the “Guarantors”),         each  lender  from  time  to  time  party  hereto  (collectively,  the  “Lenders”  and  individually,  a  “Lender”), and          WELLS FARGO  BANK,  NATIONAL  ASSOCIATION,  as  Agent, L/C  Issuer and  Swing  Line  Lender.          The  Borrowers  have  requested  that  the  Lenders  provide  a  revolving  credit  facility,  and  the  Lenders have indicated their willingness to lend and the L/C Issuer has indicated its willingness to issue  Letters of Credit, in each case on the terms and conditions set forth herein.         In  consideration  of  the  mutual  covenants  and  agreements  herein  contained,  the  parties  hereto  covenant and agree as follows:                                    ARTICLE I                      DEFINITIONS AND ACCOUNTING TERMS         1.01  Defined Terms         .         As used in this Agreement, the following terms shall have the meanings set forth below:         “A/R  Automation  Event”  means  the  establishment  of  an  automated  system for  processing  payments  from  Accounts  of  the  Loan  Parties  owed  by  wholesalers  or  distributors,  which  automated  system (including any testing results thereof conducted by a third party engaged by the Agent) shall be in  form and substance satisfactory to the Agent in its Permitted Discretion.         “Accelerated Borrowing Base Delivery Event” means any of the following (i) the occurrence and  continuance of any Event of Default, or (ii) (x) at any time on or before the Flip Date, (1) the failure of  the  Borrowers  to  maintain  Availability  of  at  least  17.5%  of  the  Loan  Cap  or  (2)  the  failure  of  the  Borrowers to maintain Deposited Cash at least equal to $32,000,000 (or such lesser amount as may be  agreed to by the Agent in writing in its sole discretion) in the aggregate at any time and (y) at any time  after the Flip Date, the failure of the Borrowers to maintain Availability of at least 20% of the Loan Cap..   For purposes of this Agreement, the occurrence of an Accelerated Borrowing Base Delivery Event shall  be deemed continuing at the Agent’s option (i) so long as such Event of Default has not been waived,  and/or (ii) if the Accelerated Borrowing Base Delivery Event arises as a result of the Borrowers’ failure to  achieve Availability or Deposited Cash as required hereunder, until Availability has exceeded 17.5% or  20%, as applicable, of the Loan Cap or Deposited Cash has exceeded $32,000,000 (or such lesser amount  as  may  be agreed  to  by  the  Agent  in  writing  in  its  sole  discretion),  as  applicable, for thirty (30)  consecutive calendar days, in which case an Accelerated Borrowing Base Delivery Event shall no longer  be  deemed  to  be  continuing  for  purposes  of  this  Agreement.   The  termination  of  an  Accelerated 

 

         Borrowing Base Delivery Event as provided herein shall in no way limit, waive or delay the occurrence of  a subsequent Accelerated Borrowing Base Delivery Event in the event that the conditions set forth in this  definition again arise.          “Acceptable Document of Title” means, with respect to any Inventory, a tangible, negotiable bill  of lading or other Document (as defined in the UCC or a “document of title” as defined in the PPSA, as  applicable)  that  (a)  is  issued  by  a  common  carrier  which  is  not  an  Affiliate of  the  Approved  Foreign  Vendor or any Loan Party which is in actual possession of such Inventory, (b) is issued to the order of a  Loan Party or, if so requested by the Agent, to the order of the Agent, (c) names the Agent as a notify  party or bears a conspicuous notation on its face of the Agent’s security interest therein, (d) is not subject  to any Lien (other than Liens in favor of the Agent or Liens permitted under clauses (a), (b), (e) and (o) of  the  definition  of  Permitted  Encumbrance),  and  (e)  is  on terms  otherwise  reasonably  acceptable  to  the  Agent.         “Accommodation Payment” shall have the meaning provided in Section 10.22(d).         “Account”  means  “accounts”  as  defined  in  the  UCC and  in  the  PPSA,  as  applicable,  and  also  means  a  right  to  payment  of  a  monetary  obligation,  whether  or  not  earned  by  performance,  (a)  for  property  that  has  been  or  is  to  be  sold,  leased,  licensed,  assigned,  or  otherwise  disposed  of,  (b)  for  services rendered or to be rendered, (c) for a policy of insurance issued or to be issued, (d) for a secondary  obligation incurred or to be incurred, (e) for energy provided or to be provided, (f) for the use or hire of a  vessel under a charter or other contract, (g) arising out of the use of a credit or charge card or information  contained on or for use with the card, or (h) as winnings in a lottery or other game of chance operated or  sponsored by a state, governmental unit of a state, or person licensed or authorized to operate the game by  a state or governmental unit of a state.           “Account Party” shall have the meaning provided in Section 2.03(h).         “ACH” means automated clearing house transfers.         “Acquisition”  means,  with  respect  to  any  Person  (a)  an  investment  in,  or  a  purchase  of,  a  Controlling interest in the Equity Interests of any other Person, (b) a purchase or other acquisition of all or  substantially all of the assets or properties of, another Person or of any business unit, division or line of  business of another Person, or (c) any merger or consolidation of such Person with any other Person or  other  transaction  or  series  of  transactions  resulting  in  the  acquisition  of  all  or  substantially  all  of  the  assets, or of any business unit, division or line of business of another Person, or a Controlling interest in  the Equity Interests, of any Person, in each case in any transaction or group of transactions which are part  of a common plan.         “Additional Commitment Lender” shall have the meaning provided in Section 2.15(b).         “Adjustment Date” means the first day of each Fiscal Quarter, commencing on January 1, 2021.          “Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the  Agent.         “Affected Financial Institution” means (a) any EEA Financial Institution, or (b) any UK Financial  Institution.          “Affiliate”  means,  with  respect  to  any  Person,  (i)  another  Person  that  directly,  or  indirectly  through one or more intermediaries, Controls or is Controlled by or is under common Control with the                                         2 

 

         Person  specified,  (ii)  any  director,  officer,  managing  member,  partner,  trustee,  or  beneficiary  of  that  Person,  (iii)  any  other  Person  directly  or  indirectly  holding  10%  or  more  of  any  class  of  the  Equity  Interests of that Person, and (iv) any other Person 10% or more of any class of whose Equity Interests is  held directly or indirectly by that Person.         “Agent” means Wells Fargo in its capacity as administrative agent and collateral agent under any  of the Loan Documents, or any successor thereto.         “Agent Parties” shall have the meaning specified in Section 10.02(c).         “Agent’s Office” means the Agent’s address and account as set forth on Schedule 10.02, or such  other address or account as the Agent may from time to time notify the Lead Borrower and the Lenders.         “Aggregate Commitments” means the Commitments of all the Lenders.  As of the Closing Date,  the Aggregate Commitments are $30,000,000.         “Agreement” means this Credit Agreement.         “Allocable Amount” has the meaning specified in Section 10.22(d).         “Anti-Corruption  Laws” means  the  FCPA,  the  U.K. Bribery  Act  of  2010,  as  amended,  and  all  other applicable laws and regulations or ordinances concerning or relating to bribery, money laundering  or corruption in any jurisdiction in which any Loan Party or any of its Subsidiaries or Affiliates is located  or is doing business.          “Anti-Money Laundering Laws” means the applicable laws or regulations in any jurisdiction in  which any Loan Party or any of its Subsidiaries or Affiliates is located or is doing business that relates to  money  laundering,  any  predicate  crime  to  money  laundering,  or  any  financial  record  keeping  and  reporting requirements related thereto.         “Applicable  Lenders”  means  the  Required  Lenders,  all  affected  Lenders,  or  all  Lenders,  as  the  context may require.         “Applicable Margin” means:          (a)  From and after the Closing Date until the first Adjustment Date, the Applicable Margin         set  forth  in  the following pricing  grid based  upon  the  Average  Daily  Availability  as  of  the         Closing  Date  (after  giving  effect  to  any  Borrowings hereunder  on  the  Closing  Date  and         deeming the Availability as of the Closing Date as the Average Daily Availability); and          (b)  From  and  after  the  first  Adjustment  Date  and  on  each  Adjustment  Date  thereafter,  the         Applicable Margin shall be determined from the following pricing grid based upon the Average         Daily Availability as of the Fiscal Quarter ended immediately preceding such Adjustment Date;         provided  however that  notwithstanding  anything  to  the  contrary  set  forth  herein,  upon  the         occurrence of an Event of Default, the Agent may, and at the direction of the Required Lenders         shall,  immediately  increase  the  Applicable  Margin  to  that  set  forth  in  Level  II  (even  if  the         Average Daily Availability requirements for a different Level have been met) and interest shall         accrue at the Default Rate; provided further if any Borrowing Base Certificates are at any time         restated or otherwise revised (including as a result of an audit) or if the information set forth in         such  Borrowing  Base  Certificates  otherwise  proves  to  be  false  or  incorrect  such  that  the         Applicable  Margin  would  have  been  higher  than  was  otherwise  in  effect  during  any  period,                                         3 

 

                without  constituting  a  waiver  of  any  Default  or  Event  of  Default  arising  as  a  result  thereof,         interest due under this Agreement shall be immediately recalculated at such higher rate for any         applicable periods and shall be due and payable on demand.                                                   LIBOR     Base Rate  Letter of   Level         Average Daily Availability      Margin     Margin    Credit Fee                                                  2.50%      1.50%      2.50%     I   Greater than or equal to 50% of the Loan Cap                                                  2.75%      1.75%      2.75%     II  Less than 50% of the Loan Cap         “Applicable Percentage” means with respect to any Lender at any time, the percentage (carried  out  to  the  ninth  decimal  place)  of  the  Aggregate  Commitments  represented  by  such  Lender’s  Commitment at such time.  If the commitment of each Lender to make Loans and the obligation of the  L/C  Issuer  to  make  L/C  Credit  Extensions  have  been  terminated  pursuant  to Section 8.02 or  if  the  Aggregate  Commitments  have  expired,  then  the  Applicable  Percentage  of  each  Lender  shall  be  determined based on the Applicable Percentage of such Lender most recently in effect, giving effect to  any subsequent assignments.  The initial Applicable Percentage of each Lender is set forth opposite the  name  of  such  Lender  on Schedule  2.01 or in the  Assignment  and  Assumption  pursuant  to  which  such  Lender becomes a party hereto, as applicable.         “Appraisal  Percentage”  means (a)  with  respect  to  Eligible  Inventory  (other  than  Eligible  In- Transit Inventory), eighty-five percent (85%) and (b) with respect to Eligible In-Transit Inventory, eighty  percent (80%).          “Appraised Value” means the appraised orderly liquidation values, net of costs and expenses to  be  incurred  in  connection  with  any  such  liquidation,  which  values are expressed  as one  or  more  percentages of Cost of Eligible Inventory as set forth in the inventory stock ledger of the Lead Borrower,  which  value  shall  be  determined  from  time  to  time  by  the  most  recent  appraisal for  such  Inventory  undertaken by an independent appraiser engaged by the Agent.         “Approved Fund” means any Person (other than a natural person) that is (or will be) engaged in  making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit  in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate  of a Lender, (c) an entity or an Affiliate of an entity that administers or manages a Lender or (d) the same  investment  advisor  or  an  advisor under  common  control  with  such  Lender,  Affiliate  or  advisor,  as  applicable.         “Approved  Foreign  Vendor”  means  a  Foreign  Vendor  which  (a)  is  located  in  any  country  acceptable  to  the  Agent  in  its Permitted  Discretion  (it  being  understood  that,  as  of  the  Closing  Date,  Canada, the United Kingdom and Germany shall be deemed acceptable to the Agent), (b) has received  timely payment or performance of all obligations owed to it by the Loan Parties, (c) has not asserted and  has no right to assert any reclamation, repossession, diversion, stoppage in transit, Lien or title retention  rights in respect of such Inventory, and (d), if so requested by the Agent, has entered into and is in full  compliance with the terms of a Foreign Vendor Agreement.         “Arranger” means Wells Fargo, in its capacity as sole lead arranger and sole book manager.                                         4 

 

               “Assignee Group” means two or more Eligible Assignees that are Affiliates of one another or two  or more Approved Funds managed by the same investment advisor.         “Assignment  and  Assumption” means  an  assignment and  assumption  entered  into  by  a  Lender  and an Eligible Assignee (with the consent of any party whose consent is required by Section 10.06(b)),  and  accepted  by  the  Agent,  in  substantially  the  form  of Exhibit  E or  any  other  form  approved  by  the  Agent.         “Audited  Financial  Statements”  means  the  audited  consolidated  balance  sheet  of  the  Lead  Borrower and its Subsidiaries for the Fiscal Year ended December 31, 2019, and the related consolidated  statements of income or operations, Shareholders’ Equity and cash flows for such Fiscal Year of the Lead  Borrower and its Subsidiaries, including the notes thereto.         “Availability”  means,  as  of  any  date  of  determination  thereof  by  the  Agent,  the  result,  if  a  positive number, of:                 (a)  The Loan Cap                           Minus          (b)  The Total Outstandings.         “Availability Period” means the period from and including the Closing Date to the earliest of (a)  the Maturity Date, (b) the date of termination of the Aggregate Commitments pursuant to Section 2.06,  and (c) the date of termination of the commitment of each Lender to make Loans and of the obligation of  the L/C Issuer to make L/C Credit Extensions pursuant to Section 8.02.         “Availability Reserves” means, without duplication of any other Reserves or items to the extent  such  items  are  otherwise  addressed  or  excluded  through  eligibility  criteria,  such  reserves  as  the  Agent  from  time  to  time  determines  in  its  Permitted  Discretion  as  being  appropriate  (a)  to  reflect  the  impediments to the Agent’s ability to realize upon the Collateral, (b) to reflect claims and liabilities that  the Agent determines will need to be satisfied in connection with the realization upon the Collateral, (c) to  reflect  criteria,  events,  conditions,  contingencies  or  risks  which  adversely  affect  any  component  of  the  Borrowing Base, or the assets, business, financial performance or financial condition of any Loan Party,  or (d) to reflect that a Default or an Event of Default then exists. Without limiting the generality of the  foregoing, Availability Reserves may include, in the Agent’s Permitted Discretion, (but are not limited to)  reserves  based  on:  (i)  rent;  (ii)  customs  duties,  and  other  costs  to  release  Inventory  which  is  being  imported  into  the  United  States;  (iii)  outstanding  Taxes  and  other  governmental  charges,  including,  without limitation, ad valorem, real estate, personal property, sales, claims of the PBGC and other Taxes  which may have priority over the interests of the Agent in the Collateral; (iv) salaries, wages and benefits  due to employees of any Loan Party, (v) customer credit liabilities consisting of the aggregate remaining  value at such time of (a) outstanding gift certificates and gift cards of the Loan Parties entitling the holder  thereof to use all or a portion of the certificate or gift card to pay all or a portion of the purchase price for  any Inventory, (b) outstanding merchandise credits of the Loan Parties, and (c) liabilities in connection  with frequent shopping programs of the Loan Parties, (vi) deposits made by customers with respect to the  purchase  of  goods  or  the  performance  of  services  and  layaway  obligations  of  the  Loan  Parties,  (vii)  reserves  for  reasonably  anticipated  changes  in  the  Appraised  Value  of  Eligible  Inventory  between  appraisals, (viii) warehousemen’s or bailee’s charges and other Liens which may have priority over the  interests of the Agent in the Collateral, (ix) amounts due to vendors on account of consigned goods, (x)  Cash  Management  Reserves,  (xi)  Bank  Products  Reserves,  and   (xii)  royalties  payable  in  respect  of  licensed merchandise.                                         5 

 

               “Average  Daily  Availability”  means,  for  any  Fiscal  Quarter,  an  amount  equal  to  the  sum  of  Availability  for  each  day  of such  Fiscal  Quarter  divided  by  the  actual  number  of  days  in  such  Fiscal  Quarter, as determined by the Agent, which determination shall be conclusive absent manifest error.         “Bail-In  Action”  means  the  exercise  of  any  Write-Down  and  Conversion  Powers  by  the  applicable Resolution Authority in respect of any liability of an Affected Financial Institution.         “Bail-In Legislation” means, (a) with respect to any EEA Member Country implementing Article  55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the  implementing  law,  rule,  regulation  or  requirement  for  such  EEA  Member  Country  from  time  to  time  which is described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom,  Part  I  of  the  United  Kingdom  Banking  Act  2009  (as  amended  from  time  to  time)  and  any  other  law,  regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks,  investment  firms  or  other  financial  institutions  or  their  affiliates  (other  than  through  liquidation,  administration or other insolvency proceedings).         “Bank  Products”  means any  services  or  facilities  provided  to  any  Loan  Party  by  the  Agent,  Lenders  or  any  of  their  Affiliates  (but  excluding Cash  Management  Services) on  account  of: (a) Swap  Contracts, (b) credit or debit cards, (c) purchase cards, and (d) print services.         “Bank Products Reserves” means such reserves as the Agent from time to time determines in its  Permitted Discretion as being appropriate to reflect the liabilities and obligations of the Loan Parties with  respect to Bank Products then provided or outstanding.         “Base  Rate”  means,  for  any  day,  a  fluctuating  rate  per  annum  equal  to  the  highest  of  (a)  the  Federal Funds Rate plus 1⁄2%, (b) the LIBOR Rate (which rate shall be calculated based upon an Interest  Period of one month and shall be determined on a daily basis), plus one percentage point, and (c) the rate  of interest announced, from time to time, within Wells Fargo at its principal office in San Francisco as its  “prime  rate”,  with  the  understanding  that  the  “prime  rate”  is  one  of  Wells  Fargo’s  base  rates  (not  necessarily  the  lowest  of  such  rates)  and  serves  as  the  basis  upon  which  effective  rates  of  interest  are  calculated  for  those  loans  making  reference  thereto  and is  evidenced  by the  recording  thereof  after  its  announcement in such internal publications as Wells Fargo may designate (and, if any such announced  rate is below zero, then the rate determined pursuant to this clause (c) shall be deemed to be zero).         “Base Rate Loan” means a Loan that bears interest based on the Base Rate.         “Beneficial Ownership Certification” means a certification regarding beneficial ownership as  required by the Beneficial Ownership Regulation.           “Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.                 “Blocked Account” has the meaning provided in Section 6.13(a)(ii).         “Blocked Account Agreement” means with respect to a deposit account or money market account  established by a Loan Party, an agreement, in form and substance reasonably satisfactory to the Agent,  establishing control (as defined in the UCC or PPSA, as applicable), of such account by the Agent and  whereby the bank or the intermediary maintaining such account agrees, upon the occurrence and during  the continuance of a Cash Dominion Event, to comply only with the instructions originated by the Agent  without the further consent of any Loan Party.                                          6 

 

               “Blocked Account Agreement (Access Restricted Immediately)” means with respect to a deposit  account  or  money  market account established  by  a  Loan  Party,  an  agreement,  in  form  and  substance  reasonably satisfactory to the Agent, establishing control (as defined in the UCC or PPSA, as applicable),  of such account by the Agent and whereby the bank or the intermediary maintaining such account agrees  to  comply  only  with  the  instructions  originated  by  the  Agent  without  the  further  consent  of  any  Loan  Party.         “Blocked Account Bank” means each bank with whom deposit accounts are maintained in which  any funds of any of the Loan Parties from one or more DDAs are concentrated and with whom a Blocked  Account Agreement has been, or is required to be, executed in accordance with the terms hereof.         “Bookrunner” means Wells Fargo, in its capacity as sole bookrunner.         “Borrower Materials” has the meaning specified in Section 6.02.         “Borrowers” has the meaning specified in the introductory paragraph hereto.         “Borrowing”  means  a  Committed  Borrowing  or  a  Swing  Line  Borrowing, as  the  context  may  require.         “Borrowing Base” means, at any time of calculation, an amount equal to:                  (a)  the  face  amount  of  Eligible  Credit  Card  Receivables multiplied  by the  Credit         Card Advance Rate;               plus          (b)   the Cost of Eligible Inventory, net of Inventory Reserves, multiplied by the product of         Appraisal  Percentage  multiplied  by  the  Appraised  Value  of  Eligible  Inventory; provided that         Eligible In-Transit Inventory shall not exceed 15% of the total Eligible Inventory;                plus          (c)  85%  multiplied  by  the  face  amount  of Eligible  Trade  Receivables  (net  of  Receivables         Reserves applicable thereto); provided that Eligible Trade Receivables shall not exceed (i) prior         to  the  A/R  Automation  Event,  50%  of  the  total  Borrowing  Base  or  (ii) on  or  after  the  A/R         Automation Event, 75% of the total Borrowing Base;               plus          (d)  100% of all Eligible Cash on Hand, provided that Eligible Cash on Hand included in the         Borrowing  Base  (i)  shall  not  exceed  15%  of  the  total  Borrowing  Base,  and  (ii)  may  not  be         withdrawn from the applicable deposit account, thereby reducing the Borrowing Base, unless         (A) no Cash Dominion Event exists and is continuing or would result after giving effect to such         withdrawal, and (B) the Lead Borrower furnishes the Agent with (1) notice of such intended         withdrawal and (2) a Borrowing Base Certificate as of the date of such proposed withdrawal         reflecting that, after giving effect to such withdrawal, no Overadvance exists or would result         from such withdrawal;               minus                                           7 

 

                (e)  the then amount of all Availability Reserves.         “Borrowing  Base  Certificate”  means  a  certificate  substantially  in  the  form  of Exhibit  F hereto  (with such changes therein as may be required by the Agent to reflect the components of and reserves  against  the  Borrowing  Base  as  provided  for  hereunder  from  time  to  time),  executed  and  certified  as  accurate and complete by a Responsible Officer of the Lead Borrower, which shall include appropriate  exhibits,  schedules,  supporting  documentation,  and  additional  reports  as  reasonably  requested  by  the  Agent.         “Business”  means  the  retail,  wholesale,  and  online  sale  of  mattresses  and  related  products,  including  the  design,  production  and  marketing  of  mattresses,  sheets,  pillows,  duvet,  bed  frames  and  related products.         “Business Day” means any day other than a Saturday, Sunday or other day on which commercial  banks are authorized to close under the Laws of, and are in fact closed in, the state where the Agent’s  Office is located and, if such day relates to any LIBOR Rate Loan, means any such day on which dealings  in Dollar deposits are conducted by and between banks in the London interbank market.          “Canadian Blocked Person” means any Person that is a “designated person”, “politically exposed  foreign person” or “terrorist group” as described in any Canadian Economic Sanctions and Export Control  Laws.         “Canadian Economic Sanctions and Export Control Laws” means any Canadian laws, regulations  or orders governing transactions in controlled goods or technologies or dealings with countries, entities,  organizations, or individuals subject to economic sanctions and similar measures, including the Special  Economic  Measures  Act (Canada),  the United  Nations  Act,  (Canada),  the Freezing  Assets  of  Corrupt  Foreign  Officials  Act (Canada),  Part  II.1  of  the Criminal  Code (Canada)  and  the Export  and  Import  Permits Act (Canada), and any related regulations.         “Capital Lease Obligations” means subject to Section 1.03(b), with respect to any Person for any  period,  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 the  amount  of  the  obligations  in  respect  thereof  that  would  at  the  time  be  required  to  be  classified  and  accounted  for  as  liabilities  on  a  balance  sheet  of  such  Person  under  GAAP  and  the  amount  of  which  obligations shall be the capitalized amount thereof determined in accordance with GAAP.         “Cash Collateral Account” means a non-interest bearing account established by one or more of  the Loan Parties with Wells Fargo, and in the name of, the Agent (or as the Agent shall otherwise direct)  and under the sole and exclusive dominion and control of the Agent, in which deposits are required to be  made in accordance with Section 2.03(k) or 8.02(c).         “Cash Collateralize” has the meaning specified in Section 2.03(k).  Derivatives of such term have  corresponding meanings.         “Cash Dominion Event” means any of the following (i) the occurrence and continuance of any  Event  of  Default or (ii) (x)  at  any time  on  or  before the  Flip  Date,  (1) the  failure  of  the  Borrowers  to  maintain Availability for more than two (2) Business Days of at least 15% of the Loan Cap or (2) the  failure of the Borrowers to maintain Deposited Cash at least equal to $32,000,000 (or such lesser amount  as may be agreed to by the Agent in writing in its sole discretion) in the aggregate at any time and (y) at  any time after the Flip Date, the failure of the Borrowers to maintain Availability of at least 17.5% of the  Loan Cap.  For purposes of this Agreement, the occurrence of a Cash Dominion Event shall be deemed                                         8 

 

         continuing at the Agent’s option (i) so long as such Event of Default has not been waived, and/or (ii) if  the Cash Dominion Event arises as a result of the Borrowers’ failure to achieve Availability or Deposited  Cash as required hereunder, until Availability has exceeded 15% or 17.5% of the Loan Cap, as applicable,  or Deposited Cash has exceeded $32,000,000 (or such lesser amount as may be agreed to by the Agent in  writing in its  sole  discretion),  as  applicable,  for  thirty  (30)  consecutive  calendar  days, in  which  case  a  Cash  Dominion  Event  shall  no  longer  be  deemed  to  be  continuing  for  purposes  of  this  Agreement;  provided  that a  Cash  Dominion  Event  shall  be  deemed  continuing  (even  if  an  Event  of  Default  is  no  longer continuing and/or Availability and/or Deposited Cash exceeds the required amount for thirty (30)  consecutive  calendar  days)  at  all  times  after  (i)  a  Cash  Dominion  Event  has  occurred  and  been  discontinued  on  (two)  (2)  occasions  in  any  twelve  month  period,  or  (ii)  a  Cash  Dominion  Event  has  occurred and been discontinued on four (4) occasions during the term of this Agreement unless no Event  of Default is continuing and/or Availability or Deposited Cash exceeds the required amount for ninety  (90) consecutive calendar days.  The termination of a Cash Dominion Event as provided herein shall in no  way  limit,  waive  or  delay  the  occurrence  of  a  subsequent  Cash  Dominion  Event  in  the  event  that  the  conditions set forth in this definition again arise.          “Cash  Equivalents”  means  (a)  readily  marketable  obligations  issued  or  directly  and  fully  guaranteed or insured by the United States of America or any agency or instrumentality thereof having  maturities of not more than 360 days from the date of acquisition thereof; provided that the full faith and  credit of the United States of America is pledged in support thereof; (b) commercial paper issued by any  Person organized under the laws of any state of the United States of America and rated at least “Prime-1”  (or the then equivalent grade) by Moody’s or at least “A-1” (or the then equivalent grade) by S&P, in  each case with maturities of not more than 180 days from the date of acquisition thereof; (c) time deposits  with, or insured certificates of deposit or bankers’ acceptances of, any commercial bank that (i) (A) is a  Lender or (B) is organized under the laws of the United States of America, any state thereof or the District  of Columbia or is the principal banking subsidiary of a bank holding company organized under the laws  of the United States of America, any state thereof or the District of Columbia, and is a member of the  Federal Reserve System, (ii) issues (or the parent of which issues) commercial paper rated as described in  clause (c) of this definition and (iii) has combined capital and surplus of at least $1,000,000,000, in each  case  with  maturities  of  not  more  than  180  days  from  the  date  of  acquisition  thereof;  (d)  fully  collateralized repurchase agreements with a term of not more than thirty (30) days for securities described  in clause (a) above (without regard to the limitation on maturity contained in such clause) and entered into  with a financial institution satisfying the criteria described in clause (c) above or with any primary dealer  and  having  a  market  value  at  the time that  such  repurchase  agreement  is  entered  into  of  not  less than  100% of the repurchase obligation of such counterparty entity with whom such repurchase agreement has  been entered into; (e) any “cash equivalents” disclosed on the balance sheet of the Lead Borrower filed  with the SEC; and (f) any Investments, classified in accordance with GAAP as current assets of the Loan  Parties, in any money market fund, mutual fund, or other investment companies that are registered under  the Investment Company Act of 1940, as amended, which are administered by financial institutions that  have the highest rating obtainable from either Moody’s or S&P, and which invest solely in one or more of  the types of securities described in clauses (a) through (d) above.         “Cash Management Reserves ” means such reserves as the Agent, from time to time, determines  in  its  Permitted  Discretion  as  being  appropriate  to  reflect  the  reasonably  anticipated  liabilities  and  obligations of the Loan Parties with respect to Cash Management Services then provided or outstanding.         “Cash Management Services” means any cash management services or facilities provided to any  Loan  Party  or  their  Subsidiaries  by  the  Agent,  Lenders  or  any  of  their  Affiliates,  including without  limitation, Wells Fargo Merchant Services, L.L.C., including, without limitation: (a) ACH transactions,  (b)  controlled  disbursement  services,  treasury,  depository,  overdraft,  and  electronic  funds  transfer  services, or (c) any services related to the acceptance and/or processing of payment cards or devices.                                         9 

 

               “CERCLA”  means  the  Comprehensive  Environmental  Response,  Compensation,  and  Liability  Act, 42 U.S.C. § 9601 et seq., as amended.          “CERCLIS”  means  the  Comprehensive  Environmental  Response,  Compensation,  and  Liability  Information System maintained by the United States Environmental Protection Agency.         “CFC”  means  a  controlled  foreign  corporation  as  that  term  is defined  in  Section 957(a)  of  the  Code.          “Change in Law” means the occurrence, after the date of this Agreement, of any of the following:  (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule,  regulation  or  treaty  or  in  the  administration,  interpretation  or  application  thereof  by  any  Governmental  Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the  force  of  law)  by  any  Governmental  Authority; provided that notwithstanding  anything  herein  to  the  contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules,  guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines  or  directives  promulgated by  the  Bank  for  International  Settlements,  the Basel  Committee  on Banking  Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities,  in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of  the date enacted, adopted or issued.         “Change of Control” means an event or series of events by which:                 (a)  any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of         the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person         or  its  subsidiaries,  and  any  person  or  entity  acting  in  its  capacity  as  trustee,  agent  or  other         fiduciary  or  administrator  of  any  such  plan)  becomes  the  “beneficial  owner”  (as  defined  in         Rules  13d-3  and  13d-5  under  the  Securities  Exchange  Act  of  1934,  except  that  a  person  or         group  shall  be  deemed  to  have  “beneficial  ownership”  of  all  securities  that  such  person  or         group has the right to acquire, whether such right is exercisable immediately or only after the         passage of time (such right, an “option right”)), directly or indirectly, of 40% or more of the         Equity Interests of the Lead Borrower entitled to vote for members of the board of directors or         equivalent  governing  body  of  the  Lead  Borrower  on  a  fully-diluted  basis  (and  taking  into         account all such Equity Interests that such “person” or “group” has the right to acquire pursuant         to any option right); or          (b)  during any period of twelve (12) consecutive months, a majority of the members of the         board  of  directors  or  other  equivalent  governing  body  of  the  Lead  Borrower  cease  to  be         composed of individuals (i) who were members of that board or equivalent governing body on         the  first  day  of  such  period,  (ii)  whose  election  or  nomination  to  that  board  or  equivalent         governing body was approved by individuals referred to in clause (i) above constituting at the         time of such election or nomination at least a majority of that board or equivalent governing         body or (iii) whose election or nomination to that board or other equivalent governing body was         approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such         election or nomination at least a majority of that board or equivalent governing body; or          (c)  the occurrence of any “change in control” or similar event as defined in any document         governing  Material  Indebtedness of  any  Loan  Party  (including  any “change  in  control”  or         “fundamental  change”  in  any  document  governing Permitted  Convertible  Indebtedness)  that         would  trigger  an  event  of  default  or  require  any  mandatory  prepayment  of  such  Material         Indebtedness; or                                         10 

 

                (d)  the Lead Borrower fails at any time to own, directly or indirectly, 100% of the Equity         Interests of each other Loan Party free and clear of all Liens (other than the Liens in favor of         the Agent or Liens permitted under clauses (a), (b), (e) and (o) of the definition of Permitted         Encumbrance), except where such failure is as a result of a transaction permitted by the Loan         Documents.         “Closing Date” means the first date all the conditions precedent in Section 4.01 are satisfied or  waived in accordance with Section 10.01.         “Code” means the Internal Revenue Code of 1986, as amended.         “Collateral” means any and all “Collateral” as defined in any applicable Security Document and  all other property that is or is intended under the terms of the Security Documents to be subject to Liens in  favor of the Agent.         “Collateral  Access  Agreement”  means  an  agreement  reasonably  satisfactory  in  form  and  substance to the Agent executed by (a) a bailee or other Person in possession of Collateral (including,  without limitation, a Logistics Servicer), and (b) any landlord of Real Estate leased by any Loan Party,  pursuant  to  which  such  Person  (i)  acknowledges  the  Agent’s  Lien  on  the  Collateral,  (ii)  releases  or  subordinates such Person’s Liens in the Collateral held by such Person or located on such Real Estate,  (iii) provides the Agent with access to the Collateral held by such bailee or other Person or located in or  on such Real Estate, (iv) as to any landlord, provides the Agent with a reasonable time to sell and dispose  of the Collateral from such Real Estate, and (v) makes such other agreements with the Agent as the Agent  may reasonably require.         “Commercial Letter of Credit” means any Letter of Credit issued for the purpose of providing the  primary  payment  mechanism in  connection  with  the purchase  of  any  materials,  goods  or services  by  a  Loan Party in the ordinary course of business of such Loan Party.         “Commercial  Letter  of  Credit  Agreement”  means  the  Commercial  Letter  of  Credit  Agreement  relating to the issuance of a Commercial Letter of Credit in the form from time to time in use by the L/C  Issuer.         “Commitment”  means,  as  to  each  Lender,  its  obligation  to  (a)  make  Committed  Loans  to  the  Borrowers  pursuant  to Section 2.01,  (b)  purchase  participations  in  L/C  Obligations,  and  (c)  purchase  participations in Swing Line Loans, in an aggregate principal amount at any one time outstanding not to  exceed  the  amount  set  forth  opposite  such  Lender’s name  on Schedule  2.01 or in the  Assignment  and  Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be  adjusted from time to time in accordance with this Agreement.         “Commitment Increases” has the meaning specified in Section 2.15(b)(i).         “Committed Borrowing” means a borrowing consisting of simultaneous Committed Loans of the  same Type and, in the case of LIBOR Rate Loans, having the same Interest Period made by each of the  Lenders pursuant to Section 2.01.         “Committed Loan” has the meaning specified in Section 2.01.         “Commodity  Exchange  Act”  means  the  Commodity  Exchange  Act  (7  U.S.C.  §  1  et  seq.),  as  amended from time to time, and any successor statute.                                          11 

 

               “Compliance Certificate” means a certificate substantially in the form of Exhibit D.         “Concentration Account” has the meaning provided in Section 6.13(d).          “Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by  net income (however denominated) or that are franchise Taxes or branch profits Taxes.         “Consent”  means  actual  consent  given  by  a  Lender  from  whom  such  consent is  sought; or  the  passage  of  seven  (7)  Business  Days from  receipt  of  written  notice  to  a  Lender  from  the  Agent  of  a  proposed course of action to be followed by the Agent without such Lender’s giving the Agent written  notice of that Lender’s objection to such course of action.         “Consolidated”  means,  when  used to  modify  a  financial  term,  test,  statement,  or  report  of  a  Person, the application or preparation of such term, test, statement or report (as applicable) based upon  the  consolidation,  in  accordance  with  GAAP,  of  the  financial  condition  or  operating  results  of  such  Person and its Subsidiaries.         “Consolidated  Adjusted  EBITDA”  means,  at  any  date  of  determination,  an  amount  equal  to  Consolidated Net Income of the Lead Borrower and its Subsidiaries on a Consolidated basis for the most  recently completed Measurement Period, plus (a) the following to the extent deducted in calculating such  Consolidated Net Income: (i) Consolidated Interest Charges, (ii) the provision for Federal, state, local and  foreign income Taxes, (iii) depreciation and amortization expense, (iv) other non-cash charges reducing  such Consolidated Net Income which do not represent a cash item in any future period (in each case of or  by Lead Borrower and its Subsidiaries for such Measurement Period), (v) unusual or non-recurring items  including,  without  limitation,  restructuring,  restructuring-related  or  other  similar  charges  or  expenses  (whether or not classified as restructuring charges or expenses under GAAP) and write-downs of excess  or  obsolete  inventory  and  including  the  amount  of  any  restructuring,  integration,  transition,  employee  severance,  facility  closing  and  similar  charges  accrued  during  such  period,  including  any  charges  to  establish accruals and reserves or to make payments associated with the reassessment or realignment of  the business and operations of the Lead Borrower and its Subsidiaries, and including the sale or closing of  facilities,  severance,  stay  bonuses  and  curtailments  or  modifications  to  pension  and  post-retirement  employee benefit plans, asset write-downs, asset impairment  or asset disposals (including abandonment  of leased facilities, leasehold improvements and right of use assets), write-downs for purchase and lease  commitments, contract termination expenses, writedowns of excess, obsolete or unbalanced inventories,  relocation  costs  which  are  not  otherwise  capitalized  and  legal  settlements  and  (vi)  any  expenses  or  charges (other than depreciation or amortization expense) related to any issuance by the Lead Borrower of  Equity  Interests,  any  Investment,  Disposition  or  recapitalization  or  the  incurrence  of  Indebtedness  permitted to be incurred hereunder (in each case whether or not consummated) minus (b) the following to  the  extent  included  in  calculating  such  Consolidated  Net  Income:  (i)  Federal,  state,  local  and  foreign  income tax credits and (ii) all non-cash items increasing Consolidated Net Income which do not represent  a  cash  item  in  any  future  period  (in  each  case  of  or  by  Lead  Borrower  and  its  Subsidiaries  for  such  Measurement Period), all as determined on a Consolidated basis in accordance with GAAP.          “Consolidated Interest Charges” means, for any Measurement Period, the sum of (a) all interest,  premium payments, debt discount, fees, charges and related expenses in connection with borrowed money  (including capitalized interest) or in connection with the deferred purchase price of assets, in each case to  the extent treated as interest in accordance with GAAP, including, without limitation, all commissions,  discounts  and  other  fees  and  charges  owed  with  respect  to  letters  of  credit  and  bankers’  acceptance  financing and net costs under Swap Contracts, but excluding any non-cash or deferred interest financing  costs, (b) all interest paid or payable with respect to discontinued operations and (c) the portion of rent  expense with  respect  to  such  period  under  Capital  Lease  Obligations  that  is  treated  as  interest  in                                         12 

 

         accordance with GAAP minus (d) interest income during such period (excluding any portion of interest  income representing accruals of amounts received in a previous period), in each case of or by the Lead  Borrower and its Subsidiaries for the most recently completed Measurement Period, all as determined on  a Consolidated basis in accordance with GAAP.         “Consolidated Net Income” means, as of any date of determination, the net income of the Lead  Borrower and its Subsidiaries for the most recently completed Measurement Period, all as determined on  a  Consolidated  basis  in  accordance  with  GAAP,  provided,  however,  that  there  shall  be  excluded  therefrom (a) extraordinary gains and extraordinary losses for such Measurement Period, (b) the income  (or loss) of such Person during such Measurement Period in which any other Person has a joint interest,  except to the extent of the amount of cash dividends or other distributions actually paid in cash to such  Person during such period, (c) the income (or loss) of such Person during such Measurement Period and  accrued prior to the date it becomes a Subsidiary of a Person or any of such Person’s Subsidiaries or is  merged into or consolidated with a Person or any of its Subsidiaries or that Person’s assets are acquired  by such Person or any of its Subsidiaries, and (d) the income of any direct or indirect Subsidiary of a  Person  to  the  extent  that  the  declaration  or  payment  of  dividends  or  similar  distributions  by  that  Subsidiary  of  that  income  is  not  at  the  time  permitted  by  operation  of  the  terms  of  its  Organization  Documents  or  any  agreement,  instrument,  judgment,  decree,  order,  statute,  rule  or  governmental  regulation applicable to that Subsidiary, except that Lead Borrower’s equity in any net loss of any such  Subsidiary for such Measurement Period shall be included in determining Consolidated Net Income.         “Contractual Obligation” means, as to any Person, any provision of any agreement, instrument or  other undertaking to which such Person is a party or by which it or any of its property is bound.         “Control”  means  the  possession,  directly  or  indirectly,  of  the  power  to  direct  or  cause  the  direction of the management or policies of a Person, whether through the ability to exercise voting power,  by contract or otherwise.  “Controlling” and “Controlled” have meanings correlative thereto.         “Cost”  means  the  lower  of  cost  or  market  value  of  Inventory,  based  upon  the  Borrowers’  accounting  practices,  known  to  the  Agent,  which  practices  are  in  effect  on  the  Closing  Date  as  such  calculated cost is determined from invoices received by the Borrowers, the Borrowers’ purchase journals  or  the  Borrowers’  stock  ledger.   “Cost”  does  not  include  inventory  capitalization  costs  or  other  non-purchase price charges (such as freight) used in the Borrowers’ calculation of cost of goods sold.         “Credit Card Advance Rate” means ninety percent (90.00)%.         “Credit Card Issuer” shall mean any person (other than a Borrower or other Loan Party) (i) who  issues  or  whose  members  issue  credit  cards,  including,  without  limitation,  Mastercard  or  VISA  bank  credit  or  debit  cards  or  other  bank  credit  or  debit  cards  issued  through  Mastercard  International,  Inc.,  Visa,  U.S.A.,  Inc.  or  Visa  International  and  American  Express,  Discover,  Diners  Club,  Carte Blanche,  Synchrony Bank and other non-bank credit or debit cards, including, without limitation, credit or debit  cards  issued  by  or  through  American  Express  Travel  Related  Services  Company,  Inc.,  and  Novus  Services,  Inc.,  and  (ii)  who  provides  e-commerce  or  electronic  payment  services,  including,  without  limitation,  PayPal,  Inc.,  Klarna,  and  Affirm,  Inc.,  and  other  issuers  or  e-commerce  electronic  payment  service providers as the Agent may reasonably approve from time to time.         “Credit Card Notifications” has the meaning provided in Section 6.13(a)(i).         “Credit Card Processor” shall mean any servicing or processing agent or any factor or financial  intermediary  who  facilitates,  services,  processes  or  manages  the  credit  authorization,  billing  transfer  and/or payment procedures with respect to any Loan Party’s sales transactions involving credit card or                                         13 

 

         debit card purchases by customers using credit cards or debit cards issued by (or e-commerce services or  electronic payment services provided by) any Credit Card Issuer.         “Credit Card Receivables” means each “payment intangible” (as defined in the UCC or PPSA, as  applicable)  together  with  all  income,  payments  and  proceeds  thereof,  owed  by  a  Credit  Card  Issuer  or  Credit Card Processor to a Loan Party resulting from charges by a customer of a Loan Party on credit or  debit cards issued by such Credit Card Issuer in connection with the sale of goods by a Loan Party, or  services performed by a Loan Party, in each case in the ordinary course of its business.         “Credit  Extensions”  mean  each  of  the  following:  (a)  a  Borrowing  and  (b)  an  L/C  Credit  Extension.         “Credit Party” or “Credit Parties” means (a) individually, (i) each Lender and its Affiliates, (ii)  the Agent, (iii) each L/C Issuer, (iv) the Arranger, (v) each beneficiary of each indemnification obligation  undertaken  by  any  Loan  Party  under  any  Loan  Document,  (vi)  any  other  Person  to  whom  Obligations  under this Agreement and other Loan Documents are owing, and (vii) the successors and assigns of each  of the foregoing, and (b) collectively, all of the foregoing.         “Credit  Party  Expenses”  means,  without  limitation,  (a)  all  reasonable  and  documented  out-of- pocket expenses incurred by the Agent and its Affiliates in connection with this Agreement and the other  Loan Documents, including without limitation (i) the reasonable fees, charges and disbursements (A) of  one  primary  counsel  for  the  Agent  and,  to  the  extent  appropriate,  one local  counsel  in  each  relevant  jurisdiction,  (B)  of  outside  consultants  and  advisors  for  the  Agent,  (C)  of  appraisers  or  third  party  valuation  servicers,  (D)  of  commercial  finance  examinations,  (E)  in  connection  with  photocopying,  notarization, couriers and messengers, telecommunication, public record searches, filing fees, recording  fees, and publication and, (F) the Agent’s customary fees and charges imposed or incurred in connection  with any background checks or OFAC/PEP searches related to any Loan Party or its Subsidiaries, and (G)  all such reasonable and documented out-of-pocket expenses incurred during any workout, restructuring or  negotiations  in  respect  of  the  Obligations,  (ii)  in  connection  with  (A)  the  syndication  of  the  credit  facilities provided for herein (including reasonable costs and expenses relative to the rating of any Loan,  CUSIP,  DXSyndicateTM,  SyndTrak  or  other  communication  costs  incurred  in  connection  with  a  syndication  of  the  credit  facilities),  (B)  the  preparation,  negotiation,  administration  (including  travel,  meals  and  lodging),  management,  execution  and  delivery  of  this  Agreement  and  the  other  Loan  Documents or any amendments, modifications or waivers of the provisions thereof (whether or not the  transactions contemplated hereby or thereby shall be consummated but in the case of any amendments,  modifications or waivers, subject to any fee or expense caps as may be agreed in writing between Agent  and Lead Borrower), (C) the enforcement or protection of their rights in connection with this Agreement  or  the  Loan  Documents  or  efforts  to  preserve,  protect,  collect,  or  enforce  the  Collateral  (including,  without  limitation,  gaining  possession  of,  maintaining,  handling,  preserving,  storing,  shipping,  selling,  preparing for sale, or advertising to sell the Collateral, or any portion thereof, irrespective of whether a  sale  is  consummated),  or  (D)  third  party  claims  or  any  other  lawsuit  or  adverse  proceeding  paid  or  incurred,  whether  in  enforcing  or  defending  the  Loan  Documents  or  otherwise  in connection  with  the  transactions contemplated by the Loan Documents, Agent’s Liens in and to the Collateral, or the Credit  Parties’  relationship  with  any  Loan  Party  or  any  of  its  Subsidiaries,  or  (E)  any  workout,  restructuring,  proceeding under any Debtor Relief Laws or negotiations in respect of any Obligations, or (F) defending  the Loan Documents, irrespective of whether a lawsuit or other adverse proceeding is brought, or (G) in  taking any enforcement action or any Remedial Action with respect to the Collateral, (iii) all reasonable  customary  fees  and  charges  (as  adjusted  from  time  to  time)  (A)  of  the  Agents  with  respect  to  the  disbursement  of  funds  (or  the  receipt  of  funds)  to  or  for  the  account  of  Borrowers  (whether  by  wire  transfer  or  otherwise),  together  with  any  out-of-pocket  costs  and  expenses  incurred  in  connection  therewith, and (B) imposed or incurred by the Agent resulting from the dishonor of checks payable by or                                         14 

 

         to any Loan Party; (b) costs or expenses (including taxes and insurance premiums) required to be paid by  any Loan Party or its Subsidiaries under any of the Loan Documents that are paid, advanced, or incurred  by any Credit Party; (c) with respect to the L/C Issuer, and its Affiliates, all reasonable and documented  out-of-pocket expenses incurred in connection with the issuance, amendment, renewal or extension of any  Letter of Credit or any demand for payment thereunder; and (d) all reasonable and documented out-of- pocket expenses incurred by the Credit Parties who are not the Agent, the L/C Issuer or any Affiliate of  any of them, after the occurrence and during the continuance of an Event of Default, provided that such  Credit Parties shall be entitled to reimbursement for no more than one counsel representing all such Credit  Parties (absent a conflict of interest in which case the Credit Parties may engage and be reimbursed for  additional counsel).         “Customs Broker/Carrier Agreement” means an agreement in form and substance satisfactory to  the Agent among a Borrower, a customs broker, freight forwarder, consolidator or carrier, and the Agent,  in which the customs broker, freight forwarder, consolidator or carrier acknowledges that it has control  over and holds the documents evidencing ownership of the subject Inventory for the benefit of the Agent  and agrees, upon notice from the Agent, to hold and dispose of the subject Inventory solely as directed by  the Agent.          “DDA” means each checking, savings or other demand deposit account maintained by any of the  Loan Parties.  All funds in each DDA (other than any Excluded Account described in clauses (b) and (c)  of the definition thereof) shall be conclusively presumed to be Collateral and proceeds of Collateral and  the Agent and the Lenders shall have no duty to inquire as to the source of the amounts on deposit in any  DDA.         “DDA Notification” has the meaning provided therefor in Section 6.13(b).         “Debtor  Relief  Laws”  means  the  Bankruptcy  Code  of  the  United  States,  and Bankruptcy  and  Insolvency  Act (Canada)  (“BIA”),  the  CCAA,  the Winding-up  and Restructuring  Act (Canada),  and  all  other  liquidation,  conservatorship,  bankruptcy,  assignment  for  the  benefit  of  creditors,  moratorium,  rearrangement,  receivership,  insolvency,  reorganization,  or  similar  debtor  relief Laws  of  the  United  States,  Canada  or  other  applicable  jurisdictions  from  time  to  time  in  effect  and  affecting  the  rights  of  creditors generally.         “Default”  means  any  event  or  condition  that  constitutes  an  Event  of  Default  or  that,  with  the  giving of any notice, the passage of time, or both, would be an Event of Default.         “Default Rate” means (a) when used with respect to Obligations other than Letter of Credit Fees,  an interest rate equal to (i) the Base Rate plus (ii) the Applicable Margin, if any, applicable to Base Rate  Loans, plus (iii) 2% per annum; provided, however, that with respect to a LIBOR Rate Loan, the Default  Rate  shall  be  an  interest  rate  equal  to  the  interest  rate  (including  any  Applicable  Margin)  otherwise  applicable to such Loan plus 2% per annum, and (b) when used with respect to Letter of Credit Fees, a  rate  equal  to  the  Applicable  Margin  for Standby  Letters  of  Credit  or  Commercial  Letters  of  Credit,  as  applicable, plus 2% per annum.         “Defaulting  Lender”  means  any  Lender  that  (a)  has  failed to  (i)  fund  all  or  any  portion  of  its  Loans within two Business Days of the date such Loans were required to be funded hereunder, or (ii) pay  to Agent, L/C Issuer, or any other Lender any other amount required to be paid by it hereunder (including  in respect of its participation in Letters of Credit) within two Business Days of the date when due, (b) has  notified any Borrower, Agent or L/C Issuer in writing that it does not intend to comply with its funding  obligations hereunder, or has made a public statement to that effect, (c) has failed, within three Business  Days after written request by Agent or Lead Borrower, to confirm in writing to Agent and Lead Borrower                                         15 

 

         that it will comply with its prospective funding obligations hereunder (provided, that such Lender shall  cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by  Agent and Lead Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the  subject of any proceeding under any Debtor Relief Laws, (ii) had appointed for it a receiver, custodian,  conservator,  trustee,  administrator,  assignee  for  the benefit  of  creditors  or  similar Person  charged  with  reorganization  or  liquidation  of  its  business  or  assets,  including  the  Federal  Deposit  Insurance  Corporation or any other state or federal regulatory authority acting in such a capacity, or (iii) become the  subject of a Bail-in Action; provided, that a Lender shall not be a Defaulting Lender solely by virtue of  the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company  thereof by a Governmental Authority so long as such ownership interest does not result in or provide such  Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of  judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to  reject,  repudiate,  disavow  or  disaffirm  any  contracts  or  agreements  made  with  such  Lender.   Any  determination by Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through  (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a  Defaulting Lender upon delivery of written notice of such determination to Lead Borrower, L/C Issuer,  and each Lender.         “Defaulting  Lender  Rate”  means  (a)  for  the  first  three  (3)  days  from  and  after  the  date  the  relevant payment is due, the Base Rate, and (b) thereafter, the interest rate then applicable to Committed  Loans that are Base Rate Loans (inclusive of the Applicable Margin applicable thereto).         “Deposited Cash” means cash or Cash Equivalents owned by a Borrower, which are at all times  in a segregated deposit account or investment account held and maintained at Wells Fargo or an Affiliate  of Wells Fargo that is subject to a Blocked Account Agreement. For the avoidance of doubt, no amounts  which then constitute Eligible Cash on Hand may also constitute Deposited Cash.          “Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (including  any sale and leaseback transaction and any sale, transfer, license or other disposition of (whether in one  transaction  or  in  a  series  of  transactions)  of  any  property  (including,  without  limitation, any  Equity  Interests other than Equity Interests of the Lead Borrower) by any Person (or the granting of any option or  other right to do any of the foregoing), including any sale, assignment, transfer or other disposal, with or  without recourse, of any notes or accounts receivable or any rights and claims associated therewith .         “Disqualified Stock” means any Equity Interest that, by its terms (or by the terms of any security  into  which  it  is  convertible,  or  for  which  it  is  exchangeable,  in  each  case  at  the option  of  the  holder  thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking  fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or  prior to the date that is ninety-one (91) days after the date on which the Loans mature; provided, however,  that (i) only the portion of such Equity Interests which so matures or is mandatorily redeemable, is so  convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date shall  be deemed to be Disqualified Stock and (ii) with respect to any Equity Interests issued to any employee or  to any plan for the benefit of employees of the Lead Borrower or its Subsidiaries or by any such plan to  such  employees,  such  Equity  Interest  shall  not  constitute  Disqualified  Stock  solely  because  it  may  be  required to be repurchased by the Lead Borrower or one of its Subsidiaries in order to satisfy applicable  statutory  or  regulatory  obligations  or  as  a  result  of  such  employee’s  termination,  resignation,  death  or  disability and if any class of Equity Interest of such Person that by its terms authorizes such Person to  satisfy  its  obligations  thereunder  by  delivery  of  an  Equity  Interest  that is  not  Disqualified Stock,  such  Equity Interests shall not be deemed to be Disqualified Stock. Notwithstanding the preceding sentence,  any Equity Interest that would constitute Disqualified Stock solely because the holders thereof have the  right  to  require  a  Loan  Party  to  repurchase  such  Equity  Interest  upon  the  occurrence  of  a  change  of                                         16 

 

         control or an asset sale shall not constitute Disqualified Stock.  The amount of Disqualified Stock deemed  to be outstanding at any time for purposes of this Agreement will be the maximum amount that the Lead  Borrower  and  its  Subsidiaries  may  become  obligated  to  pay  upon  maturity  of,  or  pursuant  to  any  mandatory redemption provisions of, such Disqualified Stock or portion thereof, plus accrued dividends.         “Dollars” and “$” mean lawful money of the United States.         “Domestic  Subsidiary”  means  any  Subsidiary  that  is  organized  under  the  laws  of  the  United  States of America, any State thereof or the District of Columbia (excluding, for the avoidance of doubt,  any Subsidiary organized under the laws of Puerto Rico or any other territory).         “Drawing Document” means any Letter of Credit or other document presented for purposes of  drawing under any Letter of Credit, including by electronic transmission such as SWIFT, electronic mail,  facsimile or computer generated communication.         “EEA Financial Institution” means (a) any credit institution or investment firm established in any  EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity  established in an EEA Member Country which is a parent of an institution described in clause (a) of this  definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of  an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision  with its parent.         “EEA  Member  Country”  means  any  of  the  member  states  of  the  European  Union,  Iceland,  Liechtenstein, and Norway.         “EEA Resolution Authority” means any public administrative authority or any person entrusted  with  public  administrative  authority  of  any  EEA  Member  Country  (including  any  delegee)  having  responsibility for the resolution of any EEA Financial Institution.         “Eligible Cash on Hand” means cash and money market fund owned by a Loan Party, which are  (a) available for use by a Loan Party, without condition or restriction (other than in favor of the Agent),  (b) free and clear of any pledge or other Lien (other than the Liens in favor of Agent and Liens permitted  under clauses (a), (e) and (l) of the definition of Permitted Encumbrances), (c) subject to a perfected first- priority security interest of the Agent, (d) in a deposit account or money market account at Wells Fargo or  an  Affiliate  of  Wells  Fargo  specifically  and  solely  used  for  purposes  of  holding  such  cash  and  which  account is subject to a Blocked Account Agreement (Access Restricted Immediately), and (e) for which  the Agent shall have received evidence, in form and substance reasonably satisfactory to the Agent, of the  amount  of  such  cash  held  in  such  deposit  account or  money  market  account,  as  applicable, as  of  the  applicable date of the calculation of Availability by the Agent and the satisfaction of the other conditions  herein (it being understood that a report of a cash balance from the depositary of such deposit account or  the intermediary of such money market account, as applicable, shall be reasonably satisfactory evidence  of the amount of cash in such account).          “Eligible  Assignee”  means  (a)  a  Credit  Party  or  any  of  its  Affiliates;  (b)  a  bank, insurance  company, or company engaged in the business of making commercial loans, which Person, together with  its Affiliates, has a combined capital and surplus in excess of $250,000,000; (c) an Approved Fund; (d)  any Person to whom a Credit Party assigns its rights and obligations under this Agreement as part of an  assignment and transfer of such Credit Party’s rights in and to a material portion of such Credit Party’s  portfolio of asset based credit facilities, and (e) any other Person (other than a natural person or a holding  company,  investment  vehicle  or  trust  for,  or  owned  and  operated  by  or  for  the  primary  benefit  of,  a  natural person) approved by (i) the Agent, the L/C Issuer and the Swing Line Lender, and (ii) unless a an                                         17 

 

         Event  of  Default  has  occurred  and  is  continuing,  the  Lead  Borrower  (each  such  approval  not  to  be  unreasonably  withheld  or  delayed);  provided  that  notwithstanding  the  foregoing,  “Eligible  Assignee”  shall not include a Loan Party or any of the Loan Parties’ Affiliates or Subsidiaries.          “Eligible Credit Card Receivables” means at the time of any determination thereof, each Credit  Card Receivable that satisfies the following criteria at the time of creation and continues to meet the same  at such time of such determination: such Credit Card Receivable (i) has been earned by performance and  represents the bona fide amounts due to a Loan Party from a Credit Card Issuer or Credit Card Processor,  and in each case originated in the ordinary course of business of such Loan Party, and (ii) in each case is  acceptable to the Agent in its Permitted Discretion, and is not ineligible for inclusion in the calculation of  the Borrowing Base pursuant to any of clauses (a) through (i) below.  Without limiting the foregoing, to  qualify as an Eligible Credit Card Receivable, such Credit Card Receivable shall indicate no Person other  than a Loan Party as payee or remittance party.  In determining the amount to be so included, the face  amount of a Credit Card Receivable shall be reduced by, without duplication, to the extent not reflected in  such face amount, (i) the amount of all accrued and actual discounts, claims, credits or credits pending,  promotional program allowances, price adjustments, finance charges or other allowances (including any  amount that a Loan Party may be obligated to rebate to a customer, a Credit Card Issuer or Credit Card  Processor pursuant to the terms of any agreement or understanding (written or oral)) and (ii) the aggregate  amount of all cash received in respect of such Credit Card Receivable but not yet applied by the Loan  Parties to reduce the amount of such Credit Card Receivable.  Except as otherwise agreed by the Agent in  its Permitted Discretion, any Credit Card Receivable included within any of the following categories shall  not constitute an Eligible Credit Card Receivable:                 (a)  Credit  Card  Receivables  which  do  not  constitute  a  “payment  intangible”  (as         defined in the UCC or PPSA, as applicable);          (b)  Credit Card Receivables that have been outstanding for more than five (5) Business Days         from the date of sale;          (c)  Credit  Card  Receivables  (i)  that  are  not  subject  to  a  perfected  first-priority  security         interest in favor of the Agent, or (ii) with respect to which a Loan Party does not have good,         valid and marketable title thereto, free and clear of any Lien (other than Liens granted to the         Agent pursuant to the Security Documents);          (d)  Credit Card Receivables which are disputed, are with recourse, or with respect to which a         claim,  counterclaim,  offset  or  chargeback  has  been  asserted  (to  the  extent  of such  claim,         counterclaim, offset or chargeback);           (e)  Credit Card Receivables as to which the Credit Card Issuer or Credit Card Processor has         the  right  under  certain  circumstances  to  require  a  Loan  Party  to  repurchase  the  Credit  Card         Receivables  from  such  Credit  Card  Issuer  or  Credit  Card  Processor  (excluding,  for  the         avoidance of doubt, any right of chargeback in the ordinary course);           (f)  Credit Card Receivables due from a Credit Card Issuer or Credit Card Processor which is         the subject of any bankruptcy or insolvency proceedings;          (g)  Credit  Card  Receivables  which  are  not  a  valid,  legally  enforceable  obligation  of  the         applicable Credit Card Issuer or Credit Card Processor with respect thereto; or          (h)  Credit Card Receivables which do not conform to all representations, warranties or other         provisions in the Loan Documents relating to Credit Card Receivables;                                          18 

 

               provided; that the Agent shall have the right, at any time and from time to time after the Closing  Date  to  deem  ineligible  any  Credit  Card  Receivables  which  the  Agent  determines  in  its  Permitted  Discretion to be uncertain of collection upon three (3) Business Days’ prior written notice to the Lead  Borrower (during which period the Agent shall be available to discuss in good faith any such proposed  ineligibles with the Loan Parties and the Loan Parties may take such action as may be required so that the  event,  condition  or  matter  that  is  the  basis  for  such  determination,  in  a  manner  and  to  the  extent  reasonably  satisfactory  to  the  Agent  and  during  which  time,  no  Borrowings shall  be  permitted  to  be  funded (or Letters of Credit issued) against such Credit Card Receivables).          “Eligible  In-Transit  Inventory”  means,  as  of  any  date  of  determination  thereof,  without  duplication of other Eligible Inventory, In-Transit Inventory:                (a)  Which has been shipped from a foreign location for receipt by a Loan Party, but         which has not yet been delivered to such Loan Party, which In-Transit Inventory has been in         transit for sixty (60) days or less from the date of shipment of such Inventory;          (b)  For which the purchase order is in the name of a Loan Party and title and risk of loss has         passed to such Loan Party;          (c)  For which an Acceptable Document of Title has been issued, and in each case as to which         the  Agent  has  control  (as  defined  in  the  UCC)  over  the documents  of  title  which  evidence         ownership  of  the  subject  Inventory  (such  as,  if  requested  by  the  Agent,  by the  delivery  of  a         Customs Broker/Carrier Agreement);           (d)  Which  is  insured  in  compliance  with  the  provisions of  Section  5.10  hereof  (including,         without limitation, marine cargo insurance);           (e)  the  Foreign  Vendor  with  respect  to  such  In-Transit  Inventory  is  an  Approved  Foreign         Vendor;           (f)  For which payment of the purchase price has been made by the Borrower or the purchase         price is supported by a Commercial Letter of Credit; and           (g)  Which otherwise would constitute Eligible Inventory;         provided that the Agent may, in its Permitted Discretion, exclude any particular Inventory from        the  definition  of  “Eligible  In-Transit  Inventory”  in  the  event  the  Agent  determines  that  such        Inventory is subject to any Person’s right of reclamation, repudiation, stoppage in transit or any        event  has  occurred  or  is  reasonably  anticipated  by  the  Agent  to  arise  which  may  otherwise        adversely impact the ability of the Agent to realize upon such Inventory.         “Eligible  Inventory”  means,  as  of  the  date  of  determination  thereof,  without  duplication,  (i)  Eligible  In-Transit  Inventory,  and  (ii)  items  of  Inventory  of  a  Loan  Party  that  are  finished  goods,  merchantable and readily saleable to the public in the ordinary course of the Loan Party’s business, in  each case that, except as otherwise agreed by the Agent, (A) complies with each of the representations  and  warranties  respecting  Inventory  made  by  the  Loan  Parties  in the  Loan  Documents,  and  (B)  is  not  excluded as ineligible by virtue of one or more of the criteria set forth below as determined by the Agent  in  its  Permitted  Discretion.   Except  as  otherwise  agreed  by  the  Agent,  in  its  Permitted  Discretion,  the  following items of Inventory shall not be included in Eligible Inventory:                                          19 

 

                            (a)  Inventory that is not solely owned by a Loan Party or a /Loan Party does not have  good and valid title thereto;   (b)  Inventory that is leased by or is on consignment to a Loan Party;   (c)  Inventory  (other  than  Eligible  In-Transit  Inventory)  that  is  not  located  in  the  United  States of America or Canada (excluding territories or possessions of the United States or the  province of Quebec);   (d)  Inventory (other than Eligible In-Transit Inventory) that is not located at a location that is  owned or leased by a Loan Party, except (i) Inventory in transit between such owned or leased  locations or locations which meet the criteria set forth in clause (ii) below, or (ii) to the extent  that the Loan Parties have furnished the Agent with (A) any UCC financing statements, PPSA  financing  statements  or  other  documents  that  the  Agent  may  determine  to  be  necessary  to  perfect  its  security  interest  in  such  Inventory  at  such  location,  and  (B)  a  Collateral  Access  Agreement executed by the Person owning or operating any such location on terms reasonably  acceptable to the Agent;   (e)  Inventory  (other  than  Eligible  In-Transit  Inventory)  that  is  located  in  (i)  a  distribution  center or warehouse leased by a Loan Party, (ii) a leased location in a Landlord Lien State, or  (iii)  a  location operated  by  a  Logistics  Servicer,  unless, in  all  cases,  the  applicable  lessor  or  operator  has  delivered  to  the  Agent  a  Collateral  Access  Agreement  or  the  Agent  has  implemented Inventory Reserves for such location in its Permitted Discretion;   (f)  Inventory  that  is  comprised  of  goods  which  (i)  are  damaged,  defective,  “seconds,”  or  otherwise  unmerchantable,  (ii)  are  to  be  returned  to  the  vendor,  (iii)  are  obsolete  or  custom  items (other  than  custom  items  that  can  be  resold  in  the  ordinary  course  of  business),  work-in-process, raw materials, or that constitute samples, spare parts, promotional, marketing,  labels, bags and other packaging and shipping materials or supplies used or consumed in a Loan  Party’s business, (iv) are seasonal in nature and which have been packed away for sale in the  subsequent  season,  (v)  not  in  compliance  with  all  standards  imposed  by  any  Governmental  Authority having regulatory authority over such Inventory, its use or sale, or (vi) are bill and  hold goods;   (g)  Inventory that is not subject to a perfected first-priority security interest in favor of the  Agent  (other  than  Liens  permitted  under  clauses  (a),  (b),  (e)  and  (o)  of  the  definition  of  Permitted Encumbrances);   (h)  Inventory that is not insured in compliance with the provisions of Section 5.10 hereof;   (i)  Inventory  that  has  been  sold  but  not  yet  delivered  or  as  to  which  a  Loan  Party  has  accepted a deposit;    (j)  Inventory  that  is  subject  to  any  licensing,  patent,  royalty,  trademark,  trade  name  or  copyright agreement with any third party from which any Loan Party or any of its Subsidiaries  has  received  notice  of  a  dispute  solely  in  respect  of the  intellectual  property licensed  in  any  such agreement or other dispute that could impact such license; or   (k)  Inventory acquired in a Permitted Acquisition or which is not of the type usually sold in  the ordinary course of the Loan Parties’ business, unless and until the Agent has completed or  received  (A)  an  appraisal  of  such  Inventory  from  appraisers  satisfactory  to  the  Agent  and                                  20 

 

                establishes  an  Inventory  Advance  Rate  and  Inventory  Reserves  (if  applicable)  therefor,  and         otherwise  agrees  that such  Inventory  shall  be  deemed  Eligible  Inventory,  and  (B)  such  other         due  diligence  as  the  Agent  may  require,  all  of  the results  of  the  foregoing  to  be  reasonably         satisfactory to the Agent;         provided; that the Agent shall have the right, at any time and from time to time after the Closing  Date to deem any Inventory ineligible to be included in the calculation of the Borrowing Base upon three  (3)  Business  Days’  prior  written  notice  to the  Lead Borrower  (during  which period the  Agent  shall  be  available to discuss in good faith any such proposed ineligibles with the Loan Parties and the Loan Parties  may take such action as may be required so that the event, condition or matter that is the basis for such  determination, in a manner and to the extent reasonably satisfactory to the Agent and during which time,  no Borrowings shall be permitted to be funded (or Letters of Credit issued) against such Inventory).          “Eligible Trade Receivables” means, as of any date of determination, Accounts arising from the  sale of the Loan Parties’ Inventory (but excluding, for the avoidance of doubt, Credit Card Receivables)  that satisfies the following criteria at the time of creation and continues to meet the same at the time of  such  determination:  such  Account  (i)  has  been  earned  by  performance  and  represents  the  bona  fide  amounts due to a Loan Party from an account debtor, and in each case originated in the ordinary course of  business of such Loan Party, and (ii) is not ineligible for inclusion in the calculation of the Borrowing  Base  pursuant  to  any  of  clauses  (a)  through  (u)  below  as  determined  by  the  Agent  in  its  Permitted  Discretion.  Without limiting the foregoing, to qualify as an Eligible Trade Receivable, an Account shall  indicate no Person other than a Loan Party as payee or remittance party.  In determining the amount to be  so included, the face amount of an Account shall be reduced by, without duplication, to the extent not  reflected in such face amount, (i) the amount of all accrued and actual discounts, claims, credits or credits  pending,  promotional  program  allowances,  price  adjustments,  finance  charges  or  other  allowances  (including any amount that a Loan Party may be obligated to rebate to a customer pursuant to the terms of  any agreement or understanding (written or oral)) and (ii) the aggregate amount of all cash received in  respect of such Account but not yet applied by the Loan Parties to reduce the amount of such Eligible  Trade  Receivable.   Except  as  otherwise  agreed  by  the  Agent  in  its Permitted  Discretion,  any  Account  included within any of the following categories shall not constitute an Eligible Trade Receivable:                 (a)  Accounts that are not evidenced by an invoice;          (b)  Accounts that have been outstanding for more than one hundred twenty (120) days from         the date of sale or more than sixty (60) days past the due date;           (c)  Accounts due from any account debtor which is obligated on any accounts described in         clause (b), above.          (d)  All  Accounts  owed  by  an  account  debtor  and/or  its  Affiliates  together  exceed  fifteen         percent (15%) (or any higher percentage agreed to between the Agent and the Lead Borrower         now or hereafter established by the Agent for any particular account debtor) of the amount of         all Accounts at any one time (but the portion of the Accounts not in excess of the applicable         percentages shall not be deemed ineligible by virtue of this clause (d)));           (e)  Accounts (i) that are not subject to a perfected first-priority security interest in favor of         the Agent, or (ii) with respect to which a Loan Party does not have good, valid and marketable         title thereto, free and clear of any Lien (other than Liens permitted under clauses (a), (e) and (l)         of the definition of Permitted Encumbrances and Permitted Encumbrances having priority over         the Lien of the Agent by operation of applicable Law);                                          21 

 

                      (f)  Accounts  which  are  disputed  or  with  respect  to  which  a  claim,  counterclaim,  offset  or  chargeback  has  been  asserted,  but  only  to  the  extent of  such  dispute,  counterclaim,  offset  or  chargeback;   (g)  Accounts which arise out of any sale made not in the ordinary course of business, made  on  a  basis  other  than  upon  credit  terms  usual  to  the  business  of  the  Loan  Parties  or  are  not  payable in Dollars;   (h)  Accounts which are owed by any account debtor whose principal place of business is not  within the continental United States or Canada;   (i)  Accounts which are owed by any Affiliate or any employee of a Loan Party;    (j)  Accounts  for  which  all  consents,  approvals  or  authorizations  of,  or  registrations  or  declarations  with  any  Governmental  Authority  required  to  be  obtained,  effected  or  given  in  connection with the performance of such Account by the account debtor or in connection with  the enforcement of such Account by the Agent have been duly obtained, effected or given and  are in full force and effect;    (k)  Accounts due from an account debtor which is the subject of any proceeding under any  Debtor Relief Law or has suspended its business;    (l)  Accounts  due  from  any  Governmental  Authority  except  to  the  extent  that  the  subject  account debtor is (i) the federal government of the United States of America and has complied  with the Federal Assignment of Claims Act of 1940 and any similar state legislation or (ii) the  federal  government,  or  any  provincial  government,  of  Canada  and  has  complied  with  the  Financial Administration Act (Canada) and any similar provincial legislation;    (m)  Accounts (i) owing from any Person that is also a supplier to or creditor of a Loan Party  or  any  of  its  Subsidiaries  unless  such  Person  has  waived  any  right  of  setoff  in  a  manner  acceptable to the Agent in its Permitted Discretion (other than any right of setoff in respect of  any  account  debtor that  provides  marketing  or  advertising  services to  the  Loan  Parties  or  its  Subsidiaries in the ordinary course of business (provided however, that the amount of all such  Accounts shall be reduced as and to the extent of any amounts that are owed to such account  debtor by the Loan Parties or their Subsidiaries and, without duplication, any setoff rights so  asserted by such account debtor)), or (ii) representing any manufacturer’s or supplier’s credits,  discounts,  incentive  plans  or  similar  arrangements  entitling  a  Loan  Party  or  any  of  its  Subsidiaries to discounts on future purchase therefrom (other than, for the avoidance of doubt,  advertising or marketing credits in the ordinary course of business (provided however, that the  amount of such Accounts shall be reduced as and to the extent of any amounts that are owed to  such  account  debtor  by  the  Loan  Parties  or  their  Subsidiaries  and,  without  duplication,  any  setoff rights so asserted by such account debtor));   (n)  Accounts arising out of sales on a bill-and-hold, guaranteed sale, sale-or-return, sale on  approval or consignment basis or subject to any right of return, set off or charge back;    (o)  Accounts  arising  out  of  sales  to  account  debtors  outside  the  United  States  or  Canada  unless such Accounts are fully backed by an irrevocable letter of credit on terms, and issued by  a financial institution, acceptable to the Agent in its Permitted Discretion and such irrevocable  letter of credit is in the possession of the Agent;                                    22 

 

                (p)  Accounts payable other than in Dollars or that are otherwise on terms other than those         normal and customary in the Loan Parties’ business;           (q)  Accounts evidenced by a promissory note or other instrument;           (r)  Accounts consisting of amounts due from vendors as rebates or allowances;           (s)  Accounts which are in excess of the credit limit for such account debtor established by         the Loan Parties in the ordinary course of business and consistent with past practices;          (t)  Accounts  which  include  extended  payment  terms  (datings)  beyond  those  generally         furnished to other account debtors in the ordinary course of business; or          (u)  Accounts with respect to which the Account Debtor is a Sanctioned Person or Sanctioned         Entity;          provided; that the Agent shall have the right, at any time and from time to time after the Closing  Date to deem any Account unacceptable for borrowing upon three (3) Business Days’ prior written notice  to the Lead Borrower (during which period the Agent shall be available to discuss in good faith any such  proposed ineligibles with the Loan Parties and the Loan Parties may take such action as may be required  so that the event, condition or matter that is the basis for such determination, in a manner and to the extent  reasonably  satisfactory  to  the  Agent  and  during  which  time,  no  Borrowings  shall  be  permitted  to  be  funded (or Letters of Credit issued) against such Accounts).          “Environmental  Laws”  means  any  and  all  Federal,  state,  local,  and  foreign  statutes,  laws,  regulations,  ordinances,  rules,  judgments,  orders,  decrees,  permits,  concessions,  grants,  franchises,  licenses,  agreements  or  governmental  restrictions  relating  to  pollution  and  the  protection  of  the  environment  or  the  release  of  any  materials  into the environment,  including  those  related to  hazardous  substances or wastes, air emissions and discharges to waste or public systems.         “Environmental  Liability”  means any  liability,  obligation,  damage,  loss,  claim,  action,  suit,  judgment, order, fine, penalty, fee, expense, or cost, contingent or otherwise (including any liability for  damages, costs of environmental remediation, fines, penalties or indemnities), of any Borrower, any other  Loan Party or any of their respective Subsidiaries directly or indirectly resulting from or based upon (a)  violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment  or  disposal  or  presence  of  any  Hazardous  Materials,  (c)  exposure  to  any  Hazardous  Materials,  (d)  the  release  or  threatened  release  of  any  Hazardous  Materials  into  the  environment  or  (e)  any  contract,  agreement  or  other  consensual  arrangement  pursuant  to  which  liability  is  assumed  or  imposed  with  respect to any of the foregoing.         “Equipment” has the meaning set forth in the UCC.         “Equity Interests” means, with respect to any Person, all of the shares of capital stock of (or other  ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase  or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in)  such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other  ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition  from such Person of such shares (or such other interests), and all of the other ownership or profit interests  in  such Person  (including  partnership,  member  or trust interests therein),  whether  voting  or  nonvoting,  and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of                                          23 

 

         determination;  provided  that  in  no  event  shall  any  Indebtedness  convertible  into  or  exchangeable  for  shares of capital stock constitute an Equity Interest at any time prior to any such conversion or exchange.         “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.         “ERISA  Affiliate”  means  any  trade or  business  (whether  or  not  incorporated)  under  common  control  with  any  Loan  Party  within  the  meaning  of  Section  414(b)  or  (c)  of  the  Code  (and  Sections  414(m) and (o) of the Code for purposes of provisions relating to Section 412 and 4971 of the Code).         “ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by  any Loan Party or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a  plan  year  in  which  it  was  a  substantial  employer  (as  defined  in  Section 4001(a)(2)  of  ERISA)  or  a  cessation  of  operations  that  is  treated  as  such  a  withdrawal  under  Section  4062(e)  of  ERISA;  (c)  a  complete or partial withdrawal by any Loan Party or any ERISA Affiliate from a Multiemployer Plan or  notification to the Lead Borrower or any ERISA Affiliate that a Multiemployer Plan is in reorganization;  (d) the filing of a notice of intent to terminate, the treatment of a plan amendment as a termination of a  Pension Plan or a Multiemployer Plan under Sections 4041 or 4041A of ERISA, or the commencement of  proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition  which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a  trustee to administer, any Pension Plan or Multiemployer Plan; (f) the imposition of any liability under  Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA,  upon  the  Lead  Borrower  or  any  ERISA  Affiliate;  or  (g)  the  determination  that  any  Pension  Plan  is  considered to be an “at-risk” plan, or that any Multiemployer Plan is considered to be in “endangered” or  “critical” status within the meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 or 305  of ERISA.         “EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the  Loan Market Association (or any successor person), as in effect from time to time.         “Event  of  Default”  has  the  meaning  specified  in Section 8.01.   An  Event  of  Default  shall  be  deemed  to  be  continuing  unless  and  until  that  Event  of  Default  has  been  duly  waived  as  provided  in  Section 10.01 hereof.         “Excluded Accounts” shall have the meaning set forth in the Security Agreement.          “Excluded Subsidiary” means (a) any Subsidiary that is not directly or indirectly a wholly owned  Subsidiary of the Lead Borrower, (b) any CFC or FSHCO, (c) any non-for-profit Subsidiaries, and (d) any  other Subsidiary with respect to which, in the reasonable judgment of the Agent, in consultation with the  Lead  Borrower,  the  burden  or  cost  or  other  consequences  (including  any  material  adverse  Tax  consequences) of providing a Guarantee shall be excessive in view of the benefits to be obtained by the  Lenders therefrom.         “Excluded Swap Obligation” means, with respect to any Loan Party, any Swap Obligation if, and  to the extent that, all or a portion of the Guarantee of such Loan Party of, or the grant by such Loan Party  of a security interest to secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal  under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading  Commission (or the application or official interpretation of any thereof) by virtue of such Loan Party’s  failure  for  any  reason  to  constitute  an  “eligible  contract  participant”  as  defined  in  the  Commodity  Exchange Act and the regulations thereunder at the time the Guarantee of such Loan Party or the grant of  such security interest becomes effective with respect to such Swap Obligation. If a Swap Obligation arises  under a master agreement governing more than one swap, such exclusion shall apply only to the portion                                         24 

 

         of such Swap Obligation that is attributable to swaps for which such Guarantee or security interest is or  becomes illegal.         “Excluded Taxes” means any of the following Taxes imposed on or with respect to the Agent,  any Lender, the L/C Issuer or any other recipient of any payment to be made by or on account of any  obligation of the Loan Parties hereunder or required to be withheld or deducted from a payment to any of  the foregoing, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes,  and  branch  profits  or  similar  Taxes,  in  each  case,  (i) imposed  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, or (ii) that are  Other Connection Taxes; (b) in the case of a Lender (other than an assignee pursuant to Section 10.13),  any U.S. federal withholding Tax that is imposed on amounts payable to or for the account of such Lender  pursuant to a law in effect on the date such Lender becomes a party hereto (or designates a new Lending  Office), except to the extent of amounts with respect to such Taxes that were payable pursuant to Section  3.01(a) either to such Lender’s assignor immediately before such Lender became a party hereto or to such  Lender immediately before it changed its lending office, (c) Taxes attributable to a recipient’s failure to  comply  with Section 3.01(e);  (d)  any  U.S.  federal,  state  or  local  backup  withholding  tax,  and  (e)  any  withholding tax imposed under FATCA.         “Executive Order” has the meaning set forth in Section 10.18.         “Existing Credit Agreement” means that certain Loan and Security Agreement, dated as of April  27,  2016,  among  the  Loan  Parties,  Pacific  Western  Bank,  as  agent,  and  a  syndicate  of  lenders,  as  amended.         “Extraordinary Receipt” means any cash received by or paid to or for the account of any Person  not in  the  ordinary  course of  business, including  pension  plan  reversions,  proceeds  of insurance  (other  than proceeds of business interruption insurance to the extent such proceeds constitute compensation for  lost  earnings),  condemnation  awards  (and  payments  in  lieu  thereof),  indemnity  payments and  any  purchase price adjustments.          “Facility Guaranty” means the Guaranty, made by the Guarantors in favor of the Agent and the  other Credit Parties, substantially in the form of Exhibit H hereto, as the same now exists or may hereafter  be amended, modified, supplemented, renewed, restated or replaced.         “Factored Receivables” means any Accounts originally owed or owing by a Loan Party to another  Person which have been purchased by or factored with Wells Fargo, any Lender or any of their Affiliates  pursuant  to  a  factoring  arrangement  or  otherwise  with  the  Person  that  sold  the  goods  or  rendered  the  services to the Loan Party which gave rise to such Account.         “FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or  any amended or successor version that is substantively comparable and not materially more onerous to  comply  with),  and  (a)  any  current  or  future  regulations  or  official  interpretations  thereof,  (b)  any  agreements  entered  into  pursuant  to  Section  1471(b)(1)  of  the  Code,  and  (c)  any  intergovernmental  agreement entered into by the United States, and any fiscal or regulatory legislation, rules, or practices  adopted  pursuant  to  any  such  intergovernmental  agreement,  or  any  treaty  or  convention  among  Governmental Authorities implementing such Sections of the Code.          “FCPA”  means  the  Foreign  Corrupt  Practices  Act  of  1977,  as  amended,  and  the  rules  and  regulations thereunder.                                          25 

 

               “Federal Funds Rate” means, for any period, a fluctuating interest rate per annum equal to, for  each day during such period, the weighted average of the rates on overnight Federal funds transactions  with members of the Federal Reserve System, 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 which is a Business  Day, the average of the quotations for such day on such transactions received by the Agent from three  Federal funds brokers of recognized standing selected by it (and, if any such rate is below zero, then the  rate determined pursuant to this definition shall be deemed to be zero).         “Fee Letter” means the letter agreement, dated as of the Closing Date, among the Borrowers, and  the  Agent,  as  the  same  now  exists  or  may  hereafter  be  amended,  modified,  supplemented,  renewed,  restated or replaced.         “Fiscal Month” means any fiscal month of any Fiscal Year, which month shall generally end on  the last day of each calendar month in accordance with the fiscal accounting calendar of the Loan Parties.         “Fiscal Quarter” means any fiscal quarter of any Fiscal Year, which quarters shall generally end  on the last day of each March, June, September and December of such Fiscal Year in accordance with the  fiscal accounting calendar of the Loan Parties.         “Fiscal Year” means any period of twelve (12) consecutive months ending on December 31 of  any calendar year.         “Flip  Date”  means  first  date  on  which  the  Loan  Parties’  Consolidated  Adjusted  EBITDA,  calculated on a trailing six (6) month basis, for the immediately preceding six (6) month period for which  the Agent shall have received financial statements, shall be greater than zero.         “Foreign Asset Control Regulations” has the meaning set forth in Section 10.18.         “Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than  that in which the Lead Borrower is resident for tax purposes.  For purposes of this definition, the United  States, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.         “Foreign Vendor” means a Person that sells In-Transit Inventory to a Loan Party.         “Foreign Vendor Agreement” means an agreement between a Foreign Vendor and the Agent in  form and substance satisfactory to the Agent and pursuant to which, among other things, the parties shall  agree upon their relative rights with respect to In-Transit Inventory of a Loan Party purchased from such  Foreign Vendor.         “FRB” means the Board of Governors of the Federal Reserve System of the United States.         “FSHCO”  means  any  Subsidiary  substantially  all  of  the  assets of  which  consist  of  (a) Equity  Interests  of  one  or  more  CFCs  or  other  entities  that  are  described  in  this  definition  (or  are  treated  as  consisting of such assets for U.S. federal income tax purposes) and/or (b) any Indebtedness that is treated  as equity for U.S. federal income tax purposes owed by any CFC or other entity that is described in this  definition, or treated as owed by any such entity for U.S. federal income tax purposes.         “GAAP”  means  generally  accepted  accounting  principles  in  the  United  States set  forth  in  the  opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified  Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or  such other principles as may be approved by a significant segment of the accounting profession in the                                         26 

 

         United  States,  that  are  applicable  to  the  circumstances  as  of  the  date  of  determination,  consistently  applied.         “Growth Capital Subordinated Agent” means TriplePoint Venture Growth BDC Corp., including  its successors and assigns.          “Growth Capital Subordinated Indebtedness” means all Indebtedness and other obligations of the  Loan Parties arising under the Growth Capital Subordinated Loan Documents.          “Growth Capital Subordinated Loan Agreement” means that certain Plain English Growth Capital  Loan  and  Security  Agreement,  dated  as  of  March  1,  2019,  by  and  between  the  Lead  Borrower,  the  Growth  Capital  Subordinated  Agent,  as  agent,  and  a  syndicate  of  lenders,  as  amended,  restated,  supplemented or otherwise modified from time to time in accordance with the terms hereof and the terms  of the Growth Capital Subordination Agreement.          “Growth Capital Subordinated Loan Documents” means the Growth Capital Subordinated Loan  Agreement  and  the  other  Loan  Documents  (as  defined  in  the  Growth  Capital  Subordinated  Loan  Agreement).          “Growth Capital Subordination Agreement” means that certain Subordination Agreement, dated  as of the Closing Date, between the Agent and Growth Capital Subordinated Agent, and acknowledged  and agreed to by the Loan Parties, as amended, restated, supplemented or otherwise modified from time  to time in accordance with the terms hereof and thereof.           “Governmental Authority” means the government of the United States or any other nation, or of  any  political  subdivision  thereof,  whether  state  or  local,  and  any  agency,  authority,  instrumentality,  regulatory  body,  court,  central  bank  or  other  entity  exercising  executive,  legislative,  judicial,  taxing,  regulatory  or  administrative  powers  or  functions  of  or  pertaining  to  government  (including  any  supra- national bodies such as the European Union or the European Central Bank).         “Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person  guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable  or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly,  and  including  any  obligation  of  such  Person,  direct  or  indirect,  (i)  to  purchase  or  pay  (or  advance  or  supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or  lease  property,  securities  or  services  for  the  purpose  of  assuring  the  obligee  in  respect  of  such  Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation,  (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or  level  of  income  or  cash  flow  of  the  primary  obligor  so  as  to  enable  the primary  obligor  to  pay  such  Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the  obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to  protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of  such  Person  securing  any  Indebtedness  or  other  obligation  of  any  other  Person,  whether  or  not  such  Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any  holder of such Indebtedness to obtain any such Lien).  The amount of any Guarantee shall be deemed to  be  an  amount  equal to  the  stated  or  determinable  amount  of  the  related  primary  obligation,  or  portion  thereof,  in  respect  of  which  such  Guarantee  is  made  or,  if  not  stated  or  determinable,  the  maximum  reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith.   The term “Guarantee” as a verb has a corresponding meaning.                                          27 

 

               “Guarantor” means each Domestic Subsidiary of the Borrowers  that shall be required to execute  and deliver a Facility Guaranty pursuant to Section 6.12.           “Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous  or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or  asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all  other substances or wastes of any nature regulated pursuant to any Environmental Law.         “Increase Effective Date” shall have the meaning provided therefor in Section 2.15(d).         “Indebtedness”  means,  as  to  any  Person at  a  particular  time,  without  duplication,  all  of  the  following, whether or not included as indebtedness or liabilities in accordance with GAAP:                (a)  all  obligations  of such  Person  for  borrowed  money  and  all  obligations  of  such         Person  evidenced  by  bonds,  debentures,  notes,  loan  agreements  or  other  similar  instruments         (including, without limitation, convertible debt);          (b)  the maximum amount of all direct or contingent obligations of such Person arising under         letters  of  credit  (including  standby  and  commercial),  bankers’  acceptances,  bank  guaranties,         surety bonds and similar instruments;          (c)  net obligations of such Person under any Swap Contract;          (d)  all obligations of such Person to pay the deferred purchase price of property or services         (other  than deferred  compensation  and trade  accounts  payable  in  the  ordinary  course  of         business);          (e)  indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or         being purchased by such Person (including indebtedness arising under conditional sales or other         title retention agreements), whether or not such indebtedness shall have been assumed by such         Person or is limited in recourse;          (f)  All Indebtedness of such Person (i) in respect of any Capital Lease Obligations, and (ii)         in respect of any Synthetic Lease Obligations, the capitalized amount of the remaining lease or         similar  payments  under  the  relevant  lease  or  other  applicable  agreement  or  instrument  that         would appear on a balance sheet of such Person prepared as of such date in accordance with         GAAP if such lease, agreement or instrument were accounted for as a capital lease;          (g)  all obligations of such Person to purchase, redeem, retire, defease or otherwise make any         payment in respect of any Disqualified Stock in such Person or any other Person (including any         warrant, right or option to acquire such Disqualified Stock), valued, in the case of a redeemable         preferred  interest,  at  the  greater  of  its  voluntary  or  involuntary  liquidation  preference plus         accrued and unpaid dividends; and          (h)  all Guarantees of such Person in respect of any of the foregoing.         For  all  purposes  hereof,  the  Indebtedness  of  any  Person  shall  include  the  Indebtedness  of  any  partnership  or  joint  venture  (other  than  a  joint  venture  that  is  itself  a  corporation  or  limited  liability  company)  in  which  such  Person  is a  general  partner  or  a  joint  venturer,  unless  such  Indebtedness  is  expressly made non-recourse to such Person.  The amount of any net obligation under any Swap Contract  on any date shall be deemed to be the Swap Termination Value thereof as of such date.                                         28 

 

               “Indemnified Taxes” means, (a) Taxes, other than Excluded Taxes, imposed on or with respect to  any payment made by, or on account of any obligation of, any Loan Party under any Loan Document, and  (b) to the extent not otherwise described in the foregoing clause (a), Other Taxes.         “Indemnitees” has the meaning specified in Section 10.04(b).         “Information” has the meaning specified in Section 10.07.         “Intellectual  Property” means  all  present  and  future:   trade  secrets,  know-how  and  other  proprietary information; trademarks, trademark applications, internet domain names, service marks, trade  dress, trade names, business names, designs, logos, slogans (and all translations, adaptations, derivations  and  combinations  of  the  foregoing)  indicia  and  other  source  and/or  business  identifiers,  and  all  registrations  or  applications  for  registrations  which  have  heretofore  been  or  may  hereafter  be  issued  thereon throughout the world; copyrights and copyright applications; (including copyrights for computer  programs)  and  all  tangible  and  intangible  property  embodying  the  copyrights,  unpatented  inventions  (whether or not patentable); patents and patent applications; industrial design applications and registered  industrial  designs;  license  agreements  related  to  any  of  the  foregoing  and  income  therefrom;  books,  customer lists, records, writings, computer tapes or disks, flow diagrams, specification sheets, computer  software, source codes, object codes, executable code, data, databases and other physical manifestations,  embodiments or incorporations of any of the foregoing; all other intellectual property; and all common  law and other rights throughout the world in and to all of the foregoing.         “Intercreditor Provisions” has the meaning specified in Section 8.01(q).         “Interest  Payment  Date”  means,  (a)  as  to  any  LIBOR  Rate  Loan, the  last  day of  each  Interest  Period applicable to such Loan and the Maturity Date; provided, however, that if any Interest Period for a  LIBOR  Rate  Loan  exceeds  three  months,  the  respective  dates  that  fall  every  three  months  after  the  beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan  (including a Swing Line Loan), the first day after the end of each month and the Maturity Date.         “Interest Period” means, as to each LIBOR Rate Loan, the period commencing on the date such  LIBOR Rate Loan is disbursed or converted to or continued as a LIBOR Rate Loan and ending on the  date one, two, three or six months thereafter, as selected by the Lead Borrower in its LIBOR Rate Loan  Notice; provided that:               (i)   any Interest Period that would otherwise end on a day that is not a Business Day        shall be extended to the next succeeding Business Day unless such Business Day falls in another        calendar month, in which case such Interest Period shall end on the next preceding Business Day;               (ii)  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 the calendar month at the end of such        Interest Period;                (iii) no Interest Period shall extend beyond the Maturity Date; and                (iv)  notwithstanding  the  provisions  of  clause  (iii),  no  Interest  Period  shall  have  a        duration of less than one (1) month, and if any Interest Period applicable to a LIBOR Borrowing        would be for a shorter period, such Interest Period shall not be available hereunder.                                           29 

 

         For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made  and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.         “Internal  Control  Event” means  a  material  weakness in,  or fraud  that  involves management  or  other  employees  who  have  a  significant  role  in, the Lead  Borrower’s and/or  its  Subsidiaries’  internal  controls over financial reporting, in each case as described in the Securities Laws.         “In-Transit Inventory” means Inventory of a Loan Party which is in the possession of a common  carrier and is in transit from a Foreign Vendor of a Loan Party from a location outside of the continental  United  States or  Canada to  a  location  of  a  Loan  Party that  is  within  the  continental  United  States or  Canada (with the exception of the province of Quebec).         “Inventory”  has  the  meaning  given  that  term  in  the  UCC,  and  shall  also include,  without  limitation, all: (a) goods which (i) are leased by a Person as lessor, (ii) are held by a Person for sale or  lease or to be furnished under a contract of service, (iii) are furnished by a Person under a contract of  service, or (iv) consist of raw materials, work in process, or materials used or consumed in a business; (b)  goods  of  said  description  in  transit;  (c)  goods  of  said  description  which  are  returned,  repossessed  or  rejected; and (d) packaging, advertising, and shipping materials related to any of the foregoing.         “Inventory Reserves” means such reserves as may be established from time to time by the Agent  in its Permitted  Discretion  with  respect  to  the  determination  of the saleability,  at  retail,  of  the  Eligible  Inventory, or which reflect such other factors as affect the market value of the Eligible Inventory or which  reflect  claims  and  liabilities  that  the  Agent  determines  will need  to  be  satisfied  in  connection  with  the  realization upon the Inventory. Without limiting the generality of the foregoing, Inventory Reserves may,  in  the  Agent’s  Permitted  Discretion,  include  (but  are  not  limited  to)  reserves  based  on  and  without  duplication:                (a)  Obsolescence;           (b)  Seasonality;           (c)  Shrink;           (d)  Imbalance;           (e)  Change in Inventory character;           (f)  Change in Inventory composition;          (g)  Change in Inventory mix;           (h)  Markdowns (both permanent and point of sale);           (i)  Retail  markons  and  markups  inconsistent  with  prior  period  practice  and  performance,         industry  standards,  current  business  plans  or  advertising  calendar  and  planned  advertising         events; and           (j)  Out-of-date and/or expired Inventory;                                          30 

 

         provided,  that  all  Inventory  Reserves  (including  the  amount  of  such  Inventory  Reserves)  shall  bear  a  reasonable  relationship  to  the  events,  conditions  or  circumstances  that  are  the  basis  for  each  such  Inventory Reserves.         “Investment” means, as to any Person, any direct or indirect acquisition or investment by such  Person, whether by means of (a) the purchase or other acquisition of Equity Interests of another Person,  (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other  acquisition  of  any  other  debt  or  interest  in,  another  Person,  (c)  any  Acquisition,  or  (d)  the  purchase,  acquisition or investment of or in any stocks, bonds, mutual funds, notes, debentures or other securities,  or any deposit account, certificate of deposit or other investment of any kind.  For purposes of covenant  compliance, the amount of any Investment in clauses (a), (b) and (c) shall be the amount actually invested  less  the  amount  of  cash  received  or  returned  for  such  Investment,  without  adjustment  for  subsequent  increases or decreases in the value of such Investment.         “IRS” means the United States Internal Revenue Service.         “ISP” means,  with  respect  to  any  Letter  of  Credit,  the  International  Standby  Practices  1998  (International Chamber of Commerce Publication No. 590) and any version or revision thereof accepted  by the L/C Issuer for use.         “Issuer Documents” means with respect to any Letter of Credit, the Letter Credit Application, the  Standby Letter of Credit Agreement or Commercial Letter of Credit Agreement, as applicable, and any  other document, agreement and instrument entered into by the L/C Issuer and the Lead Borrower (or any  Subsidiary) or in favor of the L/C Issuer and relating to any such Letter of Credit.         “Joinder” means an agreement, in form and substance satisfactory to the Agent pursuant to which,  among other things, a Person becomes a party to, and bound by the terms of, this Agreement and/or the  other Loan Documents in the same capacity and to the same extent as either a Borrower or a Guarantor, as  the Agent may determine.         “Landlord Lien State” means such state(s) in which a landlord’s claim for rent may have priority  over the Lien of the Agent in any of the Collateral.         “Laws” means each international, foreign, Federal, state and local statute, treaty, rule, guideline,  regulation,  ordinance,  code  and  administrative  or  judicial  precedent  or  authority,  including  the  interpretation  or  administration  thereof  by  any  Governmental  Authority  charged  with  the  enforcement,  interpretation or administration thereof, and each applicable administrative order, directed duty, request,  license,  authorization  and  permit  of,  and  agreement  with,  any  Governmental  Authority,  in  each  case  whether or not having the force of law.         “L/C  Credit  Extension”  means,  with  respect  to  any  Letter  of  Credit,  the  issuance  thereof  or  extension of the expiry date thereof, or the increase of the amount thereof, or the renewal thereof.         “L/C Issuer” means (a) Wells Fargo in its capacity as issuer of Letters of Credit hereunder, or any  successor issuer of Letters of Credit hereunder (which successor may only be a Lender selected by the  Agent in its discretion) and (b)  any other Lender selected by the Agent in its discretion and approved by  such  Lender  in  writing  to  the  Agent.   The  L/C  Issuer  may,  in  its  discretion,  arrange  for  one  or more  Letters of Credit to be issued by Affiliates of the L/C Issuer and/or for such Affiliate to act as an advising,  transferring, confirming and/or nominated bank in connection with the issuance or administration of any  such Letter of Credit, in which case the term “L/C Issuer” shall include any such Affiliate with respect to  Letters of Credit issued by such Affiliate.                                          31 

 

               “L/C Obligations” means, as at any date of determination, the sum of (a) the aggregate undrawn  amount of all outstanding Letters of Credit, plus (b) the aggregate amount of outstanding reimbursement  obligations  with  respect  to  Letters  of Credit  which  remain  unreimbursed  or  which  have  not  been  paid  through a Loan.  For purposes of computing the amounts available to be drawn under any Letter of Credit,  the amount of such Letter of Credit shall be determined in accordance with Section 1.06.  For all purposes  of  this  Agreement, if  on  any  date  of  determination  a Letter  of Credit  has  expired  by  its  terms  but  any  amount may still be drawn thereunder by reason of the operation of any Rule under the ISP or any article  of  the  UCP,  such  Letter  of  Credit  shall  be  deemed  to  be  “outstanding”  in  the  amount  so  remaining  available to be drawn.         “Lead Borrower” has the meaning assigned to such term in the preamble of this Agreement.         “Lease”  means  any  agreement,  whether  written  or  oral,  no  matter  how  styled  or  structured,  pursuant  to  which  a  Loan  Party  is  entitled  to  the  use  or  occupancy  of  any  space  in  a  structure,  land,  improvements or premises for any period of time.         “Lender”  has  the  meaning  specified  in  the  introductory  paragraph  hereto  and,  as  the  context  requires, includes the Swing Line Lender.         “Lending Office” means, as to any Lender, the office or offices of such Lender described as such  in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time  to time notify the Lead Borrower and the Agent.         “Letter  of  Credit”  means  each  Standby  Letter  of Credit  and  each  Commercial Letter  of Credit  issued hereunder.         “Letter of Credit Application” means an application for the issuance or amendment of a Letter of  Credit in the form from time to time in use by the L/C Issuer.         “Letter of Credit Disbursement” means a payment made by the L/C Issuer pursuant to a Letter of  Credit.         “Letter of Credit Expiration Date” means the day that is seven days prior to the Maturity Date  then in effect (or, if such day is not a Business Day, the next preceding Business Day).         “Letter of Credit Fee” has the meaning specified in Section 2.03(l).         “Letter of Credit Indemnified Costs” has the meaning specified in Section 2.03(f).         “Letter of Credit Related Person” has the meaning specified in Section 2.03(f).         “Letter of Credit Sublimit” means an amount equal to $10,000,000.  The Letter of Credit Sublimit  is part of, and not in addition to, the Aggregate Commitments.  A permanent reduction of the Aggregate  Commitments  shall  not  require  a  corresponding  pro  rata  reduction  in  the  Letter  of  Credit  Sublimit;  provided, however, that if the Aggregate Commitments are reduced to an amount less than the Letter of  Credit Sublimit, then the Letter of Credit Sublimit shall be reduced to an amount equal to (or, at Lead  Borrower’s option, less than) the Aggregate Commitments.         “LIBOR Borrowing” means a Borrowing comprised of LIBOR Rate Loans.                                          32 

 

               “LIBOR Rate” means for any Interest Period with respect to a LIBOR Rate Loan, the rate per  annum equal to the greater of (a) 0.75% and (b) as published by ICE Benchmark Administration Limited  (or any successor page or other commercially available source as the Agent may designate from time to  time)  as  of 11:00  a.m.,  London  time, two  Business Days  prior  to  the  commencement  of  the  requested  Interest Period, for a term, and in an amount, comparable to the Interest Period and the amount of the  LIBOR Rate Loan requested (whether as an initial LIBOR Rate Loan or as a continuation of a LIBOR  Rate Loan or as a conversion of a Base Rate Loan to a LIBOR Rate Loan) by Borrowers in accordance  with this Agreement (and, if any published rate is below zero, then the rate determined pursuant to this  clause (b) shall be deemed zero). Each determination of the LIBOR Rate shall be made by the Agent and  shall be conclusive in the absence of manifest error.         “LIBOR Rate Loan” means a Committed Loan that bears interest at a rate based on the LIBOR  Rate.         “LIBOR Rate Loan Notice” means a notice for a LIBOR Borrowing or continuation pursuant to  Section 2.02(b), which shall be substantially in the form of Exhibit A.         “Lien”  means  (a)  any  mortgage,  deed  of  trust,  pledge,  hypothecation,  assignment,  deposit  arrangement,  encumbrance,  lien  (statutory  or  other),  charge,  or  preference,  priority  or  other  security  interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever  (including  any  conditional  sale,  Capital  Lease  Obligation,  Synthetic  Lease  Obligation,  or  other  title  retention agreement, any easement, right of way or other encumbrance on title to real property, and any  financing lease having substantially the same economic effect as any of the foregoing) and (b) in the case  of securities, any purchase option, call or similar right of a third party with respect to such securities.         “Liquidation”  means  the  exercise  by  the  Agent  of  those  rights  and  remedies  accorded  to  the  Agent under the Loan Documents and applicable Law as a creditor of the Loan Parties with respect to the  realization on the Collateral, including (after the occurrence and during the continuation of an Event of  Default) the conduct by the Loan Parties acting with the consent of the Agent, of any public, private or  “going  out  of  business”,  “store  closing”,  or  other  similarly  themed  sale  or  other  disposition  of  the  Collateral for the purpose of liquidating the Collateral.  Derivations of the word “Liquidation” (such as  “Liquidate”) are used with like meaning in this Agreement.          “Loan” means an extension of credit by a Lender to the Borrowers under Article II in the form of  a Committed Loan or a Swing Line Loan.         “Loan Account” has the meaning assigned to such term in Section 2.11(a).         “Loan Cap” means, at any time of determination, the lesser of (a) the Aggregate Commitments or  (b) the Borrowing Base, in each case, as in effect on such date of determination.         “Loan Documents” means this Agreement, each Note, each Issuer Document, the Fee Letter, all  Borrowing  Base  Certificates,  the  Blocked  Account  Agreements,  each Blocked  Account  Agreement  (Access  Restricted  Immediately),  the  DDA  Notifications,  the  Credit  Card  Notifications,  the  Security  Documents,  the  Facility  Guaranty,  the  Post-Closing  Letter,  the  Subordinated  Intercompany  Note,  each  Request for Credit Extension, the Growth Capital Subordination Agreement and any other instrument or  agreement  now  or  hereafter  executed  and  delivered  in  connection  herewith,  or  in  connection  with  any  transaction arising out of any Cash Management Services and Bank Products provided by the Agent, the  Lenders or any of their Affiliates, each as amended and in effect from time to time.          “Loan Parties” means, collectively, the Borrowers and the Guarantors.                                            33 

 

               “Logistics  Servicer”  means  any  unaffiliated  provider  of  warehousing,  storage,  or  logistics  services, who is, in all cases, acting as an agent on behalf of, or is engaged by, any of the Loan Parties.         “London Business Day” means a day on which commercial banks are open for general business  (including dealings in foreign exchange and foreign currency deposits) in London, England.         “Margin Stock” is as defined in Regulation U of the FRB as in effect from time to time.         “Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect  upon, the operations, business, properties, liabilities (actual or contingent) or financial condition of any  Loan Party or the Lead Borrower and its Subsidiaries taken as a whole; (b) a material impairment of the  ability of any Loan Party to perform its obligations under any Loan Document to which it is a party; or (c)  a material impairment of the rights and remedies of the Agent or any Lender under any Loan Document  or a material adverse effect on (i) the Collateral, (ii) the validity, perfection or priority of any Lien granted  by any Loan Party in favor of any Agent on any material portion of the Collateral, or (iii) the legality,  validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a  party.   In  determining  whether  any  individual  event  would  result  in  a  Material Adverse  Effect,  notwithstanding that such event in and of itself does not have such effect, a Material Adverse Effect shall  be deemed to have occurred if the cumulative effect of such event and all other than existing events would  result in a Material Adverse Effect.         “Material Contract” means, with respect to any Person, each contract or agreement (a) material  contracts with Logistics Servicers (excluding, for the avoidance of doubt, any contracts with any Person  that solely provides domestic freight forwarding services), or (b) to which the breach, nonperformance,  cancellation or failure to renew by any party thereto, individually or in the aggregate, could reasonably be  expected to have a Material Adverse Effect.         “Material  Indebtedness”  means  (a)  Indebtedness  of  the  Loan  Parties  arising  and  otherwise  outstanding under the Growth Capital Subordinated Loan Documents and (b) other Indebtedness (other  than the Obligations) of the Loan Parties in an aggregate principal amount exceeding $2,500,000.  For  purposes of  determining  the  amount  of  Material  Indebtedness  at  any  time,  (a)  the  amount  of  the  obligations  in  respect  of  any  Swap  Contract  at  such  time  shall  be  calculated  at  the  Swap  Termination  Value thereof, (b) undrawn committed or available amounts shall be included, and (c) all amounts owing  to all creditors under any combined or syndicated credit arrangement shall be included.         “Maturity Date” means the earlier of (a) November 10, 2023 and (b) 91 days prior to the earliest  “Maturity Date”, “End of Term Payment” date, or similar term that is in effect at any time under, and as  defined in, each promissory note issued under the Growth Capital Subordinated Loan Documents (each, a  “Growth  Capital  Maturity  Date”)  if  such  applicable  Growth  Capital  Maturity  Date  under the  Growth  Capital Subordinated Loan Documents is not, prior to such date, repaid, refinanced, amended or modified  to extend such Growth Capital Maturity Date to a date that is at least 91 days after November 10, 2023;  provided that,  if  any  such  day  is  not  a  Business  Day,  the  Maturity  Date  shall  be  the  Business  Day  immediately preceding such day.         “Maximum Rate” has the meaning provided therefor in Section 10.09.         “Measurement  Period”  means,  at  any  date  of  determination,  as  applicable  and  as  the  context  requires (x) the most recently completed four Fiscal Quarters of the Lead Borrower or, if fewer than four  consecutive Fiscal Quarters of the Lead Borrower have been completed since the Closing Date, the Fiscal  Quarters of the Lead Borrower that have been completed since the Closing Date or (y) in connection with  determining the Flip Date, the most recently completed sixth month period of the Lead Borrower.                                         34 

 

               “Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.         “Multiemployer  Plan”  means  any  employee  benefit  plan  of  the  type  described  in  Section 4001(a)(3) of ERISA, to which the Lead Borrower or any ERISA Affiliate makes or is obligated  to  make  contributions,  or  during  the  preceding  five  plan  years, has  made  or  been  obligated  to  make  contributions.         “Net  Proceeds”  means  (a)  with  respect  to  any  Disposition  by any  Loan  Party or  any  of  its  Subsidiaries, or any Extraordinary Receipt received or paid to the account of any Loan Party or any of its  Subsidiaries, the excess, if any, of (i) the sum of cash and cash equivalents received in connection with  such transaction (including any cash or cash equivalents received by way of deferred payment pursuant  to, or by monetization of, a note receivable or otherwise, but only as and when so received) over (ii) the  sum of (A) the principal amount of any Indebtedness that is secured by the applicable asset by a Lien  permitted hereunder which is senior to the Agent’s Lien on such asset and that is required to be repaid (or  to establish an escrow for the future repayment thereof) in connection with such transaction (other than  Indebtedness  under  the  Loan  Documents),  (B)  the  reasonable  and  customary  out-of-pocket  expenses  incurred by such Loan Party or such Subsidiary in connection with such transaction (including, without  limitation, appraisals, and brokerage, legal, title and recording or transfer tax expenses and commissions)  paid by any Loan Party to third parties (other than Affiliates)) and (C) amounts to pay Federal, state and  local income or other Taxes estimated to be payable by any Loan Party as a result thereof; and               (b)   with respect to the sale or issuance of any Equity Interest by any Loan Party or  any of its Subsidiaries, or the incurrence or issuance of any Indebtedness by any Loan Party or any of its  Subsidiaries, the excess of (i) the sum of the cash and cash equivalents received in connection with such  transaction  over  (ii)  the  underwriting  discounts  and  commissions,  and  other  reasonable  and  customary  out-of-pocket expenses, incurred by such Loan Party or such Subsidiary in connection therewith.         “Non-Consenting Lender” has the meaning provided therefor in Section 10.01.         “Non-Defaulting Lender” means each Lender other than a Defaulting Lender.         “Note”  means  (a)  a  promissory  note  made  by  the  Borrowers  in  favor  of  a  Lender  evidencing  Committed Loans made by such Lender, substantially in the form of Exhibit C-1, and (b) the Swing Line  Note, as each may be amended, supplemented or modified from time to time.         “NPL” means the National Priorities List under CERCLA.         “Obligations” means (a) all advances to, and debts (including principal, interest, fees, costs, and  expenses), liabilities, obligations, covenants, indemnities, and duties of, any Loan Party arising under any  Loan Document or otherwise with respect to any Loan or Letter of Credit (including payments in respect  of reimbursement of disbursements, interest thereon and obligations to provide cash collateral therefor),  whether  direct  or  indirect  (including  those  acquired  by  assumption),  absolute  or  contingent,  due  or  to  become due, now existing or hereafter arising and including interest, fees, costs, expenses and indemnities  that  accrue  after  the  commencement  by  or  against  any  Loan  Party  or  any  Affiliate  thereof  of  any  proceeding  under  any  Debtor  Relief  Laws  naming  such  Person  as  the  debtor  in  such  proceeding,  regardless  of  whether  such  interest,  fees,  costs,  expenses  and  indemnities  are  allowed  claims  in  such  proceeding, and (b) any Other Liabilities; provided that the Obligations shall not include any Excluded  Swap Obligations.         “OFAC” means The Office of Foreign Assets Control of the U.S. Department of the Treasury.                                          35 

 

               “Organization Documents” means, (a) with respect to any corporation, the certificate or articles  of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any  non-U.S.  jurisdiction);  (b)  with  respect  to  any  limited  liability  company,  the  certificate  or  articles  of  formation or organization and operating agreement; (c) with respect to any partnership, joint venture, trust  or other form of business entity, the partnership, joint venture or other applicable agreement of formation  or organization and any agreement, instrument, filing or notice with respect thereto filed in connection  with its formation or organization with the applicable Governmental Authority in the jurisdiction of its  formation  or  organization  and,  if  applicable,  any  certificate  or  articles  of  formation  or organization  of  such  entity,  and  (d)  in  each  case,  all  shareholder  or  other  equity  holder  agreements,  voting  trusts  and  similar arrangements to which such Person is a party or which is applicable to its Equity Interests and all  other arrangements relating to the Control or management of such Person.         “Other Connection Taxes” means, with respect to any recipient of any payment to be made by or  on  account  of  any  obligation  of  the  Loan  Parties  hereunder,  Taxes  imposed  as  a  result  of  a  present  or  former connection between such recipient and the jurisdiction imposing such Tax (other than connections  arising  solely  from  such  recipient  having  executed,  delivered,  become  a  party  to,  performed  its  obligations under, received payments under, received or perfected a security interest under, engaged in  any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any  Loan or Loan Document).         “Other  Liabilities”  means  any  obligation  on  account  of  (a)  any  Cash  Management  Services  furnished to any of the Loan Parties or any of their Subsidiaries and/or (b) any transaction with the Agent,  any Lender or any of their Affiliates, which arises out of any Bank Product entered into with any Loan  Party and any such Person, as each may be amended from time to time.          “Other  Taxes”  means  all  present  or  future  stamp,  court  or  documentary  Taxes  or  any  other  intangible, recording, filing or similar Taxes, charges or similar levies arising from any payment made  hereunder or under any other Loan Document or from the execution, delivery or enforcement of, from the  receipt or perfection of a security interest under, or otherwise with respect to, this Agreement or any other  Loan  Document,  except  any  such  Taxes  that  are  Other  Connection  Taxes  imposed  with  respect  to  an  assignment (other than an assignment pursuant to Section 10.13).         “Outstanding Amount” means (i) with respect to Committed Loans and Swing Line Loans on any  date,  the  aggregate  outstanding  principal  amount  thereof  after  giving  effect  to  any  borrowings  and  prepayments or repayments of Committed Loans and Swing Line Loans, as the case may be, occurring on  such date; and (ii) with respect to any L/C Obligations on any date, the amount of such L/C Obligations  on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes  in the aggregate amount of the L/C Obligations as of such date.         “Overadvance”  means  a  Credit  Extension  to  the  extent  that,  immediately  after  its  having  been  made, Availability is less than zero.         “PacWest  Cash  Collateralized  Letters  of  Credit”  means,  collectively,  standby  letters  of  credit  issued under the Existing Credit Agreement, for the account of the Borrowers that are outstanding as of  the Closing Date and described on Schedule 1.03 hereto.           “Participant” has the meaning specified in Section 10.06(d).         “Patriot Act” has the meaning specified in Section 5.27.                                          36 

 

               “Payment  Conditions”  means,  at  the  time  of  determination  with  respect  to  any  specified  transaction or payment, that (a) no Event of Default then exists or would arise as a result of entering into  such transaction or the making of such payment, and (b) the sum of Deposited Cash plus Availability as  of the day immediately preceding the date of such transaction or payment and, projected, for each of the  six  (6)  months  immediately  following  such  transaction  or  payment,  in  each  case,  is  greater  than  $20,000,000.   Prior  to  undertaking  any  transaction  or  payment  which  is  subject  to  the  Payment  Conditions,  the  Loan  Parties  shall  deliver  to  the  Agent  an  updated  Borrowing  Base  Certificate  giving  effect to the payment or transaction.         “PBGC” means the Pension Benefit Guaranty Corporation.         “PCAOB” means the Public Company Accounting Oversight Board.         “Pension Plan” means any “employee pension benefit plan” (as such term is defined in Section  3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or  maintained by the Lead Borrower or any ERISA Affiliate or to which the Lead Borrower or any ERISA  Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan  described  in  Section  4064(a)  of  ERISA,  has  made  contributions  at  any time  during  the  immediately  preceding five plan years.         “Permitted  Acquisition”  means  an  Acquisition  in  which  all  of  the  following  conditions  are  satisfied:                (a)  no Default or Event of Default then exists or would arise from the consummation         of such Acquisition;          (b)  such Acquisition shall have been approved by the Board of Directors of the Person (or         similar  governing  body  if  such  Person  is  not  a  corporation)  which  is  the  subject  of  such         Acquisition and such Person shall not have announced that it will oppose such Acquisition or         shall  not  have  commenced  any  action  which  alleges  that  such  Acquisition  shall  violate         applicable Law;          (c)  if  the  aggregate  cash  consideration  for  such  Acquisition  exceeds  an  amount  equal  to         $5,000,000,  the  Lead  Borrower  shall  have  furnished  the  Agent  with  fifteen  (15)  days’  prior         written notice of such intended Acquisition (or such shorter period as the Agent may agree) and         shall  have  furnished  the  Agent  with  a  current  draft  of  the  acquisition  documents  (and  final         copies thereof as and when executed), and to the extent readily available to the Lead Borrower,         (i)  a  summary  of  any  due  diligence  undertaken  by  the  Loan  Parties  in  connection  with such         Acquisition,  (ii)  applicable  financial  statements  of  the  Person  which  is  the  subject  of  such         Acquisition (if  any),  (iii) pro  forma  projected  financial  statements  for the  twelve  (12) month         period  following  such  Acquisition  after  giving  effect  to  such  Acquisition  (including  balance         sheets, cash flows and income statements by month for the acquired Person, individually, and         on a Consolidated basis with all Loan Parties) (if any), and (iv) such other information as the         Agent may reasonably require, all of which shall be reasonably satisfactory to the Agent;           (d)  with  respect  to  an  Acquisition  of  the  Equity  Interests, if  a  Loan  Party  borrows  Loans         hereunder to finance, in whole or in part, the consideration paid for such Acquisition, the legal         structure of the Acquisition shall be acceptable to the Agent in its Permitted Discretion;            (e)  after giving effect to the Acquisition, if the Acquisition is an Acquisition of the Equity         Interests, a Loan Party shall acquire and own, directly or indirectly, a majority of the Equity                                         37 

 

                Interests in the Person being acquired and shall Control a majority of any voting interests or         shall otherwise Control the governance, directly or indirectly, of the Person being acquired;          (f)  any  assets  acquired  shall  be  utilized  in,  and  if  the  Acquisition  involves  a  merger,         consolidation  or  Acquisition  of  Equity  Interests,  the  Person  which  is  the  subject  of  such         Acquisition shall be engaged in, a business otherwise permitted to be engaged in by a Borrower         under this Agreement;          (g)  subject to the time periods set forth in Section 6.12, if the Person which is the subject of         such Acquisition will be maintained as a Subsidiary of a Loan Party (other than an Excluded         Subsidiary), such Subsidiary shall be joined as a Borrower hereunder or as a Guarantor, as the         Agent shall determine, and the Agent shall receive a first-priority security interest (subject in         priority  only to  Permitted  Encumbrances  having  priority  over  the  Lien  of  the  Agent  by         operation of applicable Law) in such Subsidiary’s Equity Interests, Inventory, Accounts, Real         Estate  and  other  property  of  the  same  nature  as  constitutes  collateral  under  the  Security         Documents; and          (h)  the Loan Parties shall have satisfied the Payment Conditions.          “Permitted Convertible Indebtedness” means any notes, bonds, debentures or similar instruments  issued by the Lead Borrower that are convertible into or exchangeable for (x) cash, (y) shares of the Lead  Borrower’s common stock or preferred stock or other equity securities that constitute Equity Interests of  Lead Borrower (other than Disqualified Stock) and/or (z) a combination thereof; provided that any such  indebtedness shall (A) mature, and not be subject to mandatory repurchase or redemption (other than in  connection  with  a  customary  change  of  control  or  “fundamental  change”  provision;  provided  that  the  Loan Parties’ ability to effectuate any such redemption or payment shall be governed by the provisions of  Section  7.07) prior  to at  least  180  days  after  the  Maturity  Date,  (B)  have  recourse  only  to  the  Lead  Borrower,  (C)  have  an  interest  rate  that  shall  not  exceed  the  then  applicable  market  interest  rate  as  determined by the Lead Borrower in good faith, and (D) shall be unsecured obligations.         “Permitted Discretion” means a determination made in good faith by Agent in the exercise of its  reasonable (from the perspective of an asset-based lender in the retail industry) business judgment.          “Permitted Disposition” means any of the following:                (a)  Dispositions of inventory in the ordinary course of business;          (b)  bulk  sales  or  other  Dispositions  of  the  Inventory  of  a  Loan  Party  not  in  the  ordinary         course of business, in all cases, at arm’s length, provided, that (i) such Dispositions shall not         exceed $5,000,000 in the aggregate in any Fiscal Year; (ii) if any such Disposition or series of         related  Dispositions  exceeds  $3,000,000,  the  Loan  Parties  shall  have  delivered  an  updated         Borrowing Base Certificate after giving effect to such Disposition; and (iii) in connection with         all  Dispositions  under  this  clause  (b), all  Net  Proceeds  received  in  connection  therewith  are         applied to the Obligations if then required in accordance with Section 2.05 hereof;           (c)  non-exclusive licenses of Intellectual Property of a Loan Party or any of its Subsidiaries         (including,  without  limitation,  for  marketing  and  promotional  purposes) or  non-perpetual         exclusive licenses with respect to geographic area, fields of use and customized products for         specific customers that would not result in a transfer of title of the licensed Intellectual Property         under  applicable  law,  in  each  case,  in  the  ordinary  course  of  business  so  long  as  such         arrangement would not restrict, prohibit or otherwise limit the Loan Parties from Disposing of                                         38 

 

                      any Inventory or other Collateral of the type eligible to be included in the Borrowing Base or  otherwise could reduce the Appraised Value of such Collateral;   (d)  licenses for  the  conduct  of  licensed  departments  within  the  Loan Parties’ Stores in the  ordinary course of business;   (e)  Dispositions of Equipment in the ordinary course of business that is substantially worn,  damaged,  obsolete  or,  in  the  judgment  of  a  Loan  Party,  no longer  useful  or  necessary  in  its  business or that of any Subsidiary;   (f)  sales, transfers and Dispositions among the Loan Parties or by any Subsidiary to a Loan  Party;    (g)  sales, transfers and Dispositions by any Subsidiary which is not a Loan Party to another  Subsidiary that is not a Loan Party;    (h)  so  long  as  Default  or  Event  of  Default  then  exists  or  would  arise  therefrom,  sales,  transfers  and  Dispositions  of  assets  other  than  Intellectual  Property  by  any  Loan  Party  to  a  Subsidiary  that  is  not  a  Loan  Party  in  an aggregate  amount  not  to  exceed  (i)  with  respect  to  Dispositions  of  assets  of  the  type  that  are  eligible  to  be  included  in  the  Borrowing  Base,  $1,000,000 in any Fiscal Year and (ii) with respect to Dispositions of assets that are not of the  type eligible to be included in the Borrowing Base, $4,000,000 in any Fiscal Year;    (i)  as long as no Default or Event of Default then exists or would arise therefrom, sales of  Real  Estate  of  any  Loan  Party  (or  sales  of  any  Person  or  Persons  created  to  hold  such  Real  Estate or the Equity Interests in such Person or Persons), including sale-leaseback transactions  involving any such Real Estate pursuant to leases on market terms, as long as, (A) such sale is  made for fair market value, (B) the proceeds of such sale are utilized to repay the Obligations,  and (C) in the case of any sale-leaseback transaction permitted hereunder, the Agent shall have  received from each such purchaser or transferee a Collateral Access Agreement on terms and  conditions reasonably satisfactory to the Agent;   (j)  as  long  as  no  Default  or  Event  of  Default  then  exists  or  would  arise  therefrom,  other  Dispositions  of  assets  (other  than  Intellectual  Property  and  assets  of  the  type  eligible  to  be  included in the Borrowing Base) by the Lead Borrower and its Subsidiaries; as long as, (i) such  Disposition is made for fair market value and (ii) the Lead Borrower or such Subsidiary shall  receive not less than 75% of such consideration in the form of cash or Cash Equivalents;    (k)  any  sale  or  other  Disposition  of  accounts  receivable  arising  in  the  ordinary  course  of  business in connection with the collection or compromise thereof and not part of any financing  transaction;   (l)  dissolution, liquidation or winding up of any Subsidiary of the Lead Borrower that is not  a Loan Party, provided that such dissolution, liquidation or winding up would not reasonably be  expected to result in a Material Adverse Effect;   (m)  the  abandonment,  sale  or  other  Disposition  of  Intellectual  Property  that  is,  in  the  reasonable  good  faith  judgment  of  the  Borrower,  no  longer  economically  practicable  to  maintain or useful in the conduct of the business of the Borrower and its Subsidiaries so long as  such Disposition is for fair market value;                                    39 

 

                (n)  any  use  of  Cash  Equivalents  in  the  ordinary  course  of  business  and  otherwise  as         permitted under this Agreement;          (o)  leases or subleases of real property in the ordinary course of business at locations that do         not contain Collateral; and          (p)  to  the  extent  constituting  a  Disposition, any  Disposition  consisting  of a Restricted         Payment permitted under Section 7.06(h).   provided, no Dispositions of Related Intellectual Property made to any Person (other than (i) to a Loan  Party and (ii) Dispositions specified in clauses (c) and (d) above) shall constitute a Permitted Disposition  unless  such Disposition  is  subject  to  a  non-exclusive  royalty-free  license  of  such  Related  Intellectual  Property  in  favor  of  the  Agent  for  use  in  connection  with  the  exercise  of  rights  and  remedies  of  the  Secured  Parties  under  the  Loan  Documents  in  respect  of  the  Collateral,  which  license  shall  be  substantially  similar  to  the  license  described  in  Section  6.1  of  the  Security  Agreement  (or  otherwise  reasonably  satisfactory  to  the  Agent);  provided  further  that,  in  the  case  of  a  Disposition  of  Related  Intellectual  Property  licensed  by  the  Lead  Borrower  or  one  of  its  Subsidiaries  which  are  Loan  Parties  from  any  Person  (other  than  a  Loan  Party),  the  transferee  shall  not  be  required  to  provide  the  license  described in the foregoing proviso if not permitted to do so under the license from such other Person.           “Permitted Encumbrances” means:                (a)  Liens  imposed  by  law  for  Taxes  that  are  not  yet  due  or  are  being  contested  in         compliance with Section 6.04;          (b)  carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens         imposed by applicable Law, arising in the ordinary course of business and securing obligations         that are not overdue or are being contested in compliance with Section 6.04;          (c)  pledges  and  deposits  made  in  the  ordinary  course  of  business  in  compliance  with         workers’ compensation, unemployment insurance and other social security laws or regulations,         other than any Lien imposed by ERISA;          (d)  deposits  to  secure  the  performance of  bids,  trade  contracts  and  leases  (other  than         Indebtedness),  statutory  obligations,  surety  and  appeal  bonds,  performance  bonds  and  other         obligations of a like nature incurred in the ordinary course of business;           (e)  Liens in respect of judgments that would not constitute an Event of Default hereunder;          (f)  easements,  covenants,  conditions,  restrictions,  building  code  laws,  zoning  restrictions,         rights-of-way  and  similar  encumbrances  on  real  property  imposed  by  law  or  arising  in  the         ordinary course of business that do not secure any monetary obligations and do not materially         detract from the value of the affected property or materially interfere with the ordinary conduct         of  business  of  a  Loan  Party  and  such  other  minor  title  defects  or  survey  matters  that  are         disclosed by current surveys that, in each case, do not materially interfere with the current use         of the real property;           (g)  Liens  existing  on  the  Closing  Date  and  listed  on Schedule 7.01 and  any  Permitted         Refinancings thereof;                                          40 

 

                      (h)  Liens on fixed or capital assets acquired by any Loan Party which are permitted under  clause  (c)  of  the  definition  of  Permitted  Indebtedness  so  long  as  (i)  such  Liens  and  the  Indebtedness  secured  thereby  are  incurred  prior  to  or  within  ninety  (90)  days  after  such  acquisition,  (ii)  the  Indebtedness  secured  thereby  does  not  exceed  the  cost  of  acquisition  of  such fixed or capital assets and (iii) such Liens shall not extend to any other property or assets  of the Loan Parties;   (i)  Liens in favor of the Agent;   (j)  statutory Liens of landlords and lessors in respect of rent which are not overdue or are  being contested in compliance with Section 6.04;   (k)  possessory  Liens  in  favor  of  brokers  and  dealers  arising  in  connection  with  the  acquisition  or  disposition  of  Investments  owned  as  of  the  Closing  Date  and  Permitted  Investments, provided that such liens (a) attach only to such Investments and (b) secure only  obligations  incurred  in  the  ordinary  course  and  arising  in  connection  with  the  acquisition  or  disposition of such Investments and not any obligation in connection with margin financing;    (l)  Liens  arising  solely  by  virtue  of  any  statutory  or  common  law  provisions  relating  to  banker’s liens, liens in favor of securities intermediaries, rights of setoff or similar rights and  remedies  as  to  deposit  accounts  or  securities  accounts  or  other  funds  maintained  with  depository institutions or securities intermediaries;   (m)  Liens arising from precautionary UCC filings regarding “true” operating leases or, to the  extent permitted under the Loan Documents, the consignment of goods to a Loan Party;   (n)  voluntary Liens on property (other than property of the type included in the Borrowing  Base) in existence at the time such property is acquired pursuant to a Permitted Acquisition or  on such property of a Subsidiary of a Loan Party in existence at the time such Subsidiary is  acquired  pursuant  to  a  Permitted  Acquisition; provided,  that  such  Liens  are  not  incurred  in  connection with or in anticipation of such Permitted Acquisition and do not attach to any other  assets of any Loan Party or any Subsidiary;    (o)  Liens in favor of customs and revenues authorities imposed by applicable Law arising in  the ordinary course of business in connection with the importation of goods solely to the extent  the  following  conditions  are  satisfied:  (A)  such  Liens  secure  obligations  that  are  being  contested in good faith by appropriate proceedings, (B) the applicable Loan Party or Subsidiary  has set aside on its books adequate reserves with respect thereto in accordance with GAAP and  (C) such contest effectively suspends collection of the contested obligation and enforcement of  any Lien securing such obligation;    (p)  Liens securing the Growth Capital Subordinated Indebtedness (including any Permitted  Refinancing  thereof)  so  long as  such  Liens  are,  at  all  times,  subject  to  the  Growth  Capital  Subordination Agreement;   (q)  Liens on cash or Cash Equivalents to secure Indebtedness permitted pursuant to clause  (d) of the definition of Permitted Indebtedness;    (r)  Liens  on  cash  or Cash  Equivalents  securing  reimbursement  obligations  with  respect  to  Indebtedness of the type set forth in clause (r) of the definition of Permitted Indebtedness;                                     41 

 

                (s)  other  Liens  (other  than  Liens  on  any  assets  of  the  type  eligible  to  be  included  in  the         Borrowing Base) securing Indebtedness in an aggregate amount not to exceed $1,000,000;           (t)  Liens on cash or Cash Equivalents securing Indebtedness of the type set forth in clause (t)         of the definition of Permitted Indebtedness in an aggregate amount not to exceed $1,500,000;          (u)  Liens consisting of rights of setoff against credit balances of the Lead Borrower or any of         its  Subsidiaries  with  Credit Card  Issuers or Credit Card  Processors  in  the  ordinary  course of         business, but not liens on or rights of setoff against any other property or assets of the Lead         Borrower or such Subsidiary; and           (v)  solely to the extent the granting of a license would constitute a Lien, Liens in connection         with licenses permitted pursuant to clause (c) of the definition of Permitted Disposition.         “Permitted  Equity  Derivatives”  means  any  forward  purchase,  accelerated  share  purchase,  call  option, warrant transaction or other equity derivative transactions relating to any Permitted Convertible  Indebtedness of the Lead Borrower.          “Permitted Indebtedness” means each of the following:                  (a)  Indebtedness  outstanding  on  the  Closing  Date  and  listed  on Schedule  7.03 and         any Permitted Refinancing thereof;          (b)  Indebtedness of any Loan Party to any other Loan Party;          (c)  purchase  money  Indebtedness  of  any  Loan  Party  to  finance  the  acquisition  of  any         personal  property  consisting  solely  of  fixed  or  capital  assets,  including  Capital  Lease         Obligations,  and  any  Indebtedness  assumed  in  connection  with  the  acquisition  of  any  such         assets or secured by a Lien on any such assets prior to the acquisition thereof, and Permitted         Refinancings thereof, provided, however, that the aggregate principal amount of Indebtedness         permitted by this clause (c) shall not exceed $2,500,000 at any time outstanding;           (d)  obligations  (contingent  or  otherwise)  of  any  Loan  Party  or  any  Subsidiary  thereof         existing  or  arising  under  any  Swap  Contract, provided that  such  obligations  are  (or  were)         entered  into  by  such  Person  in  the  ordinary  course  of  business  for  the  purpose  of  directly         mitigating risks associated with fluctuations in interest rates or foreign exchange rates, and not         for purposes of speculation or taking a “market view”;           (e)  contingent liabilities under surety bonds, performance bonds, bid bonds, appeal bonds or         similar instruments incurred in the ordinary course of business;           (f)  Indebtedness incurred for the construction or acquisition or improvement of, or to finance         or to refinance, any Real Estate owned by any Loan Party (including therein any Indebtedness         incurred in connection with sale-leaseback transactions permitted hereunder and any Synthetic         Lease Obligations), provided that, (A) all Net Proceeds received in connection with any such         Indebtedness are applied to the Obligations, and (B) the Loan Parties shall use commercially         reasonable  efforts  to  cause  the  holders of  such  Indebtedness  and  the  lessors  under  any  sale-        leaseback  transaction  to  enter  into  a  Collateral  Access  Agreement  on  terms  reasonably         satisfactory to the Agent;                                           42 

 

                      (g)  Indebtedness with respect to the deferred purchase price for any Permitted Acquisition,  provided that such Indebtedness (other than, for the avoidance of doubt, in respect of working  capital adjustments, milestones or earnouts) does not require the payment in cash of scheduled  principal prior to the Maturity Date, has a maturity which extends beyond the Maturity Date,  and is subordinated to the Obligations on terms reasonably acceptable to the Agent;    (h)  Indebtedness  of  any  Person  that  becomes  a  Subsidiary  of  a  Loan  Party  in  a  Permitted  Acquisition, which Indebtedness is existing at the time such Person becomes a Subsidiary of a  Loan  Party  (other  than  Indebtedness  incurred  solely  in  contemplation  of  such  Person’s  becoming a Subsidiary of a Loan Party);   (i)  the Obligations;    (j)  unsecured  Indebtedness  not  otherwise  specifically  described  herein  in  an  aggregate  principal amount not to exceed $2,500,000 at any time outstanding;    (k)  Growth Capital Subordinated Indebtedness (and Permitted Refinancings thereof) so long  as such Indebtedness does not exceed an aggregate principal amount of $100,000,000 and is, at  all times, subject to the Growth Capital Subordination Agreement;   (l)  Permitted Convertible Indebtedness in an aggregate principal amount outstanding at any  time  not  to  exceed  the  greater  of  (x)  $100,000,000  and  (y)  25%  of  the  then  current  market  capitalization  of the  Lead  Borrower  as  of  the  most  recent  Measurement  Period,  and  any  Permitted Refinancing thereof;   (m)  (i) Indebtedness of any Subsidiary of Lead Borrower that is not a Loan Party to any other  Subsidiary that is not a Loan Party and (ii) any Indebtedness of Subsidiaries that are not Loan  parties to any Loan Party to the extent permitted pursuant to Section 7.03;   (n)  Indebtedness representing deferred compensation to employees of the Lead Borrower or  any of its Subsidiaries incurred in the ordinary course of business;   (o)  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  and  Indebtedness  arising  in  connection with endorsement of instruments for deposit in the ordinary course of business;   (p)  cash management obligations and other Indebtedness incurred in the ordinary course of  business in respect of netting services and similar arrangements in each case in connection with  cash management and deposit accounts;   (q)  Indebtedness  to  trade  creditors  incurred  in  the  ordinary  course  of  business  and  Indebtedness incurred as a result of endorsing negotiable instruments received in the ordinary  course of business;   (r)  (i) letters  of  credit  in  a  face  amount  not  to  exceed  $1,500,000;  provided  that  no  such  letters of credit shall be obtained unless such letters of credit cannot be issued pursuant to the  terms  of  this  Agreement  or  the  L/C  Issuer  refuses  to  issue  such  letters  of  credit  pursuant  to  Section 2.03 hereof and (ii) Indebtedness consisting of reimbursement obligations in respect of  the PacWest Cash Collateralized Letters of Credit in an aggregate face amount not to exceed, at  any time of determination, $9,341,322.09;                                    43 

 

    (s)  Indebtedness arising from Permitted Investments; and    (t)  Indebtedness  in  respect  of  the  Borrowers’  use  of  corporate  credit  cards  or  similar   instruments in an amount not to exceed $5,000,000   “Permitted Investments” means each of the following:            (a)  reserved;          (a)  Investments existing on the Closing Date, and set forth on Schedule 7.02, but not   any increase in the amount thereof or any other modification of the terms thereof;          (b)  (i) Investments  by  any  Loan  Party  and  its  Subsidiaries  in  their  respective   Subsidiaries outstanding on the Closing Date, (ii) additional Investments by any Loan Party and   its Subsidiaries in Loan Parties, (iii) additional Investments by Subsidiaries of the Loan Parties   that are not Loan Parties in other Subsidiaries that are not Loan Parties and (iv) so long as (x)   no  Default  or  Event  of  Default  has  occurred  and  is  continuing  or  would  result  from  such   Investment  and  (y)  the  Payment  Conditions  are  satisfied,  additional  Investments (other  than   Related Intellectual Property) by the Loan Parties in Subsidiaries that are not Loan Parties in an   aggregate  amount  invested  after  the  Closing  Date  hereof  not  to  exceed  $14,000,000  in  the   aggregate in any Fiscal Year;     (c)  Investments  consisting  of  extensions  of  credit  in  the  nature  of  accounts  receivable  or   notes receivable arising from the grant of trade credit in the ordinary course of business, and   Investments  received  in  satisfaction  or  partial  satisfaction  thereof  from  financially  troubled   account debtors to the extent reasonably necessary in order to prevent or limit loss;    (d)  Guarantees constituting Permitted Indebtedness;    (e)  Investments by any Loan Party in Swap Contracts (i) entered into in the ordinary course   of  business  and  for  bona  fide  business  (and  not  speculative  purposes)  to  protect  against   fluctuations in interest rates in respect of the Obligations and (ii) Permitted Equity Derivatives;    (f)  Investments  received  in  connection  with  the  bankruptcy  or  reorganization  of,  or   settlement of delinquent accounts and disputes with, customers and suppliers, in each case in   the ordinary course of business;     (g)  advances to officers, directors and employees of the Loan Parties and Subsidiaries in the   ordinary  course  of  business  in  an  aggregate  amount  not  to  exceed  $1,000,000  at  any  time   outstanding;     (h)  Investments constituting Permitted Acquisitions;    (i)  so  long  as  Payment  Conditions  are  satisfied,  other  Investments (other  than Related   Intellectual Property) not otherwise specifically described herein;     (j)  Cash Equivalents;     (k)  to the extent constituting any Investment, any Permitted Disposition;                                    44 

 

                (l)  so long as no Cash Dominion Event then exists or would result therefrom (but subject to         the  first  proviso  of  this  definition  of  Permitted  Investments),  the  Lead  Borrower  and  its         Subsidiaries may make Investments that are made in exchange for the substantially concurrent         sale of Equity Interests of the Lead Borrower permitted to be issued by it hereunder; and          (m)  other  Investments (other  than Related Intellectual  Property) not  otherwise  specifically         described herein and not exceeding $2,500,000 in the aggregate;    provided, however, that notwithstanding the foregoing, after the occurrence and during the continuance of  a Cash Dominion Event, no such Investments specified in clause (i), (j) and (l) shall be permitted unless  (i)  either  (A)  no  Loans,  or,  if  then  required  to  be  Cash  Collateralized,  Letters  of  Credit  are  then  outstanding, or (B) the Investment is a temporary Investment pending expiration of an Interest Period for  a  LIBOR  Rate  Loan,  the  proceeds  of  which  Investment  will  be  applied  to the  Obligations  after  the  expiration of such Interest Period, and (ii) such Investments shall be pledged to the Agent as additional  collateral for the Obligations pursuant to such agreements as may be reasonably required by the Agent;    provided however, with respect to any Permitted Investment (other than Permitted Investments in Loan  Parties  and,  to  the  extent  constituting  Investments)  consisting  of  (a)  assets  included  in  the  Borrowing  Base, the Loan Parties shall, contemporaneously therewith, deliver to the Agent an updated Borrowing  Base Certificate, giving effect to such Investment; and (b) Related Intellectual Property, such Investment  of Related Intellectual Property in any Person (other than (i) in a Loan Party and (ii) any Investment that  constitutes a Permitted Disposition under clauses (c) and (d) of the definition thereof) shall not constitute  a Permitted Investment unless such Investment is subject to a non-exclusive royalty-free license of such  Related Intellectual Property in favor of the Agent for use in connection with the exercise of rights and  remedies  of  the  Secured  Parties  under the  Loan  Documents  in  respect  of  the Collateral,  which  license  shall  be  substantially  similar  to  the  license  described  in  Section  6.1  of  the  Security  Agreement  (or  otherwise  reasonably  satisfactory  to  the  Agent);  provided  further  that,  in  the  case  of  an  Investment  of  Related Intellectual Property licensed by any Loan Party from any Person (other than a Loan Party), the  transferee shall not be required to provide the license described in the foregoing proviso if not permitted  to do so under the license from such other Person.          “Permitted Overadvance” means an Overadvance made by the Agent, in its discretion, which:                (a)  is made to maintain, protect or preserve the Collateral and/or the Credit Parties’         rights under the Loan Documents or which is otherwise for the benefit of the Credit Parties; or          (b)  is made to enhance the likelihood of, or to maximize the amount of, repayment of any         Obligation;           (c)  is made to pay any other amount chargeable to any Loan Party hereunder; and          (d)  together with all other Permitted Overadvances then outstanding, shall not (i) exceed ten         percent  (10%)  of  the  Borrowing  Base  at  any  time  or  (ii)  unless  a  Liquidation  is  occurring,         remain  outstanding  for  more  than  forty-five  (45)  consecutive  Business  Days,  unless  in  each         case, the Required Lenders otherwise agree;    provided however, that the foregoing shall not (i) modify or abrogate any of the provisions of Section  2.03 regarding  the  Lenders’  obligations  with  respect to  Letters  of Credit  or Section  2.04 regarding  the  Lenders’ obligations with respect to Swing Line Loans, or (ii) result in any claim or liability against the  Agent  (regardless  of  the  amount  of  any  Overadvance)  for  Unintentional  Overadvances  and  such  Unintentional Overadvances shall not reduce the amount of Permitted Overadvances allowed hereunder,                                         45 

 

         and further provided that in no event shall the Agent make an Overadvance, if after giving effect thereto,  the principal  amount  of the Credit  Extensions  would exceed  the  Aggregate  Commitments  (as in  effect  prior to any termination of the Commitments pursuant to Section 2.06  or Section 8.02 hereof).         “Permitted Refinancing” means, with respect to any Person, any Indebtedness issued in exchange  for,  or  the  net  proceeds  of  which”  are  used  to  extend,  refinance,  renew,  replace,  defease  or  refund  (collectively,  to  “Refinance”),  the  Indebtedness  being  Refinanced  (or  previous  refinancings  thereof  constituting  a  Permitted  Refinancing); provided,  that  (a)  the  principal  amount  (or  accreted  value,  if  applicable)  of  such  Permitted  Refinancing  does  not  exceed  the  principal  amount  (or  accreted  value,  if  applicable) of the Indebtedness so Refinanced (plus unpaid accrued interest and premiums thereon and  underwriting discounts, defeasance costs, fees, commissions and expenses), (b) the weighted average life  to maturity of such Permitted Refinancing is greater than or equal to the weighted average life to maturity  of  the  Indebtedness  being  Refinanced  (c)  such  Permitted  Refinancing  shall  not  require  any  scheduled  principal payments (including, without limitation, any regularly scheduled amortization payments or end  of  term  “balloon”  payments) due  prior  to  the  Maturity  Date  in  excess  of,  or  prior  to,  the  scheduled  principal  payments  due  prior  to  such  Maturity  Date  for  the  Indebtedness  being  Refinanced,  (d)  if  the  Indebtedness  being  Refinanced  is  subordinated  in  right  of  payment  to  the  Obligations  under  this  Agreement, such Permitted Refinancing shall be subordinated in right of payment to such Obligations on  terms at least as favorable to the Credit Parties as those contained in the documentation governing the  Indebtedness  being  Refinanced  (e) no Permitted  Refinancing  shall  have  direct  or  indirect  obligors  who  were not also obligors of the Indebtedness being Refinanced, or greater guarantees or security, than the  Indebtedness being Refinanced, (f) the other material terms of such Permitted Refinancing, when taken as  a whole, shall be otherwise on terms not materially less favorable to the Credit Parties (as determined by  the  board  of  directors  of  the  Lead  Borrower)  than  those  contained  in  the  documentation  governing  the  Indebtedness  being  Refinanced,  including,  without  limitation,  with  respect  to  financial  covenants  and  events of default, (g) the interest rate applicable to any such Permitted Refinancing shall not exceed the  then applicable market interest rate as determined by the Lead Borrower in good faith, and (h) at the time  thereof, no Default or Event of Default shall have occurred and be continuing.         “Person”  means  any  natural  person,  corporation,  limited  liability  company,  trust,  joint  venture,  association, company, partnership, limited partnership, Governmental Authority or other entity.         “Plan” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA)  established by any Loan Party or, with respect to any such plan that is subject to Section 412 of the Code  or Title IV of ERISA, any ERISA Affiliate, other than a Multiemployer Plan.         “Platform” has the meaning specified in Section 6.02.         “Portal” has the meaning specified in Section 2.02.         “Post-Closing Letter” means that certain letter agreement, dated as of the Closing Date, by and  among the Loan Parties and the Agent, as amended, restated, supplemented or otherwise modified from  time to time in accordance with the terms thereof.         “PPSA” means the Personal Property Security Act (Ontario) and the regulations thereunder, as  from  time  to  time  in  effect:   (or  any  successor  statute)  or  similar  legislation  of  any  other  Canadian  jurisdiction, including the Civil Code of Québec, the laws of which are required by such legislation to be  applied in connection with the issue, perfection, enforcement, opposability, priority, validity or effect of  security interests or other applicable Liens.         “Provider” has the meaning specified in Section 9.18.                                         46 

 

               “Public Lender” has the meaning specified in Section 6.02.         “Qualified ECP Guarantor” means, in respect of any Swap Obligation, each Loan Party that has  total  assets  exceeding  $10,000,000  at the  time  the  relevant  Guarantee  or  grant  of  the  relevant  security  interest becomes effective with respect to such Swap Obligation or such other person as constitutes an  “eligible  contract  participant”  under  the  Commodity  Exchange  Act  or  any  regulations  promulgated  thereunder and can cause another person to qualify as an “eligible contract participant” at such time by  entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.         “Real Estate” means all Leases and all land, together with the buildings, structures, parking areas,  and  other  improvements thereon,  now  or  hereafter  owned  by  any  Loan Party,  including  all  easements,  rights-of-way, and similar rights relating thereto and all leases, tenancies, and occupancies thereof.         “Receivables  Reserves”  means  such  Reserves  as  may  be  established  from  time  to  time  by  the  Agent in its Permitted Discretion with respect to the determination of the collectability in the ordinary  course of Eligible Trade Receivables, including, without limitation, on account of dilution.         “Register” has the meaning specified in Section 10.06(c).         “Registered Public Accounting Firm” has the meaning specified by the Securities Laws and shall  be independent of the Lead Borrower and its Subsidiaries as prescribed by the Securities Laws.         “Related Intellectual Property” means such rights with respect to the Intellectual Property of the  Loan Parties as are reasonably necessary or useful to permit the Agent to enforce its rights and remedies  under the Loan Documents with respect to the Collateral, or the disposition of which would otherwise  materially adversely affect the Appraised Value of the Collateral of the Loan Parties.         “Related  Parties”  means,  with  respect  to  any Person, such Person’s  Affiliates  and  the  partners,  directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.         “Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than  events for which the 30 day notice period has been waived.         “Reports” has the meaning provided in Section 9.12(b).         “Request for Credit Extension” means (a) with respect to a Committed Borrowing, conversion or  continuation  of  Committed  Loans,  an  electronic  notice  via  the  Portal  or  LIBOR  Rate  Loan  Notice,  (b)  with respect to an L/C Credit Extension, a Letter of Credit Application and, if required by the L/C Issuer,  a Standby Letter of Credit Agreement or Commercial Letter of Credit Agreement, as applicable, and (c)  with respect to a Swing Line Loan, a Swing Line Loan Notice.         “Required Lenders” means, as of any date of determination, at least two Lenders holding more  than 50% of the Aggregate Commitments or, if the commitment of each Lender to make Loans and the  obligation  of the  L/C  Issuer  to  make  L/C  Credit  Extensions  have  been  terminated  pursuant  to Section  8.02, at least two Lenders holding in the aggregate more than 50% of the Total Outstandings (with the  aggregate  amount  of  each  Lender’s  risk  participation  and  funded  participation  in  L/C  Obligations  and  Swing Line Loans being deemed “held” by such Lender for purposes of this definition); provided that the  Commitment of, and the portion of the Total Outstandings held or deemed held by, any Defaulting Lender  shall be excluded for purposes of making a determination of Required Lenders.          “Reserves” means all Inventory Reserves, Availability Reserves, and Receivables Reserves.                                         47 

 

               “Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial  Institution, a UK Resolution Authority.          “Responsible  Officer”  means  the  chief  executive  officer,  president,  chief  financial  officer,  treasurer, controller or assistant treasurer of a Loan Party or any of the other individuals designated in  writing to the Agent by an existing Responsible Officer of a Loan Party as an authorized signatory of any  certificate or other document to be delivered hereunder, including, with respect to the Portal, any person  authorized  and  authenticated  through  the  Portal  in  accordance  with  the  Agent’s  procedures  for  such  authentication.   Any  document  delivered  hereunder  that  is  signed  by  a  Responsible  Officer  of  a  Loan  Party  shall  be  conclusively  presumed  to  have  been  authorized  by  all  necessary  corporate,  partnership  and/or  other  action  on  the  part  of such  Loan Party  and such  Responsible  Officer  shall  be  conclusively  presumed to have acted on behalf of such Loan Party.         “Restricted  Payment”  means  any  dividend  or  other  distribution  (whether  in  cash,  securities  or  other  property)  with  respect  to  any  capital  stock  or  other  Equity  Interest  of  any  Person  or  any  of  its  Subsidiaries, or any payment (whether in cash, securities or other property), including any sinking fund or  similar deposit, on account of the purchase, redemption, retirement, defeasance, acquisition, cancellation  or termination of any such capital stock or other Equity Interest, or on account of any return of capital to  such Person’s stockholders, partners or members (or the equivalent of any thereof), or any option, warrant  or  other  right  to  acquire  any  such  dividend  or  other  distribution  or  payment.   Without  limiting  the  foregoing, “Restricted Payments” with respect to any Person shall also include all payments made by such  Person with any proceeds of a dissolution or liquidation of such Person.         “S&P”  means  Standard  &  Poor’s  Ratings  Services,  a  division  of  Standard  &  Poor’s  Financial  Services LLC business and any successor thereto.         “Sanctioned Entity” means (a) a country or territory or a government of a country or territory, (b)  an agency of the government of a country or territory, (c) an organization directly or indirectly controlled  by a country or territory or its government, or (d) a Person resident in or determined to be resident in a  country or territory, in each case of clauses (a) through (d) that is a target of Sanctions, including a target  of any country or territory sanctions program administered and enforced by OFAC.         “Sanctioned Person” means, at any time (a) any Person named on the list of Specially Designated  Nationals and Blocked Persons maintained by OFAC, OFAC’s consolidated Non-SDN list or any other  Sanctions-related  list maintained  by  any  Governmental  Authority,  (b)  a  Person  or  legal  entity that is  a  target of Sanctions, (c) any Person operating, organized or resident in a Sanctioned Entity, (d) a Canadian  Blocked  Person  or  (e)  any  Person  directly  or  indirectly  owned  or  controlled  (individually  or  in  the  aggregate)  by  or  acting  on  behalf  of  any  such  Person  or  Persons  described  in  clauses  (a)  through  (c)  above.         “Sanctions”  means  individually  and  collectively,  respectively,  any  and  all  economic  sanctions,  trade  sanctions,  financial  sanctions,  sectoral  sanctions,  secondary  sanctions,  trade  embargoes  anti- terrorism laws and other sanctions laws, regulations or embargoes, including those imposed, administered  or  enforced  from  time  to  time  by:   (a)  the  United  States  of  America,  including  those  administered  by  OFAC,  the  U.S.  Department  of  State,  the  U.S.  Department  of  Commerce,  or  through  any  existing  or  future executive order, (b) the United Nations Security Council, (c) the European Union or any European  Union member state, (d) Her Majesty’s Treasury of the United Kingdom, or (d) any other Governmental  Authority  with  jurisdiction  over  any  member  of  Lender  Group  or  any  Loan  Party  or  any  of  their  respective Subsidiaries or Affiliates.         “Sarbanes-Oxley” means the Sarbanes-Oxley Act of 2002.                                         48 

 

               “SEC”  means  the  Securities  and  Exchange  Commission,  or  any  Governmental  Authority  succeeding to any of its principal functions.         “Securities  Laws”  means  the  Securities  Act  of 1933,  the  Securities  Exchange  Act  of  1934,  Sarbanes-Oxley,  and  the  applicable  accounting  and  auditing  principles,  rules,  standards  and  practices  promulgated, approved or incorporated by the SEC or the PCAOB.         “Security  Agreement”  means  the  Security  Agreement  dated  as  of  the  Closing  Date  among  the  Loan  Parties  and  the  Agent,  as  the  same  now  exists  or  may  hereafter  be  amended,  modified,  supplemented, renewed, restated or replaced.          “Security  Documents”  means  the Security  Agreement,  the Blocked  Account  Agreements, each  Blocked Account Agreement (Access Restricted Immediately), the DDA Notifications, the Credit Card  Notifications, and each other security agreement or other instrument or document executed and delivered  to the Agent pursuant to this Agreement or any other Loan Document granting a Lien to secure any of the  Obligations.           “SEMS”  means  the  Superfund  Enterprise  Management  System  maintained  by  the  U.S.  Environmental Protection Agency.          “Settlement Date” has the meaning provided in Section 2.14(a).         “Shareholders’ Equity” means, as of any date of determination, consolidated shareholders’ equity  of the Lead Borrower and its Subsidiaries as of that date determined in accordance with GAAP.         “Shrink”  means  Inventory which  has  been lost, misplaced,  stolen,  or  is  otherwise  unaccounted  for.         “Solvent” and “Solvency” means, with respect to any Person as of any date of determination, that  (a) at fair valuations, the sum of such Person’s debts (including contingent liabilities) is less than all of  such Person’s assets, (b) such Person is not engaged or about to engage in a business or transaction for  which  the  remaining  assets  of  such  Person  are  unreasonably  small  in  relation  to  the  business  or  transaction or for which the property remaining with such Person is an unreasonably small capital, and (c)  such Person has not incurred and does not intend to incur, or reasonably believe that it will incur, debts  beyond its ability to pay such debts as they become due (whether at maturity or otherwise), and (d) such  Person is “solvent” or not “insolvent”, as applicable within the meaning given those terms and similar  terms  under  applicable  laws  relating  to  fraudulent  transfers  and  conveyances.   For  purposes  of  this  definition, the amount of any contingent liability at any time shall be computed as the amount that, in  light of all of the facts and circumstances existing at such time, represents the amount that can reasonably  be expected to become an actual or matured liability (irrespective of whether such contingent liabilities  meet the criteria for accrual under Statement of Financial Accounting Standard No. 5).         “Spot Rate” has the meaning given to such term in Section 1.07 hereof.         “Standard Letter of Credit Practice” means, for the L/C Issuer, any domestic or foreign Law or  letter  of  credit  practices  applicable  in  the  city  in  which  the  L/C  Issuer  issued  the  applicable  Letter  of  Credit or, for its branch or correspondent, such Laws and practices applicable in the city in which it has  advised, confirmed or negotiated such Letter of Credit, as the case may be, in each case, (a) which letter  of credit practices are of banks that regularly issue letters of credit in the particular city, and (b) which  laws or letter of credit practices are required or permitted under ISP or UCP, as chosen in the applicable  Letter of Credit.                                         49 

 

               “Standby Letter of Credit” means any Letter of Credit that is not a Commercial Letter of Credit  and that (a) is used in lieu or in support of performance guaranties or performance, surety or similar bonds  (excluding appeal bonds) arising in the ordinary course of business, (b) is used in lieu or in support of  stay or appeal bonds, (c) supports the payment of insurance premiums for reasonably necessary casualty  insurance  carried  by  any  of  the  Loan  Parties,  or  (d)  supports  payment  or  performance  for  identified  purchases or exchanges of products or services in the ordinary course of business.         “Standby Letter of Credit Agreement” means the Standby Letter of Credit Agreement relating to  the issuance of a Standby Letter of Credit in the form from time to time in use by the L/C Issuer.         “Stated Amount” means at any time the maximum amount for which a Letter of Credit may be  honored.         “Store”  means  any  retail  store  (which  may  include  any real  property,  fixtures,  equipment,  inventory and other property related thereto) operated, or to be operated, by any Loan Party.          “Subordinated  Indebtedness”  means  Indebtedness  which  is  expressly  subordinated  in  right  of  payment to the prior payment in full of the Obligations and which is in form and on terms approved in  writing  by  the  Agent.   For  the  avoidance  of  doubt,  Indebtedness  arising  under  the  Growth  Capital  Subordinated Loan Documents shall constitute Subordinated Indebtedness.          “Subordinated  Intercompany  Note”  means  that  certain  Intercompany  Note,  dated  as  of  the  Closing Date, among each Loan Party and each Subsidiary that is not a Loan Party, in form and substance  reasonably  satisfactory  to  the  Agent,  as  the  same  now  exists  or  may  hereafter  be  amended,  modified,  supplemented, renewed, restated or replaced.         “Subsidiary”  of  a  Person  means  a  corporation,  partnership,  joint  venture,  limited  liability  company  or  other  business  entity  of  which  a  majority  of  the  Equity  Interests  having  ordinary  voting  power  for  the  election  of  directors  or  other  governing  body  are  at  the  time  beneficially  owned,  or  the  management of which is otherwise controlled, directly, or indirectly through one or more intermediaries,  or  both,  by  such  Person.   Unless  otherwise  specified,  all  references  herein  to  a  “Subsidiary”  or  to  “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of a Loan Party .         “Swap  Contract”  means  (a)  any  and  all  rate  swap  transactions,  basis  swaps,  credit  derivative  transactions,  forward  rate  transactions,  commodity  swaps,  commodity  options,  forward  commodity  contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or  forward  bond  or  forward  bond  price  or  forward  bond  index transactions, interest  rate  options,  forward  foreign  exchange  transactions,  cap  transactions,  floor  transactions,  collar  transactions,  currency  swap  transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar  transactions or any combination of any of the foregoing (including any options to enter into any of the  foregoing), whether or not any such transaction is governed by or subject to any master agreement, and  (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and  conditions of, or governed by, any form of master agreement published by the International Swaps and  Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master  agreement  (any  such  master agreement,  together  with  any  related  schedules,  a  “Master  Agreement”),  including any such obligations or liabilities under any Master Agreement.         “Swap Obligation” means, with respect to any Loan Party, any obligation to pay or perform under  any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of  the Commodity Exchange Act (other than obligations in respect of Permitted Equity Derivatives).                                          50 

 

               “Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking  into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a)  for  any  date  on  or  after  the  date  such  Swap  Contracts  have  been  closed  out  and  termination  value(s)  determined  in  accordance  therewith,  such  termination  value(s),  and  (b)  for  any  date  prior  to  the  date  referenced  in  clause  (a),  the  amount(s)  determined  as  the  mark-to-market  value(s)  for  such  Swap  Contracts,  as  determined  based  upon  one  or  more  mid-market  or  other  readily  available quotations  provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate  of a Lender).         “Swing Line Borrowing” means a borrowing of a Swing Line Loan pursuant to Section 2.04.         “Swing Line Lender” means Wells Fargo, in its capacity as provider of Swing Line Loans, or any  successor swing line lender hereunder.         “Swing Line Loan” has the meaning specified in Section 2.04(a).         “Swing  Line  Loan  Notice”  means  a  notice  of  a  Swing  Line  Borrowing  pursuant  to  Section 2.04(b), which, if in writing, shall be substantially in the form of Exhibit B.         “Swing  Line  Note”  means  the  promissory  note  of  the  Borrowers  substantially  in  the  form  of  Exhibit C-2, payable to the order of the Swing Line Lender, evidencing the Swing Line Loans made by  the Swing Line Lender.         “Swing  Line  Sublimit”  means  an  amount  equal  to  the  lesser  of  (a)  $5,000,000  and  (b)  the  Aggregate Commitments.   The  Swing  Line  Sublimit  is  part  of,  and  not  in  addition  to,  the  Aggregate  Commitments.         “Synthetic  Lease  Obligation”  means the  monetary  obligation  of  a Person  under  (a)  a  so-called  synthetic,  off-balance  sheet  or  tax  retention  lease,  or  (b)  an  agreement  for  the  use  or  possession  of  property (including sale and leaseback transactions), in each case, creating obligations that do not appear  on the balance sheet of such Person but which, upon the application of any Debtor Relief Laws to such  Person,  would  be  characterized  as  the  indebtedness  of  such  Person  (without  regard  to  accounting  treatment).         “Taxes”  means  all  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.         “Termination Date” means the earliest to occur of (i) the Maturity Date, (ii) the date on which the  maturity of the Obligations is accelerated (or deemed accelerated) and the Commitments are irrevocably  terminated  (or  deemed  terminated)  in  accordance  with Article VIII,  or  (iii)  the  termination  of  the  Commitments in accordance with the provisions of Section 2.06(a) hereof.         “Total  Outstandings”  means  the  aggregate  Outstanding  Amount  of  all  Loans  and  all  L/C  Obligations.         “Trading with the Enemy Act” has the meaning set forth in Section 10.18.         “Type” means, with respect to a Committed Loan, its character as a Base Rate Loan or a LIBOR  Rate Loan.                                          51 

 

               “UCC” or “Uniform Commercial Code” means the Uniform Commercial Code as in effect from  time to time in the State of New York; provided, however, that if a term is defined in Article 9 of the  Uniform Commercial Code differently than in another Article thereof, the term shall have the meaning set  forth in Article 9; provided further that, if by reason of mandatory provisions of law, perfection, or the  effect  of  perfection  or  non-perfection,  of  a security  interest  in  any Collateral  or  the  availability  of  any  remedy hereunder is governed by the Uniform Commercial Code as in effect in a jurisdiction other than  New York, “Uniform Commercial Code” means the Uniform Commercial Code as in effect in such other  jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non- perfection or availability of such remedy, as the case may be.         “UCP” means,  with  respect  to  any  Letter  of  Credit,  the  Uniform  Customs  and  Practice  for  Documentary Credits 2007 Revision, International Chamber of Commerce Publication No. 600 and any  version or revision thereof accepted by the L/C Issuer for use.         “UFCA” has the meaning specified in Section 10.22(d).         “UFTA” has the meaning specified in Section 10.22(d).         “UK  Financial  Institution”  means  any  BRRD  Undertaking  (as  such  term  is  defined  under  the  PRA  Rulebook  (as  amended  form  time  to  time)  promulgated  by  the  United  Kingdom  Prudential  Regulation Authority) or any person subject to IFPRU 11.6 of the FCA Handbook (as amended from time  to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit  institutions and investment firms, and certain affiliates of such credit institutions or investment firms.         “UK  Resolution  Authority”  means  the  Bank  of  England  or  any  other  public  administrative  authority having responsibility for the resolution of any UK Financial Institution.         “Uncommitted Increase” has the meaning specified in Section 2.15(b).         “Unfunded  Pension  Liability”  means  the  excess  of  a  Pension  Plan’s  benefit  liabilities  under  Section  4001(a)(16)  of  ERISA,  over  the  current  value  of  that  Pension  Plan’s  assets,  determined  in  accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code  for the applicable plan year.         “Unintentional Overadvance” means an Overadvance which, to the Agent’s knowledge, did not  constitute  an  Overadvance when  made  but  which  has  become  an  Overadvance  resulting  from  changed  circumstances beyond the control of the Credit Parties, including, without limitation, a reduction in the  Appraised  Value  of  property  or  assets  included  in  the  Borrowing  Base,  increase  in Reserves  or  misrepresentation by the Loan Parties.         “United States” and “U.S.” mean the United States of America.         “Wells Fargo” means Wells Fargo Bank, National Association and its successors.         “Write-Down and Conversion Powers” means (a) with respect to any EEA Resolution Authority,  the write-down and conversion powers of such EEA Resolution Authority from time to time under the  Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers  are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any  powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or  change the form of a liability of any UK Financial Institution or any contract or instrument under which  that  liability  arises,  to  convert  all  or  part  of  that  liability  into  shares,  securities  or  obligations  of  that                                         52 

 

         person or any other person, to provide that any such contract or instrument is to have effect as if a right  had been exercised under it or to suspend any obligation in respect of that liability or any of the powers  under that Bail-In Legislation that are related to or ancillary to any of those powers.         1.02  Other Interpretive Provisions         .  With reference to this Agreement and each other Loan Document, unless otherwise specified  herein or in such other Loan Document:          (a)  The definitions of terms herein shall apply equally to the singular and plural forms of the         terms defined.  Whenever the context may require, any pronoun shall include the corresponding         masculine, feminine and neuter forms.  The words “include,” “includes” and “including” shall         be  deemed  to  be  followed  by  the  phrase  “without  limitation.”   The  word  “will”  shall  be         construed to have the same meaning and effect as the word “shall.”  Unless the context requires         otherwise,  (i)  any  definition  of  or  reference  to  any  agreement,  instrument  or  other document         (including  any  Organization  Document)  shall  be  construed  as  referring  to  such  agreement,         instrument  or  other  document  as  from time  to  time  amended,  supplemented  or  otherwise         modified  (subject  to  any  restrictions  on  such  amendments,  supplements  or  modifications  set         forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be         construed  to  include  such Person’s  successors  and  assigns,  (iii)  the  words  “herein,”  “hereof”         and  “hereunder,”  and  words  of  similar  import  when  used  in  any  Loan  Document,  shall  be         construed  to  refer  to  such  Loan  Document in  its  entirety  and  not to  any  particular  provision         thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules         shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan         Document  in  which  such  references  appear,  (v)  any  reference  to  any  law shall  include  all         statutory and regulatory provisions consolidating, amending replacing or interpreting such law         and any reference to any law or regulation shall, unless otherwise specified, refer to such law or         regulation as amended, modified or supplemented from time to time, and (vi) the words “asset”         and “property” shall be construed to have the same meaning and effect and to refer to any and         all  tangible  and  intangible  assets  and  properties,  including  cash,  securities,  accounts  and         contract rights.          (b)  In the computation of periods of time from a specified date to a later specified date, the         word  “from”  means  “from  and  including;”  the  words  “to”  and  “until”  each  mean  “to  but         excluding;” and the word “through” means “to and including.”          (c)  Section headings herein and in the other Loan Documents are included for convenience         of reference only and shall not affect the interpretation of this Agreement or any other Loan         Document.          (d)  Any reference herein or in any other Loan Document to the satisfaction, repayment, or         payment  in  full  of  the  Obligations  shall mean  (i) the repayment  in  Dollars in  full in  cash  or         immediately  available  funds  (or,  in  the  case  of  contingent  reimbursement  obligations  with         respect  to  Letters  of  Credit  and  Bank  Products  (other  than  Swap  Contracts) and  any  other         contingent Obligation, including indemnification obligations, providing Cash Collateralization)         or  other  collateral  as  may  be  requested  by  the  Agent of  all  of  the  Obligations  (including  the         payment  of  any  termination  amount  then  applicable  (or  which  would  or  could  become         applicable as a result of the repayment of the other Obligations) under Swap Contracts) other         than  (A)  unasserted  contingent  indemnification  Obligations,  (B)  any  Obligations  relating  to         Bank  Products  (other than Swap  Contracts)  that,  at  such  time,  are  allowed  by the  applicable         Bank  Product  provider  to  remain  outstanding  without  being  required  to  be  repaid  or  Cash                                         53 

 

                Collateralized or other collateral as may be requested by the Agent, and (C) any Obligations         relating to Swap Contracts that, at such time, are allowed by the applicable provider of such         Swap  Contracts  to  remain  outstanding  without  being  required  to  be  repaid,  and  (ii)  the         termination of the Aggregate Commitments and the Loan Documents.         1.03  Accounting Terms.          (a)  Generally.  All accounting terms not specifically or completely defined herein shall be         construed  in  conformity  with,  and  all  financial  data  (including  financial  ratios  and  other         financial calculations) required to be submitted pursuant to this Agreement shall be prepared in         conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in         a  manner  consistent  with that  used  in  preparing  the  Audited  Financial  Statements, except as         otherwise specifically prescribed herein.          (b)  Changes in GAAP.  If at any time any change in GAAP would affect the computation of         any  financial  ratio  or  requirement  set  forth  in  any  Loan  Document,  and  either  the  Lead         Borrower  or  the  Required  Lenders  shall  so  request,  the  Agent,  the  Lenders  and  the  Lead         Borrower  shall  negotiate  in  good  faith  to  amend  such  ratio  or  requirement  to  preserve  the         original intent thereof in light of such change in GAAP (subject to the approval of the Required         Lenders); provided that,  until so  amended,  (i)  such  ratio  or  requirement  shall  continue to be         computed in accordance with GAAP prior to such change therein and (ii) the Lead Borrower         shall provide to the Agent and the Lenders financial statements and other documents required         under  this  Agreement  or  as  reasonably  requested  hereunder  setting  forth  a  reconciliation         between calculations of such ratio or requirement made before and after giving effect to such         change  in  GAAP.   Notwithstanding  any  other  provision  contained  herein,  all  terms  of  an         accounting or financial nature used herein shall be construed, and all computations of amounts         and  ratios  referred  to  herein  shall  be  made,  without  giving  effect  to  any  lease  obligation         recorded  pursuant  to  the  adoption  of  FASB  ASU  No.  2016-02,  Leases  (Topic  842),  to  the         extent  such  obligation  would  not  have been  recorded  as  a  Capital  Lease  Obligation  prior  to         adoption.         1.04  Rounding         .  Any financial ratios required to be maintained by the Borrowers pursuant to this Agreement  shall be calculated by dividing the appropriate component by the other component, carrying the result to  one place more than the number of places by which such ratio is expressed herein and rounding the result  up or down to the nearest number (with a rounding-up if there is no nearest number).         1.05  Times of Day         .  Unless otherwise specified, all references herein to times of day shall be references to Eastern  time (daylight or standard, as applicable).         1.06  Letter of Credit Amounts         .  Unless otherwise specified, all references herein to the amount of a Letter of Credit at any time  shall  be  deemed  to  be  the  Stated  Amount  of  such  Letter  of  Credit  in  effect  at  such  time;  provided,  however,  that  with  respect  to  any  Letter  of  Credit  that,  by  its  terms  of  any  Issuer  Documents  related  thereto, provides for one or more automatic increases in the Stated Amount thereof, the amount of such  Letter of Credit shall be deemed to be the maximum Stated Amount of such Letter of Credit after giving  effect to all such increases, whether or not such maximum Stated Amount is in effect at such time.                                         54 

 

               1.07  Currency Equivalents Generally         .  Any amount specified in this Agreement (other than in Articles II, IX and X) or any of the other  Loan Documents to be in Dollars shall also include the equivalent of such amount in any currency other  than Dollars, such equivalent amount thereof in the applicable currency to be determined by the Agent at  such time on the basis of the Spot Rate (as defined below) for the purchase of such currency with Dollars.   For purposes of this Section 1.07, the “Spot Rate” for a currency means the rate determined by the Agent  to be the rate quoted by the Person acting in such capacity as the spot rate for the purchase by such Person  of  such  currency  with  another  currency  through  its  principal  foreign  exchange  trading  office  at  approximately 11:00 a.m. on the date two Business Days prior to the date of such determination; provided  that the Agent may obtain such spot rate from another financial institution designated by the Agent if the  Person acting in such capacity does not have as of the date of determination a spot buying rate for any  such currency.         1.08  Divisions.  For all purposes under the Loan Documents, in connection with any division  or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws):  (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability  of  a  different Person,  then  it  shall  be  deemed  to  have  been  transferred  from  the  original Person to  the  subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to  have been organized on the first date of its existence by the holders of its Equity Interests at such time.         1.09  LIBOR Replacement.                (a)   Benchmark Replacement.  Notwithstanding anything to the contrary herein or in        any  other  Loan  Document,  upon  the  occurrence  of  a  Benchmark  Transition  Event or  an  Early        Opt-in Election, as applicable, the Agent and the Lead Borrower may amend this Agreement to        replace LIBOR with a Benchmark Replacement.  Any such amendment will become effective at        5:00 p.m. on the first Business Day after the Agent has posted such proposed amendment to all        Lenders  and  the  Lead  Borrower  so  long  as  the  Agent  has  not  received,  by  such  time,  written        notice  of  objection  to  such  Benchmark  Replacement  from  Lenders  comprising  the  Required        Lenders of each Class.               (b)   Benchmark  Replacement  Conforming  Changes.   In  connection  with  the        implementation of a Benchmark Replacement, the Agent will have the right to make Benchmark        Replacement  Conforming  Changes  from  time  to  time,  in  consultation  with  the  Lead  Borrower        and,  notwithstanding  anything  to  the  contrary  herein  or  in  any  other  Loan  Document,  any        amendments  implementing  such  Benchmark  Replacement  Conforming  Changes  will  become        effective without any further action or consent of any other party to this Agreement.               (c)   Notices; Standards for Decisions and Determinations.  The Agent will promptly        notify the Lead Borrower and the Lenders of (i) any occurrence of a Benchmark Transition Event        or  an  Early  Opt-in  Election,  as  applicable,  and  its  related  Benchmark  Replacement  Date  and        Benchmark Transition Start Date, (ii) the implementation of any Benchmark Replacement, (iii)        the  effectiveness  of  any  Benchmark  Replacement  Conforming  Changes,  and  (iv)  the        commencement  or  conclusion  of  any  Benchmark  Unavailability  Period.   Any  determination,        decision  or  election  that may  be  made  by  the  Agent or  Lenders  pursuant  to  this Section  titled        “LIBOR Replacement,” including any determination with respect to a tenor, rate or adjustment or        of the occurrence or nonoccurrence of an event, circumstance or date and any decision to take or        refrain from taking any action, will be conclusive and binding absent manifest error and may be        made in its or their sole discretion and without consent from any other party hereto, except, in        each case, as expressly required pursuant to this Section titled “LIBOR Replacement.”                                         55 

 

         (d)   Benchmark Unavailability Period.  Upon the Lead Borrower’s receipt of notice  of the commencement of a Benchmark Unavailability Period, the Lead Borrower may revoke any  request for a LIBOR Rate Loan or continuation of same during any Benchmark Unavailability  Period and, failing that, the Lead Borrower will be deemed to have converted any such request  into  a  request  for  a  Borrowing  of  or  conversion  to  Base  Rate  Loans.   During  any  Benchmark  Unavailability Period, the component of Base Rate based upon the LIBOR Rate will not be used  in any determination of Base Rate.         (e)   Certain Defined Terms.  As used in this Section titled “LIBOR Replacement”:               (i)   “Benchmark  Replacement”  means  the  sum  of:  (a)  the  alternate  benchmark  rate  (which  may  include Term SOFR) that  has  been  selected by the  Agent  and  the  Lead Borrower giving due consideration to (i) any selection or recommendation of a replacement  rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any  evolving or then-prevailing market convention for determining a rate of interest as a replacement  to  LIBOR  for  U.S.  dollar-denominated  syndicated  credit  facilities  and  (b)  the  Benchmark  Replacement Adjustment; provided that, if the Benchmark Replacement as so determined would  be less than 0.75%, the Benchmark Replacement will be deemed to be 0.75% for the purposes of  this Agreement.               (ii)  “Benchmark  Replacement  Adjustment”  means,  with  respect  to  any  replacement of the LIBOR Rate with an Unadjusted Benchmark Replacement for each applicable  Interest  Period,  the  spread  adjustment,  or  method  for  calculating  or  determining  such  spread  adjustment,  (which  may be  a  positive  or  negative  value  or  zero)  that  has  been  selected  by  the  Agent and the Lead Borrower giving due consideration to (i) any selection or recommendation of  a  spread  adjustment,  or  method  for  calculating  or  determining  such  spread  adjustment,  for  the  replacement of the LIBOR Rate with the applicable Unadjusted Benchmark Replacement by the  Relevant  Governmental  Body  or (ii)  any  evolving  or  then-prevailing  market  convention  for  determining  a  spread  adjustment,  or  method  for  calculating  or  determining  such  spread  adjustment, for the replacement of the LIBOR Rate with the applicable Unadjusted Benchmark  Replacement for U.S. dollar denominated syndicated credit facilities at such time.               (iii) “Benchmark Replacement Conforming Changes” means, with respect to  any  Benchmark  Replacement,  any  technical,  administrative  or  operational  changes  (including  changes to the definition of “Base Rate,” the definition of “Interest Period,” timing and frequency  of determining rates and making payments of interest and other administrative matters) that the  Agent decides, in consultation with the Lead Borrower, may be appropriate to reflect the adoption  and implementation of such Benchmark Replacement and to permit the administration thereof by  the Agent in a manner substantially consistent with market practice (or, if the Agent decides that  adoption of any portion of such market practice is not administratively feasible or if the Agent  determines that no market practice for the administration of the Benchmark Replacement exists,  in  such  other  manner  of  administration  as  the  Agent  decides,  in  consultation  with  the  Lead  Borrower, is reasonably necessary in connection with the administration of this Agreement).               (iv)  “Benchmark  Replacement  Date”  means  the  earlier  to  occur  of  the  following  events  with  respect  to  the  LIBOR  Rate:  (1)  in  the  case  of  clause  (1)  or  (2)  of  the  definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or  publication of information referenced therein and (b) the date on which the administrator of the  LIBOR Rate permanently or indefinitely ceases to provide the LIBOR Rate; or (2) in the case of  clause (3) of the definition of “Benchmark Transition Event,” the date of the public statement or  publication of information referenced therein.                                   56 

 

               (v)   “Benchmark Transition Event” means the occurrence of one or more of  the  following  events  with  respect  to  the  LIBOR Rate: (1)  a  public  statement  or  publication  of  information  by  or  on  behalf  of  the  administrator  of  the  LIBOR  Rate  announcing  that  such  administrator has ceased or will cease to provide the LIBOR Rate, permanently or indefinitely,  provided that, at the time of such statement or publication, there is no successor administrator that  will continue to provide the LIBOR Rate; (2) a public statement or publication of information by  the  regulatory  supervisor  for  the  administrator  of  the  LIBOR  Rate,  the  U.S.  Federal  Reserve  System,  an  insolvency  official  with  jurisdiction  over  the  administrator  for  the  LIBOR  Rate,  a  resolution authority with jurisdiction over the administrator for the LIBOR Rate or a court or an  entity with similar insolvency or resolution authority over the administrator for the LIBOR Rate,  which  states that the  administrator  of  the  LIBOR  Rate  has  ceased  or  will  cease  to  provide the  Benchmark  permanently  or  indefinitely,  provided  that,  at  the  time  of  such  statement  or  publication, there is no successor administrator that will continue to provide the LIBOR Rate; or  (3)  a  public  statement  or  publication  of  information  by  the  regulatory  supervisor  for  the  administrator of the LIBOR Rate announcing that the LIBOR Rate is no longer representative.               (vi)  “Benchmark  Transition  Start  Date”  means  (a)  in  the  case  of  a  Benchmark Transition Event, the earlier of (i) the applicable Benchmark Replacement Date and  (ii) if such Benchmark Transition Event is a public statement or publication of information of a  prospective  event, the  90th  day  prior  to  the  expected  date  of  such  event  as  of  such  public  statement or publication of information (or if the expected date of such prospective event is fewer  than 90 days after such statement or publication, the date of such statement or publication) and  (b)  in  the  case  of  an  Early  Opt-in  Election,  the  date  specified  by  the  Agent  or  the  Required  Lenders, as applicable, by notice to the Lead Borrower, the Agent (in the case of such notice by  the Required Lenders) and the Lenders.               (vii) “Benchmark  Unavailability  Period”  means,  if  a  Benchmark  Transition  Event  and  its  related  Benchmark  Replacement  Date  have  occurred  with  respect  to  the  LIBOR  Rate  and  solely  to  the  extent  that  the  LIBOR  Rate  has  not  been  replaced  with  a  Benchmark  Replacement, the period (x) beginning at the time that such Benchmark Replacement Date has  occurred  if,  at  such  time,  no  Benchmark  Replacement  has  replaced  the  LIBOR  Rate  for  all  purposes hereunder in accordance with this Section titled “LIBOR Replacement” and (y) ending  at  the  time  that  a  Benchmark  Replacement  has  replaced  the  LIBOR  Rate  for  all  purposes  hereunder pursuant to this Section titled “LIBOR Replacement”.               (viii) “Early Opt-in Election” means the occurrence of: (i) a determination by  the Agent or (ii) a notification by the Required Lenders to the Agent (with a copy to the Lead  Borrower)  that the Required  Lenders have  determined  that  U.S.  dollar-denominated  syndicated  credit facilities being executed at such time, or that include language similar to that contained in  this  Section  titled  “LIBOR  Replacement,”  are  being  executed  or  amended,  as  applicable,  to  incorporate or adopt a new benchmark interest rate to replace LIBOR, and (i) the election by the  Agent, in consultation with the Lead Borrower, or (ii) the election by the Required Lenders to  declare that an Early Opt-in Election has occurred and the provision, as applicable, by the Agent  of  written  notice  of  such  election  to  the  Lead  Borrower  and  the  Lenders  or  by  the  Required  Lenders of written notice of such election to the Agent.               (ix)  “Federal Reserve Bank of New York’s Website” means the website of the  Federal Reserve Bank of New York at http://www.newyorkfed.org, or any successor source.                                     57 

 

                           (x)   “Relevant Governmental Body” means the Federal Reserve Board and/or        the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the        Federal Reserve Board and/or the Federal Reserve Bank of New York or any successor thereto.                      (xi)  “SOFR” with respect to any day means the secured overnight financing        rate published for such day by the Federal Reserve Bank of New York, as the administrator of the        benchmark, (or a successor administrator) on the Federal Reserve Bank of New York’s Website.                      (xii) “Term SOFR” means the forward-looking term rate based on SOFR that        has been selected or recommended by the Relevant Governmental Body.                       (xiii) “Unadjusted  Benchmark  Replacement”  means  the  Benchmark        Replacement excluding the Benchmark Replacement Adjustment.                                    ARTICLE II                   THE COMMITMENTS AND CREDIT EXTENSIONS         2.01  Committed Loans; Reserves         .                 (a)   Subject to the terms and conditions set forth herein, each Lender severally agrees  to make loans (each such loan, a “Committed Loan”) to the Borrowers from time to time, on any Business  Day  during  the  Availability  Period,  in  an  aggregate  amount  not  to  exceed  at  any  time  outstanding the  lesser of (x) the amount of such Lender’s Commitment, or (y) such Lender’s Applicable Percentage of the  Borrowing Base; subject in each case to the following limitations:                     (i)   after giving effect to any Committed Borrowing, the Total Outstandings        shall not exceed the Loan Cap,                      (ii)  after  giving  effect  to  any  Committed  Borrowing,  the  aggregate        Outstanding  Amount  of  the  Committed  Loans  of  any  Lender, plus such  Lender’s  Applicable        Percentage  of  the  Outstanding  Amount  of  all  L/C  Obligations, plus such  Lender’s  Applicable        Percentage of the Outstanding Amount of all Swing Line Loans shall not exceed such Lender’s        Commitment,                     (iii) The  Outstanding  Amount  of  all  L/C  Obligations  shall  not  at  any  time        exceed the Letter of Credit Sublimit    Within the limits of each Lender’s Commitment, and subject to the other terms and conditions hereof, the  Borrowers  may  borrow  under  this Section 2.01,  prepay  under Section 2.05,  and  reborrow  under  this  Section 2.01.  Committed  Loans may  be  Base  Rate  Loans  or  LIBOR  Rate  Loans,  as  further  provided  herein.               (b)   The Inventory Reserves and Availability Reserves as of the Closing Date are set  forth in the Borrowing Base Certificate delivered pursuant to Section 4.01(c) hereof.               (c)   The  Agent  shall  have  the  right,  at  any  time  and  from  time  to  time  after  the  Closing  Date  in  its  Permitted  Discretion  to  establish,  modify  or  eliminate  Reserves  upon  three  (3)  Business  Days’  prior  written  notice  to  the  Lead  Borrower  (during  which  period  the  Agent  shall  be  available to discuss in good faith any such proposed Reserve with the Loan Parties and the Loan Parties                                         58 

 

         may take such action as may be required so that the event, condition or matter that is the basis for such  Reserve no longer exists, in a manner and to the extent reasonably satisfactory to the Agent); provided  that, no such prior written notice shall be required (1) after the occurrence and during the continuance of a  Default or Event of Default or (2) for changes to any Reserves resulting solely by virtue of mathematical  calculations of the amount of the Reserve in accordance with the methodology of calculation previously  utilized; provided, further, that no Borrowings shall be permitted to be funded (or Letters of Credit issued)  against the newly proposed Reserves during any such three (3) Business Day period.           2.02  Borrowings, Conversions and Continuations of Committed Loans.               (a)   Committed Loans (other than Swing Line Loans) shall be either Base Rate Loans  or LIBOR Rate Loans as the Lead Borrower may request subject to and in accordance with this Section  2.02.   All  Swing  Line  Loans  shall  be  only  Base  Rate  Loans.   Subject  to  the  other  provisions  of  this  Section 2.02, Committed Borrowings of more than one Type may be incurred at the same time.                (b)   Each request for a Committed Borrowing consisting of a Base Rate Loan shall be  made  by  electronic  request  of  the  Lead  Borrower  through  the  Agent’s  Commercial  Electronic  Office  Portal  or  through  such  other  electronic  portal  provided  by  the  Agent  (the  “Portal”),  which  must  be  received  by  the  Agent  not  later  than  2:00  p.m.  on  the  requested  date  of  any  Borrowing  of  Base  Rate  Loans.  The Borrowers hereby acknowledge and agree that any request made through the Portal shall be  deemed made by a Responsible Officer of the Lead Borrower.  Each request for a Committed Borrowing  consisting of a LIBOR Rate Loan shall be made pursuant to the Lead Borrower’s submission of a LIBOR  Rate Loan Notice, which must be received by the Agent not later than 11:00 a.m. three (3) Business Days  prior to the requested date of any Borrowing or continuation of LIBOR Rate Loans.  Each LIBOR Rate  Loan  Notice  shall  specify  (i) the  requested  date  of the  Borrowing  or  continuation,  as  the  case may  be  (which  shall  be  a  Business  Day),  (ii)  the  principal  amount  of  LIBOR  Rate  Loans  to  be  borrowed  or  continued  (which  shall  be  in  a  principal  amount  of  $1,000,000  or  a  whole  multiple  of  $1,000,000  in  excess thereof), and (iii) the duration of the Interest Period with respect thereto.  If the Lead Borrower  fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month.  On  the requested date of any LIBOR Rate Loan, (i) in the event that Base Rate Loans are outstanding in an  amount equal to or greater than the requested LIBOR Rate Loan, all or a portion of such Base Rate Loans  shall be automatically converted to a LIBOR Rate Loan in the amount requested by the Lead Borrower,  and (ii) if Base Rate Loans are not outstanding in an amount at least equal to the requested LIBOR Rate  Loan, the Lead Borrower shall make an electronic request via the Portal for additional Base Rate Loans in  an  such  amount,  when  taken  with  the  outstanding  Base  Rate  Loans  (which  shall  be  converted  automatically  at  such  time),  as  is  necessary  to  satisfy  the  requested  LIBOR  Rate  Loan.   If  the  Lead  Borrower  fails to  make  such  additional  request via the  Portal  as required  pursuant  to  clause  (ii)  of  the  foregoing sentence, then the Borrowers shall be responsible for all amounts due pursuant to Section 3.05  hereof arising on account of such failure.  If the Lead Borrower fails to give a timely notice with respect  to any continuation of a LIBOR Rate Loan, then the applicable Committed Loans shall be converted to  Base  Rate  Loans,  effective  as  of  the  last  day  of  the  Interest  Period  then  in  effect  with  respect  to  the  applicable  LIBOR  Rate  Loans.   All  requests  for  a  Committed  Borrowing  which  are  not  made  by  electronic request of the Lead Borrower through the Portal shall be subject to (and unless the Agent elects  otherwise in the exercise of its sole discretion, such Committed Borrowing shall not be made until the  completion  of)  the  Agent’s  authentication  process  (with  results  satisfactory  to  the  Agent)  prior  to  the  funding of any such requested Committed Loan.               (c)   The  Agent  shall  promptly  notify  each  Lender  of  the  amount  of  its  Applicable  Percentage of the applicable Committed Loans, and if no timely notice of a conversion or continuation is  provided  by  the  Lead  Borrower,  the  Agent  shall  notify  each  Lender  of  the  details  of  any  automatic  conversion to Base Rate Loans described in Section 2.02(b).  In the case of a Committed Borrowing, each                                         59 

 

         Lender  shall  make the  amount of  its Committed  Loan  available  to  the  Agent in  immediately  available  funds  at  the  Agent’s  Office  not  later  than  1:00  p.m.  on  the  Business  Day  specified  in  the  applicable  notice.  Upon satisfaction of the applicable conditions set forth in Section 4.02 (and, if such Borrowing is  the  initial Credit  Extension, Section 4.01),  the  Agent shall  use  reasonable  efforts  to  make  all  funds  so  received available to the Borrowers in like funds by no later than 4:00 p.m. on the day of receipt by the  Agent  either  by  (i)  crediting  the  account  of  the  Lead  Borrower  on  the  books  of Wells  Fargo  with  the  amount  of  such  funds  or  (ii)  wire  transfer  of  such  funds,  in  each  case  in  accordance  with  instructions  provided to (and reasonably acceptable to) the Agent by the Lead Borrower.               (d)   The Agent, without the request of the Lead Borrower, may advance any interest,  fee,  service  charge  (including  direct  wire  fees),  Credit Party  Expenses,  or  other  payment to  which  any  Credit  Party  is  entitled  from  the  Loan  Parties  pursuant  hereto  or  any  other  Loan  Document  and  may  charge  the  same  to  the  Loan  Account  notwithstanding  that  an  Overadvance  may  result  thereby.   The  Agent shall advise the Lead Borrower of any such advance or charge promptly after the making thereof.   Such action on the part of the Agent shall not constitute a waiver of the Agent’s rights and the Borrowers’  obligations  under Section 2.05(c).   Any  amount  which  is  added  to  the  principal  balance  of  the  Loan  Account  as  provided  in  this Section 2.02(d) shall  bear  interest  at  the  interest  rate  then  and  thereafter  applicable to Base Rate Loans.               (e)   Except as otherwise provided herein, a LIBOR Rate Loan may be continued or  converted only on the last day of an Interest Period for such LIBOR Rate Loan.  During the existence of a  Default or an Event of Default, no Loans may be requested as, converted to or continued as LIBOR Rate  Loans without the Consent of the Required Lenders.               (f)   The  Agent  shall  promptly  notify  the  Lead  Borrower  and  the  Lenders  of  the  interest rate applicable to any Interest Period for LIBOR Rate Loans upon determination of such interest  rate.  At any time that Base Rate Loans are outstanding, the Agent shall notify the Lead Borrower and the  Lenders of any change in Wells Fargo’s prime rate used in determining the Base Rate promptly following  the public announcement of such change.               (g)   After giving effect to all Committed Borrowings, all conversions of Committed  Loans  from  one  Type to  the  other,  and  all  continuations  of  Committed  Loans  as the same  Type, there  shall not be more than four (4) Interest Periods in effect with respect to LIBOR Rate Loans.                (h)   The Agent, the Lenders, the Swing Line Lender and the L/C Issuer shall have no  obligation  to  make  any  Loan  or  to  provide  any  Letter  of  Credit  if  an  Overadvance  would  result.   The  Agent  may,  in  its  discretion,  make  Permitted  Overadvances  without  the  consent  of the  Borrowers,  the  Lenders, the Swing Line Lender and the L/C Issuer and the Borrowers and each Lender and L/C Issuer  shall  be  bound  thereby.   Any  Permitted  Overadvance  may  constitute  a  Swing  Line  Loan.  A  Permitted  Overadvance is for the account of the Borrowers and shall constitute a Base Rate Loan and an Obligation  and shall be repaid by the Borrowers in accordance with the provisions of Section 2.05(c).  The making of  any such Permitted Overadvance on any one occasion shall not obligate the Agent or any Lender to make  or permit any Permitted Overadvance on any other occasion or to permit such Permitted Overadvances to  remain outstanding. The making by the Agent of a Permitted Overadvance shall not modify or abrogate  any of the provisions of Section 2.03 regarding the Lenders’ obligations to purchase participations with  respect  to  Letter  of Credits  or  of  Section  2.04  regarding  the  Lenders’  obligations  to  purchase  participations with respect to Swing Line Loans.  The Agent shall have no liability for, and no Loan Party  or Credit Party shall have the right to, or shall, bring any claim of any kind whatsoever against the Agent  with respect to Unintentional Overadvances regardless of the amount of any such Overadvance(s).                                          60 

 

               2.03  Letters of Credit.               (a)   Subject to the terms and conditions of this Agreement, upon the request of the  Lead  Borrower  made  in  accordance  herewith,  and  prior  to  the  Maturity  Date,  the  L/C  Issuer  agrees  to  issue a requested Letter of Credit for the account of the Loan Parties.  By submitting a request to the L/C  Issuer for the issuance of a Letter of Credit, the Borrowers shall be deemed to have requested that the L/C  Issuer  issue the  requested  Letter of  Credit.   Each  request  for  the  issuance  of  a  Letter  of  Credit,  or the  amendment,  renewal,  or  extension  of  any  outstanding  Letter  of  Credit,  shall  be  (i)  irrevocable  and  be  made in writing pursuant to a Letter of Credit Application by a Responsible Officer, (ii) delivered to the  L/C  Issuer  and  the  Agent  via  telefacsimile  or  other  electronic  method  of  transmission  reasonably  acceptable to the L/C Issuer not later than 11:00 a.m. at least two Business Days (or such other date and  time as the Agent and the L/C Issuer may agree in a particular instance in their sole discretion) prior to the  requested  date  of  issuance,  amendment,  renewal,  or  extension,  and  (iii)  subject  to  the  L/C  Issuer’s  authentication procedures with results satisfactory to the L/C Issuer.  Each such request shall be in form  and substance reasonably satisfactory to the Agent and the L/C Issuer and (i) shall specify (A) the amount  of  such  Letter  of  Credit,  (B)  the  date  of  issuance,  amendment,  renewal,  or  extension  of  such  Letter  of  Credit,  (C)  the  proposed  expiration  date  of  such  Letter  of  Credit,  (D)  the  name  and  address  of  the  beneficiary of the Letter of Credit, and (E) such other information (including, the conditions to drawing,  and, in the case of an amendment, renewal, or extension, identification of the Letter of Credit to be so  amended, renewed, or extended) as shall be necessary to prepare, amend, renew, or extend such Letter of  Credit,  and  (ii)  shall  be  accompanied  by  such  Issuer  Documents  as  the  Agent  or  the  L/C  Issuer  may  request  or  require,  to  the  extent  that  such  requests  or  requirements  are  consistent  with  the  Issuer  Documents  that  the  L/C  Issuer  generally  requests  for  Letters  of  Credit  in  similar  circumstances.   The  Agent’s records of the content of any such request will be conclusive.  Anything contained herein to the  contrary notwithstanding, the L/C Issuer may, but shall not be obligated to, issue a Letter of Credit that  supports the obligations of a Loan Party or one of its Subsidiaries in respect of (x) a lease of real property  to the extent that the face amount of such Letter of Credit exceeds the highest rent (including all rent-like  charges) payable under such lease for a period of one year, or (y) an employment contract to the extent  that  the  face  amount  of  such  Letter  of  Credit  exceeds  the  highest  compensation  payable  under  such  contract for a period of one year.               (b)   The L/C Issuer shall have no obligation to issue a Letter of Credit if, after giving  effect to the requested issuance, (i) the Total Outstandings would exceed the Loan Cap, (ii) the aggregate  Outstanding Amount of the Committed Loans of any Lender, plus such Lender’s Applicable Percentage  of  the  Outstanding  Amount  of  all  L/C  Obligations, plus such  Lender’s  Applicable  Percentage  of  the  Outstanding  Amount  of  all  Swing  Line  Loans  would  exceed  such  Lender’s  Commitment,  or  (iii)  the  Outstanding Amount of the L/C Obligations would exceed the Letter of Credit Sublimit.               (c)   In  the  event  there  is  a  Defaulting  Lender as  of  the  date  of  any  request  for  the  issuance of a Letter of Credit, the L/C Issuer shall not be required to issue or arrange for such Letter of  Credit to the extent (i) the Defaulting Lender’s participation with respect to such Letter of Credit may not  be  reallocated  pursuant  to Section  9.16(b),  or  (ii)  the  L/C  Issuer  has  not  otherwise  entered  into  arrangements  reasonably  satisfactory  to  it  and  the  Borrowers  to  eliminate  the  L/C  Issuer’s  risk  with  respect to the participation in such Letter of Credit of the Defaulting Lender, which arrangements may  include  the  Borrowers  cash  collateralizing  such  Defaulting  Lender’s  participation  with  respect  to  such  Letter of Credit in accordance with Section 9.16(b).  Additionally, the L/C Issuer shall have no obligation  to  issue  and/or  extend  a  Letter  of  Credit  if  (A)  any  order,  judgment,  or  decree  of  any  Governmental  Authority or arbitrator shall, by its terms, purport to enjoin or restrain the L/C Issuer from issuing such  Letter  of  Credit,  or  any  Law  applicable  to  the L/C  Issuer  or  any  request  or  directive  (whether  or  not  having the force of Law) from any Governmental Authority with jurisdiction over the L/C Issuer shall  prohibit or request that the L/C Issuer refrain from the issuance of letters of credit generally or such Letter                                         61 

 

         of Credit in particular, (B) the issuance of such Letter of Credit would violate one or more policies of the  L/C Issuer applicable to letters of credit generally, (C) the expiry date of such requested Letter of Credit  that is a Standby Letter of Credit would occur later than the date that is twelve (12) months after the date  of issuance thereof, provided, that, such Standby Letter of Credit may provide for the automatic extension  thereof  for  any  number  of  additional  periods  each  of  up  to  one  year  in  duration,  subject  to  the  terms  hereof (including, without limitation, clause (E) below and Section 2.03(h)), (D) the expiry date of such  requested Letter of Credit that is a Commercial Letter of Credit would occur later than the date that is the  earlier of (i) 120 days after the date of the issuance of such Commercial Letter of Credit and (ii) the Letter  of Credit Expiration Date, and (E) the expiry date of such requested Letter of Credit would occur after the  Letter of Credit Expiration Date, unless either such Letter of Credit is Cash Collateralized on or prior to  the date of issuance of such Letter of Credit (or such later date as to which the Agent may agree) or all the  Lenders have approved such expiry date.               (d)   Any L/C Issuer (other than Wells Fargo or any of its Affiliates) shall notify the  Agent  in  writing  no  later  than  the  Business  Day  prior  to  the  Business  Day  on  which  such  L/C  Issuer  issues any Letter of Credit.  In addition, each L/C Issuer (other than Wells Fargo or any of its Affiliates)  shall, on  the  first  Business  Day  of  each  week,  submit  to  Agent  a  report  detailing  the  daily  undrawn  amount of each Letter of Credit issued by such L/C Issuer during the prior calendar week.  Each Letter of  Credit shall be in form and substance reasonably acceptable to the L/C Issuer, including the requirement  that the amounts payable thereunder must be payable in Dollars; provided that if the L/C Issuer, in its  discretion, issues a Letter of Credit denominated in a currency other than Dollars, all reimbursements by  the Borrowers of the honoring of any drawing under such Letter of Credit shall be paid in Dollars based  on the Spot Rate.  If the L/C Issuer makes a payment under a Letter of Credit, the Borrowers shall pay to  Agent an amount equal to the applicable Letter of Credit Disbursement on the Business Day such Letter  of Credit Disbursement is made and, in the absence of such payment, the amount of the Letter of Credit  Disbursement  immediately  and  automatically  shall  be  deemed  to  be  a  Committed  Loan  hereunder  (notwithstanding  any  failure  to  satisfy  any  condition  precedent  set  forth  in Section  4.02 hereof)  and,  initially, shall bear interest at the rate then applicable to Committed Loans that are Base Rate Loans. If a  Letter of Credit Disbursement is deemed to be a Committed Loan hereunder, the Borrowers’ obligation to  pay the amount of such Letter of Credit Disbursement to the L/C Issuer shall be automatically converted  into an obligation to pay the resulting Committed Loan.  Promptly following receipt by the Agent of any  payment from the Borrowers pursuant to this paragraph, the Agent shall distribute such payment to the  L/C Issuer or, to the extent that the Lenders have made payments pursuant to Section 2.03(e) to reimburse  the L/C Issuer, then to such Lenders and the L/C Issuer as their interests may appear.               (e)   Promptly  following  receipt  of  a  notice  of  a  Letter  of  Credit  Disbursement  pursuant to Section 2.03(d), each Lender agrees to fund its Applicable Percentage of any Committed Loan  deemed  made  pursuant  to Section  2.03(d) on  the  same  terms  and  conditions  as  if  the  Borrowers  had  requested the amount thereof as a Committed Loan and the Agent shall promptly pay to the L/C Issuer the  amounts so received by it from the Lenders.  By the issuance of a Letter of Credit (or an amendment,  renewal, or extension of a Letter of Credit) and without any further action on the part of the L/C Issuer or  the Lenders, the L/C Issuer shall be deemed to have granted to each Lender, and each Lender shall be  deemed to have purchased, a participation in each Letter of Credit issued by the L/C Issuer, in an amount  equal to its Applicable Percentage of such Letter of Credit, and each such Lender agrees to pay to the  Agent,  for  the  account of the  L/C  Issuer,  such  Lender’s  Applicable  Percentage of  any  Letter  of Credit  Disbursement  made  by  the  L/C  Issuer  under  the  applicable  Letter  of  Credit.   In  consideration  and  in  furtherance  of  the  foregoing,  each  Lender  hereby  absolutely  and  unconditionally  agrees  to  pay  to  the  Agent, for the account of the L/C Issuer, such Lender’s Applicable Percentage of each Letter of Credit  Disbursement made by the L/C Issuer and not reimbursed by Borrowers on the date due as provided in  Section 2.03(d), or of any reimbursement payment that is required to be refunded (or that the Agent or the  L/C Issuer elects, based upon the advice of counsel, to refund) to the Borrowers for any reason.  Each                                         62 

 

         Lender acknowledges and agrees that its obligation to deliver to the Agent, for the account of the L/C  Issuer,  an  amount  equal  to its  respective  Applicable Percentage  of  each  Letter  of  Credit  Disbursement  pursuant to this Section 2.03(e) shall be absolute and unconditional and such remittance shall be made  notwithstanding the occurrence or continuation of a Default or Event of Default or the failure to satisfy  any condition set forth in Section 4.02 hereof.  If any such Lender fails to make available to the Agent the  amount of such Lender’s Applicable Percentage of a Letter of Credit Disbursement as provided in this  Section, such Lender shall be deemed to be a Defaulting Lender and the Agent (for the account of the L/C  Issuer)  shall  be  entitled  to  recover  such  amount  on  demand  from  such  Lender  together  with  interest  thereon at the Defaulting Lender Rate until paid in full.               (f)   Each Borrower agrees to indemnify, defend and hold harmless each Credit Party  (including  the  L/C  Issuer  and  its  branches,  Affiliates,  and  correspondents)  and  each  such  Person’s  respective directors, officers, employees, attorneys and agents (each, including the L/C Issuer, a “Letter of  Credit  Related  Person”)  (to  the  fullest  extent  permitted  by  Law)  from  and  against  any  and  all  claims,  demands, suits, actions, investigations, proceedings, liabilities, fines, costs, penalties, and damages, and  all  reasonable  fees  and  disbursements  of  attorneys,  experts,  or  consultants  and  all  other  costs  and  expenses  actually  incurred  in  connection  therewith  or  in  connection  with  the  enforcement  of  this  indemnification (as and when they are incurred and irrespective of whether suit is brought), which may be  incurred by or awarded against any such Letter of Credit Related Person (other than Taxes, which shall be  governed  by Article  III)  (the  “Letter  of  Credit  Indemnified  Costs”),  and  which  arise  out  of  or  in  connection with, or as a result of:                     (i)   any Letter of Credit or any pre-advice of its issuance;                     (ii)  any transfer, sale, delivery, surrender or endorsement (or lack thereof) of        any  Drawing  Document  at  any  time(s)  held  by  any  such  Letter  of  Credit  Related  Person  in        connection with any Letter of Credit;                     (iii) any action or proceeding arising out of, or in connection with, any Letter        of Credit (whether administrative, judicial or in connection with arbitration), including any action        or proceeding to compel or restrain any presentation or payment under any Letter of Credit, or for        the wrongful dishonor of, or honoring a presentation under, any Letter of Credit;                     (iv)  any independent undertakings issued by the beneficiary of any Letter of        Credit;                     (v)   any  unauthorized  instruction  or  request  made  to  the  L/C  Issuer  in        connection  with  any  Letter  of  Credit  or  requested  Letter  of  Credit,  or  any  error,  omission,        interruption  or  delay  in  such  instruction  or  request,  whether  transmitted  by  mail,  courier,        electronic  transmission,  SWIFT,  or  any  other  telecommunication  including  communications        through a correspondent;                     (vi)  an  adviser,  confirmer  or  other  nominated  person  seeking  to  be        reimbursed, indemnified or compensated;                     (vii) any third party seeking to enforce the rights of an applicant, beneficiary,        nominated person, transferee, assignee of Letter of Credit proceeds or holder of an instrument or        document;                     (viii) the  fraud,  forgery  or  illegal  action  of  parties  other  than  the  Letter  of        Credit Related Person;                                         63 

 

                           (ix)  any prohibition on payment or delay in payment of any amount payable        by the L/C Issuer to a beneficiary or transferee beneficiary of a Letter of Credit arising out of        Anti-Corruption Laws, Anti-Money Laundering Laws, or Sanctions;                     (x)   the  L/C  Issuer’s  performance  of  the  obligations  of  a  confirming        institution or entity that wrongfully dishonors a confirmation;                     (xi)  any foreign language translation provided to the L/C Issuer in connection        with any Letter of Credit;                      (xii) any  foreign  law  or  usage  as  it  relates to  the  L/C  Issuer’s  issuance  of  a        Letter  of  Credit  in  support  of  a  foreign  guaranty  including  without  limitation  the  expiration  of        such guaranty after the related Letter of Credit expiration date and any resulting drawing paid by        the L/C Issuer in connection therewith; or                     (xiii) the  acts  or  omissions,  whether  rightful  or  wrongful,  of  any  present  or        future  de  jure or  de  facto  governmental  or  regulatory  authority  or  cause  or  event  beyond  the        control of the Letter of Credit Related Person;         provided, however,  that  such  indemnity  shall  not  be  available  to  any  Letter  of  Credit  Related  Person claiming indemnification under clauses (i) through (xiii) above to the extent that such Letter of  Credit  Indemnified  Costs may  be  finally  determined in  a  final,  non-appealable  judgment  of  a  court  of  competent jurisdiction to have resulted directly from the gross negligence or willful misconduct of the  Letter  of  Credit  Related Person  claiming  indemnity.  The  Borrowers  hereby  agree  to  pay  the  Letter  of  Credit Related  Person  claiming  indemnity  on  demand  from time  to  time  all  amounts  owing  under  this  Section 2.03(f).  If and to the extent that the obligations of the Borrowers under this Section 2.03(f) are  unenforceable for any reason, the Borrowers agree to make the maximum contribution to the Letter of  Credit Indemnified Costs permissible under applicable Law.  This indemnification provision shall survive  termination of this Agreement and all Letters of Credit.               (g)   The  liability  of  the  L/C  Issuer  (or  any  other  Letter  of  Credit  Related  Person)  under, in connection with or arising out of any Letter of Credit (or pre-advice), regardless of the form or  legal grounds of the action or proceeding, shall be limited to direct damages suffered by the Borrowers  that  are  caused  directly  by  the  L/C  Issuer’s  (or  any  of  its  Letter  of  Credit  Related  Person’s)  gross  negligence or willful misconduct in (i) honoring a presentation under a Letter of Credit that on its face  does not at least substantially comply with the terms and conditions of such Letter of Credit, (ii) failing to  honor a presentation under a Letter of Credit that strictly complies with the terms and conditions of such  Letter of Credit or (iii) retaining Drawing Documents presented under a Letter of Credit.  The L/C Issuer  shall be deemed to have acted with due diligence and reasonable care if the L/C Issuer’s conduct is in  accordance  with  Standard Letter  of  Credit  Practice  or  in  accordance  with  this  Agreement.   The  Borrowers’  aggregate  remedies  against  the  L/C  Issuer  and  any  Letter  of  Credit  Related  Person  for  wrongfully honoring a presentation under any Letter of Credit or wrongfully retaining honored Drawing  Documents  shall in  no  event  exceed  the  aggregate  amount  paid  by the Borrowers  to  the  L/C  Issuer in  respect of the honored presentation in connection with such Letter of Credit under Section 2.03(d), plus  interest  at  the  rate  then  applicable  to Base  Rate  Loans  hereunder.   The  Borrowers  shall  take  action  to  avoid  and  mitigate  the  amount  of  any  damages  claimed  against  the  L/C  Issuer  or  any  other  Letter  of  Credit Related Person, including by enforcing its rights against the beneficiaries of the Letters of Credit.   Any  claim  by  the Borrowers  under  or  in  connection  with  any  Letter  of  Credit  shall  be  reduced  by  an  amount equal to the sum of (x) the amount (if any) saved by the Borrowers as a result of the breach or  alleged wrongful conduct complained of; and (y) the amount (if any) of the loss that would have been                                         64 

 

         avoided  had  the  Borrowers  taken  all  reasonable  steps  to  mitigate  any  loss,  and  in  case  of  a  claim  of  wrongful dishonor, by specifically and timely authorizing the L/C Issuer to effect a cure.               (h)   The Borrowers are responsible for the final text of the Letter of Credit as issued  by  the  L/C  Issuer,  irrespective  of  any  assistance  the  L/C  Issuer  may  provide  such  as  drafting  or  recommending text or by the L/C Issuer’s use or refusal to use text submitted by the Borrowers.  The  Borrowers understand that the final form of any Letter of Credit may be subject to such revisions and  changes as are deemed necessary or appropriate by the L/C Issuer, and Borrowers hereby consent to such  revisions and changes not materially different from the application executed in connection therewith.  The  Borrowers are solely responsible for the suitability of the Letter of Credit for the Borrowers’ purposes.  If  the  Borrowers  request  that  the  L/C  Issuer  issue  a  Letter  of Credit  for  an  affiliated  or  unaffiliated  third  party (an “Account Party”), (i) such Account Party shall have no rights against the L/C Issuer; (ii) the  Borrowers  shall  be  responsible  for  the  application  and  obligations  under  this  Agreement;  and  (iii)  communications  (including  notices)  related  to  the  respective  Letter  of  Credit  shall  be  among  the  L/C  Issuer and the Borrowers.  The Borrowers will examine the copy of the Letter of Credit and any other  documents sent by the L/C Issuer in connection therewith and shall promptly notify the L/C Issuer (not  later than three (3) Business Days following the Borrowers’ receipt of documents from the L/C Issuer) of  any non-compliance with the Borrowers’ instructions and of any discrepancy in any document under any  presentment or other irregularity.  The Borrowers understand and agree that the L/C Issuer is not required  to extend the expiration date of any Letter of Credit for any reason.  With respect to any Letter of Credit  containing  an  “automatic  amendment”  to  extend  the  expiration  date  of  such  Letter  of  Credit,  the  L/C  Issuer, in its sole and absolute discretion, may give notice of nonrenewal of such Letter of Credit and, if  the  Borrowers  do  not  at  any  time  want  the  then  current  expiration  date  of  such  Letter  of Credit  to  be  extended, the Borrowers will so notify the Agent and the L/C Issuer at least 30 calendar days before the  L/C Issuer is required to notify the beneficiary of such Letter of Credit or any advising bank of such non- extension pursuant to the terms of such Letter of Credit.               (i)   The Borrowers’ reimbursement and payment obligations under this Section 2.03  are absolute, unconditional and irrevocable and shall be performed strictly in accordance with the terms of  this Agreement under any and all circumstances whatsoever, including:                     (i)   any lack of validity, enforceability or legal effect of any Letter of Credit,        any Issuer Document, this Agreement or any Loan Document, or any term or provision therein or        herein;                     (ii)  payment against presentation of any draft, demand or claim for payment        under  any  Drawing  Document  that  does  not  comply in  whole  or  in  part  with  the  terms  of the        applicable Letter of Credit or which proves to be fraudulent, forged or invalid in any respect or        any  statement  therein  being  untrue  or  inaccurate  in  any  respect,  or  which  is  signed,  issued  or        presented by a Person or a transferee of such Person purporting to be a successor or transferee of        the beneficiary of such Letter of Credit;                     (iii) the L/C Issuer or any of its branches or Affiliates being the beneficiary of        any Letter of Credit;                     (iv)  the  L/C  Issuer  or  any  correspondent  honoring  a  drawing  against  a        Drawing Document up to the amount available under any Letter of Credit even if such Drawing        Document claims an amount in excess of the amount available under the Letter of Credit;                                          65 

 

                           (v)   the existence of any claim, set-off, defense or other right that any Loan        Party  or  any  of  its  Subsidiaries  may  have  at  any  time  against  any  beneficiary  or  transferee        beneficiary, any assignee of proceeds, the L/C Issuer or any other Person;                     (vi)  the L/C Issuer or any correspondent honoring a drawing upon receipt of        an electronic presentation under a Letter of Credit requiring the same, regardless of whether the        original  Drawing  Documents  arrive  at  the  L/C  Issuer’s  counters  or  are  different  from  the        electronic presentation;                     (vii) any  other  event,  circumstance  or  conduct  whatsoever,  whether  or  not        similar  to  any  of  the  foregoing  that  might,  but  for  this Section  2.03(i),  constitute  a  legal  or        equitable defense to or discharge of, or provide a right of set-off against, any Borrower’s or any        of its Subsidiaries’ reimbursement and other payment obligations and liabilities, arising under, or        in connection with, any Letter of Credit, whether against the L/C Issuer, the beneficiary or any        other Person; or                     (viii) the fact that any Default or Event of Default shall have occurred and be        continuing;         provided, however, that subject to Section 2.03(g) above, the foregoing shall not release the L/C  Issuer  from  such  liability  to  the  Borrowers  as  may  be  finally  determined  in  a  final,  non-appealable  judgment of a court of competent jurisdiction against the L/C Issuer following reimbursement or payment  of  the  obligations  and  liabilities,  including  reimbursement  and  other  payment  obligations,  of  the  Borrowers to the L/C Issuer arising under, or in connection with, this Section 2.03 or any Letter of Credit.               (j)   Without limiting any other provision of this Agreement, the L/C Issuer and each  other Letter of Credit Related Person (if applicable) shall not be responsible to the Borrowers for, and the  L/C Issuer’s rights and remedies against the Borrowers and the obligation of the Borrowers to reimburse  the L/C Issuer for each drawing under each Letter of Credit shall not be impaired by:                     (i)   honor  of  a  presentation  under  any  Letter  of  Credit  that  on  its  face        substantially complies with the terms and conditions of such Letter of Credit, even if the Letter of        Credit requires strict compliance by the beneficiary;                     (ii)  honor  of  a  presentation  of  any  Drawing  Document  that  appears  on  its        face to have been signed, presented or issued (A) by any purported successor or transferee of any        beneficiary  or  other  Person  required  to  sign,  present  or  issue  such  Drawing  Document  or  (B)        under a new name of the beneficiary;                     (iii) acceptance as a draft of any written or electronic demand or request for        payment  under  a  Letter  of  Credit,  even  if  nonnegotiable  or  not  in  the  form  of  a  draft  or        notwithstanding  any  requirement  that  such  draft,  demand  or  request  bear  any  or  adequate        reference to the Letter of Credit;                     (iv)  the  identity  or  authority  of any  presenter  or  signer  of  any  Drawing        Document or the form, accuracy, genuineness or legal effect of any Drawing Document (other        than the L/C Issuer’s determination that such Drawing Document appears on its face substantially        to comply with the terms and conditions of the Letter of Credit);                                          66 

 

                           (v)   acting  upon  any  instruction  or  request  relative  to  a  Letter  of  Credit  or        requested  Letter  of  Credit  that  the  L/C  Issuer  in  good  faith  believes  to  have  been  given  by  a        Person authorized to give such instruction or request;                     (vi)  any errors, omissions, interruptions or delays in transmission or delivery        of  any  message,  advice  or  document  (regardless  of  how  sent  or  transmitted)  or  for  errors  in        interpretation of technical terms or in translation or any delay in giving or failing to give notice to        any Borrower;                     (vii) any  acts,  omissions  or  fraud  by,  or  the  insolvency  of,  any  beneficiary,        any  nominated  person  or  entity  or  any  other  Person  or  any  breach  of  contract  between  any        beneficiary  and  any  Borrower  or  any  of  the  parties  to  the  underlying  transaction  to  which  the        Letter of Credit relates;                     (viii) assertion  or  waiver  of  any  provision  of  the  ISP  or  UCP  that  primarily        benefits an issuer of a letter of credit, including any requirement that any Drawing Document be        presented to it at a particular hour or place;                     (ix)  payment to any presenting bank (designated or permitted by the terms of        the applicable Letter of Credit) claiming that it rightfully honored or is entitled to reimbursement        or indemnity under Standard Letter of Credit Practice applicable to it;                     (x)   acting or failing to act as required or permitted under Standard Letter of        Credit Practice applicable to where the L/C Issuer has issued, confirmed, advised or negotiated        such Letter of Credit, as the case may be;                     (xi)  honor of a presentation after the expiration date of any Letter of Credit        notwithstanding that a presentation was made prior to such expiration date and dishonored by the        L/C  Issuer  if  subsequently the  L/C  Issuer  or  any  court  or  other  finder  of  fact  determines  such        presentation should have been honored;                     (xii) dishonor  of  any  presentation  that  does  not  strictly  comply  or  that  is        fraudulent, forged or otherwise not entitled to honor; or                     (xiii) honor of a presentation that is subsequently determined by the L/C Issuer        to  have  been  made  in  violation  of  international,  federal,  state  or  local  restrictions  on  the        transaction of business with certain prohibited Persons.               (k)   Upon the request of the Agent, (i) if the L/C Issuer has honored any full or partial  drawing  request  under  any  Letter  of  Credit  and  such  drawing  has resulted  in  an  L/C  Obligation  that  remains  outstanding,  or  (ii)  if,  as  of  the  Letter  of  Credit  Expiration  Date,  any  L/C  Obligation  for  any  reason remains outstanding, the Borrowers shall, in each case, immediately Cash Collateralize the then  Outstanding  Amount  of  all  L/C  Obligations.  Sections 2.05 and 8.02(c) set  forth  certain  additional  requirements to deliver Cash Collateral hereunder.  For purposes of this Section 2.03, Section 2.05 and  Section 8.02(c),  “Cash Collateralize” means to pledge and deposit with or deliver to the Agent, for the  benefit of the L/C Issuer and the Lenders, as collateral for the L/C Obligations, cash or deposit account  balances in an amount equal to 105% of the Outstanding Amount of all L/C Obligations (other than L/C  Obligations with respect to Letters of Credit denominated in a currency other than Dollars, which L/C  Obligations shall be Cash Collateralized in an amount equal to 115% of the Outstanding Amount of such  L/C Obligations), pursuant to documentation in form and substance satisfactory to the Agent and the L/C  Issuer (which documents are hereby Consented to by the Lenders).  The Borrowers hereby grant to the                                         67 

 

         Agent a security interest in all such cash, deposit accounts and all balances therein and all proceeds of the  foregoing.  Cash Collateral shall be maintained in blocked, non-interest bearing deposit accounts at Wells  Fargo.  If at any time the Agent determines that any funds held as Cash Collateral are subject to any right  or  claim  of  any  Person  other  than  the  Agent  or  that  the  total  amount  of  such  funds  is  less  than  the  aggregate Outstanding Amount of all L/C Obligations, the Borrowers will, forthwith upon demand by the  Agent, pay to the Agent, as additional funds to be deposited as Cash Collateral, an amount equal to the  excess of (x) such aggregate Outstanding Amount over (y) the total amount of funds, if any, then held as  Cash Collateral  that  the  Agent  determines  to  be  free and  clear  of  any  such  right  and  claim.   Upon  the  drawing of any Letter of Credit for which funds are on deposit as Cash Collateral, such funds shall be  applied, to the extent permitted under applicable Laws, to reimburse the L/C Issuer and, to the extent not  so  applied,  shall  thereafter  be  applied  to  satisfy  other  Obligations.   If  Borrowers  fail  to  provide  Cash  Collateral as required by this Section 2.03, Section 2.05 or Section 8.02(c), the Lenders may (and, upon  direction of the Agent, shall) advance, as Committed Loans, the amount of the cash collateral required  pursuant to the terms of this Agreement so that the then Outstanding Amount of all L/C Obligations is  cash collateralized in accordance with the terms hereof (whether or not the Aggregate Commitments have  terminated, an Overadvance exists or the conditions in Section 4.02 are satisfied).               (l)   The  Borrowers  shall  pay  to  the  Agent  for  the  account  of  each  Lender  in  accordance  with  its  Applicable  Percentage  a  Letter  of  Credit  fee  (the  “Letter  of  Credit  Fee”)  for  each  Letter of Credit equal to the Applicable Margin times the daily Stated Amount under each such Letter of  Credit (whether or not such maximum amount is then in effect under such Letter of Credit).  For purposes  of computing the daily amount available to be drawn under any Letter of Credit, the amount of the Letter  of Credit shall be determined in accordance with Section 1.06.  Letter of Credit Fees shall be (i) due and  payable on the first (1st) Business Day after the end of each month commencing with the first such date to  occur  after  the  issuance  of  such  Letter  of  Credit,  and after  the  Letter  of  Credit  Expiration  Date,  on  demand,  and  (ii)  computed  on  a  monthly  basis  in  arrears.   Notwithstanding  anything  to  the  contrary  contained herein, while any Event of Default exists, all Letter of Credit Fees shall accrue at the Default  Rate as provided in Section 2.08(b) hereof.               (m)   In addition to the Letter of Credit Fees as set forth in Section 2.03(l) above, the  Borrowers shall pay immediately upon demand to the Agent for the account of the L/C Issuer as non- refundable fees, commissions, and charges (it being acknowledged and agreed that any charging of such  fees, commissions, and charges to the Loan Account pursuant to the provisions of Section 2.02(d) shall be  deemed  to  constitute  a  demand  for  payment  thereof  for  the  purposes  of  this Section  2.03(m)):   (i)  a  fronting  fee  which  shall  be  imposed  by  the  L/C  Issuer  equal  to  0.125%  per  annum times the  average  amount of the L/C Obligations during the immediately preceding month (or portion thereof), plus (ii) any  and  all  other  customary  commissions,  fees  and  charges  then  in  effect  imposed  by,  and  any  and  all  expenses  incurred  by,  the  L/C  Issuer,  or  by  any  adviser,  confirming  institution  or  entity  or  other  nominated person, relating to Letters of Credit, at the time of issuance of any Letter of Credit and upon  the occurrence of any other activity with respect to any Letter of Credit (including transfers, assignments  of proceeds, amendments, drawings, renewals or cancellations).               (n)   Unless otherwise expressly agreed by the L/C Issuer and the Borrowers when a  Letter of Credit is issued, (i) the rules of the ISP shall apply to each Standby Letter of Credit, and (ii) the  rules of the UCP shall apply to each Commercial Letter of Credit.               (o)   The L/C Issuer shall be deemed to have acted with due diligence and reasonable  care if the L/C Issuer’s conduct is in accordance with Standard Letter of Credit Practice or in accordance  with this Agreement.                                          68 

 

                     (p)   The L/C Issuer shall act on behalf of the Lenders with respect to any Letters of  Credit  issued  by  it  and  the  documents  associated  therewith,  and  the  L/C  Issuer  shall  have  all  of  the  benefits  and  immunities  (A)  provided  to  the  Agent  in Article IX with  respect  to  any  acts  taken  or  omissions suffered by the L/C Issuer in connection with Letters of Credit issued by it or proposed to be  issued by it and Issuer Documents pertaining to such Letters of Credit as fully as if the term “Agent” as  used in Article IX included the L/C Issuer with respect to such acts or omissions, and (B) as additionally  provided herein with respect to the L/C Issuer.               (q)   In the event of a direct conflict between the provisions of this Section 2.03 and  any  provision  contained  in  any  Issuer  Document,  it  is  the  intention  of  the  parties  hereto  that  such  provisions be read together and construed, to the fullest extent possible, to be in concert with each other.   In  the  event  of  any  actual,  irreconcilable  conflict  that  cannot  be  resolved  as  aforesaid,  the  terms  and  provisions of this Section 2.03 shall control and govern.               (r)   The  provisions  of  this Section  2.03 shall  survive  the  termination  of  this  Agreement and the repayment in full of the Obligations with respect to any Letters of Credit that remain  outstanding.               (s)   At the Borrowers’ costs and expense, the Borrowers shall execute and deliver to  the L/C Issuer such additional certificates, instruments and/or documents and take such additional action  as may be reasonably requested by the L/C Issuer to enable the L/C Issuer to issue any Letter of Credit  pursuant  to  this  Agreement  and  related  Issuer  Document,  to  protect,  exercise  and/or  enforce  the  L/C  Issuer’s  rights  and interests  under this  Agreement  or to  give  effect  to the  terms  and  provisions of  this  Agreement or any Issuer Document.  Each Borrower irrevocably appoints the L/C Issuer as its attorney- in-fact and authorizes the L/C Issuer, without notice to the Borrowers, to execute and deliver ancillary  documents and letters customary in the letter of credit business that may include but are not limited to  advisements,  indemnities,  checks,  bills  of  exchange  and  issuance  documents.   The  power  of  attorney  granted  by  the  Borrowers  is  limited  solely  to  such  actions  related  to  the  issuance,  confirmation  or  amendment of any Letter of Credit and to ancillary documents or letters customary in the letter of credit  business.  This appointment is coupled with an interest.         2.04  Swing Line Loans.               (a)   The Swing Line.  Subject to the terms and conditions set forth herein, the Swing  Line  Lender  may,  in  reliance  upon  the  agreements  of  the  other  Lenders  set  forth  in this Section 2.04,  make loans (each such loan, a “Swing Line Loan”) to the Borrowers from time to time on any Business  Day  during  the  Availability  Period in  an  aggregate  amount  not  to  exceed  at  any  time  outstanding  the  amount  of  the  Swing  Line  Sublimit,  notwithstanding  the  fact  that  such  Swing  Line  Loans,  when  aggregated  with  the  Applicable  Percentage  of  the  Outstanding  Amount  of  Committed  Loans  and  L/C  Obligations  of  the  Lender  acting  as  Swing  Line  Lender,  may  exceed  the  amount  of  such  Lender’s  Commitment; provided, however,  that  after  giving  effect  to  any  Swing  Line  Loan,  (i)  the  Total  Outstandings shall not exceed Loan Cap, and (ii) the aggregate Outstanding Amount of the Committed  Loans of any Lender at such time, plus such Lender’s Applicable Percentage of the Outstanding Amount  of all L/C Obligations at such time, plus such Lender’s Applicable Percentage of the Outstanding Amount  of all Swing Line Loans at such time shall not exceed such Lender’s Commitment, and provided, further,  that the Borrowers shall not use the proceeds of any Swing Line Loan to refinance any outstanding Swing  Line  Loan.   Within  the  foregoing  limits,  and  subject  to  the  other  terms and  conditions  hereof,  the  Borrowers  may  borrow  under  this Section 2.04,  prepay  under Section 2.05,  and  reborrow  under  this  Section 2.04.  Each Swing Line Loan shall bear interest only at the rate applicable to Base Rate Loans.   Immediately  upon  the  making  of  a  Swing  Line  Loan,  each  Lender  shall  be  deemed  to,  and  hereby  irrevocably and unconditionally agrees to, purchase from the Swing Line Lender a risk participation in                                         69 

 

         such Swing Line Loan in an amount equal to the product of such Lender’s Applicable Percentage times  the  amount  of  such  Swing  Line  Loan.   The  Swing  Line  Lender  shall  have  all  of  the  benefits  and  immunities (A) provided to the Agent in Article IX with respect to any acts taken or omissions suffered  by the Swing Line Lender in connection with Swing Line Loans made by it or proposed to be made by it  as if the term “Agent” as used in Article IX included the Swing Line Lender with respect to such acts or  omissions, and (B) as additionally provided herein with respect to the Swing Line Lender.               (b)   Borrowing  Procedures.   Each Swing  Line  Borrowing  shall  be  made  upon  the  Lead  Borrower’s  irrevocable  notice  to  the Swing  Line  Lender  and  the  Agent,  which  may  be given  by  telephone. Each such notice must be received by the Swing Line Lender and the Agent not later than 1:00  p.m. on the requested borrowing date, and shall specify (i) the amount to be borrowed, which shall be a  minimum of $100,000, and (ii) the requested borrowing date, which shall be a Business Day.  Each such  telephonic notice must be confirmed promptly by delivery to the Swing Line Lender and the Agent of a  written  Swing  Line  Loan  Notice,  appropriately  completed  and  signed  by  a  Responsible  Officer  of  the  Lead Borrower.  Promptly after receipt by the Swing Line Lender of any telephonic Swing Line Loan  Notice, the Swing Line Lender will confirm with the Agent (by telephone or in writing) that the Agent  has also received such Swing Line Loan Notice and, if not, the Swing Line Lender will notify the Agent  (by telephone or in writing) of the contents thereof.  Unless the Swing Line Lender has received notice  (by telephone or in writing) from the Agent at the request of the Required Lenders prior to 2:00 p.m. on  the date of the proposed Swing Line Borrowing (A) directing the Swing Line Lender not to make such  Swing  Line  Loan  as  a  result  of the  limitations  set  forth  in  the proviso to  the  first  sentence  of Section  2.04(a), or (B) that one or more of the applicable conditions specified in Article IV is not then satisfied,  then, subject to the terms and conditions hereof, the Swing Line Lender may, not later than 3:00 p.m. on  the borrowing date specified in such Swing Line Loan Notice, make the amount of its Swing Line Loan  available to the Borrowers at its office by crediting the account of the Lead Borrower on the books of the  Swing Line Lender in immediately available funds.               (c)   Refinancing of Swing Line Loans.                     (i)   The  Swing  Line  Lender  at  any  time  in its  sole  and  absolute  discretion  may request, on behalf of the Borrowers (which hereby irrevocably authorize the Swing Line Lender to so  request on their behalf), that each Lender make a Base Rate Loan in an amount equal to such Lender's  Applicable Percentage of the amount of Swing Line Loans then outstanding.  Such request shall be made  in  accordance  with  the  requirements  of Section 2.02,  without  regard  to  the  minimum  and  multiples  specified therein for the principal amount of Base Rate Loans, but subject to the unutilized portion of the  Loan Cap and the conditions set forth in Section 4.02.  Each Lender shall make an amount equal to its  Applicable  Percentage  of  the  amount  of  such  outstanding  Swing  Line  Loan  available  to  the  Agent  in  immediately available funds for the account of the Swing Line Lender at the Agent’s Office not later than  1:00 p.m. on the day specified by the Swing Line Lender, whereupon, subject to Section 2.04(c)(ii), each  Lender that so makes funds available shall be deemed to have made a Base Rate Loan to the Borrowers in  such amount.  The Agent shall remit the funds so received to the Swing Line Lender.                     (ii)  If for any reason any Swing Line Loan cannot be refinanced by such a  Committed Borrowing in accordance with Section 2.04(c)(i), the request for Base Rate Loans submitted  by the Swing Line Lender as set forth herein shall be deemed to be a request by the Swing Line Lender  that each of the Lenders fund its risk participation in the relevant Swing Line Loan and each Lender’s  payment to the Agent for the account of the Swing Line Lender pursuant to Section 2.04(c)(i) shall be  deemed payment in respect of such participation.                     (iii) If any Lender fails to make available to the Agent for the account of the  Swing Line Lender any amount required to be paid by such Lender pursuant to the foregoing provisions                                         70 

 

         of this Section 2.04(c) by the time specified in Section 2.04(c)(i), the Swing Line Lender shall be entitled  to recover from such Lender (acting through the Agent), on demand, such amount with interest thereon  for the period from the date such payment is required to the date on which such payment is immediately  available to the Swing Line Lender at a rate per annum equal to the greater of the Federal Funds Rate and  a  rate  determined  by  the  Swing  Line  Lender  in  accordance  with  banking  industry  rules  on  interbank  compensation plus any administrative, processing or similar fees customarily charged by the Swing Line  Lender  in  connection  with the  foregoing.   If  such  Lender  pays  such  amount  (with  interest  and  fees  as  aforesaid), the amount so paid shall constitute such Lender’s Committed Loan included in the relevant  Committed Borrowing or funded participation in the relevant Swing Line Loan, as the case may be.   A  certificate  of  the Swing  Line  Lender  submitted  to  any  Lender  (through  the  Agent)  with  respect  to  any  amounts owing under this clause (iii) shall be conclusive absent manifest error.                     (iv)  Each Lender’s obligation to make Committed Loans or to purchase and  fund  risk  participations  in  Swing  Line  Loans  pursuant  to  this Section 2.04(c) shall  be  absolute  and  unconditional  and  shall  not  be  affected  by  any  circumstance,  including  (A)  any  setoff,  counterclaim,  recoupment,  defense  or  other  right  which  such  Lender  may  have  against  the  Swing  Line  Lender,  the  Borrowers or any other Person for any reason whatsoever, (B) the occurrence or continuance of a Default  or an Event of Default, or (C) any other occurrence, event or condition, whether or not similar to any of  the foregoing; provided, however, that each Lender’s obligation to make Committed Loans pursuant to  this Section 2.04(c) is  subject  to  the  conditions  set  forth  in Section 4.02.   No  such  funding  of  risk  participations  shall  relieve  or  otherwise  impair  the  obligation  of  the  Borrowers  to  repay  Swing  Line  Loans, together with interest as provided herein.               (d)   Repayment of Participations.                     (i)   At  any  time  after  any  Lender  has  purchased  and  funded  a  risk  participation in a Swing Line Loan, if the Swing Line Lender receives any payment on account of such  Swing Line Loan, the Swing Line Lender will distribute to such Lender its Applicable Percentage of such  payment  (appropriately  adjusted,  in  the  case  of  interest  payments,  to  reflect  the  period  of  time  during  which such Lender’s risk participation was funded) in the same funds as those received by the Swing Line  Lender.                     (ii)  If any payment received by the Swing Line Lender in respect of principal  or interest on any Swing Line Loan is required to be returned by the Swing Line Lender under any of the  circumstances described in Section 10.05 (including pursuant to any settlement entered into by the Swing  Line Lender in its discretion), each Lender shall pay to the Swing Line Lender its Applicable Percentage  thereof  on  demand  of  the  Agent,  plus  interest  thereon  from  the  date  of  such  demand  to  the  date  such  amount  is  returned,  at  a  rate  per  annum  equal  to the  Federal  Funds  Rate.   The  Agent  will  make  such  demand upon the request of the Swing Line Lender.  The obligations of the Lenders under this clause  shall survive the payment in full of the Obligations and the termination of this Agreement.               (e)   Interest  for Account  of  Swing  Line  Lender.   The  Swing  Line  Lender  shall  be  responsible for invoicing the Borrowers for interest on the Swing Line Loans.  Until each Lender funds its  Base Rate Loan or risk participation pursuant to this Section 2.04 to refinance such Lender’s Applicable  Percentage of any Swing Line Loan, interest in respect of such Applicable Percentage shall be solely for  the account of the Swing Line Lender.               (f)   Payments  Directly  to  Swing  Line  Lender.   The  Borrowers  shall  make  all  payments of principal and interest in respect of the Swing Line Loans directly to the Swing Line Lender.                                          71 

 

               2.05  Prepayments.               (a)   The  Borrowers  may,  upon  irrevocable  notice  from  the  Lead  Borrower  to  the  Agent, at any time or from time to time voluntarily prepay Committed Loans in whole or in part without  premium or penalty; provided that such notice must be received by the Agent not later than 11:00 a.m. (i)  three  Business  Days  prior  to  any  date  of  prepayment  of  LIBOR  Rate  Loans  and  (ii)  on  the  date of  prepayment of Base Rate Loans.  Each such notice shall specify the date and amount of such prepayment  and the Type(s) of Loans to be prepaid and, if LIBOR Rate Loans, the Interest Period(s) of such Loans;  provided,  further,  that  such  notice  may  state  that  such  notice  is  conditioned  upon  the  effectiveness  of  other  credit  facilities  or  the  receipt  of  the  proceeds  from  the  issuance  of  other  Indebtedness  or  the  occurrence of some other identifiable event or condition, in which case such notice may be revoked by the  Lead Borrower (by notice to the Agent on or prior to the specified effective date of termination) if such  condition is not satisfied.  The Agent will promptly notify each Lender of its receipt of each such notice,  and of the amount of such Lender’s Applicable Percentage of such prepayment.  If such notice is given by  the Lead Borrower, the Borrowers shall make such prepayment and the payment amount specified in such  notice shall be due and payable on the date specified therein.  Any prepayment of a LIBOR Rate Loan  shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts  required pursuant to Section 3.05.  Each such prepayment shall be applied to the Committed Loans of the  Lenders in accordance with their respective Applicable Percentages.               (b)   The  Borrowers  may,  upon  irrevocable  notice  from  the  Lead  Borrower  to  the  Swing Line Lender (with a copy to the Agent), at any time or from time to time, voluntarily prepay Swing  Line Loans in whole or in part without premium or penalty; provided that such notice must be received by  the Swing Line Lender and the Agent not later than 1:00 p.m. on the date of the prepayment.  Each such  notice  shall  specify  the  date  and  amount  of such  prepayment.   If  such  notice  is  given  by  the  Lead  Borrower, the Borrowers shall make such prepayment and the payment amount specified in such notice  shall be due and payable on the date specified therein.               (c)   If for any reason the Total Outstandings at any time exceed the Loan Cap as then  in effect, the Borrowers shall immediately prepay Loans, Swing Line Loans and/or Cash Collateralize the  L/C  Obligations  in  an  aggregate  amount  equal  to  such  excess; provided, however,  that  the  Borrowers  shall  not  be  required  to  Cash Collateralize  the  L/C  Obligations  pursuant to  this Section 2.05(c) unless  after such prepayment in full of the Loans the Total Outstandings exceed the Loan Cap as then in effect.               (d)   After the occurrence and during the continuance of a Cash Dominion Event, the  Borrowers  shall  prepay  the  Loans  and  Cash  Collateralize  the  L/C  Obligations  with  the  proceeds  and  collections received by the Loan Parties to the extent so required under the provisions of Section 6.13  hereof.                 (e)   Prepayments  made  pursuant  to Section 2.05(c) and (d) above, first,  shall  be  applied to the Swing Line Loans, second, shall be applied ratably to the outstanding Committed Loans,  third,  shall  be  used  to  Cash  Collateralize  the  remaining  L/C  Obligations;  and, fourth, the  amount  remaining, if any, after the prepayment in full of all Swing Line Loans and Committed Loans outstanding  at such time and the Cash Collateralization of the remaining L/C Obligations in full may be retained by  the Borrowers for use in the ordinary course of its business.  Upon the drawing of any Letter of Credit  that has been Cash Collateralized, the funds held as Cash Collateral shall be applied (without any further  action by or notice to or from the Borrowers or any other Loan Party) to reimburse the L/C Issuer or the  Lenders, as applicable.         2.06  Termination or Reduction of Commitments                                         72 

 

                     (a)   The  Borrowers  may,  upon  irrevocable  notice  from  the  Lead  Borrower  to  the  Agent, terminate the Aggregate Commitments, the Letter of Credit Sublimit or the Swing Line Sublimit  or from time to time permanently reduce the Aggregate Commitments, the Letter of Credit Sublimit or the  Swing Line Sublimit, without premium or penalty; provided that (i) any such notice shall be received by  the Agent not later than 11:00 a.m. five Business Days prior to the date of termination or reduction, (ii)  any  such  partial  reduction  shall  be  in  an  aggregate  amount  of  $10,000,000  or  any  whole  multiple  of  $1,000,000  in  excess  thereof,  (iii)  the  Borrowers  shall  not  terminate  or  reduce  (A)  the  Aggregate  Commitments  if,  after  giving  effect  thereto  and  to  any  concurrent  prepayments  hereunder,  the Total  Outstandings would exceed the Aggregate Commitments, (B) the Letter of Credit Sublimit if, after giving  effect thereto, the Outstanding Amount of L/C Obligations not fully Cash Collateralized hereunder would  exceed the Letter of Credit Sublimit, and (C) the Swing Line Sublimit if, after giving effect thereto, and to  any  concurrent  payments  hereunder,  the  Outstanding  Amount  of  Swing  Line  Loans  hereunder  would  exceed  the  Swing  Line  Sublimit;  provided,  further,  that  such  notice  may  state  that  such  notice is  conditioned  upon  the  effectiveness  of  other  credit  facilities  or  the  receipt  of  the  proceeds  from  the  issuance of other Indebtedness or the occurrence of some other identifiable event or condition, in which  case such notice may be revoked by the Lead Borrower (by notice to the Agent on or prior to the specified  effective date of termination).               (b)   If, after giving effect to any reduction of the Aggregate Commitments, the Letter  of Credit Sublimit or the Swing Line Sublimit exceeds the amount of the Aggregate Commitments, such  Letter of Credit Sublimit or Swing Line Sublimit shall be automatically reduced by the amount of such  excess.                 (c)   The Agent will promptly notify the Lenders of any termination or reduction of  the  Letter  of  Credit  Sublimit, Swing  Line Sublimit  or  the  Aggregate  Commitments  under  this Section  2.06.   Upon  any  reduction  of  the  Aggregate  Commitments,  the  Commitment  of  each  Lender  shall  be  reduced by such Lender’s Applicable Percentage of such reduction amount.  All fees (including, without  limitation,  commitment  fees,  and  Letter  of  Credit  Fees)  and  interest  in  respect  of  the  Aggregate  Commitments accrued until the effective date of any termination of the Aggregate Commitments shall be  paid on the effective date of such termination.               (d)   In  connection  with  any  reduction  in  the  Aggregate  Commitments  prior  to  the  Maturity  Date,  if  any  Loan  Party  or  any  of  its  Subsidiaries  owns  any  Margin  Stock,  Borrowers  shall  deliver to the Agent an updated Form U-1 (with sufficient additional originals thereof for each Lender),  duly executed and delivered by the Borrowers, together with such other documentation as the Agent shall  reasonably request, in order to enable the Agent and the Lenders to comply with any of the requirements  under Regulations T, U or X of the FRB.         2.07  Repayment of Loans.               (a)   The Borrowers shall repay to the Lenders on the Termination Date the aggregate  principal amount of Committed Loans outstanding on such date.               (b)   To  the  extent  not  previously  paid,  the  Borrowers  shall  repay  the  outstanding  balance of the Swing Line Loans on the Termination Date.           2.08  Interest.               (a)   Subject  to  the  provisions  of Section 2.08(b) below,  (i)  each  LIBOR Rate  Loan  shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum  equal to the LIBOR Rate for such Interest Period plus the Applicable Margin; (ii) each Base Rate Loan                                         73 

 

         shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a  rate per annum equal to the Base Rate plus the Applicable Margin; and (iii) each Swing Line Loan shall  bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per  annum equal to the Base Rate plus the Applicable Margin.               (b)   (i)   If  any  Event  of  Default  exists  under Sections  8.01(a), (f) or (g),  all  outstanding Obligations shall thereafter bear interest at a fluctuating interest rate per annum at all times  equal to the Default Rate to the fullest extent permitted by applicable Laws.                       (ii)  If any other Event of Default exists, then the Agent may, and upon the  request  of  the  Required  Lenders  shall,  notify the  Lead  Borrower  that  all  outstanding  Obligations  shall  thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate and  thereafter  such  Obligations  shall  bear  interest  at  the  Default  Rate  to  the  fullest  extent  permitted  by  applicable Laws.                     (iii) Accrued and unpaid interest on past due amounts (including interest on  past due interest) shall be due and payable upon demand.               (c)   Interest  on  each  Loan  shall  be  due  and  payable  in  arrears  on  each  Interest  Payment Date applicable thereto and at such other times as may be specified herein.  Interest hereunder  shall be due and payable in accordance with the terms hereof before and after judgment, and before and  after the commencement of any proceeding under any Debtor Relief Law.         2.09  Fees         .  In addition to certain fees described in subsections (l) and (m) of Section 2.03:               (a)   Commitment Fee.  The Borrowers shall pay to the Agent for the account of each  Lender in accordance with its Applicable Percentage, a commitment fee calculated on a per annum basis  equal to 0.375% times the actual daily amount by which the Aggregate Commitments exceed the Total  Outstandings.  The commitment fee shall accrue at all times during the Availability Period, including at  any  time  during  which  one  or  more  of  the  conditions  in Article IV is  not  met, and  shall  be  due  and  payable quarterly in arrears on the first day after the end of each quarter, commencing with the first such  date to occur after the Closing Date, and on the last day of the Availability Period.  The commitment fee  shall be calculated quarterly in arrears, and if there is any change in the Applicable Margin during any  quarter, the actual daily amount shall be computed and multiplied by the Applicable Margin separately for  each period during such quarter that such Applicable Margin was in effect.                (b)   Other Fees.  The Borrowers shall pay to the Agent for its own account fees in the  amounts and at the times specified in the Fee Letter.  Such fees shall be fully earned when paid and shall  not be refundable for any reason whatsoever.         2.10  Computation of Interest and Fees         .  All computations of fees and interest shall be made on the basis of a 360-day year and actual  days elapsed.  Interest shall accrue on each outstanding Loan beginning, and including the day, such Loan  is  made  and  until  (but  not  including)  the  day  on  which  such  Loan  (or  such  portion  thereof)  is  paid,  provided that  any  Loan  that  is  repaid  on  the  same  day  on  which  it  is  made  shall,  subject  to Section  2.12(a), bear interest for one day.  Each determination by the Agent of an interest rate or fee hereunder  shall be conclusive and binding for all purposes, absent manifest error.                                          74 

 

               2.11  Evidence of Debt.                 (a)   The Credit Extensions made by each Lender shall be evidenced by one or more  accounts or records maintained by the Agent (the “Loan Account”) in the ordinary course of business.  In  addition, each Lender may record in such Lender’s internal records, an appropriate notation evidencing  the date and amount of each Loan from such Lender, each payment and prepayment of principal of any  such Loan, and each payment of interest, fees and other amounts due in connection with the Obligations  due  to  such  Lender.   The  accounts  or  records  maintained  by  the  Agent  and  each  Lender  shall  be  conclusive  absent  manifest  error  of  the  amount  of  the  Credit  Extensions  made  by  the  Lenders  to  the  Borrowers and the interest and payments thereon.  Any failure to so record or any error in doing so shall  not,  however,  limit  or  otherwise  affect  the  obligation  of  the  Borrowers  hereunder to  pay  any  amount  owing  with  respect  to  the  Obligations.   In the  event of  any  conflict  between  the  accounts  and  records  maintained  by  any  Lender  and  the  accounts  and  records  of  the  Agent  in  respect  of  such  matters,  the  accounts and records of the Agent shall control in the absence of manifest error.  Upon the request of any  Lender  made  through  the  Agent, the  Borrowers  shall  execute  and  deliver  to  such  Lender  (through  the  Agent) a Note, which shall evidence such Lender’s Loans in addition to such accounts or records.  Each  Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and  maturity of its Loans and payments with respect thereto.  Upon receipt of an affidavit of a Lender as to  the loss, theft, destruction or mutilation of such Lender’s Note and upon cancellation of such Note, the  Borrowers will issue, in lieu thereof, a replacement Note in favor of such Lender, in the same principal  amount thereof and otherwise of like tenor.               (b)   In  addition  to  the  accounts  and  records  referred  to  in Section 2.11(a),  each  Lender and the Agent shall maintain in accordance with its usual practice accounts or records evidencing  the purchases and sales by such Lender of participations in Letters of Credit and Swing Line Loans.  In  the event of any conflict between the accounts and records maintained by the Agent and the accounts and  records of any Lender in respect of such matters, the accounts and records of the Agent shall control in  the absence of manifest error.         2.12  Payments Generally; Agent’s Clawback.               (a)   General.   All  payments to  be  made  by  the  Loan  Parties  shall  be  made  without  condition  or  deduction  for  any  counterclaim,  defense,  recoupment  or  setoff.   Except  as  otherwise  expressly provided herein, all payments by the Borrowers hereunder shall be made to the Agent, for the  account of the respective Lenders to which such payment is owed, at the Agent’s Office in Dollars and in  immediately available funds not later than 2:00 p.m. on the date specified herein.  Subject to Section 2.14  hereof, the Agent will promptly distribute to each Lender its Applicable Percentage (or other applicable  share  as  provided  herein)  of  such  payment  in  like  funds  as  received  by  wire  transfer  to  such  Lender’s  Lending Office.  All payments received by the Agent after 2:00 p.m., at the option of the Agent, shall be  deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to  accrue.  If any payment to be made by the Borrowers shall come due on a day other than a Business Day,  payment shall be made on the next following Business Day, and such extension of time shall be reflected  in computing interest or fees, as the case may be.               (b)   (i)   Funding  by  Lenders;  Presumption  by Agent.   Unless  the  Agent  shall  have received notice from a Lender prior to the proposed date of any Borrowing of LIBOR Rate Loans  (or in the case of any Borrowing of Base Rate Loans, prior to 12:00 noon on the date of such Borrowing)  that such Lender will not make available to the Agent such Lender’s share of such Borrowing, the Agent  may assume that such Lender has made such share available on such date in accordance with Section 2.02  (or in the case of a Borrowing of Base Rate Loans, that such Lender has made such share available in  accordance with and at the time required by Section 2.02) and may, in reliance upon such assumption,                                         75 

 

         make available to the Borrowers a corresponding amount.  In such event, if a Lender has not in fact made  its share of the applicable Committed Borrowing available to the Agent, then the applicable Lender and  the Borrowers severally agree to pay to the Agent forthwith on demand such corresponding amount in  immediately available funds with interest thereon, for each day from and including the date such amount  is made available to the Borrowers to but excluding the date of payment to the Agent, at (A) in the case of  a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate determined by the  Agent  in  accordance  with  banking  industry  rules  on  interbank  compensation  plus  any  administrative  processing or similar fees customarily charged by the Agent in connection with the foregoing, and (B) in  the case of a payment to be made by the Borrowers, the interest rate applicable to Base Rate Loans.  If the  Borrowers and such Lender shall pay such interest to the Agent for the same or an overlapping period, the  Agent shall promptly remit to the Borrowers the amount of such interest paid by the Borrowers for such  period.   If  such  Lender  pays  its  share  of  the  applicable  Committed  Borrowing  to  the  Agent,  then  the  amount so paid shall constitute such Lender’s Committed Loan included in such Committed Borrowing.   Any payment by the Borrowers shall be without prejudice to any claim the Borrowers may have against a  Lender that shall have failed to make such payment to the Agent.                     (ii)  Payments by Borrowers; Presumptions by Agent.  Unless the Agent shall  have received notice from the Lead Borrower prior to the time at which any payment is due to the Agent  for  the  account  of  the  Lenders  or  the  L/C  Issuer  hereunder  that  the  Borrowers  will  not  make  such  payment, the Agent may assume that the Borrowers have made such payment on such date in accordance  herewith and may, in reliance upon such assumption, distribute to the Lenders or the L/C Issuer, as the  case may be, the amount due.  In such event, if the Borrowers have not in fact made such payment, then  each of the Lenders or the L/C Issuer, as the case may be, severally agrees to repay to the Agent forthwith  on demand the amount so distributed to such Lender or the L/C Issuer, in immediately available funds  with  interest  thereon,  for  each  day  from  and including  the  date  such  amount is  distributed to it  to  but  excluding the date of payment to the Agent, at the greater of the Federal Funds Rate and a rate determined  by the Agent in accordance with banking industry rules on interbank compensation.         A  notice  of the  Agent to  any  Lender or the  Lead Borrower  with  respect to  any  amount  owing  under this subsection (b) shall be conclusive, absent manifest error.               (c)   Failure  to  Satisfy  Conditions Precedent.   If  any  Lender  makes  available  to  the  Agent  funds  for  any  Loan  to  be  made  by such  Lender  as  provided  in  the  foregoing provisions  of  this  Article II, and such funds are not made available to the Borrowers by the Agent because the conditions to  the applicable Credit Extension set forth in Article IV are not satisfied or waived in accordance with the  terms hereof (subject to the provisions of the last paragraph of Section 4.02 hereof), the Agent shall return  such funds (in like funds as received from such Lender) to such Lender, without interest.               (d)   Obligations  of  Lenders  Several.   The  obligations  of  the  Lenders  hereunder  to  make Committed Loans, to fund participations in Letters of Credit and Swing Line Loans and to make  payments hereunder are several and not joint.  The failure of any Lender to make any Committed Loan, to  fund any such participation or to make any payment hereunder on any date required hereunder shall not  relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be  responsible  for  the  failure  of  any  other  Lender  to  so  make  its  Committed  Loan,  to  purchase  its  participation or to make its payment hereunder.               (e)   Funding  Source.   Nothing  herein  shall  be  deemed  to  obligate  any  Lender  to  obtain the funds for any Loan in any particular place or manner or to constitute a representation by any  Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.         2.13  Sharing of Payments by Lenders                                         76 

 

               .  If any Credit Party shall, by exercising any right of setoff or counterclaim or otherwise, obtain  payment  in  respect  of  any  principal  of,  interest  on,  or  other  amounts  with  respect  to,  any  of  the  Obligations resulting in such Lender’s receiving payment of a proportion of the aggregate amount of such  Obligations greater than its pro rata share thereof as provided herein (including as in contravention of the  priorities of payment set forth in Section 8.03), then the Credit Party receiving such greater proportion  shall  (a)  notify  the  Agent  of  such  fact,  and  (b)  purchase  (for  cash  at  face  value)  participations  in  the  Obligations of the other Credit Parties, or make such other adjustments as shall be equitable, so that the  benefit of all such payments shall be shared by the Credit Parties ratably and in the priorities set forth in  Section 8.03, provided that:               (i)   if  any  such  participations  or  subparticipations  are  purchased  and  all  or  any        portion of the payment giving rise thereto is recovered, such participations or subparticipations        shall be rescinded and the purchase price restored to the extent of such recovery, without interest;        and               (ii)  the provisions of this Section shall not be construed to apply to (x) any payment        made by the Loan Parties pursuant to and in accordance with the express terms of this Agreement        or  (y)  any  payment  obtained  by  a  Lender as  consideration  for  the  assignment  of  or  sale  of  a        participation  in  any  of  its  Committed  Loans  or  subparticipations  in  L/C  Obligations  or  Swing        Line Loans to any assignee or participant, other than to the Borrowers or any Subsidiary thereof        (as to which the provisions of this Section shall apply).         Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under  applicable  Law,  that  any  Lender  acquiring  a  participation  pursuant  to  the  foregoing  arrangements may  exercise against such Loan Party rights of setoff and counterclaim with respect to such participation as  fully as if such Lender were a direct creditor of such Loan Party in the amount of such participation.         2.14  Settlement Amongst Lenders                (a)   The  amount  of  each  Lender’s  Applicable  Percentage  of  outstanding  Loans  (including outstanding Swing Line Loans, shall be computed weekly (or more frequently in the Agent’s  discretion) and shall be adjusted upward or downward based on all Loans (including Swing Line Loans)  and repayments of Loans (including Swing Line Loans) received by the Agent as of 3:00 p.m. on the first  Business Day (such date, the “Settlement Date”) following the end of the period specified by the Agent.               (b)   The Agent shall deliver to each of the Lenders promptly after a Settlement Date a  summary statement of the amount of outstanding Committed Loans and Swing Line Loans for the period  and the amount of repayments received for the period.  As reflected on the summary statement, (i) the  Agent shall transfer to each Lender its Applicable Percentage of repayments, and (ii) each Lender shall  transfer to the Agent (as provided below) or the Agent shall transfer to each Lender, such amounts as are  necessary to insure that, after giving effect to all such transfers, the amount of Committed Loans made by  each Lender shall be equal to such Lender’s Applicable Percentage of all Committed Loans outstanding  as of such Settlement Date.  If the summary statement requires transfers to be made to the Agent by the  Lenders and is received prior to 1:00 p.m. on a Business Day, such transfers shall be made in immediately  available funds no later than 3:00 p.m. that day; and, if received after 1:00 p.m., then no later than 3:00  p.m.  on  the  next  Business  Day.  The  obligation  of  each  Lender  to  transfer  such  funds  is  irrevocable,  unconditional and without recourse to or warranty by the Agent.  If and to the extent any Lender shall not  have so made its transfer to the Agent, such Lender agrees to pay to the Agent, forthwith on demand such  amount, together with interest thereon, for each day from such date until the date such amount is paid to  the  Agent,  equal  to  the  greater  of  the  Federal  Funds  Rate  and  a  rate  determined  by  the  Agent  in                                         77 

 

         accordance with banking industry rules on interbank compensation plus any administrative, processing, or  similar fees customarily charged by the Agent in connection with the foregoing.         2.15  Uncommitted Increase in Commitments.               (a)   Request  for  Increase.   Provided  no  Default  or  Event  of  Default  then  exists  or  would  arise  therefrom,  upon  notice  to  the  Agent  (which  shall  promptly  notify  the  Lenders),  the  Lead  Borrower may from time to time, request an increase in the Aggregate Commitments by an amount (for  all such requests) not exceeding $15,000,000 (each a “Commitment Increase”, and, together with all such  increases, collectively, the “Commitment Increases”); provided that (i) any such request for an increase  shall be in a minimum amount of $5,000,000, and (ii) the amount of the Aggregate Commitments, as the  same may be increased pursuant to any Committed Increase and/or this Section 2.15(b), shall not exceed  $45,000,000 at any time.  At the time of sending such notice, the Lead Borrower (in consultation with the  Agent) shall specify the time period within which each Lender is requested to respond (which shall in no  event be less than ten Business Days from the date of delivery of such notice to the Lenders).                 (b)   Lender  Elections  to  Increase.   Each  Lender  shall  notify  the  Agent  within  such  time period whether or not it agrees to increase its Commitment and, if so, whether by an amount equal  to,  greater  than,  or  less  than  its  Applicable  Percentage  of  such  requested  increase.   Any  Lender  not  responding within such time period shall be deemed to have declined to increase its Commitment.                 (c)   Notification  by  Agent;  Additional  Lenders.   The  Agent  shall  notify  the  Lead  Borrower and each Lender of the Lenders’ responses to each request made hereunder.  To achieve the full  amount  of  a  requested increase  and  subject  to the  approval  of  the  Agent  (which  approval  shall  not  be  unreasonably withheld), to the extent that the existing Lenders decline to increase their Commitments, or  decline  to  increase  their  Commitments  to  the  amount  requested  by  the  Lead  Borrower,  the  Agent,  in  consultation  with  the  Lead  Borrower,  will  use  its  reasonable  efforts  to  arrange  for  other  Eligible  Assignees to become a Lender hereunder and to issue commitments in an amount equal to the amount of  the  increase  in  the  Aggregate  Commitments  requested  by  the  Lead  Borrower  and  not  accepted  by  the  existing  Lenders  (and  the  Lead  Borrower  may  also  invite  additional  Eligible  Assignees  to  become  Lenders) (each, an “Additional Commitment Lender”), provided, however, that without the consent of the  Agent, at no time shall the Commitment of any Additional Commitment Lender be less than $5,000,000.                 (d)   Effective Date and Allocations.  If the Aggregate Commitments are increased in  accordance  with  this  Section,  the  Agent,  in  consultation  with  the  Lead  Borrower,  shall  determine  the  effective date (the “Increase Effective Date”) and the final allocation of such increase.  The Agent shall  promptly  notify  the  Lead  Borrower  and  the  Lenders  of  the  final  allocation  of  such  increase  and  the  Increase Effective Date and on the Increase Effective Date (i) the Aggregate Commitments under, and for  all  purposes  of,  this  Agreement  shall  be  increased  by  the  aggregate  amount  of  such  Commitment  Increases, (ii) Schedule 2.01 shall be deemed modified, without further action by any party, to reflect the  revised Commitments and Applicable Percentages of the Lenders and (iii) all dollar thresholds contained  in  the  definitions  of  “Payment  Conditions”  and  in Section  7.15 shall,  at  the  request  of  the  Agent,  automatically  be  proportionately  increased  in  accordance  with  the  amount of  each  such  Commitment  Increase, without further action or consent by any party.                 (e)   Conditions to Effectiveness of Commitment Increase.  As a condition precedent  to such Commitment Increase, (i) the Lead Borrower shall deliver to the Agent a certificate of each Loan  Party  dated  as  of  the  Increase  Effective  Date  (in  sufficient  copies  for  each  Lender)  signed  by  a  Responsible Officer of such Loan Party (A) certifying and attaching the resolutions adopted by such Loan  Party  approving  or  consenting  to  such  Commitment  Increase,  and  (B)  in  the  case  of  the  Borrowers,  certifying that, before and after giving effect to such Commitment Increase, (1) the representations and                                         78 

 

         warranties  contained  in Article V and  the  other Loan  Documents  are  true  and  correct  in  all  material  respects  on  and  as  of  the  Increase  Effective  Date,  except  to  the  extent  that  such  representations  and  warranties are qualified by materiality, in which case they shall be true and correct in all respects, and  except to the extent that such representations and warranties specifically refer to an earlier date, in which  case they are true and correct as of such earlier date, and except that for purposes of this Section 2.15, the  representations  and  warranties  contained  in subsections (a) and (b) of Section 5.05 shall  be  deemed  to  refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01,  and (2) no Default or Event of Default exists or would arise therefrom, (ii) the Borrowers, the Agent, and  any Additional Commitment Lender shall have executed and delivered a joinder agreement to the Loan  Documents in such form and substance as the Agent shall reasonably require; (iii) the Borrowers shall  have  paid  such  fees  and  other  compensation  to,  the  Additional  Commitment  Lenders  as  the  Lead  Borrower  and  such  Additional  Commitment  Lenders  shall  agree;  (iv)  if  requested  by  the  Agent,  the  Borrowers  shall  deliver  to the  Agent  and  the  Lenders  an  opinion  or  opinions,  in  form  and  substance  reasonably satisfactory to the Agent, from counsel to the Borrowers reasonably satisfactory to the Agent  and dated such date; (v) the Borrowers and the Additional Commitment Lender shall have delivered such  other  instruments,  documents  and  agreements  as  the  Agent  may  reasonably  have  requested;  (vi)  no  Default or Event of Default exists; (vii) if any Loan Party or any of its Subsidiaries owns any Margin  Stock, Borrowers  shall  deliver  to the  Agent  an  updated  Form  U-1  (with  sufficient  additional  originals  thereof  for  each  Lender),  duly  executed  and  delivered  by  the  Borrowers,  together  with  such  other  documentation  as the  Agent  shall  reasonably  request,  in  order  to  enable  the  Agent  and  the  Lenders  to  comply with any of the requirements under Regulations T, U or X of the FRB; and (viii) if requested by  the Agent, the Borrowers shall deliver to the Agent and the Lenders duly executed amendments to (or  consents under)  the  Growth  Capital  Subordinated  Loan  Agreement  and  Growth  Capital  Subordination  Agreement addressing (or consenting to) such Commitment Increase, in each case in form and substance  reasonably satisfactory to the Agent.  The Borrowers shall prepay any Committed Loans outstanding on  the  Increase  Effective  Date  (and  pay  any  additional  amounts  required  pursuant  to Section  2.05)  to the  extent  necessary  to  keep  the  outstanding  Committed  Loans  ratable  with  any  revised  Applicable  Percentages arising from any nonratable increase in the Commitments under this Section.               (f)   Conflicting Provisions.  This Section shall supersede any provisions in Sections  2.13 or 10.01 to the contrary.                                     ARTICLE III                   TAXES, YIELD PROTECTION AND ILLEGALITY;                        APPOINTMENT OF LEAD BORROWER         3.01  Taxes.                 (a)   Payments  Free  of  Taxes.   Any  and  all  payments  by  or  on  account  of  any  obligation of the Borrowers hereunder or under any other Loan Document shall be made free and clear of  and without reduction or withholding for any Taxes, except as required by applicable Law.  If applicable  Law (as determined in good faith discretion of the applicable withholding agent) requires the deduction  and  withholding  of  any  Tax  from  any  such  payment,  then  the  applicable  withholding  agent  shall  be  entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld  to the relevant Governmental Authority in accordance with applicable Law, provided that if such Tax is  an Indemnified Tax, then the sum payable by the Borrowers shall be increased as necessary so that after  making  all  required  deductions  (including  deductions  applicable  to  additional  sums payable  under  this  Section)  the  Agent,  Lender,  L/C  Issuer,  or  other  applicable  recipient,  as  the  case  may  be,  receives  an  amount equal to the sum it would have received had no such deductions or withholdings for Indemnified  Taxes been made.                                         79 

 

                     (b)   Payment of Other Taxes by the Borrowers.  Without limiting the provisions of  subsection (a) above,  the  Borrowers  shall  timely  pay  any  Other  Taxes  to  the  relevant  Governmental  Authority in accordance with applicable Law.               (c)   Indemnification  by  the  Loan  Parties.   The  Loan  Parties  shall  indemnify  the  Agent, each Lender and the L/C Issuer, within 10 days after demand therefor, for the full amount of any  Indemnified  Taxes  (including  Indemnified  Taxes  imposed  or  asserted  on  or  attributable  to  amounts  payable under this Section) paid by the Agent, such Lender or the L/C Issuer, as the case may be, and any  penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such  Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.   A certificate as to the amount of such payment or liability delivered to the Lead Borrower by a Lender or  the L/C Issuer (with a copy to the Agent), or by the Agent on its own behalf or on behalf of the Agent, a  Lender or the L/C Issuer, shall be conclusive absent manifest error.               (d)   Evidence of Payments.  As soon as practicable after any payment of Indemnified  Taxes or Other Taxes by the Borrowers to a Governmental Authority, the Lead Borrower shall deliver to  the 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 Agent.               (e)   Status of Lenders.  Any Lender that is entitled to an exemption from or reduction  of withholding Tax with respect to payments hereunder or under any other Loan Document shall deliver  to the Lead Borrower (with a copy to the Agent), at the time or times prescribed by applicable Law or  reasonably  requested  by  the  Lead  Borrower  or  the  Agent,  such  properly  completed  and  executed  documentation prescribed by applicable Law or reasonably requested by the Lead Borrower or the Agent  as will permit such payments to be made without withholding or at a reduced rate of withholding. Such  delivery shall be provided on the Closing Date and on or before such documentation expires or becomes  obsolete  or after  the  occurrence  of  an  event  requiring  a  change  in  the  documentation  most  recently  delivered.  In addition, any Lender, if requested by the Lead Borrower or the Agent, shall deliver such  other documentation prescribed by applicable Law or reasonably requested by the Lead Borrower or the  Agent as will enable the Lead Borrower or the Agent to determine whether or not such Lender is subject  to backup withholding or information reporting requirements.         Without limiting the generality of the foregoing, in the event that any Borrower is resident for tax  purposes in the United States, any Lender that is a U.S. Person shall deliver to the Lead Borrower and the  Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which  such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the request  of  the  Lead Borrower  or  the  Agent),  executed  copies  of  IRS  Form W-9  certifying  that  such  Lender is  exempt  from  U.S.  federal  backup  withholding  tax,  and  any  Foreign  Lender  shall  deliver  to  the  Lead  Borrower and the Agent (in such number of copies as shall be requested by the recipient) on or prior to  the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time  thereafter upon the request of the Lead Borrower or the Agent, but only if such Foreign Lender is legally  entitled to do so), whichever of the following is applicable:                     (i)   duly completed copies of IRS Form W-8BEN  or IRS Form W-8BEN-E        establishing an exemption from, or a reduction of, U.S. federal withholding Tax pursuant to the        applicable articles of an income tax treaty to which the United States is a party,                     (ii)  duly completed copies of IRS Form W-8ECI,                                          80 

 

                           (iii) in the case of a Foreign Lender claiming the benefits of the exemption        for portfolio interest under section 881(c) of the Code, (x) a certificate substantially in the form of        Exhibit  I-1 to  the  effect  that  such  Foreign  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  Borrowers  within  the        meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described        in section 881(c)(3)(C) of the Code and (y) duly completed copies of  IRS Form W-8BEN or IRS        Form W-8BEN-E,                      (iv)  to  the  extent  a Foreign  Lender  is  not  the  beneficial  owner,  executed        copies  of  IRS  Form  W-8IMY,  accompanied  by  IRS  Form  W-8ECI,  IRS  Form  W-8BEN,  IRS        Form W 8BEN-E, a certificate substantially in the form of Exhibit I-2 or Exhibit I-3, IRS Form        W-9,  and/or  other  certification  documents  from  each beneficial  owner,  as  applicable;  provided        that  if  the  Foreign  Lender  is  a  partnership  and  one  or  more  direct  or  indirect  partners  of  such        Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a        certificate  substantially  in  the  form  of Exhibit  I-4 on  behalf  of  each  such  direct  and  indirect        partner; or                     (v)   any  other  form  prescribed  by  applicable  Law  as  a  basis  for  claiming        exemption from or a reduction in United States Federal withholding tax duly completed together        with such supplementary documentation as may be prescribed by applicable Law to permit the        Lead Borrower to determine the withholding or deduction required to be made.         If  a  payment  made  to  a  Lender  under  any  Loan  Document  would  be  subject to  U.S.  federal  income 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  Lead  Borrower  and  the  Agent  (or,  in  the  case  of  a  Participant, to the Lender granting the participation only) at the time or times prescribed by law and at  such  time  or  times  reasonably  requested  by  the  Lead  Borrower  and  the  Agent  (or,  in  the  case  of  a  Participant,  the  Lender  granting  the  participation)  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 Lead Borrower and the Agent (or, in the case of a Participant, the Lender  granting  the  participation)  as  may  be  necessary  for  the  Agent  or  the  Borrowers  to  comply  with  their  obligations  under  FATCA  and  to  determine  that  such  Lender  has  complied  with  such  Lender’s  obligations under FATCA or to determine the amount to deduct and withhold from such payment.  Solely  for purposes of this clause (f), “FATCA” shall include any amendments made to FATCA after the date of  this Agreement.  For purposes of this Section, the term “applicable law” includes FATCA.         To the extent legally permissible, the Agent, in the event that the Agent is a U.S. Person, shall  deliver an IRS Form W-9 to the Lead Borrower and if the Agent is not a U.S. Person, the applicable IRS  Form  W-8  certifying  its  exemption  from  U.S.  withholding  Taxes  with  respect  to  amounts  payable  hereunder, on or prior to the date the Agent becomes a party to this Agreement.               (f)   Treatment  of  Certain  Refunds.   If  the  Agent,  any  Lender  or  the  L/C  Issuer  determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it  has  been  indemnified  by  the  Borrowers  or  with  respect  to  which  the  Borrowers  have  paid  additional  amounts pursuant to this Section, it shall pay to the Borrowers an amount equal to such refund (but only  to  the  extent  of  indemnity  payments  made,  or  additional  amounts  paid,  by  the  Borrowers  under  this  Section  with  respect  to  the  Taxes  or  Other  Taxes  giving  rise  to  such  refund),  net  of  all  out-of-pocket  expenses of the Agent, such Lender or the L/C Issuer, as the case may be, and without interest (other than  any interest paid by the relevant Governmental Authority with respect to such refund), provided that the  Borrowers, upon the request of the Agent, such Lender or the L/C Issuer, agree to repay the amount paid                                         81 

 

         over to the Borrowers (plus any penalties, interest or other charges imposed by the relevant Governmental  Authority) to the Agent, such Lender or the L/C Issuer in the event the Agent, such Lender or the L/C  Issuer  is  required  to  repay such  refund to  such  Governmental  Authority.   This  subsection  shall  not  be  construed  to  require  the  Agent,  any  Lender  or the  L/C  Issuer  to  make  available  its tax  returns  (or  any  other information relating to its taxes that it deems confidential) to the Borrowers or any other Person.               (g)   Indemnification by Lenders and L/C Issuers.  Each Lender and L/C Issuer shall  severally  indemnify  the  Agent,  within  10  days  after  demand  therefor,  for  (i)  any  Indemnified  Taxes  attributable  to  such  Lender  or  L/C  Issuer  (but  only to  the  extent  that  the  Borrowers  have  not  already  indemnified the Agent for such Indemnified Taxes and without limiting the obligation of the Borrowers to  do  so),  (ii)  any  Taxes  attributable  to  such  Lender’s  failure  to  comply  with  the  provisions  of  Section  10.06(d) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to  such Lender or L/C Issuer, in each case, that are payable or paid by the Agent in connection with any  Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not  such  Taxes  were  correctly  or  legally  imposed  or  asserted  by  the  relevant  Governmental  Authority.   A  certificate as to the amount of such payment or liability delivered to any Lender by the Agent shall be  conclusive absent manifest error.  Each Lender hereby authorizes the Agent to set off and apply any and  all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the  Agent to the Lender from any other source against any amount due to the Agent under this paragraph (h).                (h)   Survival.   Each  party’s  obligations  under  this  Section  shall  survive  the  resignation or replacement of the Agent or any assignment of rights by, or the replacement of, a Lender or  L/C  Issuer,  the  termination  of  the  Commitments  and  the  repayment,  satisfaction  or  discharge  of  all  obligations under any Loan Document.         3.02  Illegality         .  If  any  Lender  determines  that  any  Law  has  made  it  unlawful,  or  that  any  Governmental  Authority  has  asserted  that  it  is  unlawful,  for  any  Lender  or  its  applicable  Lending  Office  to  make,  maintain or fund LIBOR Rate Loans, or to determine or charge interest rates based upon the LIBOR Rate,  or  any  Governmental  Authority  has  imposed  material  restrictions  on  the  authority  of  such  Lender  to  purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on notice thereof by  such Lender to the Lead Borrower through the Agent, any obligation of such Lender to make or continue  LIBOR Rate Loans or to convert Base Rate Loans to LIBOR Rate Loans shall be suspended until such  Lender notifies the Agent and the Lead Borrower that the circumstances giving rise to such determination  no longer exist.  Upon receipt of such notice, the Borrowers shall, upon demand from such Lender (with a  copy to the Agent), prepay or, if applicable, convert all LIBOR Rate Loans of such Lender to Base Rate  Loans,  either  on  the  last  day  of  the  Interest  Period  therefor,  if  such  Lender  may  lawfully  continue  to  maintain such LIBOR Rate Loans to such day, or immediately, if such Lender may not lawfully continue  to maintain such LIBOR Rate Loans.  Upon any such prepayment or conversion, the Borrowers shall also  pay accrued interest on the amount so prepaid or converted.         3.03  Inability to Determine Rates         .  If  the  Required  Lenders  determine  that  for  any  reason  in  connection  with  any  request  for  a  LIBOR Rate Loan or a conversion to or continuation thereof that (a) Dollar deposits are not being offered  to banks in the London interbank market for the applicable amount and Interest Period of such LIBOR  Rate  Loan,  (b) adequate  and  reasonable  means  do  not  exist  for  determining  the  LIBOR  Rate  for  any  requested Interest Period with respect to a proposed LIBOR Rate Loan , or (c) the LIBOR Rate for any  requested  Interest Period  with  respect  to  a  proposed LIBOR Rate  Loan does  not  adequately  and  fairly  reflect  the  cost  to  such  Lenders  of  funding  such  Loan,  the  Agent  will  promptly  so  notify  the  Lead                                         82 

 

         Borrower and each Lender.  Thereafter, the obligation of the Lenders to make or maintain LIBOR Rate  Loans  shall be  suspended  until the  Agent  (upon  the  instruction  of  the  Required  Lenders)  revokes such  notice.  Upon receipt of such notice, the Lead Borrower may revoke any pending request for a Borrowing  of, conversion to or continuation of LIBOR Rate Loans or, failing that, will be deemed to have converted  such  request  into  a  request  for  a  Committed  Borrowing  of  Base  Rate  Loans  in  the  amount  specified  therein.         3.04  Increased Costs; Reserves on LIBOR Rate Loans.                 (a)   Increased Costs Generally.  If any (i) Change in Law, or (ii) compliance by any  Lender or the L/C Issuer with any direction, request, or requirement (irrespective of whether having the  force of law) of any Governmental Authority or monetary authority (including Regulation D of the FRB),  shall:                     (A)   impose,  modify  or  deem  applicable  any  reserve,  special  deposit,        compulsory loan, insurance charge or similar requirement against assets of, deposits with or for        the account of, or credit extended or participated in (including, without limitation, in respect of        any  Letter  of  Credit)  by,  any  Lender  (except  any  reserve  requirement  reflected  in  the  LIBOR        Rate) or the L/C Issuer;                      (B)   subject  any  Lender  or  the  L/C  Issuer  to  any  Taxes  (other  than        Indemnified Taxes, Taxes described in clauses (b) through (e) of the definition of Excluded Taxes        and  Connection  Income  Taxes)  with  respect  to  this  Agreement,  any  Letter  of  Credit,  any        participation in a Letter of Credit or any LIBOR Rate Loan made by it; or                      (C)   impose on any Lender or the L/C Issuer or the London interbank market        any  other  condition,  cost  or  expense  affecting  this  Agreement  or  LIBOR Rate  Loans  made  by        such Lender or any Letter of Credit or participation therein;   and  the  result  of  any  of  the  foregoing  shall  be  to  increase  the  cost  to  such  Lender  of  making  or  maintaining  any  LIBOR  Rate  Loan  (or  of  maintaining  its  obligation  to  make  any  such  Loan),  or  to  increase the cost to such Lender or the L/C Issuer of participating in, issuing or maintaining any Letter of  Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the  amount  of  any  sum  received  or  receivable  by  such  Lender  or  the  L/C  Issuer  hereunder  (whether  of  principal,  interest  or  any  other  amount)  then,  upon  request  of  such  Lender  or the  L/C  Issuer,  the  Borrowers  will  pay  to  such  Lender  or  the  L/C  Issuer,  as  the  case  may  be,  such  additional  amount  or  amounts as will compensate such Lender or the L/C Issuer, as the case may be, for such additional costs  incurred or reduction suffered, together with interest on such amount from the date of such demand until  payment in full thereof at the rate then applicable to Base Rate Loans hereunder.               (b)   Capital  Requirements.   If  any  Lender  or  the  L/C  Issuer  determines  that  any  Change in Law affecting such Lender or the L/C Issuer or any Lending Office of such Lender or such  Lender’s or the L/C Issuer’s holding company, if any, regarding capital requirements has or would have  the effect of reducing the rate of return on such Lender’s or the L/C Issuer’s capital or on the capital of  such  Lender’s  or  the  L/C  Issuer’s  holding  company,  if  any,  as  a  consequence  of  this  Agreement,  the  Commitments of such Lender or the Loans made by, or participations in Letters of Credit held by, such  Lender, or the Letters of Credit issued by the L/C Issuer, to a level below that which such Lender or the  L/C  Issuer  or  such  Lender’s  or  the  L/C  Issuer’s  holding  company  could  have  achieved  but  for  such  Change in Law (taking into consideration such Lender’s or the L/C Issuer’s policies and the policies of  such Lender’s or the L/C Issuer’s holding company with respect to capital adequacy), then from time to  time the Borrowers will pay to such Lender or the L/C Issuer, as the case may be, such additional amount                                         83 

 

         or amounts as will compensate such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding  company for any such reduction suffered.               (c)   Certificates  for  Reimbursement.   A  certificate  of  a  Lender  or  the  L/C  Issuer  setting forth the amount or amounts necessary to compensate such Lender or the L/C Issuer or its holding  company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to the  Lead Borrower shall be conclusive absent manifest error.  The Borrowers shall pay such Lender or the  L/C  Issuer,  as  the  case  may  be,  the  amount  shown  as  due  on  any  such  certificate  within 10  days  after  receipt thereof.               (d)   Delay in Requests.  Failure or delay on the part of any Lender or the L/C Issuer  to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a waiver  of  such  Lender’s  or  the  L/C  Issuer’s  right  to  demand  such  compensation, provided that the  Borrowers  shall not be required to compensate a Lender or the L/C Issuer pursuant to the foregoing provisions of this  Section for any increased costs incurred or reductions suffered more than nine months prior to the date  that such Lender or the L/C Issuer, as the case may be, notifies the Lead Borrower of the Change in Law  giving  rise  to  such  increased  costs  or  reductions  and of  such  Lender’s  or the  L/C  Issuer’s intention  to  claim  compensation  therefor  (except  that,  if  the  Change  in  Law  giving  rise  to  such  increased  costs  or  reductions is retroactive, then the nine-month period referred to above shall be extended to include the  period of retroactive effect thereof).               (e)   Reserves  on  LIBOR  Rate  Loans.   The Borrowers  shall  pay to  each  Lender,  as  long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of  or  including  Eurocurrency  funds  or  deposits  (currently  known  as  "Eurocurrency  liabilities"),  additional  interest  on  the  unpaid  principal  amount  of  each  LIBOR  Rate  Loan  equal  to  the  actual  costs of  such  reserves  allocated  to  such  Loan  by  such  Lender  (as  determined  by  such  Lender  in  good  faith,  which  determination  shall  be  conclusive),  which  shall  be  due  and  payable  on  each  date  on  which  interest  is  payable on such Loan, provided the Lead Borrower shall have received at least 10 days’ prior notice (with  a copy to the Agent) of such additional interest from such Lender.  If a Lender fails to give notice 10 days  prior to the relevant Interest Payment Date, such additional interest shall be due and payable 10 days from  receipt of such notice.         3.05  Compensation for Losses         .  Upon demand of any Lender (with a copy to the Agent) from time to time, the Borrowers shall  promptly  compensate  such  Lender  for  and  hold  such  Lender  harmless  from  any  loss,  cost  or  expense  incurred by it as a result of:          (a)  any continuation, conversion, payment or prepayment of any Loan other than a Base Rate         Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary,         mandatory, automatic, by reason of acceleration, or otherwise);          (b)  any failure by the Borrowers (for a reason other than the failure of such Lender to make a         Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date         or in the amount notified by the Lead Borrower; or          (c)  any assignment of a LIBOR Rate Loan on a day other than the last day of the Interest         Period therefor as a result of a request by the Lead Borrower pursuant to Section 10.13;   including any  loss  of  anticipated profits and  any  loss  or  expense  arising  from  the  liquidation  or  reemployment  of  funds  obtained  by  it  to  maintain  such  Loan  or  from  fees  payable  to  terminate  the                                         84 

 

         deposits from which such funds were obtained.  The Borrowers shall also pay any customary administrative  fees charged by such Lender in connection with the foregoing.         For purposes of calculating amounts payable by the Borrowers to the Lenders under this Section  3.05, each Lender shall be deemed to have funded each LIBOR Rate Loan made by it at the LIBOR Rate  for such Loan by a matching deposit or other borrowing in the London interbank market for a comparable  amount  and  for  a  comparable  period,  whether  or  not  such  LIBOR  Rate  Loan  was  in  fact  so  funded.   Anything to the contrary contained herein notwithstanding, neither the Agent, nor any Lender, nor any of  their  Participants,  is  required  to  acquire  eurodollar  deposits  to  fund  or  otherwise  match  fund  any  Obligation as to which interest accrues based on the LIBOR Rate.         A certificate of the Agent or a Lender delivered to the Lead Borrower setting forth the amount that  the  Agent  or  such  Lender  is  entitled  to  receive  pursuant  to  this Section  3.05 shall  be  conclusive  absent  manifest error.  The Borrowers shall pay such amount to the Agent or such Lender, as the case may be, within  10 days after receipt thereof.         3.06  Mitigation Obligations; Replacement of Lenders.                 (a)   Designation of a Different Lending Office.  If any Lender requests compensation  under Section 3.04, or  the Borrowers  are  required  to pay  any  additional  amount to  any  Lender  or  any  Governmental Authority for the account of any Lender pursuant to Section 3.01, or if any Lender gives a  notice  pursuant  to Section 3.02,  then  such  Lender  shall  use  reasonable  efforts  to  designate  a  different  Lending  Office  for  funding  or  booking  its  Loans  hereunder  or  to  assign  its  rights  and  obligations  hereunder  to  another  of  its  offices,  branches  or  affiliates,  if,  in  the  judgment  of  such  Lender,  such  designation  or  assignment  (i)  would  eliminate  or  reduce  amounts  payable  pursuant  to Section 3.01 or  3.04, as the case may be, in the future, or eliminate the need for the notice pursuant to Section 3.02, as  applicable, and (ii) in each case, would not subject such Lender to any unreimbursed cost or expense and  would  not  otherwise  be  disadvantageous  to  such  Lender.   The  Borrowers  hereby  agree  to  pay  all  reasonable  costs  and  expenses  incurred  by  any  Lender  in  connection  with  any  such  designation  or  assignment.               (b)   Replacement  of  Lenders.   If  any  Lender  requests  compensation  under Section  3.04, or if the Borrowers are required to pay any additional amount to any Lender or any Governmental  Authority for the account of any Lender pursuant to Section 3.01, the Borrowers may replace such Lender  in accordance with Section 10.13.         3.07  Survival         .  All  of  the  Borrowers’  obligations  under  this Article III shall  survive  termination  of  the  Aggregate Commitments and repayment of all other Obligations hereunder.         3.08  Designation of Lead Borrower as Borrowers’ Agent.               (a)   Each Borrower hereby irrevocably designates and appoints the Lead  Borrower  as such Borrower’s agent to obtain Credit Extensions, the proceeds of which shall be available to each  Borrower for such uses as are permitted under this Agreement.  As the disclosed principal for its agent,  each Borrower shall be obligated to each Credit Party on account of Credit Extensions so made as if made  directly  by  the  applicable  Credit  Party  to  such  Borrower,  notwithstanding  the  manner  by  which  such  Credit  Extensions  are  recorded  on  the  books  and  records  of  the  Lead  Borrower  and  of  any  other  Borrower.   In  addition,  each  Loan  Party  other  than  the  Borrowers  hereby  irrevocably  designates  and                                          85 

 

         appoints the Lead Borrower as such Loan Party’s agent to represent such Loan Party in all respects under  this Agreement and the other Loan Documents.               (b)   Each Borrower recognizes that credit available to it hereunder is in excess of and  on  better  terms  than it  otherwise  could  obtain  on  and  for  its  own  account  and  that  one  of the  reasons  therefor is its joining in the credit facility contemplated herein with all other Borrowers.  Consequently,  each Borrower hereby assumes and agrees to discharge all Obligations of each of the other Borrowers.               (c)   The Lead Borrower shall act as a conduit for each Borrower (including itself, as a  “Borrower”) on whose behalf the Lead Borrower has requested a Credit Extension.  Neither the Agent nor  any other Credit Party shall have any obligation to see to the application of such proceeds therefrom.                                    ARTICLE IV                 CONDITIONS PRECEDENT TO CREDIT EXTENSIONS         4.01  Conditions of Initial Credit Extension         .  The obligation of the L/C Issuer and each Lender to make its initial Credit Extension hereunder  is subject to satisfaction of the following conditions precedent (except to the extent any of the following  conditions precedent are permitted to be satisfied after the Closing Date in accordance with Section 6.21):           (a)  The Agent’s receipt of the following, each of which shall be originals, telecopies or other         electronic  image  scan  transmission  (e.g.,  “pdf”  or  “tif  ”  via  e-mail)  (followed  promptly  by         originals to the extent requested by the Agent or any Lender) unless otherwise specified, each         properly  executed  by  a  Responsible  Officer  of  the  signing  Loan  Party  or  the  Lenders,  as         applicable, each dated the Closing Date (or, in the case of certificates of governmental officials,         a recent date before the Closing Date) and each in form and substance satisfactory to the Agent:                     (i)   executed  counterparts  of  this  Agreement  sufficient  in  number  for              distribution to the Agent, each Lender and the Lead Borrower;                     (ii)  a Note executed by the Borrowers in favor of each Lender requesting a              Note;                     (iii) such  certificates  of  resolutions  or  other  action,  incumbency  certificates              and/or  other  certificates  of  Responsible  Officers  of  each  Loan  Party  as the  Agent  may              require evidencing (A) the authority of each Loan Party to enter into this Agreement and              the other Loan Documents to which such Loan Party is a party or is to become a party              and  (B)  the  identity,  authority  and  capacity  of  each  Responsible  Officer  thereof              authorized  to  act  as  a  Responsible  Officer  in  connection  with  this  Agreement  and  the              other Loan Documents to which such Loan Party is a party or is to become a party;                     (iv)  copies  of  each  Loan  Party’s  Organization  Documents  and  such  other              documents and certifications as the Agent may reasonably require to evidence that each              Loan Party is duly organized or formed, and that each Loan Party is validly existing, in              good  standing  and  qualified  to  engage  in  business  in  each  jurisdiction  where  its              ownership, lease or operation of properties or the conduct of its business requires such              qualification, except to the extent that failure to so qualify in such jurisdiction could not              reasonably be expected to have a Material Adverse Effect;                                          86 

 

                            (v)   a  favorable  opinion  of  Cooley  LLP,  counsel  to  the  Loan  Parties,  addressed to the Agent and each Lender, as to such matters concerning the Loan Parties  and the Loan Documents as the Agent may reasonably request;          (vi)  a  certificate  signed  by  a  Responsible  Officer  of  the  Lead  Borrower  certifying  (A)  that  the  conditions  specified  in Sections 4.02(a) and (b) have  been  satisfied, (B) that there has been no event or circumstance since the date of the Audited  Financial  Statements  that  has  had  or  could be  reasonably  expected  to  have,  either  individually  or  in the  aggregate,  a  Material  Adverse Effect,  (C) to the Solvency  of the  Loan Parties as of the Closing Date after giving effect to the transactions contemplated  hereby,  and  (D)  either  that  (1)  no  consents,  licenses  or  approvals  are  required  in  connection  with  the  execution,  delivery  and  performance  by  such  Loan  Party  and  the  validity against such Loan Party of the Loan Documents to which it is a party, or (2) that  all  such  consents,  licenses  and  approvals  have  been  obtained  and  are  in  full  force  and  effect;         (vii) evidence  that  all  insurance  required  to  be  maintained  pursuant  to  the  Loan  Documents  and  all  endorsements  in  favor  of  the  Agent  required  under  the  Loan  Documents have been obtained and are in effect;         (viii) a payoff letter from the agent for the lenders under the Existing Credit  Agreement satisfactory in form and substance to the Agent evidencing that the Existing  Credit Agreement has been or concurrently with the Closing Date is being terminated, all  obligations thereunder are being paid in full, and all Liens securing obligations under the  Existing  Credit  Agreement  have  been  or  concurrently  with  the  Closing  Date  are  being  released;          (ix)  the  Security  Documents  and  certificates  evidencing  any  stock  being  pledged  thereunder,  together  with  undated  stock  powers  executed  in  blank,  each  duly  executed by the applicable Loan Parties;         (x)   the  Growth  Capital  Subordination  Agreement,  duly  executed  by  the  Growth  Capital  Subordinated  Agent  and  acknowledged  and  agreed to  by  the  Loan  Parties;          (xi)  all  other  Loan  Documents,  each  duly  executed  by  the  applicable  Loan  Parties;         (xii) (A)   appraisals  (based  on  net  liquidation  value)  by  a  third  party  appraiser acceptable to the Agent of all Inventory of the Loan Parties, the results of which  are  satisfactory  to  the  Agent  and  (B)  a  written  report  regarding  the  results  of  a  commercial finance examination of the Loan Parties, which shall be satisfactory to the  Agent;         (xiii) results of searches or other evidence reasonably satisfactory to the Agent  (in  each  case  dated  as  of  a  date  reasonably  satisfactory  to  the  Agent)  indicating  the  absence of Liens on the assets of the Loan Parties, except for Permitted Encumbrances  and Liens for which termination statements and releases, satisfactions and discharges of  any mortgages, and releases  or subordination agreements satisfactory to the Agent are  being  tendered  concurrently  with  such  extension  of  credit  or  other  arrangements                              87 

 

                           satisfactory  to  the  Agent  for  the  delivery  of  such  termination  statements  and  releases,       satisfactions and discharges have been made;              (xiv) (A)   all  documents  and  instruments,  including  Uniform  Commercial       Code  and  PPSA  financing  statements,  required  by  law  or  reasonably  requested  by  the       Agent to be filed, registered or recorded to create or perfect the first priority Liens (other       than Permitted Encumbrances having priority over the Lien of the Agent by operation of       applicable  Law)  intended  to  be  created  under  the  Loan  Documents  and  all  such       documents  and  instruments  shall  have  been  so  filed,  registered  or  recorded  to  the       satisfaction  of  the  Agent,  (B)  the  Credit  Card  Notifications,  each  Blocked  Account       Agreement  (Access  Restricted  Immediately), and the Blocked  Account  Agreements       required pursuant to Section 6.13 hereof, (C) control agreements with respect to the Loan       Parties’  securities  and  investment  accounts,  and  (D)  Collateral  Access  Agreements  as       required by the Agent;              (xv)  such  other  assurances,  certificates,  documents,  consents,  approvals   or       opinions as the Agent reasonably may require.   (b)  The Agent shall have received an amendment to the Growth Capital Subordinated Loan  Agreement, in form and substance reasonably satisfactory to the Agent, duly executed by each  of  the  parties  thereto,  and  such amendment  shall  have  become  effective  (or  shall  become  effective concurrently with the effectiveness of this Agreement).    (c)  After giving effect to (i) the first funding under the Loans, (ii) any charges to the Loan  Account made in connection with the establishment of the credit facility contemplated hereby  and (iii) all Letters of Credit to be issued at, or immediately subsequent to, such establishment,  Availability shall be not less than $7,000,000.   (d)  The  Agent  shall  have  received  a  Borrowing  Base  Certificate dated  the Closing  Date,  relating to the month ended on September 30, 2020, and executed by a Responsible Officer of  the Lead Borrower.     (e)  The Agent shall be reasonably satisfied that any financial statements delivered to it fairly  present the business and financial condition of the Loan Parties and there has been no event or  circumstance  since  the  date  of  the  Audited  Financial  Statements  that  has  had  or  could  be  reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect.   (f)  The Agent shall be reasonably satisfied with the capital structure of the Loan Parties.   (g)  The  Agent  shall  have  received  and  be  satisfied  with  (i)  (x)  detailed  month-by-month  forecast for key working capital terms prepared in conformity with GAAP and consistent with  the Loan Parties’ then current practices, (ii) historical financial statements, and (iii) such other  information (financial or otherwise) reasonably requested by the Agent.   (h)  There shall not be pending any action, suit, investigation other proceeding pending or, to  the  knowledge  of  the  Loan  Parties,  threatened  in  any  court  or  before  any  arbitrator  or  Governmental  Authority  the  result  of  which,  either  individually  or  in  the  aggregate,  could  reasonably be expected to have a Material Adverse Effect.   (i)  There shall not have occurred any default of any Material Contract of any Loan Party.                                   88 

 

                (j)  The  consummation  of  the  transactions  contemplated  hereby  shall  not  violate  any         applicable Law or any Organization Document.          (k)  All  of  the  Borrowers’  accounts  payable  shall  be  within  stated  invoice  terms  as  of  the         Closing  Date,  or  as  otherwise  permitted  in  the  ordinary  course  of  business  of the  Borrowers         consistent with past practices.          (l)  All fees and expenses required to be paid or reimbursed to the Agent or the Arranger on         or before the Closing Date shall have been paid in full, and all fees and expenses required to be         paid to the Lenders on or before the Closing Date shall have been paid in full.          (m)  The  Borrowers  shall  have  paid  all  fees,  charges  and  disbursements  of  counsel  to  the         Agent to the extent invoiced prior to or on the Closing Date, plus such additional amounts of         such  fees,  charges  and  disbursements  as  shall  constitute  its  reasonable  estimate  of such  fees,         charges and disbursements incurred or to be incurred by it through the Closing Date (provided         that  such  estimate  shall  not  thereafter  preclude  a  final  settling  of  accounts  between  the         Borrowers and the Agent).          (n)  The Agent and the Lenders shall have received all documentation and other information         required  by  regulatory  authorities  under  applicable  “know  your  customer”  and  anti-money         laundering rules and regulations, including without limitation the Patriot Act, in each case, the         results of which are satisfactory to the Agent.          Without  limiting  the  generality  of  the  provisions of Section 9.04,  for  purposes  of  determining  compliance with the conditions specified in this Section 4.01, each Lender that has signed this Agreement  shall be deemed to have Consented to, approved or accepted or to be satisfied with, each document or  other  matter  required  thereunder  to  be  Consented  to  or  approved  by  or  acceptable  or  satisfactory  to  a  Lender unless the Agent shall have received notice from such Lender prior to the proposed Closing Date  specifying its objection thereto.         4.02  Conditions to all Credit Extensions         .  The obligation of each Lender to honor any Request for Credit Extension (other than a LIBOR  Rate Loan Notice requesting only a continuation of LIBOR Rate Loans) and each L/C Issuer to issue each  Letter of Credit is subject to the following conditions precedent:          (a)  The representations and warranties of each Loan Party contained in Article V or in any         other Loan Document, or which are contained in any document furnished at any time under or         in connection herewith or therewith, shall be true and correct in all material respects on and as         of  the  date  of  such  Credit  Extension,  except  (i)  to  the  extent  that  such representations  and         warranties specifically refer to an earlier date, in which case they shall be true and correct as of         such earlier date, (ii) in the case of any representation and warranty qualified by materiality,         they  shall  be  true  and  correct  in  all respects,  and  (iii)  for  purposes  of  this Section 4.02,  the         representations  and  warranties  contained  in  subsections (a) and (b) of Section 5.05 shall  be         deemed  to  refer  to  the  most  recent  statements  furnished  pursuant  to  clauses (a) and (b),         respectively, of Section 6.01;          (b)  No  Default  or  Event  of  Default  shall  exist,  or  would result  from  such proposed Credit         Extension or from the application of the proceeds thereof;                                          89 

 

                (c)  The  Agent  and,  if  applicable,  the  L/C  Issuer  or  the  Swing  Line  Lender  shall  have         received  a  Request  for  Credit  Extension,  as  applicable,  in  accordance  with  the  requirements         hereof; and          (d)  No Overadvance shall result from such Credit Extension.   Each Request for Credit Extension (other than a LIBOR Rate Loan Notice requesting only a continuation  of LIBOR Rate Loans) submitted by the Borrowers shall be deemed to be a representation and warranty  by the Borrowers that the conditions specified in Sections 4.02(a) and (b) have been satisfied on and as of  the date of the applicable Credit Extension.  The conditions set forth in this Section 4.02 are for the sole  benefit of the Credit Parties but until the Required Lenders otherwise direct the Agent to cease making  Loans  and  the  L/C  Issuer  to  cease  issuing  Letters  of  Credit,  the  Lenders  will  fund  their  Applicable  Percentage of all Loans and participate in all Swing Line Loans and Letters of Credit whenever made or  issued,  which  are  requested  by  the  Lead  Borrower  and  which,  notwithstanding  the  failure  of  the  Loan  Parties  to comply with the provisions of this Article IV, agreed to by the Agent, provided, however, the  making of any such Loans or the issuance of any Letters of Credit shall not be deemed a modification or  waiver by any Credit Party of the provisions of this Article IV on any future occasion or a waiver of any  rights or the Credit Parties as a result of any such failure to comply.                                    ARTICLE V                       REPRESENTATIONS AND WARRANTIES         To induce the Credit Parties to enter into this Agreement and to make Loans and to issue Letters  of Credit hereunder, each Loan Party represents and warrants to the Agent and the other Credit Parties  that:         5.01  Existence, Qualification and Power         .  Each Loan Party and each Subsidiary thereof (a) is a corporation, limited liability company,  partnership  or  limited  partnership,  duly  incorporated, organized  or  formed,  validly  existing  and,  where  applicable,  in  good  standing  under  the  Laws  of  the  jurisdiction  of  its  incorporation,  organization,  or  formation  (b)  has  all  requisite  power  and  authority  and  all  requisite  governmental  licenses,  permits,  authorizations,  consents  and  approvals  to  (i)  own  or  lease  its  assets  and  carry  on  its  business  and  (ii)  execute, deliver and perform its obligations under the Loan Documents to which it is a party, and (c) is  duly qualified and is licensed and, where applicable, in good standing under the Laws of each jurisdiction  where  its  ownership,  lease  or  operation  of  properties  or  the  conduct  of  its  business  requires  such  qualification or license; except in each case referred to in clause (b)(i) or (c), to the extent that failure to  do so could not reasonably be expected to have a Material Adverse Effect.  Schedule 5.01 annexed hereto  sets forth, as of the Closing Date, each Loan Party’s name as it appears in official filings in its state of  incorporation or organization, its state of incorporation or organization, organization type, organization  number, if any, issued by its state of incorporation or organization, and its federal employer identification  number.  No Loan Party is an Affected Financial Institution.          5.02  Authorization; No Contravention         .  The execution, delivery and performance by each Loan Party of each Loan Document to which  such  Person  is  or  is  to  be  a  party,  has  been  duly  authorized  by  all  necessary  corporate  or  other  organizational  action,  and  does  not  and  will  not  (a)  contravene  the  terms  of  any  of  such  Person's  Organization  Documents;  (b)  conflict  with  or  result in  any  breach, termination,  or  contravention of,  or  constitute  a  default  under,  or  require  any  payment  to  be  made  under  (i)  any  Material  Contract  or  any  Material Indebtedness to which such Person is a party or affecting such Person or the properties of such                                         90 

 

         Person  or  any  of  its  Subsidiaries  or  (ii)  any  order,  injunction,  writ  or  decree  of  any  Governmental  Authority or any arbitral award to which such Person or its property is subject; (c) result in or require the  creation of any Lien upon any asset of any Loan Party (other than Liens in favor of the Agent under the  Security  Documents);  or  (d)  except  where  such  violation  could  not  reasonably  be  expected  to  have  a  Material Adverse Effect, violate any applicable Law.         5.03  Governmental Authorization; Other Consents         .  No approval, consent, exemption, authorization, or other action by, or notice to, or filing with,  any  Governmental Authority  or  any  other  Person  is  necessary  or  required  in  connection  with  the  execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any  other  Loan  Document,  except  for  (a)  the  perfection  or  maintenance  of  the  Liens  created  under  the  Security  Documents  (including  the  first  priority  nature  thereof)  (subject  to  Permitted  Encumbrances  having priority over the Lien of the Agent by operation of applicable Law) and (b) such as have been  obtained or made and are in full force and effect.          5.04  Binding Effect         .  This Agreement has been, and each other Loan Document, when delivered, will have been, duly  executed and delivered by each Loan Party that is party thereto.  This Agreement constitutes, and each  other  Loan  Document  when so  delivered  will  constitute,  a  legal,  valid  and  binding  obligation  of  such  Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms, subject  to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights  generally and subject to general principles of equity, regardless of whether considered in a proceeding in  equity or at law.         5.05  Financial Statements; No Material Adverse Effect.                 (a)   The Audited Financial Statements (i) were prepared in accordance with GAAP  consistently applied throughout the period covered thereby, except as otherwise expressly noted therein;  (ii) fairly present the financial condition of the Lead Borrower and its Subsidiaries as of the date thereof  and  their results  of  operations  for  the  period  covered  thereby  in  accordance  with  GAAP  consistently  applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show  all  Material  Indebtedness  and  other  liabilities,  direct  or contingent,  of  the  Lead  Borrower  and  its  Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Indebtedness.               (b)   The  unaudited  Consolidated  balance  sheet  of  the  Lead  Borrower  and  its  Subsidiaries  dated  June  30,  2020,  and  the  related  Consolidated  statements  of  income  or  operations,  Shareholders’  Equity  and  cash  flows  for  the  Fiscal  Quarter  ended  on  that  date  (i)  were  prepared  in  accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise  expressly  noted  therein,  and  (ii)  fairly  present  the  financial  condition  of  the  Lead  Borrower  and  its  Subsidiaries as of the date thereof and their results of operations for the period covered thereby, subject,  in the case of clauses (i) and (ii), to the absence of footnotes and to normal year-end audit adjustments.                 (c)   Since the date of the Audited Financial Statements, there has been no event or  circumstance, either individually or in the aggregate, that has had a Material Adverse Effect.               (d)   To the best knowledge of the Lead Borrower, no Internal Control Event exists or  has occurred since the date of the Audited Financial Statements that has resulted in or could reasonably be  expected to result in a misstatement in any material respect, (i) in any financial information delivered or  to  be  delivered  to  the  Agent  or  the  Lenders,  (ii)  of  the  Borrowing  Base,  (iii)  of  covenant  compliance                                         91 

 

         calculations provided hereunder or (iv) of the assets, liabilities, financial condition or results of operations  of the Lead Borrower and its Subsidiaries on a Consolidated basis.               (e)   The  Consolidated  forecasted  balance  sheet  and  statements  of  income  and  cash  flows of the Lead Borrower and its Subsidiaries delivered pursuant to Section 6.01(d) were prepared in  good faith on the basis of the assumptions believed by the Lead Borrower to be reasonable at the time  made, it being understood that (i) such Consolidated forecasted balance sheet and statements of income  and cash flows are not to be viewed as facts and are subject to significant uncertainties and contingencies,  many  of  which  are  beyond  the  Loan  Parties’  control,  (ii)  no  assurance  can  be  given  that  such  Consolidated forecasted statements of income and material cash flows will be realized, (iii) actual results  may differ and (iv) such differences may be material.         5.06  Litigation         .  There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the  Loan Parties after due and diligent investigation, threatened in writing or contemplated, at law, in equity,  in  arbitration  or  before  any  Governmental  Authority,  by  or  against  any  Loan  Party  or  any  of  its  Subsidiaries  or  against  any  of  its  properties  or  revenues  that  (a)  purport  to  affect  or  pertain  to  this  Agreement or any other Loan Document, or any of the transactions contemplated hereby, or (b) except as  specifically  disclosed  in Schedule  5.06,  either  individually  or  in  the  aggregate  could  reasonably  be  expected to have a Material Adverse Effect, and since the Closing Date, there has been no adverse change  in the status, or financial effect on any Loan Party or any Subsidiary thereof, of the matters described on  Schedule 5.06.         5.07  No Default         .  No Loan Party or any Subsidiary is in default under or with respect to, or party to any Material  Indebtedness.  No Default or Event of Default has occurred and is continuing or would result from the  consummation of the transactions contemplated by this Agreement or any other Loan Document.         5.08  Ownership of Property; Liens               (a)   Each  of  the  Loan  Parties  and  each  Subsidiary  thereof  has  good  record  and  marketable title in fee simple to or valid leasehold interests in, all Real Estate necessary or used in the  ordinary  conduct  of  its  business,  except  for  such  defects  in  title  as  could not,  individually  or  in  the  aggregate, reasonably be expected to have a Material Adverse Effect.  Each of the Loan Parties and each  Subsidiary  has  good  and  marketable  title  to,  valid  leasehold  interests  in,  or  valid  licenses  to  use  all  personal property and assets material to the ordinary conduct of its business.               (b)   Schedule 5.08(b)(1) sets forth the address (including street address, county and  state)  of  all  Real  Estate  that  is  owned  by  the  Loan  Parties,  together  with  a  list  of  the  holders  of  any  mortgage or other Lien thereon as of the Closing Date.  Each Loan Party and each of its Subsidiaries has  good,  marketable  and  insurable  fee  simple  title  to  the  Real  Estate  owned  by  such  Loan  Party  or  such  Subsidiary, free and clear of all Liens, other than Permitted Encumbrances.  Schedule 5.08(b)(2) sets forth  the address (including street address, county and state) of all Leases of the Loan Parties, together with a  list of the lessor and its contact information with respect to each such Lease as of the Closing Date.  Each  of such Leases is in full force and effect and the Loan Parties are not in default of the terms thereof.                                           92 

 

               5.09  Environmental Compliance               (a)   Except  as  specifically  disclosed  in Schedule  5.09,  no  Loan  Party  or  any  Subsidiary thereof (i) has failed to comply with any Environmental Law or to obtain, maintain or comply  with any permit, license or other approval required under any Environmental Law, (ii) has become subject  to any Environmental Liability, (iii) has received notice of any claim with respect to any Environmental  Liability or (iv) knows of any basis for any Environmental Liability, except, in each case, as could not,  individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.               (b)   Except as otherwise set forth in Schedule 5.09, none of the properties currently  owned or operated by any Loan Party or any Subsidiary thereof is listed or proposed for listing on the  NPL or on the CERCLIS or SEMS or any analogous foreign, state or local list; there are no and never  have been any underground or above-ground storage tanks or any surface impoundments, septic tanks,  pits, sumps or lagoons in which Hazardous Materials are being or have been treated, stored or disposed on  any property currently owned or operated by any Loan Party or any Subsidiary thereof or, to the best of  the knowledge of the Loan Parties, on any property formerly owned or operated by any Loan Party or  Subsidiary thereof; there is no asbestos or asbestos-containing material in violation of Environmental Law  or that could reasonably be expected to be required to be removed or remedied on any property currently  owned  or  operated  by  any  Loan  Party  or  Subsidiary  thereof;  and  Hazardous  Materials  have  not  been  released, discharged or disposed of on any property currently owned or operated by any Loan Party or any  Subsidiary thereof.               (c)   Except as otherwise set forth on Schedule 5,09, no Loan Party or any Subsidiary  thereof is undertaking, and no Loan Party or any Subsidiary thereof has completed, either individually or  together  with  other  potentially  responsible  parties,  any  investigation  or  assessment  or  remedial  or  response action relating to any actual or threatened release, discharge or disposal of Hazardous Materials  at  any  site,  location  or  operation,  either  voluntarily  or  pursuant  to  the  order  of  any  Governmental  Authority or the requirements of any Environmental Law; and all Hazardous Materials generated, used,  treated,  handled  or  stored  at,  or  transported  to  or  from,  any  property  currently  or  formerly  owned  or  operated by any Loan Party or any Subsidiary thereof have been disposed of in a manner not reasonably  expected to result in material liability to any Loan Party or any Subsidiary thereof.         5.10  Insurance         .  The properties of the Loan Parties and their Subsidiaries are insured with financially sound and  reputable insurance companies which are not Affiliates of the Loan Parties, in such amounts, with such  deductibles  and  covering  such  risks  (including,  without  limitation,  workmen’s  compensation,  public  liability, marine cargo, business interruption and property damage insurance) as are customarily carried  by companies engaged in similar businesses and owning similar properties in localities where the Loan  Parties  or  the  applicable  Subsidiary  operates.  Schedule  5.10 sets  forth  a  description  of  all  insurance  maintained by or on behalf of the Loan Parties as of the Closing Date. Each insurance policy listed on  Schedule 5.10 is in full force and effect and all premiums in respect thereof that are due and payable have  been paid.         5.11  Taxes         .  The Loan Parties and their Subsidiaries have filed all Federal, state and other tax returns and  reports required to be filed, and have paid all Federal, state and other Taxes, assessments, fees and other  governmental charges levied or imposed upon them or their properties, income or assets otherwise due  and  payable,  except,  in  each  case,  with  respect  to  Taxes  which  are  being  contested  in  good  faith  by  appropriate proceedings being diligently conducted, for which adequate reserves have been provided in                                         93 

 

         accordance  with  GAAP,  or  to  the  extent  not  reasonably  expected  to  have  a  Material  Adverse  Effect.   There is no tax assessment proposed in writing against any Loan Party or any Subsidiary that would, if  made, reasonably be expected to have a Material Adverse Effect.           5.12  ERISA Compliance.               (a)   The Lead Borrower, each of its ERISA Affiliates, and each Plan is in compliance  in  all  material  respects  with  the  applicable  provisions  of  ERISA,  the  Code  and  other  Federal  or  state  Laws.  Each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable  determination letter from the IRS or an application for such a letter is currently being processed by the  IRS with respect thereto and, to the best knowledge of the Lead Borrower, nothing has occurred which  would prevent, or cause the loss of, such qualification.  The Loan Parties and each ERISA Affiliate have  made  all  required  contributions  to  each  Plan  subject  to  Sections  412  or  430  of  the  Code  and  to  each  Multiemployer Plan, and no application for a funding waiver or an extension of any amortization period  pursuant to Sections 412 or 430 of the Code has been made with respect to any Plan.  No Lien imposed  under the Code or ERISA exists or is likely to arise on account of any Plan or Multiemployer Plan.               (b)   There are no pending or, to the best knowledge of the Lead Borrower, threatened  claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could  reasonably be expected to have a Material Adverse Effect.  There has been no prohibited transaction or  violation  of  the  fiduciary  responsibility  rules  with  respect  to  any  Plan  that  has  resulted  or  could  reasonably be expected to result in a Material Adverse Effect.               (c)   (i)   No ERISA Event has occurred or is reasonably expected to occur; (ii) no  Pension Plan has any Unfunded Pension Liability; (iii) neither any Loan Party nor any ERISA Affiliate  has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any  Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither  any Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no  event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such  liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither  any Loan Party nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections  4069 or 4212(c) of ERISA.         5.13  Subsidiaries; Equity Interests.                 As  of  the  Closing  Date,  the  Loan  Parties  have  no  Subsidiaries  other  than  those  specifically disclosed in Part (a) of Schedule 5.13, which Schedule sets forth the legal name, jurisdiction  of  incorporation  or  formation  and  authorized  Equity  Interests  of  each  such  Subsidiary.   All  of  the  outstanding  Equity  Interests  in  such  Subsidiaries  have  been  validly  issued,  are  fully  paid  and  non- assessable and, as of the Closing Date, are owned by a Loan Party (or a Subsidiary of a Loan Party) in the  amounts specified on Part (a) of Schedule 5.13 free and clear of all Liens except for those created under  the  Security  Documents  and  Liens  permitted  under  clauses  (a),  (b),  (e)  and  (o)  of  the  definition  of  Permitted Encumbrance.  Except as set forth in Schedule 5.13, there are no outstanding rights to purchase  any  Equity  Interests  in  any  Subsidiary.   The  Loan  Parties  have  no  equity  investments  in  any  other  corporation  or  entity  other  than  those  specifically  disclosed  in  Part(b)  of Schedule  5.13.   All  of  the  outstanding Equity Interests in the Subsidiaries that are Loan Parties or whose Equity Interests constitute  Collateral have been validly issued, and are fully paid and non-assessable and, as of the Closing Date, are  owned in the amounts specified on Part (c) of Schedule 5.13 free and clear of all Liens except for those  created  under  the  Security  Documents  and  Liens  permitted  under  clauses  (a),  (b),  (e)  and  (o)  of  the  definition of Permitted Encumbrance.  As of the Closing Date, the copies of the Organization Documents                                         94 

 

         of each Loan Party and each amendment thereto provided pursuant to Section 4.01 are true and correct  copies of each such document, each of which is valid and in full force and effect.           5.14  Margin Regulations; Investment Company Act;                 (a)   Neither any Loan Party nor any of its Subsidiaries owns any Margin Stock or is  engaged or will be engaged, principally or as one of its important activities, in the business of purchasing  or carrying Margin Stock, or extending credit for the purpose of purchasing or carrying Margin Stock.   None  of  the  proceeds  of  the  Credit  Extensions  shall  be  used  directly  or  indirectly  for  the  purpose  of  purchasing or carrying any Margin Stock, for the purpose of extending credit to others for the purpose of  purchasing or carrying any Margin Stock, or for any purpose that violates the provisions of Regulation T,  U or X of the FRB.                 (b)   None  of  the  Loan  Parties,  any  Person  Controlling  any  Loan  Party,  or  any  Subsidiary is or is required to be registered as an “investment company” under the Investment Company  Act of 1940.         5.15  Disclosure         .  Each Loan Party has disclosed to the Agent and the Lenders all agreements, instruments and  corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known  to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse  Effect.  No report, financial statement, certificate or other written information furnished by or on behalf of  any Loan Party to the Agent or any Lender in connection with the transactions contemplated hereby and  the  negotiation  of  this  Agreement  or  delivered  hereunder  or  under  any  other  Loan  Document  (in  each  case, as modified or supplemented by other information so furnished and when taken as a whole) contains  any  material  misstatement  of  fact  or  omits  to  state  any  material  fact  necessary  to  make the  statements  therein, in the light of the circumstances under which they were made, not misleading; provided that, with  respect  to  projected  financial  information,  the  Loan  Parties  represent  only  that  such  information  was  prepared in good faith based upon assumptions believed to be reasonable at the time such assumptions  were  made,  it  being  understood  that  (i) such  Consolidated  forecasted  balance  sheet  and  statements  of  income  and  cash  flows  are  not  to  be  viewed  as  facts  and  are  subject  to  significant  uncertainties  and  contingencies, many of which are beyond the Loan Parties’ control, (ii) no assurance can be given that  such Consolidated forecasted statements of income and material cash flows will be realized, (iii) actual  results may differ and (iv) such differences may be material.  Any Beneficial Ownership Certifications  executed  and  delivered  to  the  Agent  and Lenders  from  time to  time,  as  updated  from time  to  time,  is  accurate,  complete,  and  correct  as  of  the  date  any  as  of  certificates  are  delivered.  The  Loan  Parties  acknowledge  and  agree  that  the  Beneficial  Ownership  Certification,  if  applicable,  is  subject to  this  Section 5.15.         5.16  Compliance with Laws         .  Each of the Loan Parties and each Subsidiary is in compliance (A) in all material respects with  the  requirements  of  all  Laws  and  all  orders,  writs,  injunctions  and  decrees  applicable  to  it  or  to  its  properties, except  in  such  instances  in  which  (i)  such  requirement  of  Law  or order,  writ,  injunction or  decree is being contested in good faith by appropriate proceedings diligently conducted or (ii) the failure  to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a  Material Adverse Effect and (B) with Section 10.17 and 10.18.         5.17  Intellectual Property; Licenses, Etc.                                          95 

 

                 The Loan Parties and their Subsidiaries own, or possess the right to use, all of the Intellectual  Property,  licenses  and  permits  that  are  reasonably  necessary  for  the  operation  of  their  respective  businesses,  without  conflict  with  the  rights  of  any  other  Person.   To  the  best  knowledge  of  the  Lead  Borrower,  no  slogan  or  other  advertising  device,  product,  process,  method,  substance,  part  or  other  material  now  employed,  or  now  contemplated  to  be  employed,  by  any  Loan  Party  or  any  Subsidiary  infringes upon any rights held by any other Person.  Except as specifically disclosed in Schedule 5.17, no  claim  or  litigation  regarding  any  of  the  foregoing  is  pending  or,  to  the  best  knowledge  of  the  Lead  Borrower, threatened, which, either individually or in the aggregate, could reasonably be expected to have  a Material Adverse Effect.         5.18  Labor Matters.         There are no strikes, lockouts, slowdowns or other material labor disputes against any Loan Party  or any Subsidiary thereof pending or, to the knowledge of any Loan Party, threatened. The hours worked  by and payments made to employees of the Loan Parties comply with the Fair Labor Standards Act and  any other applicable federal, state, local or foreign Law dealing with such matters. No Loan Party or any  of its Subsidiaries has incurred any liability or obligation under the Worker Adjustment and Retraining  Act or similar state Law.  All payments due from any Loan Party and its Subsidiaries, or for which any  claim may be made against any Loan Party or any of its Subsidiaries, on account of wages and employee  health and welfare insurance and other benefits, have been paid or properly accrued in accordance with  GAAP as a liability on the books of such Loan Party. Except as set forth on Schedule 5.18, no Loan Party  or any Subsidiary is a party to or bound by any collective bargaining agreement, management agreement,  employment agreement, bonus, restricted stock, stock option, or stock appreciation plan or agreement or  any similar plan, agreement or arrangement. There are no representation proceedings pending or, to any  Loan Party’s knowledge, threatened to be filed with the National Labor Relations Board, and no labor  organization or group of employees of any Loan Party or any Subsidiary has made a pending demand for  recognition.  There  are  no  complaints,  unfair  labor  practice  charges,  grievances,  arbitrations,  unfair  employment practices charges or any other claims or complaints against any Loan Party or any Subsidiary  pending or, to the knowledge of any Loan Party, threatened to be filed with any Governmental Authority  or  arbitrator  based  on,  arising  out  of,  in  connection  with,  or  otherwise  relating  to  the  employment  or  termination  of  employment  of  any  employee  of  any  Loan  Party  or  any  of  its  Subsidiaries.  The  consummation of the transactions contemplated by the Loan Documents will not give rise to any right of  termination or right of renegotiation on the part of any union under any collective bargaining agreement  to which any Loan Party or any of its Subsidiaries is bound.         5.19  Security Documents.                 (a)   The  Security  Agreement  creates  in  favor  of  the  Agent,  for  the  benefit  of  the  Secured  Parties  referred  to  therein,  a  legal,  valid,  continuing  and  enforceable  security  interest  in  the  Collateral  (as  defined  in  the  Security  Agreement),  the  enforceability  of  which  is  subject  to  applicable  bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and  subject to general principles of equity, regardless of whether considered in a proceeding in equity or at  law.  The financing statements, releases and other filings are in appropriate form and have been or will be  filed  in  the  offices  specified  in  Schedule  II  of  the  Security  Agreement.   Upon  such  filings  and/or  the  obtaining  of  “control,”  (as  defined  in  the  UCC)  the Agent  will  have  a  perfected  Lien  on,  and  security  interest in, to and under all right, title and interest of the grantors thereunder in all Collateral that may be  perfected  by  filing,  recording  or  registering  a  financing  statement  or  analogous  document  (including  without limitation the proceeds of such Collateral subject to the limitations relating to such proceeds in  the UCC) or by obtaining control, under the UCC (in effect on the date this representation is made) in  each case prior and superior in right to any other Person.                                         96 

 

                     (b)   When  the  Security  Agreement  (or  a  short  form  thereof)  is  filed  in  the  United  States  Patent  and  Trademark  Office  and  the  United  States  Copyright  Office  and  when  financing  statements, releases and other filings in appropriate form are filed in the offices specified in Schedule II of  the Security Agreement, the Agent shall have a fully perfected Lien on, and security interest in, all right,  title  and  interest  of  the  applicable  Loan  Parties  in  the  Intellectual  Property  (as  defined  in  the  Security  Agreement)  in  which  a  security  interest  may  be  perfected  by  filing,  recording  or  registering  a security  agreement, financing statement or analogous document in the United States Patent and Trademark Office  or the United States Copyright Office, as applicable, in each case prior and superior in right to any other  Person (it being understood that subsequent recordings in the United States Patent and Trademark Office  and  the  United  States  Copyright  Office  may  be  necessary  to  perfect  a  Lien  on  registered  trademarks,  trademark applications and copyrights acquired by the Loan Parties after the Closing Date).         5.20  Solvency         After  giving  effect  to  the  transactions  contemplated  by  this  Agreement,  and  before  and  after  giving effect to each Credit Extension, the Loan Parties, on a Consolidated basis, are Solvent. No transfer  of property has been or will be made by any Loan Party and no obligation has been or will be incurred by  any  Loan  Party  in  connection  with  the  transactions  contemplated  by  this  Agreement  or  the  other  Loan  Documents with the intent to hinder, delay, or defraud either present or future creditors of any Loan Party.         5.21  Deposit Accounts; Credit Card Arrangements.               (a)   Annexed hereto as Schedule 5.21(a) is a list of all DDAs maintained by the Loan  Parties  as  of  the  Closing  Date,  which  Schedule  includes,  with  respect  to  each  DDA  (i)  the  name  and  address  of  the  depository;  (ii)  the  account  number(s)  maintained  with  such  depository;  (iii)  a  contact  person at such depository, and (iv) the identification of each Blocked Account Bank.               (b)   Annexed hereto as Schedule 5.21(b) is a list describing all arrangements as of the  Closing Date to which any Loan Party is a party with respect to the processing and/or payment to such  Loan Party of the proceeds of any credit card charges and debit card charges for sales made by such Loan  Party.         5.22  Brokers         .  No broker or finder brought about the obtaining, making or closing of the Loans or transactions  contemplated by the Loan Documents, and no Loan  Party or Affiliate thereof has any obligation to any  Person in respect of any finder’s or brokerage fees in connection therewith.         5.23  Customer and Trade Relations         .   There  exists  no  actual  or,  to  the  knowledge  of  any  Loan  Party,  threatened,  termination  or  cancellation of, or any material adverse modification or change in the business relationship of any Loan  Party with any supplier material to its operations that could reasonably be expected to have a Material  Adverse Effect.         5.24  Material Contracts         .  Schedule 5.24 sets forth all Material Contracts to which any Loan Party is a party or is bound as  of the Closing Date.  The Loan Parties have delivered true, correct and complete copies of such Material  Contracts to the Agent on or before the Closing Date.  The Loan Parties are not in breach or in default in                                          97 

 

         any material respect of or under any Material Contract and have not received any notice of the intention  of any other party thereto to terminate any Material Contract.         5.25  Casualty         .   Neither  the  businesses  nor  the  properties  of  any  Loan  Party  or  any  of  its  Subsidiaries  are  affected  by  any  fire,  explosion,  accident,  strike,  lockout  or  other  labor  dispute,  drought,  storm,  hail,  earthquake,  embargo,  act  of  God  or  of the  public  enemy  or  other  casualty  (whether  or  not  covered  by  insurance) that, either individually or in the aggregate, could reasonably be expected to have a Material  Adverse Effect.         5.26  OFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws.  No Loan  Party  nor  any  of  its  Subsidiaries  is  in  violation  of  any Sanctions.  No  Loan  Party  nor  any  of  its  Subsidiaries nor, to the knowledge of such Loan Party, any director, officer, employee, agent or Affiliate  of  such  Loan  Party  or  such  Subsidiary  (a)  is  a  Sanctioned  Person  or  a  Sanctioned  Entity,  (b)  has  any  assets  located  in Sanctioned  Entities,  or  (c)  derives  revenues  from  investments  in,  or  transactions  with  Sanctioned  Persons  or  Sanctioned  Entities.  Each  of  the  Loan  Parties  and  its  Subsidiaries  has  implemented and maintains in effect policies and procedures designed to ensure compliance by the Loan  Parties  and  their  Subsidiaries  and  their  respective  directors,  officers,  employees,  agents  and  Affiliates  with all Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws.  Each of the Loan Parties  and  its  Subsidiaries,  and  to  the  knowledge  of  each  such  Loan  Party,  each  director,  officer,  employee,  agent and Affiliate of each such Loan Party and each such Subsidiary, is in compliance with all Sanctions,  and, in all material respects, Anti-Corruption Laws and Anti-Money Laundering Laws.  No proceeds of  any Loan made or Letter of Credit issued hereunder will be used to fund any operations in, finance any  investments or  activities  in,  or make  any  payments  to,  a Sanctioned  Person  or  a  Sanctioned  Entity,  or  otherwise  used  in  any  manner  that  would  result  in  a  violation  of  any  applicable  Sanctions,  Anti- Corruption  Laws or  Anti-Money  Laundering  Laws  by  any  Person  (including  any Credit  Party  or  other  individual or entity participating in any transaction).          5.27  Patriot Act.  To the extent applicable, each Loan Party is in compliance, in all material  respects, with the (a) Trading with the Enemy Act, as amended, and each of the foreign assets control  regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and  any other enabling legislation or executive order relating thereto, (b) Uniting and Strengthening America  by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act of 2001,  as amended) (the “Patriot Act”) and (c) the Canadian Economic Sanctions and Export Control Laws.                                    ARTICLE VI                            AFFIRMATIVE COVENANTS         So  long  as  any  Lender  shall  have  any  Commitment  hereunder,  any  Loan  or  other  Obligation  hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding (subject in  each case to Section 1.02(d)), the Loan Parties shall, and shall (except in the case of the covenants set  forth in Sections 6.01, 6.02, and 6.03) cause each Subsidiary to:         6.01  Financial Statements         .  Deliver to the Agent, in form and detail satisfactory to the Agent:           (a)  as soon as available, but in any event within ninety (90) days after the end of each Fiscal         Year  of  the  Lead  Borrower,  a  Consolidated  balance  sheet  of  the  Lead  Borrower  and  its         Subsidiaries  as  at  the  end  of  such  Fiscal  Year,  and  the  related  consolidated  statements  of                                         98 

 

    income or operations, Shareholders’ Equity and cash flows for such Fiscal Year, setting forth in   each case in comparative form the figures for the previous Fiscal Year, all in reasonable detail   and  prepared  in  accordance  with  GAAP,  such  consolidated  statements  to  be  audited  and   accompanied by a report and unqualified opinion of a Registered Public Accounting Firm of   nationally  recognized  standing  reasonably  acceptable  to the  Agent,  which  report  and  opinion   shall be  prepared  in  accordance  with  generally  accepted  auditing  standards  and  shall  not  be   subject  to  any  “going  concern”  or  like  qualification  or  exception  or  any  qualification  or   exception as to the scope of such audit (except for any qualification pertaining to the maturity   of any Indebtedness occurring within twelve (12) months of the date of the relevant audit);     (b)  as soon as available, but in any event within forty-five (45) days after the end of each of   the first three Fiscal Quarters of each Fiscal Year of the Lead Borrower, a Consolidated balance   sheet of the Lead Borrower and its Subsidiaries as at the end of such Fiscal Quarter, and the   related consolidated statements of income or operations, Shareholders’ Equity and cash flows   for  such  Fiscal  Quarter  and  for  the  portion  of  the  Lead  Borrower’s  Fiscal  Year  then  ended,   setting forth in each case in comparative form the figures for (A) such period set forth in the   projections delivered pursuant to Section 6.01(d) hereof, (B) the corresponding Fiscal Quarter   of the previous Fiscal Year and (C) the corresponding portion of the previous Fiscal Year, all in   reasonable detail, such Consolidated statements to be certified by a Responsible Officer of the   Lead Borrower as fairly presenting the financial condition, results of operations, Shareholders’   Equity and cash flows of the Lead Borrower and its Subsidiaries as of the end of such Fiscal   Quarter in accordance with GAAP, subject only to normal year-end audit adjustments and the   absence of footnotes;    (c)  as soon as available, but in any event within thirty (30) days after the end of each of the   Fiscal Months of each Fiscal Year of the Lead Borrower, a consolidated balance sheet of the   Lead  Borrower  and  its  Subsidiaries  as  at  the  end  of  such  Fiscal  Month,  and  the  related   consolidated statements of income or operations and cash flows for such Fiscal Month, and for   the  portion  of  the  Lead  Borrower’s  Fiscal  Year  then  ended,  setting  forth  in  each  case  in   comparative form the figures for (A) such period set forth in the projections delivered pursuant   to Section 6.01(d) hereof, (B) the corresponding Fiscal Month of the previous Fiscal Year and   (C)  the  corresponding  portion  of  the  previous  Fiscal  Year,  all  in  reasonable  detail,  such   consolidated statements to be certified by a Responsible Officer of the Lead Borrower as fairly   presenting the financial condition, results of operations and cash flows of the Lead Borrower   and its Subsidiaries as of the end of such Fiscal Month in accordance with GAAP, subject only   to normal year-end audit adjustments and the absence of footnotes;         (d)   forecasts prepared by management of the Lead Borrower, in form satisfactory to  the Agent, of consolidated balance sheets and statements of income or operations and cash flows  of  the  Lead  Borrower  and  its  Subsidiaries  on  a  monthly  basis  for  the  immediately  following  Fiscal Year (including the Fiscal Year in which the Maturity Date occurs) as soon as available,  but in any event, within (x) with respect to draft forecasts, thirty (30) days after the end of each  Fiscal Year of the Lead Borrower and (y) with respect to final forecasts approved by the board of  directors of the Lead Borrower, thirty (30) days of such approval (in each case, or such later date  as  the  Agent  may  agree  in  its  reasonable  discretion),  and  as  soon  as  available,  any  significant  revisions to such forecast with respect to such Fiscal Year.   6.02  Certificates; Other Information   .  Deliver to the Agent, in form and detail satisfactory to the Agent:                                   99 

 

                      (a)  reserved;   (b)  concurrently with the delivery of the financial statements referred to in Sections 6.01(a)  and (b) and (c), a duly completed Compliance Certificate signed by a Responsible Officer of  the Lead Borrower, and in the event of any change in generally accepted accounting principles  used in the preparation of such financial statements, the Lead Borrower shall also provide: (i) a  statement of reconciliation conforming such financial statements to GAAP and (ii) in the case  of financial statements required to be delivered pursuant to Section 6.01(a) and (b), a copy of  management’s discussion and analysis with respect to such financial statements;   (c)  on the fifteenth (15th) day of each Fiscal Month (or, if such day is not a Business Day, on  the next succeeding Business Day), a Borrowing Base Certificate showing the Borrowing Base  as  of  the  close  of  business  as  of  the  last  day  of  the  immediately  preceding  Fiscal  Month  (provided that  the  Appraised  Value  applied  to  the  Eligible  Inventory  set  forth  in  each  Borrowing Base Certificate shall be the Appraised Value set forth in the most recent appraisal  obtained by the Agent pursuant to Section 6.10 hereof for the applicable month to which such  Borrowing  Base  Certificate  relates),  each  Borrowing  Base  Certificate  to  be  certified  as  complete and correct by a Responsible Officer of the Lead Borrower; provided that at any time  that  an  Accelerated  Borrowing  Base  Delivery  Event  has  occurred  and  is  continuing,  at  the  election  of  the  Agent,  such  Borrowing  Base  Certificate  shall  be  delivered  on  Wednesday  of  each week (or, if Wednesday is not a Business Day, on the next succeeding Business Day), as  of the close of business on the immediately preceding Saturday;   (d)  promptly  upon  receipt,  copies  of  any  detailed  audit  reports,  management  letters  or  recommendations submitted to the board of directors (or the audit committee of the board of  directors) of any Loan Party by its Registered Public Accounting Firm in connection with the  accounts or books of the Loan Parties or any Subsidiary, or any audit of any of them, including,  without limitation, specifying any Internal Control Event;   (e)  promptly  after  the  same  are  available,  copies  of  each  annual  report,  proxy  or  financial  statement or other report or communication sent to the stockholders of the Loan Parties, and  copies of all annual, regular, periodic and special reports and registration statements which any  Loan  Party  may  file  or  be  required  to  file  with  the  SEC  under  Section  13  or  15(d)  of  the  Securities Exchange Act of 1934 or with any national securities exchange, and in any case not  otherwise required to be delivered to the Agent pursuant hereto;    (f)  The financial and collateral reports described on Schedule 6.02 hereto, at the times set  forth in such Schedule;   (g)  promptly after the furnishing thereof, copies of any statement or report furnished to any  holder of debt securities of any Loan Party or any Subsidiary thereof pursuant to the terms of  any indenture, loan or credit or similar agreement and not otherwise required to be furnished to  the Lenders pursuant to Section 6.01 or any other clause of this Section 6.02 that are material to  the interests of the Lenders;    (h)  together with the delivery of the financial statements referred to in Section 6.01(c) for the  month of December each year, a report summarizing the insurance coverage (specifying type,  amount  and  carrier)  in  effect  for  each  Loan  Party  and  its  Subsidiaries  and  containing  such  additional information as the Agent, or any Lender through the Agent, may reasonably specify;                                   100 

 

                (i)  promptly  after  the  Agent’s  request  therefor,  copies  of  all  Material  Contracts  and         documents evidencing Material Indebtedness;          (j)  promptly,  and  in  any  event  within  five  (5)  Business  Days  after  receipt  thereof  by  any         Loan Party or any Subsidiary thereof, copies of each notice or other correspondence received         from  any  Governmental  Authority  (including,  without  limitation,  the  SEC  (or  comparable         agency  in  any  applicable  non-U.S.  jurisdiction))  concerning  any  proceeding  with,  or         investigation  or  possible  investigation  or  other  inquiry  by  such  Governmental  Authority         regarding financial or other operational results of any Loan Party or any Subsidiary thereof or         any other matter which, if adversely determined, could reasonably expected to have a Material         Adverse Effect;          (k)  promptly  after  the  Agent’s  or  any  Lender’s  request  therefor,  such  information  as         requested pursuant to Section 10.17 hereof and, as and to the extent applicable, in connection         with the Beneficial Ownership Regulation; and          (l)  promptly, such additional information regarding the business affairs, financial condition         or operations of any Loan Party or any Subsidiary, or compliance with the terms of the Loan         Documents, as the Agent or any Lender may from time to time reasonably request.   Documents required to be delivered pursuant to Section 6.01(a), (b), or (c) or Section 6.02(b), (c), (d), (e),  (f), (g), (h) and (i) (to the extent any such documents are included in materials otherwise filed with the  SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the  date  (i)  on  which  the  Lead  Borrower  posts  such  documents,  or  provides  a  link  thereto  on  the  Lead  Borrower’s  website;  or  (ii)  on  which such  documents  are  posted  on the  Lead  Borrower’s  behalf  on  an  Internet  or  intranet  website,  if  any,  to  which  each  Lender  and  the  Agent  have  access  (whether  a  commercial,  third-party  website  or  whether  sponsored  by  the  Agent  and  including  the  website  of  the  SEC).  Notwithstanding anything contained herein, in every instance the Lead Borrower shall be required  to  provide  paper  copies  of  the Compliance  Certificates  required by Section  6.02(b) to  the  Agent.   The  Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to  above, and in any event shall have no responsibility to monitor compliance by the Loan Parties with any  such  request  for  delivery,  and  each  Lender shall  be  solely  responsible  for  requesting  delivery  to  it  or  maintaining its copies of such documents.          The  Loan  Parties  hereby  acknowledge  that  the  Agent  may  make  available  materials  or  information provided by or on behalf of the Loan Parties hereunder (collectively, “Borrower Materials”)  to the Lenders and the L/C Issuer by posting the Borrower Materials on IntraLinks, SyndTrack or another  similar  secure  electronic  transmission  system  (the  “Platform”).   Each  Loan  Party  further  agrees  that  certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive material  non-public information with respect to the Loan Parties or their securities) (each, a “Public Lender”).  The  Loan  Parties  shall  be  deemed  to  have  authorized  Agent  and  its  Affiliates  and  the  Lenders  to  treat  Borrower Materials marked “PUBLIC” or otherwise at any time filed with the SEC as not containing any  material non-public information with respect to the Loan Parties or their securities for purposes of United  States federal and state securities laws.  All Borrower Materials marked “PUBLIC” are permitted to be  made  available  through  a  portion  of  the  Platform  designated  as  “Public  Investor”  (or  another  similar  term).  Agent and its Affiliates and the Lenders shall be entitled to treat any Borrower Materials that are  not marked “PUBLIC” or that are not at any time filed with the SEC as being suitable only for posting on  a portion of the Platform not marked as “Public Investor” (or such other similar term).         6.03  Notices                                        101 

 

               .         Promptly notify the Agent after a Responsible Officer (after due inquiry) becomes aware thereof:          (a)  of the occurrence of any Default or Event of Default;          (b)  of  any  matter  that has  resulted  or  could  reasonably  be  expected  to  result  in  a Material         Adverse Effect;          (c)  of any breach or non-performance of, or any default under, a Material Contract or with         respect to Material Indebtedness of any Loan Party or any Subsidiary thereof;          (d)  of  any  dispute,  litigation,  investigation,  proceeding  or  suspension  between  any  Loan         Party or any Subsidiary thereof and any Governmental Authority or the commencement of, or         any  material  development  in,  any  litigation  or  proceeding  affecting  any  Loan  Party  or  any         Subsidiary  thereof,  including  pursuant  to  any  applicable  Environmental  Laws,  in  each  case,         which could reasonably be expected to have a Material Adverse Effect;          (e)  of the occurrence of any ERISA Event;          (f)  of any casualty or other insured damage to any material portion of the Collateral or the         commencement of any action or proceeding for the taking of any interest in a material portion         of the Collateral under power of eminent domain or by condemnation or similar proceeding or         if any material portion of the Collateral is damaged or destroyed; and          (g)  of  any  failure  by  any  Loan  Party  to  pay  rent  or  such  other  amounts  due  (i)  any         distribution  centers  or  warehouses;  (ii)  ten  percent  (10%)  or  more  of  such  Loan  Party’s         locations; or (iii) any of a Loan Party’s locations if such failure continues for more than ten (10)         days following the day on which such rent first came due and such failure would be reasonably         likely to result in a Material Adverse Effect.   Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer of the  Lead Borrower setting forth details of the occurrence referred to therein and stating what action the Lead  Borrower has taken and proposes to take with respect thereto.  Each notice pursuant to Section 6.03(a)  shall describe with particularity any and all provisions of this Agreement and any other Loan Document  that have been breached.         6.04  Payment of Obligations         .  Pay and discharge as the same shall become due and payable, all its obligations and liabilities,  including (a) all Tax liabilities, assessments and governmental charges or levies upon it or its properties  or assets, (b) all lawful claims (including, without limitation, claims of landlords, warehousemen, customs  brokers,  freight  forwarders,  consolidators  and  carriers)  which, if  unpaid,  would  by  law  become  a  Lien  upon  its  property;  and  (c) all  material  Indebtedness,  as  and  when  due  and  payable,  but  subject  to  any  subordination provisions contained in any instrument or agreement evidencing such Indebtedness, except,  in  each  case,  where  (a)  the  validity  or  amount  thereof  is  being  contested  in  good  faith  by  appropriate  proceedings,  and  such  Loan  Party  has  set  aside  on its  books  adequate  reserves  with  respect  thereto  in  accordance with GAAP, or (b) the failure to make payment could not reasonably be expected to result in a  Material Adverse Effect.  Nothing contained herein shall be deemed to limit the rights of the Agent with  respect to determining Reserves pursuant to this Agreement.                                         102 

 

               6.05  Preservation of Existence, Etc.         Preserve, renew and maintain in full force and effect its legal existence and good standing under  the Laws of the jurisdiction of its organization or formation except in a transaction permitted by Section  7.04 or 7.05; and  (b)  take  all  reasonable  action to maintain  all  rights,  privileges,  permits, licenses  and  franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to  do so could not reasonably be expected to have a Material Adverse Effect.         6.06  Maintenance of Properties               (a)   Maintain,  preserve  and  protect  all  of  its  material  properties  and  equipment  necessary in the operation of its business in good working order and condition, ordinary wear and tear  excepted; and (b) make all necessary repairs thereto and renewals and replacements thereof except where  the failure to do so could not reasonably be expected to have a Material Adverse Effect.         6.07  Maintenance of Insurance.               (a)   Maintain  with  financially  sound  and  reputable  insurance  companies  having  an  A.M. Best Rating of at least A- (or otherwise reasonably acceptable to the Agent) not Affiliates of the  Loan  Parties, insurance  with  respect to  its  properties and  business  against loss  or  damage  of  the  kinds  customarily insured against by Persons engaged in the same or similar business and operating in the same  or  similar  locations  or  as  is  required  by  applicable  Law  (including,  without  limitation,  business  interruption  coverage),  of  such  types  and  in  such  amounts  as  are  customarily  carried  under  similar  circumstances by such other Persons and as are reasonably acceptable to the Agent.  It is understood and  agreed  that  as  of  the  Closing  Date,  the  insurance  policies  of  the  Lead  Borrower  and  its  Loan  Parties  satisfy the requirements set forth in this Section 6.07(a).               (b)   Cause  fire  and  extended  coverage  policies  maintained  with  respect  to  any  Collateral  to  be  endorsed  or  otherwise  amended  to  include  (i)  a  non-contributing  mortgage  clause  (regarding improvements to Real Estate) and lenders’ loss payable clause (regarding personal property),  in form and substance satisfactory to the Agent, which endorsements or amendments shall provide that  the insurer shall pay all proceeds otherwise payable to the Loan Parties under the policies directly to the  Agent, (ii) a provision to the effect that none of the Loan Parties, Credit Parties or any other Person shall  be a co-insurer and (iii) such other provisions as the Agent may reasonably require from time to time to  protect the interests of the Credit Parties.                (c)   Cause commercial general liability policies to be endorsed to name the Agent as  an additional insured.                (d)   Cause business interruption policies (to the extent not covered under the property  policy) to name the Agent as a loss payee and to be endorsed or amended to include (i) a provision that,  from and after the Closing Date, the insurer shall pay all proceeds otherwise payable to the Loan Parties  under the policies directly to the Agent, (ii) a provision to the effect that none of the Loan Parties, the  Agent, the Agent or any other party shall be a co-insurer and (iii) such other provisions as the Agent may  reasonably require from time to time to protect the interests of the Credit Parties.               (e)   Cause each such policy referred to in this Section 6.07 to also provide that it shall  not be canceled, modified or not renewed (i) by reason of nonpayment of premium except upon not less  than ten (10) days’ prior written notice thereof by the insurer to the Agent (giving the Agent the right to  cure defaults in the payment of premiums) or (ii) for any other reason except upon not less than thirty (30)  days’ prior written notice thereof by the insurer to the Agent.                                         103 

 

                     (f)   Deliver  to  the  Agent,  prior  to  the  cancellation,  modification  or  non-renewal  of  any such policy of insurance, a copy of a renewal or replacement policy (or other evidence of renewal of a  policy previously delivered to the Agent, including a certificate of insurance and as such policy may be  redacted  as  is  customary  by  the  insurance  carrier)  together  with  evidence  satisfactory  to  the  Agent  of  payment of the premium therefor.               (g)   Maintain for  themselves  and  their  Subsidiaries,  a  Directors  and  Officers  insurance  policy,  and  a  “Blanket  Crime”  policy  including  employee  dishonesty,  forgery  or  alteration,  theft, disappearance and destruction, robbery and safe burglary, property, and computer fraud coverage  with responsible companies in such amounts as are customarily carried by business entities engaged in  similar  businesses  similarly  situated,  and  will  upon  request  by the  Agent  furnish  the  Agent  certificates  evidencing renewal of each such policy.         None of the Credit Parties, or their agents or employees shall be liable for any loss or damage  insured  by  the insurance  policies  required to be  maintained  under  this Section 6.07.   Each  Loan  Party  shall  look  solely  to  its  insurance  companies  or  any  other  parties  other  than  the  Credit  Parties  for  the  recovery of such loss or damage and such insurance companies shall have no rights of subrogation against  any Credit Party or its agents or employees.  If, however, the insurance policies do not provide waiver of  subrogation  rights  against  such  parties,  as  required  above,  then  the  Loan  Parties  hereby  agree,  to  the  extent permitted by law, to waive their right of recovery, if any, against the Credit Parties and their agents  and employees.  The designation of any form, type or amount of insurance coverage by any Credit Party  under this Section 6.07 shall in no event be deemed a representation, warranty or advice by such Credit  Party that such insurance is adequate for the purposes of the business of the Loan Parties or the protection  of their properties.         6.08  Compliance with Laws         .  Comply  (a)  in  all  material  respects  with  the  requirements  of  all  Laws  and  all  orders,  writs,  injunctions and decrees applicable to it or to its business or property, except in such instances in which (i)  such  requirement  of  Law  or  order,  writ,  injunction  or  decree  is  being  contested  in  good  faith  by  appropriate proceedings diligently conducted and with respect to which adequate reserves have been set  aside and maintained by the Loan Parties in accordance with GAAP; (ii) such contest effectively suspends  enforcement  of  the contested  Laws,  and  (iii)  the  failure  to  comply  therewith  could  not  reasonably  be  expected to have a Material Adverse Effect, and (b) with Sections 10.17 and 10.18.         6.09  Books and Records; Accountants               (a)   Maintain  proper  books  of  record  and  account,  in  which  full, true  and  correct  entries  in  conformity  with  GAAP  consistently  applied  shall  be  made  of  all  financial  transactions  and  matters involving the assets and business of the Loan Parties or such Subsidiary, as the case may be; and  (ii) maintain such books of record and account in material conformity with all applicable requirements of  any Governmental Authority having regulatory jurisdiction over the Loan Parties or such Subsidiary, as  the case may be.               (b)   At  all  times  retain  a  Registered  Public  Accounting  Firm  which is  reasonably  satisfactory  to  the  Agent  and  shall instruct  such  Registered  Public  Accounting  Firm  to  cooperate  with,  and be available to, the Agent or its representatives to discuss the Loan Parties’ financial performance,  financial condition, operating results, controls, and such other matters, within the scope of the retention of  such Registered Public Accounting Firm, as may be raised by the Agent.                                         104 

 

               6.10  Inspection Rights               (a)   Permit  representatives  and  independent  contractors  of  the  Agent  to  visit  and  inspect any of its properties, to examine its corporate, financial and operating records, and make copies  thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers,  and  Registered  Public  Accounting  Firm,  and  permit the  Agent  or  professionals  (including  investment  bankers, consultants, accountants, and lawyers) retained by the Agent to conduct evaluations of the Loan  Parties’  business  plan,  forecasts  and  cash  flows,  all  at  the  expense  of  the  Loan  Parties  and  at  such  reasonable times during normal business hours and limited to one such visit and inspection per calendar  year  (other  than  with  respect  to  auditors  and  appraisers)  upon  reasonable  advance  notice  to  the  Lead  Borrower; provided, however, that if required by Law or when an Event of Default exists the Agent (or  any of its representatives or independent contractors) may do any of the foregoing at the expense of the  Loan Parties at any time during normal business hours and as often as may be reasonably desired and  without advance notice.               (b)   Upon the request of the Agent after reasonable prior notice, permit the Agent or  professionals (including investment bankers, consultants, accountants, and lawyers) retained by the Agent  to conduct commercial finance examinations and other evaluations, including, without limitation, of (i)  the Lead Borrower’s practices in the computation of the Borrowing Base and (ii) the assets included in  the  Borrowing  Base  and  related  financial information  such  as, but  not limited  to,  sales,  gross margins,  payables, accruals and reserves.  Subject to the limitations set forth below, the Loan Parties shall pay the  fees and expenses of the Agent and such professionals with respect to such examinations and evaluations.   Without  limiting  the  foregoing, the  Loan  Parties  acknowledge  that  the  Agent  may,  in  its  discretion,  undertake up to two (2) commercial finance examinations each Fiscal Year at the Loan Parties’ expense.   Notwithstanding the foregoing, the Agent may cause additional commercial finance examinations to be  undertaken (i) as it in its Permitted Discretion deems necessary or appropriate, at its own expense or, (ii)  if required by Law or if an Event of Default shall have occurred and be continuing, at the expense of the  Loan Parties and without advance notice.               (c)   Upon the request of the Agent after reasonable prior notice, permit the Agent or  professionals  (including  appraisers)  retained  by  the  Agent  to  conduct  appraisals  of  the  Collateral,  including, without limitation, the assets included in the Borrowing Base.  Subject to the limitations set  forth below, the Loan Parties shall pay the fees and expenses of the Agent and such professionals with  respect to such appraisals.  Without limiting the foregoing, the Loan Parties acknowledge that the Agent  may,  in its Permitted  Discretion,  undertake  up  to two  (2)  inventory  appraisals  each  Fiscal  Year  at  the  Loan Parties’ expense.  Notwithstanding the foregoing, the Agent may cause additional appraisals to be  undertaken (i) as it in its Permitted Discretion deems necessary or appropriate, at its own expense or, (ii)  if required by Law or if an Event of Default shall have occurred and be continuing, at the expense of the  Loan Parties and without advance notice.         6.11  Use of Proceeds         .   Use  the  proceeds  of  the  Credit Extensions  (a)  to  repay  all  Indebtedness  under  the  Existing  Credit Agreement, (b) to finance the acquisition of working capital assets of the Borrowers, including the  purchase of inventory and equipment, in each case in the ordinary course of business, (c) to pay fees and  expenses  in  connection  with  the  transactions  contemplated  by  this  Agreement,  and  (d)  for  general  corporate purposes of the Loan Parties, in each case to the extent expressly permitted under applicable  Law and the Loan Documents.         6.12  Additional Loan Parties                                        105 

 

               .  Notify the Agent at the time that any Person becomes a Subsidiary  promptly thereafter (and in  any  event  within  thirty  (30)  days),  cause  any  such Person  (a)  which  is  a  Domestic Subsidiary  directly  owned by a Loan Party and is not an Excluded Subsidiary, to (i) become a Loan Party by executing and  delivering to the Agent a Joinder to this Agreement or a Joinder to the Facility Guaranty or such other  documents as the Agent shall deem appropriate for such purpose, (ii) grant a Lien to the Agent on such  Person’s assets of the same type that constitute Collateral to secure the Obligations, and (iii) deliver to the  Agent documents of the types referred to in clauses (iii) and (iv) of Section 4.01(a) and favorable opinions  of counsel to such Person (which shall cover, among other things, the legality, validity, binding effect and  enforceability  of  the  documentation  referred  to  in  clause (a)),  and  (b)  if  any  Equity  Interests  or  Indebtedness of such Person are directly owned by or on behalf of any Loan Party, to pledge such Equity  Interests and promissory notes evidencing such Indebtedness (except that, if such Subsidiary is a CFC or  FSHCO that is not joined as a Loan Party, the Equity Interests of such Subsidiary to be pledged shall be  limited to 65% of the outstanding voting Equity Interests of such Subsidiary and 100% of the non-voting  Equity Interests of such Subsidiary, in each case in form, content and scope reasonably satisfactory to the  Agent.  In no event shall compliance with this Section 6.12 waive or be deemed a waiver or Consent to  any  transaction  giving  rise  to  the  need  to  comply  with  this Section 6.12 if  such  transaction  was  not  otherwise expressly permitted by this Agreement or constitute or be deemed to constitute, with respect to  any Subsidiary, an approval of such Person as a Borrower or permit the inclusion of any acquired assets  in the computation of the Borrowing Base.         6.13  Cash Management.               (a)   On or prior to the Closing Date:                      (i)   deliver  to  the  Agent  copies  of  notifications  (each, a  “Credit  Card        Notification”) substantially in the form attached hereto as Exhibit G which have been executed on        behalf of such Loan Party and delivered to such Loan Party’s Credit Card Issuers and Credit Card        Processors  listed on Schedule 5.21(b); and                      (ii)  enter  into  a  Blocked  Account  Agreement  satisfactory  in  form  and        substance to the Agent with each Blocked Account Bank (collectively, the “Blocked Accounts”).               (b)   At the request of the Agent, the Loan Parties shall deliver to the Agent copies of  notifications (each, a “DDA Notification”), in form and substance reasonably satisfactory to the Agent,  which have been executed on behalf of such Loan Party and delivered to each depository institution listed  on Schedule 5.21(a).               (c)   The Loan Parties shall ACH or wire transfer no less frequently than daily (and  whether or not there are then any outstanding Obligations) to a Blocked Account all amounts on deposit  in each DDA (net of an amount not to exceed $2,500.00) that is not a Blocked Account and all payments  due from all Credit Card Issuers and Credit Card Processors.               (d)   Each Blocked Account Agreement shall require upon notice from Agent which  notice shall be delivered only after the occurrence and during the continuance of a Cash Dominion Event  the ACH or wire transfer no less frequently than daily (and whether or not there are then any outstanding  Obligations)  to  the  concentration  account maintained by  the  Agent  at Wells  Fargo  (the  “Concentration  Account”), of all cash receipts and collections received by each Loan Party from all sources, including,  without limitation, the following:                     (i)   all  available  cash  receipts  from  the  sale  of  Inventory  and  other  assets        (whether or not constituting Collateral);                                        106 

 

                           (ii)  all proceeds of collections of Accounts;                      (iii) all Net Proceeds, and all other cash payments received by a Loan Party        from  any  Person  or  from  any  source  or  on  account  of  any  Disposition  or  other  transaction  or        event;                     (iv)  the  then  contents  of  each  DDA  (net  of  any  minimum  balance,  not  to        exceed $2,500.00, as may be required to be kept in the subject DDA by the depository institution        at which such DDA is maintained);                      (v)   the  then  entire  ledger  balance  of  each  Blocked  Account  (net  of  any        minimum balance, not to exceed $2,500.00, as may be required to be kept in the subject Blocked        Account by the Blocked Account Bank); and                     (vi)  the proceeds of all credit card charges.               (e)   The  Concentration  Account  shall  at  all  times  be  under  the  sole  dominion  and  control of the Agent.  The Loan Parties hereby acknowledge and agree that (i) the Loan Parties have no  right  of  withdrawal  from  the  Concentration  Account,  (ii)  the  funds  on  deposit  in  the  Concentration  Account shall at all times be collateral security for all of the Obligations and (iii) the funds on deposit in  the Concentration Account shall be applied to the Obligations as provided in this Agreement.  At all times  during  a  Cash  Dominion  Event,  notwithstanding  the  provisions  of  this Section 6.13,  any  Loan  Party  receives or otherwise has dominion and control of any such cash receipts or collections, such receipts and  collections shall be held in trust by such Loan Party for the Agent, shall not be commingled with any of  such Loan Party’s other funds or deposited in any account of such Loan Party and shall, not later than the  Business  Day  after  receipt  thereof,  be  deposited  into  the  Concentration  Account  or  dealt  with  in  such  other fashion as such Loan Party may be instructed by the Agent.               (f)   Upon  the  request  of  the  Agent,  the  Loan  Parties  shall  cause  bank  statements  and/or other reports to be delivered to the Agent not less often than monthly, accurately setting forth all  amounts deposited in each Blocked Account to ensure the proper transfer of funds as set forth above.         6.14  Information Regarding the Collateral.               Furnish to the Agent at least thirty (30) days prior written notice of any change in: (i) any  Loan  Party’s  name  or  in  any  trade  name  used  to  identify  it  in  the  conduct  of  its  business  or  in  the  ownership of its properties; (ii) the location of any Loan Party’s chief executive office, its principal place  of business, any office in which it maintains books or records relating to Collateral owned by it or any  office or facility at which Collateral owned by it is located (including the establishment of any such new  office  or  facility); (iii)  any  Loan  Party’s  organizational  structure  or  jurisdiction  of  incorporation  or  formation; (iv) any Loan Party’s Federal Taxpayer Identification Number or organizational identification  number assigned to it by its state of organization; or (v) the Canadian provinces or territories in which any  Loan  Party  maintains  any  assets  or  other  property  included  in  the  Borrowing  Base.  The  Loan  Parties  agree not to effect or permit any change referred to in the preceding sentence unless all filings have been  made under  the  UCC  or  otherwise  that  are  required  in  order  for  the  Agent  to  continue  at  all  times  following  such  change  to  have  a  valid,  legal  and  perfected  first  priority  security  interest  in  all  the  Collateral  (subject  only  to  Permitted  Encumbrances  having  priority  over  the  Lien  of  the  Agent  by  operation of applicable Law) for its own benefit and the benefit of the other Credit Parties.                                         107 

 

               6.15  Physical Inventories.               (a)   Cause  not  less  than  one  (1)  physical  inventory or  full  cycle  count to  be  undertaken, at the expense of the Loan Parties, in each Fiscal Year and periodic cycle counts, in each case  consistent  with  past  practices,  conducted  by  such inventory  takers  as  are  satisfactory  to  the  Agent  and  following  such  methodology  as is  consistent  with  the  methodology  used in  the immediately  preceding  inventory  or  as  otherwise  may  be  satisfactory  to  the  Agent.   The  Agent,  at  the  expense  of  the  Loan  Parties, may participate in and/or observe each scheduled physical count of Inventory which is undertaken  on behalf of any Loan Party.  The Lead Borrower, within thirty (30 days following the completion of such  inventory, shall provide the Agent with a reconciliation of the results of such inventory (as well as of any  other physical inventory or cycle counts undertaken by a Loan Party) and shall post such results to the  Loan Parties’ stock ledgers and general ledgers, as applicable.               (b)   Permit  the  Agent,  in  its  discretion,  if  any  Event  of  Default  exists,  to  cause  additional such inventories to be taken as the Agent determines (each, at the expense of the Loan Parties).         6.16  Environmental Laws.               (a)   Conduct  its  operations  and  keep  and  maintain  its  Real  Estate  in  material  compliance with all Environmental Laws; (b) obtain and renew all environmental permits necessary for  its  operations  and  properties;  and  (c)  implement  any  and  all  investigation,  remediation,  removal  and  response actions that are required to comply in all material respects with Environmental Laws pertaining  to the presence, generation, treatment, storage, use, disposal, transportation or release of any Hazardous  Materials on, at, in, under, above, to, from or about any of its Real Estate, provided, however, that neither  a  Loan  Party  nor  any  of  its  Subsidiaries  shall  be  required  to  undertake  any  such  cleanup,  removal,  remedial or other action to the extent that its obligation to do so is being contested in good faith and by  proper  proceedings  and  adequate  reserves  have  been  set  aside  and  are  being  maintained  by  the  Loan  Parties with respect to such circumstances in accordance with GAAP.         6.17  Further Assurances.               (a)   Execute  any  and  all  further  documents,  financing  statements,  agreements  and  instruments, and take all such further actions (including the filing and recording of financing statements  and  other  documents),  that  may  be  required  under  any  applicable  Law,  or  which  the  Agent  may  reasonably  request,  to  effectuate  the  transactions  contemplated  by  the  Loan  Documents  or  to  grant,  preserve, protect or perfect the Liens created or intended to be created by the Security Documents or the  validity or priority of any such Lien, all at the expense of the Loan Parties. The Loan Parties also agree to  provide  to  the  Agent,  from  time  to  time  upon  request,  evidence  satisfactory  to  the  Agent  as  to  the  perfection and priority of the Liens created or intended to be created by the Security Documents.               (b)   If  any  material  assets  are  acquired  by  any  Loan  Party  after  the  Closing  Date  (other  than  assets  constituting  Collateral  under  the  Security  Documents  that  become  subject  to  the  perfected  first-priority  Lien  under  the  Security  Documents  upon  acquisition  thereof),  notify  the  Agent  thereof, and the Loan Parties will cause such assets to be subjected to a Lien securing the Obligations and  will take such actions as shall be necessary or shall be reasonably requested by the Agent to grant and  perfect such Liens, including actions described in paragraph (a) of this Section 6.17, all at the expense of  the Loan Parties. In no event shall compliance with this Section 6.17(b) waive or be deemed a waiver or  Consent to any transaction giving rise to the need to comply with this Section 6.17(b) if such transaction  was not otherwise expressly permitted by this Agreement or constitute or be deemed to constitute Consent  to the inclusion of any acquired assets in the computation of the Borrowing Base.                                        108 

 

               6.18  Compliance with Terms of Leaseholds         .  Except as otherwise expressly permitted hereunder or could not reasonably be expected to have  a Material Adverse Effect, (a) make all payments and otherwise perform all obligations in respect of all  Leases  to which  any  Loan  Party  or  any  of  its  Subsidiaries  is  a  party  unless  such  payments  are  being  contested  pursuant  to Section  6.04, keep  such  Leases  in  full  force  and  effect,  and  (b)  not  allow  such  Leases to lapse or be terminated or any rights to renew such Leases to be forfeited or cancelled.         6.19  Material Contracts         .  (a) Perform and observe all the terms and provisions of each Material Contract to be performed  or observed by it in all material respects, (b) maintain each such Material Contract in full force and effect  except, in the case of agreements described in clause (a) of the definition of Material Contract, if (x) such  agreements  are  replaced  by  a  similar  agreement  or  arrangement or  (y) such  termination  could  not  reasonably be expected to have a Material Adverse Effect, and (c) use commercially reasonable efforts to  take all such action to such end as may be from time to time requested by the Agent.         6.20  OFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws.         Each  Loan  Party  will,  and  will  cause  each  of  its  Subsidiaries  to  comply  with  all  applicable  Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws.  Each of the Loan Parties and its  Subsidiaries  shall  implement  and  maintain  in  effect  policies  and  procedures  designed  to  ensure  compliance by the Loan Parties and their Subsidiaries and their respective directors, officers, employees,  agents and Affiliates with all Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws.  Each  of the Loan Parties shall and shall cause their respective Subsidiaries to comply with all Sanctions, Anti- Corruption Laws and Anti-Money Laundering Laws.                                   ARTICLE VII                              NEGATIVE COVENANTS         So  long  as  any  Lender  shall  have  any  Commitment  hereunder,  any  Loan  or  other  Obligation  hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding (subject to  Section 1.02(d)), no Loan Party shall, nor shall it permit any Subsidiary (provided that Section 7.14 shall  not apply to any non-Loan Party Subsidiaries) to, directly or indirectly:         7.01  Liens         .  Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues,  whether now owned or hereafter acquired other than Permitted Encumbrances.          7.02  Investments         .  Make any Investments, except Permitted Investments.         7.03  Indebtedness; Disqualified Stock.  Create, incur, assume, guarantee, suffer to exist or  otherwise  become  or  remain  liable  with  respect  to,  any  Indebtedness  (including  the  issuance  of  Disqualified Stock) except Permitted Indebtedness.         7.04  Fundamental Changes         .  Merge, dissolve, liquidate, divide, consolidate with or into another Person, except that:                                        109 

 

    (a)  any Subsidiary which is not a Loan Party may merge with (i) a Loan Party, provided that   the Loan Party shall be the continuing or surviving Person or the surviving Person shall join as   a Loan Party in accordance with Section 6.12, or (ii) any one or more other Subsidiaries which   are not Loan Parties, provided that when any wholly-owned Subsidiary is merging with another   Subsidiary that is not wholly-owned, the wholly-owned Subsidiary shall be the continuing or   surviving Person;     (b)  any Subsidiary which is a Loan Party may merge into any Subsidiary which is a Loan   Party  or into  a Borrower, provided that in  any  merger  involving  a  Borrower,  such  Borrower   shall be the continuing or surviving Person;    (c)  so  long  as  no  Default  or  Event  of  Default  has  occurred  or  would  result  therefrom,  in   connection with a Permitted Acquisition, any Subsidiary of a Loan Party may merge with or   into or consolidate with any other Person or permit any other Person to merge with or into or   consolidate with it; provided that the Person surviving such merger shall be a wholly-owned   Subsidiary of a Loan Party and such Person shall become a Loan Party in accordance with the   provisions of Section 6.12 hereof;     (d)  so long as no Default or Event of Default has occurred or would result therefrom, any   Loan Party which is a limited liability company may divide into two or more limited liability   companies so long as each of the resulting Persons shall remain jointly and severally liable for   the Obligations, and each resulting Person remains and, as applicable, is joined as a Loan Party   hereunder; and    (e)  so long as no Default or Event of Default has occurred or would result therefrom, any   Subsidiary  (other  than  any  Loan  Party)  may  liquidate  or  dissolve if  the  Lead  Borrower   determines in good faith that such liquidation is in the best interests of such Borrower and could   not have a Material Adverse Effect.    7.05  Dispositions   .  Make any Disposition except Permitted Dispositions.   7.06  Restricted Payments   .  Declare or make, directly or indirectly, any Restricted Payment, except that:     (a)  (i) the Loan Parties and each Subsidiary of a Loan Party may make Restricted Payments   to any Loan Party and (ii) any non-Loan Party Subsidiaries may make Restricted Payments to   any Subsidiary, Loan Party or third party on a ratable basis;    (b)  the Loan Parties and each Subsidiary may declare and make dividend payments or other   distributions  payable  solely  in  the  common  stock  or  other  common  Equity  Interests  of  such   Person;    (c)  if the Payment Conditions are satisfied, the Loan Parties and each Subsidiary may make   any Restricted Payment;     (d)  cash payment, in lieu of issuance of fractional shares in connection with the exercise of   warrants, options or other securities convertible into or exchangeable for the Equity Interests of   the Lead Borrower or a Subsidiary;                                  110 

 

                (e)  repurchases  of  Equity  Interests  deemed  to  occur  upon  the  exercise  of  stock  options,         warrants  or  other  convertible  or  exchangeable  securities  if  such  Equity  Interests  represents  a         portion  of  the  exercise,  conversion  or  exchange  price  thereof  and  repurchases  of  Equity         Interests deemed to occur upon the withholding of a portion of the Equity Interests granted or         awarded  to  a  current  or  former  officer,  director,  employee  or  consultant  to  pay  for the  taxes         payable by such Person upon such grant or award (or upon vesting thereof), provided that, such         payments pursuant to this clause (e) shall not exceed an aggregate amount of $2,500,000 in any         Fiscal Year;          (f)  repurchases  of  the  Borrower’s  Equity  Interests  in  connection  with  the  issuance  of any         Permitted Convertible Indebtedness (including  through  payments  under  or  pursuant  to         accelerated or forward stock repurchase arrangements or settlement of call spreads entered into         at  the  time  of  and  in  connection  with such  issuance),  but  in  each  case  under  this  clause  (f)         solely to the extent necessary to repurchase the “delta hedge” amount related to such issuance,         determined in accordance with customary practices, provided that, such payments pursuant to         this clause (f) shall be made solely with the proceeds of, and shall not exceed 10% of, the net         cash  proceeds  from  such  issuance of Permitted Convertible  Indebtedness and  such  purchases         shall  be  made  with  the  proceeds  of  such  Permitted  Convertible  Indebtedness  substantially         contemporaneous with the Loan Parties receipt of the same;          (g)  the  purchase  of  any  Permitted  Equity  Derivatives  of  the  Lead  Borrower  in  connection         with the issuance of any Permitted Convertible Indebtedness permitted under Section 7.03 (and         the replacement of any such Permitted Equity Derivatives); provided, that the purchase price         for such Permitted Equity Derivatives, net of any proceeds relating to any concurrent sale or         termination of any Permitted Equity Derivatives, in respect of any such Permitted Convertible         Indebtedness does not exceed 15% of the net cash proceeds from such issuance of Permitted         Convertible  Indebtedness,  and  such  purchases  shall  be  made  with  the  proceeds  of  such         Permitted  Convertible  Indebtedness  substantially  contemporaneous  with the  Loan  Parties         receipt of the same;          (h)  so long as no Event of Default has occurred or would result therefrom, the settlement or         termination of any Permitted Equity Derivatives; provided, that the entry into such Permitted         Equity  Derivative  was  not  prohibited  by  this  Agreement and  any  cash  payments  made  to         hedging counterparties or other Persons in connection with such Permitted Equity Derivatives         shall only be made pursuant to other clauses of Section 7.06;          (i)  so  long  as  no Default  or Event  of  Default  has  occurred  or  would  result therefrom, the         Lead Borrower may repurchase, redeem, retire or otherwise acquire for value Equity Interests         (including any stock appreciation rights in respect thereof) of the Lead Borrower from current         or former employees, officers, directors or consultants; provided, that the aggregate annual cash         payments  in  respect  of  such  repurchases,  redemptions,  retirements  and  acquisitions  shall not         exceed $2,500,000 in any Fiscal Year;    provided, no Loan Party shall be permitted to make any Restricted Payment in the form of any Intellectual  Property to any Person (other than another Loan Party).         7.07  Prepayments of Indebtedness         .  Prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity (or, with  respect to the Growth Capital Subordinated Indebtedness, at or  prior to maturity) thereof in any manner  any Indebtedness of the type described in clause (a) of the definition thereof, or make any cash payments                                        111 

 

         upon the settlement, conversion, termination or otherwise in connection with any Permitted Convertible  Indebtedness, except for the following:          (a)  regularly scheduled or mandatory repayments, repurchases, redemptions or defeasances         of (i) Permitted Indebtedness (other than Subordinated Indebtedness), (ii) as long as no Default         or  Event  of  Default  then  exists, Subordinated  Indebtedness (other  than  the Growth  Capital         Subordinated Indebtedness) in  accordance  with  the  subordination  terms  thereof  or  the         applicable subordination agreement relating thereto, and (iii) as long as the Payment Conditions         are  satisfied,  Indebtedness  between  the  Loan  Parties  and non-Loan  Parties  so  long  as  such         Indebtedness is subject to the Subordinated Intercompany Note;           (b)  as long as the Payment Conditions are satisfied (i) voluntary prepayments, repurchases,         redemptions  or  defeasances  of: (A)  Permitted  Indebtedness  (other  than Subordinated         Indebtedness and  Permitted  Convertible  Indebtedness) and (B)  Subordinated  Indebtedness         (other  than  the Growth  Capital Subordinated Indebtedness) in  accordance  with  the         subordination terms thereof or the applicable subordination agreement relating thereto and (ii)         cash payments of any Permitted Convertible Indebtedness;           (c)  with respect to the Growth Capital Subordinated Indebtedness:                      (i)   any payments permitted to be made pursuant to Section 4 of the Growth              Capital  Subordination  Agreement  (without  regard  to  the  last  sentence  of  Section  4(a)              thereof); and                     (ii)  as  long  as  the  Payment  Conditions  are  satisfied,  other  payments  in              respect  of  the  Growth  Capital  Subordinated  Indebtedness  which are  not  otherwise              permitted  to  be  made  pursuant  to  Section  4  of  the  Growth  Capital  Subordination              Agreement  (without  regard  to  the  last  sentence  of  Section  4(a)  thereof)  (including,              without limitation, prepayments thereof required to be made pursuant to clauses (d) and              (e)  of  the  definition  of  “Permitted  Indebtedness”  in  the  Growth  Capital  Subordinated              Loan Agreement as in effect as of the date hereof);          (d)  [reserved];          (e)  repayments  of  principal  and  interest and  other  payments of  any  Indebtedness  with  the         proceeds of a Permitted Refinancing thereof or by exchange or conversion to Equity Interests of         Lead  Borrower substantially  contemporaneously  therewith (other  than  Disqualified Stock)  as         well as cash payment, in lieu of issuance of fractional shares in connection therewith; provided         that, with respect to a refinancing of any Subordinated Indebtedness, such refinancing shall also         be  in  accordance  with  the  subordination  terms  thereof  or  the  applicable  subordination         agreement relating thereto;           (f)  so  long  as  no  Default  or Event  of  Default  then  exists  or  would  result  therefrom,  cash         settlement upon any conversion of Permitted Convertible Indebtedness in accordance with the         terms thereof in an aggregate amount not to exceed the principal amount thereof; and           (g)  as  long  as  no  Cash  Dominion  Event  then  exists  and  is  continuing,  such  prepayments,         redemptions,  repurchases  or  defeasements  of  Indebtedness  made  substantially  simultaneously         with proceeds of Equity Interests issued by Lead Borrower.                                         112 

 

               7.08  Change in Nature of Business               (a)   In  the  case  of  each  of  the  Loan  Parties,  engage  in  any  line  of  business  substantially  different  from  the  Business  conducted  by  the  Loan  Parties  and  their  Subsidiaries  on  the  Closing  Date or  any  business  reasonably  related,  incidental,  ancillary  or  complementary  thereto,  or  a  reasonable extension, development or expansion thereof.         7.09  Transactions with Affiliates         .  Enter into, renew, extend or be a party to any transaction of any kind with any Affiliate of any  Loan Party, whether or not in the ordinary course of business, other than on fair and reasonable terms  substantially  as  favorable  to  the  Loan  Parties  or  such  Subsidiary  as  would  be  obtainable  by  the  Loan  Parties or such Subsidiary at the time in a comparable arm’s length transaction with a Person other than  an Affiliate, provided that the foregoing restriction shall not apply to (a) a transaction between or among  the Loan Parties, (b) transactions described on Schedule 7.09 hereto, (c) advances for commissions, travel  and other similar purposes in the ordinary course of business to directors, officers and employees, (d) the  issuance of Equity Interests in the Lead Borrower to any officer, director, employee or consultant of the  Lead Borrower or any of its Subsidiaries, (e) the payment of reasonable fees and out-of-pocket costs to  directors, and compensation and employee benefit arrangements paid to, and indemnities provided for the  benefit of, directors, officers or employees of the Lead Borrower or any of its Subsidiaries, and (f) any  issuances of securities of the Lead Borrower (other than Disqualified Stock and other Equity Interests not  permitted hereunder) or other payments, awards or grants in cash, securities or otherwise pursuant to, or  the funding of, employment agreements, stock options and stock ownership plans (in each case in respect  of Equity Interests in the Lead Borrower) of the Lead Borrower or any of its Subsidiaries.         7.10  Burdensome Agreements         .  Enter into or permit to exist any Contractual Obligation (other than this Agreement or any other  Loan  Document) that  (a)  limits  the  ability  (i)  of  any Subsidiary  to  make  Restricted  Payments  or  other  distributions to any Loan Party or to otherwise transfer property to or invest in a Loan Party, (ii) of any  Subsidiary to Guarantee the Obligations, (iii) of any Subsidiary to make or repay loans to a Loan Party, or  (iv) of the Loan Parties or any Subsidiary to create, incur, assume or suffer to exist Liens on property of  such Person in favor of the Agent or (b) requires the grant of a Lien to secure an obligation of such Person  if a Lien is granted to secure another obligation of such Person; provided, however, that this Section 7.10  shall  not  prohibit (1) any negative  pledge incurred  or  provided in  favor  of  any  holder  of  Indebtedness  permitted under clauses (c) or (f) of the definition of Permitted Indebtedness solely to the extent any such  negative pledge relates to the property financed by or the subject of such Indebtedness; (2) the Growth  Capital  Subordinated  Indebtedness to  the  extent  constituting  Permitted  Indebtedness  hereunder;  (3)  customary  provisions  restricting  assignment  of any  agreement  or  license  entered  into  by  the  Lead  Borrower or any Subsidiary thereof in the ordinary course of business; (4) any prohibition or limitation  that (i) exists pursuant to applicable Law, (ii) consists of customary restrictions and conditions contained  in  any  agreement  relating  to  any Lien permitted to  be  incurred under  Section  7.01, or (iii) consists  of  customary  provisions  restricting subletting  or  assignment  of  leasehold  interests  contained  in  any  lease  governing a leasehold interest of the Lead Borrower or a Subsidiary entered into in the ordinary course of  business; (5) any agreement of a Person that becomes a Subsidiary of the Lead Borrower as permitted  hereunder and in effect at the time such Person becomes a Subsidiary of the Lead Borrower, so long as  such  agreement  was  not  entered  into (or  made  more  restrictive) in  contemplation  of  such  Person  becoming a Subsidiary of the Lead Borrower, or (v) any instrument of a Person acquired as permitted  hereunder governing Permitted Indebtedness  assumed  in  connection  with  any  Permitted  Acquisition,  which  encumbrance  or  restriction contained  in  such  instrument  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                                        113 

 

         acquired and  were  not  created  (or  made  more  restrictive)  in  connection  with  or  in  anticipation  of  the  respective acquisition.         7.11  Use of Proceeds         .  Use  the  proceeds  of  any  Credit  Extension,  whether  directly  or  indirectly,  and  whether  immediately, incidentally or ultimately, (a) to purchase or carry Margin Stock or to extend credit to others  for  the  purpose  of  purchasing  or  carrying  any  such Margin  Stock  or  extending  credit  to  others  for the  purpose of purchasing or carrying any such Margin Stock or for any purpose that violates the provisions  of Regulation T, U or X of the FRB; (b) to make any payments to a Sanctioned Entity or a Sanctioned  Person,  to  finance  any  investments  in  a  Sanctioned  Entity  or  a  Sanctioned  Person,  to  fund  any  investments, loans or contributions in, or otherwise make such proceeds available to, a Sanctioned Entity  or  a  Sanctioned  Person,  to  fund  any  operations,  activities  or  business  of  a  Sanctioned  Entity  or  a  Sanctioned Person, or in any other manner that would result in a violation of Sanctions by any Person; (c)  in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money,  or  anything  else  of  value,  to  any Person  in  violation of  any Sanctions,  Anti-Corruption  Laws or  Anti- Money Laundering Laws; or (d) for purposes other than those permitted under this Agreement.         7.12  Amendment of Material Documents.         Amend,  modify,  supplement or  waive  any  of  a  Loan  Party’s  rights  under  (a)  its  Organization  Documents in a manner materially adverse to the Credit Parties or (b) any Material Indebtedness (other  than on account of any refinancing thereof otherwise permitted hereunder), in each case to the extent that  such amendment, modification or waiver (i) would result in an Event of Default under any of the Loan  Documents, (ii) would be materially adverse to the Credit Parties, (iii) would be in violation of the Capital  Growth Subordination Agreement in the case of the Growth Capital Subordinated Loan Documents, or  (iv) otherwise would be reasonably likely to have a Material Adverse Effect.         7.13  Fiscal Year.         Change the Fiscal Year of any Loan Party, or the accounting policies or reporting practices of the  Loan Parties, except as required by GAAP.         7.14  Deposit Accounts; Credit Card Processors.         Open  new  DDAs  or deposit  accounts unless  the  Loan  Parties  shall  have provided  contemporaneous written notice to the Agent and delivered to the Agent Blocked Account Agreements  consistent  with  the  provisions  of Section 6.13 (and  if  requested  by  the  Agent,  appropriate  DDA  Notifications) and otherwise satisfactory to the Agent.  No Loan Party shall maintain any bank accounts  or  enter  into  any  agreements  with  Credit  Card  Issuers  or  Credit  Card Processors  other  than  the  ones  expressly contemplated herein or in Section 6.13 hereof.         7.15  Financial Covenants.                 Permit Availability at any time to be less than the greater of (i) ten percent (10%) of the  Loan Cap and (ii) $3,000,000.                                   ARTICLE VIII                       EVENTS OF DEFAULT AND REMEDIES          8.01  Events of Default                                        114 

 

   .  Any of the following shall constitute an Event of Default:     (a)  Non-Payment.  The Borrowers or any other Loan Party fails to pay when and as required   to be paid herein, (i) any amount of principal of any Loan or any L/C Obligation, or deposit any   funds as Cash Collateral in respect of L/C Obligations, or (ii) any interest on any Loan or on   any  L/C  Obligation,  or  any  fee  due  hereunder within  three  (3)  Business  Days  after  the  date   when  due  hereunder,  or  (iii)  any  other  amount  payable  hereunder  or  under  any  other  Loan   Document within five (5) Business Days after the date when due hereunder; or    (b)  Specific Covenants.  Any Loan Party fails to perform or observe any term, covenant or   agreement contained in the Post-Closing Letter or any of Section 6.01, 6.02(b) and (c), 6.03(a),   6.05 (solely with respect to the Loan Parties), 6.07, 6.10, 6.11, 6.12, 6.13, 6.14, or Article VII   provided, that with respect to Sections 6.10 and 6.14 such failure continues for fifteen (15) days   after the earlier of (i) the date any Loan Party has (or reasonably should have had) knowledge   of the occurrence of the acts or omissions that constitute such failure after due inquiry and (ii)   notice thereof furnished to any Loan Party by the Agent; or    (c)  Other  Defaults.   Any  Loan  Party  fails  to  perform  or  observe  any  other  covenant  or   agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its   part to be performed or observed and such failure continues for thirty (30) days after the earlier   of (i) the date any Loan Party has knowledge of the occurrence of the acts or omissions that   constitute such failure after due inquiry, and (ii) notice thereof furnished to any Loan Party by   the Agent; or     (d)  Representations and Warranties.  Any representation, warranty, certification or statement   of fact made or deemed made by or on behalf of any Borrower or any other Loan Party herein,   in any other Loan Document, or in any document delivered in connection herewith or therewith   (including, without limitation, any Borrowing Base Certificate or Beneficial Ownership Form),   or in completing any request for a Borrowing via the Portal, shall be incorrect or misleading in   any  material  respect  when  made  or  deemed  made (or,  with  respect  to  any  representation,   warranty, certification, or statement of fact qualified by materiality, incorrect or misleading in   any respect); or    (e)  Cross-Default.   (i)  Any  Loan  Party  or  any  Subsidiary  thereof  (A)  fails  to  make  any   payment  when  due  (whether  by  scheduled  maturity,  required  prepayment,  acceleration,   demand,  or  otherwise and  taking  into  account  any  grace  period  therein)  in  respect  of  any   Material  Indebtedness  (including  undrawn  committed  or  available  amounts  and  including   amounts owing to all creditors under any combined or syndicated credit arrangement), or (B)   fails  to  observe  or  perform  any  other  agreement  or  condition  relating  to  any  such  Material   Indebtedness or  contained  in  any  instrument  or  agreement  evidencing,  securing  or  relating   thereto (excluding any Swap Contract), or any other event occurs, the effect of which default or   other event is to cause, or to permit the holder or holders of such Material Indebtedness or the   beneficiary or beneficiaries of any Guarantee thereof (or a trustee or agent on behalf of such   holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required,   such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or   redeemed  (automatically  or  otherwise),  or  an  offer  to  repurchase,  prepay,  defease  or  redeem   such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable   or cash collateral in respect thereof to be demanded (excluding, in the case of any Permitted   Convertible  Indebtedness,  any  event  or  condition  that  would solely permit  the  holder  or   beneficiary of such Permitted Convertible Indebtedness to convert such Permitted Convertible   Indebtedness  into  cash,  shares  of  the  Lead  Borrower’s  common  stock  or  a  combination                                  115 

 

                      thereof); or (ii) there occurs under any Swap Contract (other than the occurrence of an Early  Termination Date (as defined in such Swap Contract) under any Permitted Equity Derivative in  connection  with  any  conversion,  redemption  or  repurchase  of  the  Permitted  Convertible  Indebtedness solely to the extent such conversion, redemption or repurchase is permitted under  this Agreement) an Early Termination resulting from (A) any event of default under such Swap  Contract as to which a Loan Party or any Subsidiary thereof is the Defaulting Party (as defined  in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract  as to which a Loan Party or any Subsidiary thereof is an Affected Party (as so defined) and, in  either  event,  the  Swap  Termination  Value  owed  by  the  Loan  Party  or  such  Subsidiary  as  a  result thereof is greater than $2,500,000; or    (f)  Insolvency  Proceedings,  Etc.  Any  Loan  Party  or  any  of  its  Subsidiaries  institutes,  consents  to  the  institution  of or  declares  its  intention  to  institute any  proceeding  under  any  Debtor  Relief  Law,  or  makes  an  assignment  for  the  benefit  of  creditors;  or  applies  for  or  consents  to  the  appointment  of  any  receiver,  trustee,  custodian,  conservator,  liquidator,  rehabilitator  or  similar  officer  for  it  or  for  all  or  any  material  part  of  its  property;  or  a  proceeding shall be commenced or a petition filed, without the application or consent of such  Person, seeking or requesting the appointment of any receiver, trustee, custodian, conservator,  liquidator,  rehabilitator  or  similar  officer  is  appointed  and  the  appointment  continues  undischarged, undismissed or unstayed for forty-five (45) calendar days or an order or decree  approving  or  ordering  any  of  the  foregoing  shall  be  entered;  or  any  proceeding  under  any  Debtor Relief Law relating to any such Person or to all or any material part of its property is  instituted without the consent of such Person and continues undismissed or unstayed for forty- five (45) calendar days, or an order for relief is entered in any such proceeding; or   (g)  Inability  to  Pay  Debts;  Attachment.   (i)  Any  Loan  Party  or  any  Subsidiary  thereof  becomes  unable  or  admits  in  writing  its  inability  or  fails  generally to  pay  its  debts  as  they  become  due  in  the  ordinary  course  of  business,  or  (ii)  any  writ  or  warrant  of  attachment  or  execution or similar process is issued or levied against all or any material part of the property of  any such Person and is not released, vacated or fully bonded within thirty (30) days after its  issuance or levy; or   (h)  Judgments.  There is entered against any Loan Party or any Subsidiary thereof (i) one or  more  judgments  or  orders  for  the payment  of money  in  an  aggregate  amount  (as  to  all  such  judgments and orders) exceeding $2,500,000 (to the extent not covered by independent third- party insurance as to which the insurer is rated at least “A” by A.M. Best Company, has been  notified  of  the  potential  claim  and  does  not  dispute  coverage),  or  (ii) any  one  or  more  non- monetary judgments that have, or could reasonably be expected to have, individually or in the  aggregate,  a  Material  Adverse  Effect  and,  in  either  case,  (A)  enforcement  proceedings  are  commenced by any creditor upon such judgment or order, or (B) there is a period of thirty (30)  consecutive days during which a stay of enforcement of such judgment or order, by reason of a  pending appeal or otherwise, is not in effect; or    (i)  ERISA.   (i)  An  ERISA  Event  occurs  with  respect  to a  Pension Plan or Multiemployer  Plan which has resulted or could reasonably be expected to result in liability of any Loan Party  under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate  amount in excess of $2,500,000 or which would reasonably likely result in a Material Adverse  Effect, or (ii) a Loan Party or any ERISA Affiliate fails to pay when due, after the expiration of  any  applicable  grace  period,  any  installment  payment  with  respect  to  its  withdrawal  liability  under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of  $2,500,000 or which would reasonably likely result in a Material Adverse Effect; or                                 116 

 

                (j)  Invalidity of Loan Documents.  (i)  Any provision of any Loan Document, at any time         after its execution and delivery and for any reason other than as expressly permitted hereunder         or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect;         or  any  Loan  Party,  any  Subsidiary  thereof or  any Governmental  Authority contests  in  any         manner  the  validity  or  enforceability  of  any  provision  of  any  Loan  Document;  or  any  Loan         Party denies that it has any or further liability or obligation under any provision of any Loan         Document, or purports to revoke, terminate or rescind any provision of any Loan Document or         seeks to avoid, limit or otherwise adversely affect any Lien purported to be created under any         Security Document; or (ii) any Lien purported to be created under any Security Document shall         cease to be, or shall be asserted by any Loan Party, any Subsidiary thereof or any Governmental         Authority not to be, a valid and perfected Lien on any Collateral, with the priority required by         the applicable Security Document; or          (k)  Change of Control.  There occurs any Change of Control; or          (l)  Cessation  of  Business.  Except  as  otherwise  expressly  permitted  hereunder,  any  Loan         Party shall take any action, or shall make a determination, whether or not yet formally approved         by any Loan Party’s management or board of directors, to (i) suspend the operation of all or         substantially all of the business of the Loan Parties, taken as a whole, (ii) solicit proposals for         the  liquidation  of,  or undertake  to  liquidate,  all  or substantially  all of the assets of  the  Loan         Parties, taken as a whole, or (iii) solicit proposals for the employment of, or employ, an agent         or other third party to conduct a program of closings, liquidations, or “Going-Out-Of-Business”         sales of all or substantially all of the business of the Loan Parties, taken as a whole;          (m)  Guaranty.  The termination or attempted termination of any Facility Guaranty except as         expressly permitted hereunder or under any other Loan Document;           (n)  Subordination.   (i)  The  subordination  provisions  of  the  documents  evidencing  or         governing any Subordinated Indebtedness, or provisions of  any intercreditor agreement entered         into  by the Agent  after  the  date  hereof,  any  such  provisions  being  referred  to  as  the         “Intercreditor  Provisions”, including,  for  the  avoidance  of  doubt,  the Growth  Capital         Subordination Agreement, shall, in whole or in part, terminate, cease to be effective or cease to         be legally valid, binding and enforceable against any holder of the applicable Indebtedness; or         (ii) any Borrower or any other Loan Party shall, directly or indirectly, (A) make any payment         on account of any Subordinated Indebtedness that has been contractually subordinated in right         of  payment  to  the  payment  of  the  Obligations,  except  to  the  extent  that  such  payment  is         permitted  by  the  terms  of  the  Intercreditor  Provisions  applicable  to  such  Subordinated         Indebtedness  or  (B) disavow  or  contest  in  any  manner  (1)  the  effectiveness,  validity  or         enforceability of any of the Intercreditor Provisions, (2) that the Intercreditor Provisions exist         for the benefit of the Credit Parties, or (3) in the case of Subordinated Indebtedness, that all         payments of principal of or premium and interest on the applicable Subordinated Indebtedness,         or realized from the liquidation of any property of any Loan Party, shall be subject to any of the         Intercreditor Provisions.          8.02  Remedies Upon Event of Default         .  If  any  Event  of  Default  occurs  and  is  continuing,  the  Agent  may,  or,  at  the  request  of  the  Required Lenders shall, take any or all of the following actions:                                         117 

 

                (a)  declare the Commitments of each Lender to make Loans and any obligation of the L/C         Issuer  to  make  L/C  Credit  Extensions  to  be  terminated,  whereupon  such  Commitments  and         obligation shall be terminated;           (b)  declare  the  unpaid  principal  amount  of  all  outstanding  Loans,  all  interest  accrued  and         unpaid thereon, and all other Obligations (other than Obligations under any Swap Contract) to         be immediately due and payable, without presentment, demand, protest or other notice of any         kind, all of which are hereby expressly waived by the Loan Parties;           (c)  require that the Loan Parties Cash Collateralize the L/C Obligations; and          (d)  whether  or  not  the  maturity  of  the  Obligations  shall  have  been  accelerated  pursuant         hereto,  proceed  to  protect,  enforce  and  exercise  all  rights  and  remedies  of  the Credit Parties         under this Agreement, any of the other Loan Documents or applicable Law, including, but not         limited  to,  by  suit  in  equity,  action  at  law  or  other  appropriate  proceeding,  whether  for  the         specific performance of any covenant or agreement contained in this Agreement and the other         Loan  Documents  or  any  instrument  pursuant  to  which  the  Obligations  are  evidenced,  and,  if         such  amount  shall  have  become  due,  by  declaration  or  otherwise,  proceed  to  enforce  the         payment thereof or any other legal or equitable right of the Credit Parties;   provided, however, that upon the occurrence of any Event of Default with respect to any Loan Party or  any  Subsidiary  thereof  under Section  8.01(f),  the  obligation  of  each  Lender  to  make  Loans  and  any  obligation  of  the  L/C  Issuer  to  make  L/C  Credit  Extensions  shall automatically  terminate,  the  unpaid  principal  amount  of  all  outstanding  Loans  and  all  interest  and  other  amounts  as  aforesaid  shall  automatically become due and payable, and the obligation of the Loan Parties to Cash Collateralize the  L/C Obligations as aforesaid shall automatically become effective, in each case without further act of the  Agent or any Lender.         No remedy herein is intended to be exclusive of any other remedy and each and every remedy  shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter  existing at law or in equity or by statute or any other provision of Law.         Each of the Lenders agrees that it shall not, unless specifically requested to do so in writing by  Agent,  take  or  cause  to  be  taken  any  action,  including,  the  commencement  of  any  legal  or  equitable  proceedings  to  enforce  any  Loan  Document  against  any  Loan  Party  or  to  foreclose  any  Lien  on,  or  otherwise enforce any security interest in, or other rights to, any of the Collateral.         8.03  Application of Funds         .  After  the  exercise  of  remedies  provided  for  in Section 8.02 (or  after  the  Loans  have  automatically  become  immediately  due  and  payable  and  the  L/C  Obligations  have  automatically  been  required to be Cash Collateralized as set forth in the proviso to Section 8.02), any amounts received on  account of the Obligations shall be applied by the Agent in the following order:               First,  to  payment  of  that  portion  of  the  Obligations  (excluding  the  Other  Liabilities)        constituting fees, indemnities, Credit Party Expenses and other amounts (including fees, charges        and disbursements of counsel to the Agent and amounts payable under Article III) payable to the        Agent;               Second,  to  payment  of  that  portion  of  the  Obligations  (excluding  the  Other  Liabilities)        constituting indemnities, Credit Party Expenses, and other amounts (other than principal, interest                                        118 

 

               and fees) payable to the Lenders and the L/C Issuer (including fees, charges and disbursements of        counsel  to  the  respective  Lenders  and  the  L/C  Issuer  and  amounts  payable  under Article III),        ratably  among  them  in  proportion  to  the  amounts described  in  this  clause Second payable  to        them;               Third, to the extent not previously reimbursed by the Lenders, to payment to the Agent of        that  portion  of  the  Obligations  constituting  principal  and  accrued  and  unpaid  interest  on  any        Permitted Overadvances;               Fourth, to the extent that Swing Line Loans have not been refinanced by a Committed        Loan, payment to the Swing Line Lender of that portion of the Obligations constituting accrued        and unpaid interest on the Swing Line Loans;               Fifth,  to  payment  of  that  portion  of  the  Obligations  constituting  accrued  and  unpaid        interest  on  the  Committed  Loans  and  other  Obligations,  and  fees  (including  Letter  of  Credit        Fees),  ratably  among  the  Lenders  and  the  L/C  Issuer  in  proportion  to  the  respective  amounts        described in this clause Fifth payable to them;               Sixth,  to  the  extent  that  Swing  Line  Loans  have  not  been  refinanced  by  a  Committed        Loan, to payment to the Swing Line Lender of that portion of the Obligations constituting unpaid        principal of the Swing Line Loans;               Seventh, to payment of that portion of the Obligations constituting unpaid principal of the        Committed Loans, ratably among the Lenders in proportion to the respective amounts described        in this clause Seventh held by them;               Eighth, to the Agent for the account of the L/C Issuer, to Cash Collateralize that portion        of L/C Obligations comprised of the aggregate undrawn amount of Letters of Credit;                Ninth, to  payment  of  all  other  Obligations  (including  without  limitation  the  cash        collateralization of unliquidated indemnification obligations for which a claim has been asserted,        but  excluding  any  Other  Liabilities),  ratably  among  the  Credit  Parties  in  proportion  to  the        respective amounts described in this clause Ninth held by them;               Tenth,  to  payment  of  that  portion  of  the  Obligations  arising  from  Cash  Management        Services to the extent secured under the Security Documents, ratably among the Credit Parties in        proportion to the respective amounts described in this clause Tenth held by them;               Eleventh, to payment of all other Obligations arising from Bank Products to the extent        secured  under  the  Security  Documents,  ratably  among  the  Credit  Parties  in  proportion  to  the        respective amounts described in this clause Eleventh held by them; and               Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to        the Loan Parties or as otherwise required by Law.   Subject to Section 2.03(c), amounts used to Cash Collateralize the aggregate undrawn amount of Letters  of Credit pursuant to clause Eighth above shall be applied to satisfy drawings under such Letters of Credit  as they occur.  If any amount remains on deposit as Cash Collateral after all Letters of Credit have either  been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in  the order set forth above.                                         119 

 

                                          ARTICLE IX                                   THE AGENT         9.01  Appointment and Authority         .  Each of the Lenders and the Swing Line Lender hereby irrevocably appoints Wells Fargo to act  on its behalf as the Agent hereunder and under the other Loan Documents (other than the Swap Contracts)  and authorizes the Agent to take such actions on its behalf and to exercise such powers as are delegated to  the Agent by the terms hereof or thereof (including, without limitation, acquiring, holding and enforcing  any  and  all  Liens  on Collateral  granted  by  any  of  the  Loan  Parties  to  secure  any  of  the  Obligations),  together with such actions and powers as are reasonably incidental thereto.  The provisions of this Article  are  solely  for  the  benefit  of  the  Agent,  the  Lenders  and  the  L/C  Issuer,  and  no  Loan  Party  or  any  Subsidiary  thereof  shall  have  rights  as  a  third  party  beneficiary  of  any  of  such  provisions (other  than  Section 9.10).         9.02  Rights as a Lender         .  The Person serving as the Agent hereunder shall have the same rights and powers in its capacity  as a Lender as any other Lender and may exercise the same as though they were not the Agent and the  term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise  requires, include the Person serving as the Agent hereunder in its individual capacity.  Such Person and its  Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory  capacity for and generally engage in any kind of business with the Loan Parties or any Subsidiary or other  Affiliate thereof as if such Person were not the hereunder and without any duty to account therefor to the  Lenders.         9.03  Exculpatory Provisions         .  The Agent shall not have any duties or obligations except those expressly set forth herein and in  the other Loan Documents.  Without limiting the generality of the foregoing, the Agent:          (a)  shall  not  be  subject  to  any  fiduciary  or  other  implied  duties,  regardless  of  whether  a         Default or Event of Default has occurred and is continuing;          (b)  shall  not  have  any  duty  to  take  any  discretionary  action  or  exercise  any  discretionary         powers, except discretionary rights and powers expressly contemplated hereby or by the other         Loan Documents that the Agent is required to exercise as directed in writing by the Required         Lenders (or such other number or percentage of the Lenders as shall be expressly provided for         herein or in the other Loan Documents), provided that the Agent shall not be required to take         any action that, in its opinion or the opinion of its counsel, may expose the Agent to liability or         that is contrary to any Loan Document or applicable Law; and          (c)  shall not, except as expressly set forth herein and in the other Loan Documents, have any         duty to disclose, and shall not be liable for the failure to disclose, any information relating to         the  Loan  Parties  or  any  of  its  Affiliates  that  is  communicated  to  or  obtained  by  the  Person         serving as the Agent or any of its Affiliates in any capacity.   The Agent shall not be liable for any action taken or not taken by it (i) with the Consent or at the request  of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as  the Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections                                         120 

 

         10.01 and 8.02) or (ii) in the absence of its own gross negligence or willful misconduct as determined by  a final and non-appealable judgment of a court of competent jurisdiction.           The Agent shall not be deemed to have knowledge of any Default or Event of Default unless and  until  notice  describing  such  Default  or  Event  of  Default  is  given  to  the  Agent  by  the  Loan  Parties,  a  Lender or the L/C Issuer. Upon the occurrence of a Default or Event of Default, the Agent shall take such  action with respect to such Default or Event of Default as shall be reasonably directed by the Applicable  Lenders.  Unless and until the Agent shall have received such direction, the Agent may (but shall not be  obligated  to)  take  such  action, or  refrain  from  taking  such  action,  with  respect  to  any  such  Default  or  Event of Default as it shall deem advisable in the best interest of the Credit Parties.  In no event shall the  Agent  be  required  to  comply  with  any  such  directions  to  the  extent  that  the  Agent  believes  that  its  compliance with such directions would be unlawful.         The  Agent  shall  not  be  responsible  for  or  have  any  duty  to  ascertain  or  inquire  into  (i)  any  statement, warranty or representation made in or in connection with this Agreement or any other Loan  Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder  or  in  connection  herewith  or  therewith,  (iii) the  performance  or  observance  of  any  of  the  covenants,  agreements or other terms or conditions set forth herein or therein or the occurrence of any Default or  Event  of  Default,  (iv) the  validity,  enforceability,  effectiveness  or  genuineness  of  this  Agreement,  any  other  Loan  Document  or  any  other  agreement,  instrument  or  document  or  the  creation,  perfection  or  priority of any Lien purported to be created by the Security Documents, (v) the value or the sufficiency of  any Collateral, or (vi) the satisfaction of any condition set forth in Article IV or elsewhere herein, other  than to confirm receipt of items expressly required to be delivered to the Agent.         9.04  Reliance by Agent.           The Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any  notice, request, certificate, consent, statement, instrument, document or other writing (including, but not  limited to, any electronic message, Internet or intranet website posting or other distribution) believed by it  to be genuine and to have been signed, sent or otherwise authenticated by the proper Person.  The Agent  also may rely upon any statement made to it orally or by telephone and believed by it to have been made  by  the  proper Person,  and  shall  not  incur  any  liability  for  relying thereon.   In  determining  compliance  with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its  terms must be fulfilled to the satisfaction of a Lender or the L/C Issuer, the Agent may presume that such  condition is satisfactory to such Lender or the L/C Issuer unless the Agent shall have received written  notice to the contrary from such Lender or the L/C Issuer prior to the making of such Loan or the issuance  of such Letter of Credit.  The Agent may consult with legal counsel (who may be counsel for any Loan  Party), independent  accountants  and  other  experts selected  by  it,  and  shall  not  be  liable  for  any  action  taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.         9.05  Delegation of Duties         .  The Agent may perform any and all of its duties and exercise its rights and powers hereunder or  under  any  other  Loan  Document  by  or  through  any  one  or  more  sub-agents  appointed  by  the  Agent  (including,  without  limitation,  appointing  a  sub-collateral  agent  in  connection  with  any  portion  of  the  Collateral).   The  Agent  and  any  such  sub-agent may perform  any  and  all  of  its  duties  and  exercise  its  rights  and  powers  by  or  through  their  respective  Related  Parties.   The  exculpatory  provisions  of this  Article shall apply to any such sub-agent and to the Related Parties of the Agent and any such sub-agent,  and  shall  apply  to  their  respective  activities  in  connection  with  the  syndication  of  the  credit  facilities  provided for herein as well as activities as the Agent.                                        121 

 

               9.06  Resignation of Agent         .  The Agent may at any time give written notice of its resignation to the Lenders and the Lead  Borrower.  Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in  consultation with the Lead Borrower, to appoint a successor, which shall be a bank with an office in the  United States, or an Affiliate of any such bank with an office in the United States.  If no such successor  shall have been so appointed by the Required Lenders and shall have accepted such appointment within  30 days after the retiring Agent gives notice of its resignation, then the retiring Agent may on behalf of  the  Lenders  and  the  L/C  Issuer,  appoint  a  successor  Agent  meeting  the  qualifications  set  forth  above;  provided that if the Agent shall notify the Lead Borrower and the Lenders that no qualifying Person has  accepted such appointment, then such resignation shall nonetheless become effective in accordance with  such notice and (1) the retiring Agent shall be discharged from its duties and obligations hereunder and  under the other Loan Documents (except that in the case of any Collateral held by the Agent on behalf of  the Lenders or the L/C Issuer under any of the Loan Documents, the retiring Agent shall continue to hold  such  collateral  security  until  such  time  as  a  successor  Agent  is  appointed)  and  (2) all  payments,  communications  and determinations  provided  to  be made  by,  to  or  through the  Agent  shall  instead  be  made by or to each Lender and the L/C Issuer directly, until such time as the Required Lenders appoint a  successor Agent as provided for above in this Section.  Upon the acceptance of a successor’s appointment  as Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers,  privileges and duties of the retiring (or retired) Agent, and the retiring Agent shall be discharged from all  of  its  duties  and  obligations  hereunder  or  under  the  other  Loan  Documents  (if  not  already  discharged  therefrom as provided above in this Section).  The fees payable by the Borrowers to a successor Agent  shall be the same as those payable to its predecessor unless otherwise agreed between the Lead Borrower  and  such  successor.   After  the  retiring  Agent’s  resignation  hereunder  and  under  the  other  Loan  Documents, the provisions of this Article and Section 10.04 shall continue in effect for the benefit of such  retiring  Agent,  its  sub-agents  and  their  respective  Related  Parties  in  respect  of  any  actions  taken or  omitted to be taken by any of them while the retiring Agent was acting as Agent hereunder.         Any  resignation  by  Wells  Fargo  as  Agent  pursuant  to  this  Section  shall  also  constitute  its  resignation as Swing Line Lender and the resignation of Wells Fargo as L/C Issuer.  Upon the acceptance  of a successor’s appointment as Agent hereunder, (a) such successor shall succeed to and become vested  with all of the rights, powers, privileges and duties of the retiring L/C Issuer and Swing Line Lender, (b)  the retiring L/C Issuer and Swing Line Lender shall be discharged from all of their respective duties and  obligations hereunder or under the other Loan Documents, and (c) the successor L/C Issuer shall issue  letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession  or make other arrangements satisfactory to the retiring L/C Issuer to effectively assume the obligations of  the retiring L/C Issuer with respect to such Letters of Credit.         9.07  Non-Reliance on Agent and Other Lenders         .  Each Lender and the L/C Issuer acknowledges that it has, independently and without reliance  upon the  Agent or  any  other  Lender  or  any  of  their Related Parties  and  based  on  such  documents  and  information  as  it  has  deemed  appropriate,  made  its  own credit  analysis  and  decision  to  enter  into  this  Agreement.  Each Lender and the L/C Issuer also acknowledges that it will, independently and without  reliance upon the Agent or any other Lender or any of their Related Parties and based on such documents  and  information  as it  shall  from time  to  time  deem  appropriate,  continue to  make  its  own  decisions  in  taking or not taking action under or based upon this Agreement, any other Loan Document or any related  agreement or any document furnished hereunder or thereunder.  Except as provided in Section 9.12, the  Agent shall not have any duty or responsibility to provide any Credit Party with any other credit or other  information concerning the affairs, financial condition or business of any Loan Party that may come into  the possession of the Agent.                                        122 

 

               9.08  No Other Duties, Etc.           Anything herein to the contrary notwithstanding, neither the Bookrunner nor the Arranger shall  have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents,  except in its capacity as the Agent, a Lender or the L/C Issuer hereunder.         9.09  Agent May File Proofs of Claim         .  In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial  proceeding relative to any Loan Party, the Agent (irrespective of whether the principal of any Loan or L/C  Obligation  shall  then  be  due  and  payable  as  herein  expressed  or  by  declaration  or  otherwise  and  irrespective of whether the Agent shall have made any demand on the Loan Parties) shall be entitled and  empowered, by intervention in such proceeding or otherwise          (a)  to file and prove a claim for the whole amount of the principal and interest owing and         unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing and         unpaid and to file such other documents as may be necessary or advisable in order to have the         claims  of  the  Lenders,  the  L/C  Issuer,  the  Agent  and  the  other Credit Parties  (including  any         claim for the reasonable compensation, expenses, disbursements and advances of the Lenders,         the L/C Issuer, the Agent, such Credit Parties and their respective agents and counsel and all         other amounts due the Lenders, the L/C Issuer the Agent and such Credit Parties under Sections         2.03, 2.09 and 10.04) allowed in such judicial proceeding; and          (b)  to collect and receive any monies or other property payable or deliverable on any such         claims and to distribute the same;   and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such  judicial proceeding is hereby authorized by each Lender and the L/C Issuer to make such payments to the  Agent and, if the Agent shall consent to the making of such payments directly to the Lenders and the L/C  Issuer, to pay to the Agent any amount due for the reasonable compensation, expenses, disbursements and  advances of the Agent and its agents and counsel, and any other amounts due the Agent under Sections  2.03, 2.09 and 10.04.         Nothing contained herein shall be deemed to authorize the Agent to authorize or consent to or  accept  or  adopt  on  behalf  of  any  Lender or  the  L/C  Issuer  any  plan  of  reorganization,  arrangement,  adjustment or composition affecting the Obligations or the rights of any Lender or the L/C Issuer or to  authorize  the  Agent  to  vote  in  respect  of  the  claim  of  any  Lender  or  the  L/C  Issuer  in  any  such  proceeding.         9.10  Collateral and Guaranty Matters         .  The Credit Parties irrevocably authorize the Agent, at its option and in its discretion,          (a)  to  release  any  Lien  on  any  property  granted  to  or  held  by  the  Agent  under  any  Loan         Document (i) upon payment in full of all Obligations subject to Section 1.02(d), (ii) that is sold         or to be sold as part of or in connection with any sale or other disposition permitted hereunder         or under any other Loan Document, or (iii) if approved, authorized or ratified in writing by the         Applicable Lenders in accordance with Section 10.01;                                         123 

 

                (b)  to subordinate  any  Lien  on Collateral granted to  or  held  by  the  Agent  under  any  Loan         Document  to  the  holder  of  any  Lien  on  such  property  that  is  permitted by  clause  (h)  of  the         definition of Permitted Encumbrances; and           (c)  to release any Guarantor from its obligations under the Facility Guaranty if such Person         ceases to be a Subsidiary as a result of a transaction permitted hereunder.   Upon  request  by  the  Agent at  any  time,  the  Applicable  Lenders  will  confirm  in  writing  the  Agent’s  authority to release or subordinate its interest in particular types or items of property, or to release any  Guarantor from its obligations under the Facility Guaranty pursuant to this Section 9.10.  In each case as  specified  in  this Section 9.10,  the  Agent  will,  at the Loan  Parties’  expense,  execute  and  deliver  to  the  applicable Loan Party such documents as such Loan Party may reasonably request to evidence the release  of  such  item  of  Collateral  from  the  assignment  and  security  interest  granted  under  the  Security  Documents or to subordinate its interest in such item, or to release such Guarantor from its obligations  under the Facility Guaranty, in each case in accordance with the terms of the Loan Documents and this  Section 9.10.         9.11  Notice of Transfer.         The Agent may deem and treat a Lender party to this Agreement as the owner of such Lender’s  portion of the Obligations for all purposes, unless and until, and except to the extent, an Assignment and  Acceptance shall have become effective as set forth in Section 10.06.         9.12  Reports and Financial Statements.         By signing this Agreement, each Lender:          (a)  agrees  to  furnish  the  Agent  (and  thereafter  at  such  frequency  as  the  Agent  may         reasonably  request)  with  a  summary  of  all  Other  Liabilities  due  or  to  become  due  to  such         Lender. In connection with any distributions to be made hereunder, the Agent shall be entitled         to  assume that  no  amounts  are  due  to  any  Lender  on  account  of  Other  Liabilities  unless the         Agent has received written notice thereof from such Lender;          (b)  is  deemed  to  have  requested  that  the  Agent  furnish  such  Lender,  promptly  after  they         become available, copies of all Borrowing Base Certificates and financial statements required         to be delivered by the Lead Borrower hereunder and all commercial finance examinations and         appraisals of the Collateral received by the Agent (collectively, the “Reports”);          (c)  expressly agrees and acknowledges that the Agent makes no representation or warranty         as to the accuracy of the Reports, and shall not be liable for any information contained in any         Report;          (d)  expressly  agrees  and  acknowledges  that  the  Reports  are  not  comprehensive  audits  or         examinations,  that  the  Agent  or  any  other  party  performing  any  audit  or  examination  will         inspect only specific information regarding the Loan Parties and will rely significantly upon the         Loan Parties' books and records, as well as on representations of the Loan Parties' personnel;          (e)  agrees to keep all Reports confidential in accordance with the provisions of Section 10.07         hereof; and                                         124 

 

                (f)  without limiting the generality of any other indemnification provision contained in this         Agreement,  agrees:  (i)  to  hold  the  Agent  and  any  such  other  Lender  preparing  a  Report         harmless  from  any  action  the  indemnifying  Lender  may  take  or  conclusion  the indemnifying         Lender may reach or draw from any Report in connection with any Credit Extensions that the         indemnifying Lender has made or may make to the Borrowers, or the indemnifying Lender's         participation in, or the indemnifying Lender's purchase of, a Loan or Loans; and (ii) to pay and         protect,  and  indemnify,  defend,  and  hold  the  Agent  and  any  such  other  Lender  preparing  a         Report harmless from and against, the claims, actions, proceedings, damages, costs, expenses,         and other amounts (including attorney costs) incurred by the Agent and any such other Lender         preparing a Report as the direct or indirect result of any third parties who might obtain all or         part of any Report through the indemnifying Lender.         9.13  Agency for Perfection.         Agent and each Lender hereby appoints each other Lender as agent for the purpose of perfecting  Liens for the benefit of the Agent and the Lenders, in assets which, in accordance with Article 9 of the  UCC or any other applicable Law of the United States can be perfected only by possession.  Should any  Lender  (other  than  the  Agent)  obtain  possession  of  any  such  Collateral,  such  Lender  shall  notify  the  Agent thereof, and, promptly upon the Agent's request therefor shall deliver such Collateral to the Agent  or otherwise deal with such Collateral in accordance with the Agent's instructions.         9.14  Indemnification of Agent         .   Without  limiting  the  obligations  of  the  Loan  Parties  hereunder,  the  Lenders  hereby  agree  to  indemnify the Agent, the L/C Issuer and any Related Party, as the case may be, ratably according to their  Applicable Percentages, from and against any and all liabilities, obligations, losses, damages, penalties,  actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be  imposed on, incurred by, or asserted against the Agent, the L/C Issuer and their Related Parties in any  way  relating  to  or  arising  out  of  this  Agreement  or  any  other  Loan  Document  or  any  action  taken  or  omitted  to  be  taken  by  the  Agent,  the  L/C  Issuer  and  their  Related  Parties in  connection  therewith;  provided, that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages,  penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent’s, the L/C  Issuer’s and their Related Parties’ gross negligence or willful misconduct as determined by a final and  nonappealable judgment of a court of competent jurisdiction.         9.15  Relation among Lenders         .   The  Lenders  are  not  partners  or  co-venturers,  and  no  Lender  shall  be  liable  for  the  acts  or  omissions of, or (except as otherwise set forth herein in case of the Agent) authorized to act for, any other  Lender.         9.16  Defaulting Lenders.                 (a)   Notwithstanding  the  provisions  of Section  2.14 hereof,  the  Agent  shall  not  be  obligated to transfer to a Defaulting Lender any payments made by the Borrowers to the Agent for the  Defaulting Lender’s benefit or any proceeds of Collateral that would otherwise be remitted hereunder to  the  Defaulting  Lender,  and,  in  the  absence  of  such  transfer  to  the  Defaulting Lender,  the  Agent  shall  transfer any such payments (i) first, to the Swing Line Lender to the extent of any Swing Line Loans that  were made by the Swing Line Lender and that were required to be, but were not, paid by the Defaulting  Lender, (ii) second, to the L/C Issuer, to the extent of the portion of a Letter of Credit Disbursement that  was required to be, but was not, paid by the Defaulting Lender, (iii) third, to each Non-Defaulting Lender                                        125 

 

         ratably in accordance with their Commitments (but, in each case, only to the extent that such Defaulting  Lender’s  portion  of  a  Loan  (or  other  funding  obligation)  was  funded  by  such  other  Non-Defaulting  Lender), (iv) to the Cash Collateral Account, the proceeds of which shall be retained by the Agent and  may be made available to be re-advanced to or for the benefit of the Borrowers (upon the request of the  Lead Borrower and subject to the conditions set forth in Section 4.02) as if such Defaulting Lender had  made its portion of the Loans (or other funding obligations) hereunder, and (v) from and after the date on  which all other Obligations have been paid in full, to such Defaulting Lender.  Subject to the foregoing,  the Agent may hold and, in its discretion, re-lend to the Borrowers for the account of such Defaulting  Lender  the  amount  of  all  such  payments  received  and  retained  by the Agent  for  the  account  of  such  Defaulting Lender.  Solely for the purposes of voting or consenting to matters with respect to the Loan  Documents  (including  the  calculation  of Applicable  Percentages in  connection  therewith)  and  for  the  purpose of calculating the fee payable under Section 2.09(a), such Defaulting Lender shall be deemed not  to be a “Lender” and such Lender’s Commitment shall be deemed to be zero; provided, that the foregoing  shall not apply to any of the matters governed by Section 10.01(a) through (c).  The provisions of this  Section 9.16 shall remain effective with respect to such Defaulting Lender until the earlier of (y) the date  on  which  all  of  the  Non-Defaulting  Lenders, the Agent, the  L/C  Issuer,  and the Borrowers  shall  have  waived, in writing, the application of this Section 9.16 to such Defaulting Lender, or (z) the date on which  such Defaulting Lender pays to the Agent all amounts owing by such Defaulting Lender in respect of the  amounts  that  it  was  obligated  to  fund  hereunder,  and,  if  requested  by the Agent,  provides  adequate  assurance of its ability to perform its future obligations hereunder (on which earlier date, so long as no  Event of Default has occurred and is continuing, any remaining cash collateral held by the Agent pursuant  to Section 9.16(b) shall be released to the Borrowers).  The operation of this Section 9.16 shall not be  construed  to  increase  or  otherwise  affect  the  Commitment  of  any  Lender,  to  relieve  or  excuse  the  performance by such Defaulting Lender or any other Lender of its duties and obligations hereunder, or to  relieve or excuse the performance by any Borrower of its duties and obligations hereunder to the Agent,  the L/C Issuer, the Swing Line Lender, or to the Lenders other than such Defaulting Lender.  Any failure  by a Defaulting Lender to fund amounts that it was obligated to fund hereunder shall constitute a material  breach by such Defaulting Lender of this Agreement and shall entitle the Borrowers, at their option, upon  written  notice  to the Agent,  to  arrange  for  a  substitute  Lender  to  assume  the  Commitment  of  such  Defaulting Lender, such substitute Lender to be reasonably acceptable to the Agent.  In connection with  the  arrangement  of such  a  substitute  Lender,  the  Defaulting  Lender  shall  have  no  right  to  refuse  to  be  replaced hereunder, and agrees to execute and deliver a completed form of Assignment and Assumption  in favor of the substitute Lender (and agrees that it shall be deemed to have executed and delivered such  document if it fails to do so) subject only to being paid its share of the outstanding Obligations (other than  any Other Liabilities, but including (1) all interest, fees (except any Commitment Fees or Letter of Credit  Fees  not  due  to  such  Defaulting  Lender  in  accordance  with  the  terms  of  this  Agreement),  and  other  amounts  that  may  be  due  and  payable  in  respect  thereof,  and  (2)  an  assumption  of  its Applicable  Percentage of  its  participation  in  the  Letters  of  Credit); provided,  that  any  such  assumption  of  the  Commitment of such Defaulting Lender shall not be deemed to constitute a waiver of any of the Credit  Parties’ or the Loan Parties’ rights or remedies against any such Defaulting Lender arising out of or in  relation to such failure to fund.  In the event of a direct conflict between the priority provisions of this  Section 9.16 and any other provision contained in this Agreement or any other Loan Document, it is the  intention of the parties hereto that such provisions be read together and construed, to the fullest extent  possible, to be in concert with each other.  In the event of any actual, irreconcilable conflict that cannot be  resolved as aforesaid, the terms and provisions of this Section 9.16 shall control and govern.               (b)   If  any  Swing  Line  Loan  or  Letter  of  Credit  is  outstanding  at  the  time  that  a  Lender becomes a Defaulting Lender then:                     (i)   such Defaulting Lender’s participation interest in any Swing Line Loan        or  Letter  of  Credit  shall  be  reallocated  among the  Non-Defaulting  Lenders  in  accordance  with                                        126 

 

   their respective Applicable Percentages but only to the extent (x) the Outstanding Amount sum of  all Non-Defaulting Lenders’ Credit Extensions after giving effect to such reallocation does not  exceed the total of all Non-Defaulting Lenders’ Commitments and (y) the conditions set forth in  Section 4.02 are satisfied at such time;               (ii)  if  the  reallocation  described  in  clause  (b)(i)  above  cannot,  or  can  only  partially, be effected, the Borrowers shall within one Business Day following notice by the Agent  (x)  first,  prepay  such  Defaulting  Lender’s participation  in  any  outstanding Swing Line Loans  (after giving effect to any partial reallocation pursuant to clause (b)(i) above) and (y) second, cash  collateralize such Defaulting Lender’s participation in Letters of Credit (after giving effect to any  partial reallocation pursuant to clause (b)(i) above), pursuant to a cash collateral agreement to be  entered into in form and substance reasonably satisfactory to the Agent, for so long as such L/C  Obligations are outstanding; provided,  that the Borrowers  shall  not  be  obligated  to  cash  collateralize any Defaulting Lender’s participations in Letters of Credit if such Defaulting Lender  is also the L/C Issuer;               (iii) if  the  Borrowers  cash  collateralize  any  portion  of  such Defaulting  Lender’s  participation  in  Letters  of  Credit  Exposure  pursuant  to  this Section  9.16(b),  the  Borrowers shall not be required to pay any Letter of Credit Fees to the Agent for the account of  such Defaulting Lender pursuant to Section 2.03 with respect to such cash collateralized portion  of such Defaulting Lender’s participation in Letters of Credit during the period such participation  is cash collateralized;               (iv)  to  the  extent  the  participation  by  any  Non-Defaulting  Lender  in  the  Letters  of  Credit  is  reallocated  pursuant  to this Section  9.16(b),  then  the  Letter  of  Credit  Fees  payable to the Non-Defaulting Lenders pursuant to Section 2.03 shall be adjusted in accordance  with such reallocation;               (v)   to the extent any Defaulting Lender’s participation in Letters of Credit is  neither cash collateralized nor reallocated pursuant to this Section 9.16(b), then, without prejudice  to any rights or remedies of the L/C Issuer or any Lender hereunder, all Letter of Credit Fees that  would have otherwise been payable to such Defaulting Lender under Section 2.03 with respect to  such portion of such participation shall instead be payable to the L/C Issuer until such portion of  such Defaulting Lender’s participation is cash collateralized or reallocated;               (vi)  so  long  as  any  Lender  is  a  Defaulting  Lender,  the  Swing  Line  Lender  shall not be required to make any Swing Line Loan and the L/C Issuer shall not be required to  issue,  amend,  or  increase  any  Letter  of  Credit,  in  each  case,  to  the  extent  (x)  the  Defaulting  Lender’s  Applicable  Percentage  of  such  Swing  Line  Loans  or  Letter  of  Credit  cannot  be  reallocated pursuant to this Section 9.16(b) or (y) the Swing Line Lender or the L/C Issuer, as  applicable, has not otherwise entered into arrangements reasonably satisfactory to the Swing Line  Lender or the L/C Issuer, as applicable, and the Borrowers to eliminate the Swing Line Lender’s  or L/C Issuer’s risk with respect to the Defaulting Lender’s participation in Swing Line Loans or  Letters of Credit; and               (vii) The  Agent  may  release  any  cash  collateral  provided  by  the  Borrowers  pursuant to this Section 9.16(b) to the L/C Issuer and the L/C Issuer may apply any such cash  collateral  to  the  payment  of  such  Defaulting  Lender’s  Applicable  Percentage  of  any  Letter  of  Credit Disbursement that is not reimbursed by the Borrowers pursuant to Section 2.03.  Subject to  Section 10.26, no reallocation hereunder shall constitute a waiver or release of any claim of any  party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting                                  127 

 

               Lender,  including  any  claim  of  a  Non-Defaulting  Lender  as  a  result  of  such  Non-Defaulting        Lender’s increased exposure following such reallocation.         9.17  Lender Press Releases.  Each Credit Party executing this Agreement agrees that neither  it nor its Affiliates will in the future issue any press releases or other public disclosure using the name of  the Agent or its Affiliates or referring to this Agreement or the other Loan Documents without at least two  (2) Business Days’ prior notice to the Agent and without the prior written consent of the Agent unless  (and only to the extent that) such Credit Party or Affiliate is required to do so under applicable Law and  then, in any event, such Credit Party or Affiliate will consult with the Agent before issuing such press  release or other public disclosure.           9.18  Providers.         Each  provider  of  Bank  Products and Cash  Management  Services  (each,  a  “Provider”)  in  its  capacity as such shall be deemed a third party beneficiary hereof and of the provisions of the other Loan  Documents  for  purposes  of  any  reference  in  a  Loan  Document  to  the  parties  for  whom  the  Agent  is  acting.  The Agent  hereby  agrees  to  act  as  agent  for such  Providers  and,  by  virtue  of  entering  into  an  agreement in respect of Bank Products or Cash Management Services (each, a “Specified Agreement”),  the applicable Provider automatically shall be deemed to have appointed each Agent as its agent and to  have  accepted  the  benefits  of  the  Loan  Documents.   It  is  understood  and  agreed  that  the  rights  and  benefits  of  each  Provider  under  the  Loan  Documents  consist  exclusively  of  such  Provider’s  being  a  beneficiary of the Liens and security interests (and, if applicable, guarantees) granted to the Agent and the  right to share in payments and collections out of the Collateral as more fully set forth herein. In addition,  each Provider, by virtue of entering into a Specified Agreement, automatically shall be deemed to have  agreed that the Agent shall have the right, but shall have no obligation, to establish, maintain, relax, or  release Bank Products Reserves and reserves in respect of Cash Management Services and that if reserves  are established there is no obligation on the part of the Agent to determine or insure whether the amount  of any such reserve is appropriate or not.  The Agent shall have no obligation to calculate the amount due  and payable with respect to any Other Liabilities, but may rely upon a written notice from the applicable  Provider provided pursuant to Section 9.12(a).  In the absence of an updated written notice, the Agent  shall be entitled to assume that the amount due and payable to the applicable Provider is the amount last  certified  to the  Agent  by  such  Provider  as  being  due and  payable  (less  any  distributions  made to  such  Provider on account thereof).  Borrowers may obtain Bank Products or Cash Management Services from  any Provider, although Borrowers are not required to do so.  Each Borrower acknowledges and agrees  that no Provider has committed to provide any Bank Products or Cash Management Services and that any  provision of any Bank Products or Cash Management Services by any Provider is in the sole and absolute  discretion of such Provider.                                             ARTICLE X                                MISCELLANEOUS         10.01 Amendments, Etc.           No  amendment  or  waiver  of  any  provision  of  this  Agreement  or  any  other  Loan  Document  (other  than  Swap  Contracts,  Bank  Products  or  Cash  Management  Services),  and  no  Consent  to  any  departure by any Loan Party therefrom, shall be effective unless in writing signed by the Agent, with the  Consent of the Required Lenders, and the Lead Borrower or the applicable Loan Party, as the case may  be,  and  acknowledged  by  the  Agent,  and  each  such  waiver  or  Consent  shall  be  effective  only  in  the                                        128 

 

         specific  instance  and  for  the  specific  purpose  for  which  given; provided, however,  that  no  such  amendment, waiver or consent shall:          (a)  increase  the  Commitment  of  any  Lender  (or  reinstate  any  Commitment  terminated         pursuant to Section 8.02) without the written Consent of such Lender;          (b)  as  to  any  Lender,  postpone  any  date  fixed  by  this Agreement  or  any  other  Loan         Document  for  (i)  any  scheduled  payment  (including  the  Maturity  Date)  or  mandatory         prepayment of principal, interest, fees or other amounts due hereunder or under any of the other         Loan Documents without the written Consent of such Lender entitled to such payment, or (ii)         any scheduled or mandatory reduction or termination of the Aggregate Commitments hereunder         or under any other Loan Document without the written Consent of such Lender;          (c)  as to any Lender, reduce the principal of, or the rate of interest specified herein on, any         Loan held by such Lender, or (subject to clause (iv) of the second proviso to this Section 10.01)         any fees or other amounts payable hereunder or under any other Loan Document to or for the         account of such Lender, without the written Consent of each Lender entitled to such amount;         provided, however,  that  only  the  Consent  of  the  Required  Lenders  shall  be  necessary  (i)  to         amend  the  definition  of  “Default  Rate”  or  to  waive  any  obligation  of  the  Borrowers  to  pay         interest  or  Letter  of  Credit  Fees  at  the  Default  Rate  or  (ii)  to  amend  any  financial  covenant         hereunder (or any defined term used therein) even if the effect of such amendment would be to         reduce the rate of interest on any Loan or to reduce any fee payable hereunder;          (d)  as to any Lender, change Section 2.13 or Section 8.03 in a manner that would alter the         pro rata sharing of payments required thereby without the written Consent of such Lender;          (e)  change any provision of this Section or the definition of “Required Lenders”, or any other         provision hereof specifying the number or percentage of Lenders required to amend, waive or         otherwise  modify  any  rights  hereunder  or  make  any  determination  or  grant  any  consent         hereunder, without the written Consent of each Lender;           (f)  except as expressly permitted hereunder or under any other Loan Document, release, or         limit the liability of, any Loan Party without the written Consent of each Lender;          (g)  except for Permitted Dispositions, release all or substantially all of the Collateral from the         Liens of the Security Documents without the written Consent of each Lender;          (h)  except  as  provided  in Section 2.15,  increase  the  Aggregate  Commitments  without  the         written Consent of each Lender;          (i)  change the definition of the term “Borrowing Base” or any component definition thereof         if as a result thereof the amounts available to be borrowed by the Borrowers would be increased         without  the  written  Consent  of  each  Lender, provided  that the  foregoing  shall  not  limit  the         discretion of the Agent to change, establish or eliminate any Reserves;          (j)  modify the definition of Permitted Overadvance so as to increase the amount thereof or,         except as provided in such definition, the time period for which a Permitted Overadvance may         remain outstanding without the written Consent of each Lender; and                                         129 

 

                (k)  except  as  expressly  permitted  herein  or  in  any  other  Loan  Document,  subordinate  the         Obligations hereunder or the Liens granted hereunder or under the other Loan Documents, to         any other Indebtedness or Lien, as the case may be without the written Consent of each Lender;   and, provided further, that (i) no amendment, waiver or Consent shall, unless in writing and signed by the  L/C Issuer in addition to the Lenders required above, affect the rights or duties of the L/C Issuer under  this Agreement or any Issuer Document relating to any Letter of Credit issued or to be issued by it; (ii) no  amendment, waiver or Consent shall, unless in writing and signed by the Swing Line Lender in addition  to the Lenders required above, affect the rights or duties of the Swing Line Lender under this Agreement;  (iii) no amendment, waiver or Consent shall, unless in writing and signed by the Agent in addition to the  Lenders required above, affect the rights or duties of the Agent under this Agreement or any other Loan  Document; (iv) the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing  executed only by the parties thereto; (v) any amendment contemplated by Section 1.09 in connection with  a  Benchmark  Transition  Event  or  an  Early  Opt-In  Election  shall be  effective  as  contemplated  by  such  Section 1.09.         Notwithstanding  anything  to  the  contrary  in  this  Agreement  or  any  other  Loan  Document,  no  provider or holder of any Bank Products or Cash Management Services shall have any voting or approval  rights hereunder (or be deemed a Lender) solely by virtue of its status as the provider or holder of such  agreements or products or the Obligations owing thereunder, nor shall the consent of any such provider or  holder  be  required  (other  than  in  their  capacities  as  Lenders,  to  the  extent  applicable)  for  any  matter  hereunder or under any of the other Loan Documents, including as to any matter relating to the Collateral  or the release of Collateral or any Loan Party.         If any Lender does not Consent (a “Non-Consenting Lender”) to a proposed amendment, waiver,  consent or release with respect to any Loan Document that requires the Consent of each Lender and that  has  been  approved  by  the  Required  Lenders,  the  Lead  Borrower  may  replace  such  Non-Consenting  Lender in accordance with Section 10.13; provided that such amendment, waiver, consent or release can  be  effected  as  a  result  of  the  assignment  contemplated  by  such  Section  (together  with  all  other  such  assignments required by the Lead Borrower to be made pursuant to this paragraph).         10.02 Notices; Effectiveness; Electronic Communications.                 (a)   Notices Generally.  Except as provided in subsection (b) below, all notices and  other communications provided for herein shall be in writing and shall be delivered by hand or overnight  courier service, mailed by certified or registered mail or sent by telecopier as follows:                     (i)   if  to  the  Loan  Parties,  the  Agent,  the  L/C  Issuer  or  the  Swing  Line        Lender, to the address, telecopier number, electronic mail address specified for such Person on        Schedule 10.02; and                      (ii)  if to any other Lender, to the address, telecopier number, electronic mail        address specified in its Administrative Questionnaire.   Notices  sent  by  hand  or  overnight  courier  service,  or  mailed  by  certified  or  registered  mail,  shall  be  deemed to have been given when received; notices sent by telecopier shall be deemed to have been given  when sent (except that, if not given during normal business hours for the recipient, shall be deemed to  have been given at the opening of business on the next Business Day for the recipient).  Notices delivered  through electronic communications to the extent provided in subsection (b) below, shall be effective as  provided in such subsection (b).                                         130 

 

                     (b)   Electronic  Communications.   Notices  and  other  communications  to  the  Loan  Parties,  the  Lenders  and  the  L/C  Issuer  hereunder  may  be  delivered  or  furnished  by  electronic  communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by  the Agent, provided that the foregoing shall not apply to notices to any Lender or the L/C Issuer pursuant  to Article II if such Lender or the L/C Issuer, as applicable, has notified the Agent that it is incapable of  receiving  notices  under  such  Article  by  electronic  communication.   The  Agent  may,  in  its  discretion,  agree to accept notices and other communications to it hereunder by electronic communications pursuant  to  procedures  approved  by  it, provided that  approval  of  such  procedures  may  be  limited  to  particular  notices or communications.         Unless  the  Agent  otherwise  prescribes,  (i) notices  and  other communications sent  to  an  e-mail  address  shall be  deemed  received  upon  the sender’s  receipt  of  an  acknowledgement  from the  intended  recipient (such as by the “return receipt requested” function, as available, return e-mail or other written  acknowledgement),  provided  that  if such  notice  or  other  communication  is  not sent  during the  normal  business hours of the recipient, such notice or communication shall be deemed to have been sent at the  opening of business on the next Business Day for the recipient, and (ii) notices or communications posted  to  an  Internet  or  intranet  website  shall  be  deemed  received  upon  the  deemed  receipt  by  the  intended  recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or  communication is available and identifying the website address therefor.               (c)   The  Platform.   THE  PLATFORM  IS  PROVIDED  “AS  IS”  AND  “AS  AVAILABLE.”   THE  AGENT  PARTIES  (AS  DEFINED  BELOW)  DO  NOT  WARRANT  THE  ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF  THE  PLATFORM,  AND  EXPRESSLY  DISCLAIM LIABILITY  FOR  ERRORS  IN  OR  OMISSIONS  FROM THE BORROWER MATERIALS.  NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED  OR  STATUTORY,  INCLUDING  ANY  WARRANTY  OF  MERCHANTABILITY,  FITNESS  FOR  A  PARTICULAR  PURPOSE,  NON-INFRINGEMENT   OF  THIRD  PARTY  RIGHTS  OR  FREEDOM  FROM  VIRUSES  OR  OTHER  CODE  DEFECTS,  IS  MADE  BY  ANY  AGENT  PARTY  IN  CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM.  In no event shall the  Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to any Loan Party,  any Lender, the L/C Issuer or any other Person for losses, claims, damages, liabilities or expenses of any  kind,  including  direct  or  indirect,  special,  incidental  or  consequential  damages,  losses  or  expenses  (whether  in  tort,  contract  or  otherwise)  arising  out  of  the  Loan Parties’  or the  Agent’s  transmission  of  Borrower  Materials or  any  other  communications through  the  Internet,  except  to  the  extent  that  such  losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a  final and non-appealable judgment to have resulted from the gross negligence or willful misconduct of  such  Agent  Party; provided, however,  that  in  no  event  shall  any  Agent  Party  have  any  liability  to any  Loan Party, any Lender, the L/C Issuer or any other Person for indirect, special, incidental, consequential  or punitive damages (as opposed to direct or actual damages).               (d)   Change of Address, Etc.  Each of the Loan Parties, the Agent, the L/C Issuer and  the  Swing  Line  Lender  may  change  its  address or telecopier  for  notices  and  other  communications  hereunder, or, solely with respect to communications, may change its telephone number, by notice to the  other parties hereto.  Each other Lender may change its address or telecopier number for notices and other  communications hereunder by notice to the Lead Borrower, the Agent, the L/C Issuer and the Swing Line  Lender.  In addition, each Lender agrees to notify the Agent from time to time to ensure that the Agent  has on record (i) an effective address, contact name, telephone number, telecopier number and electronic  mail address to which notices and other communications may be sent and (ii) accurate wire instructions  for such Lender.                                         131 

 

                     (e)   Reliance by Agent, L/C Issuer and Lenders.  The Agent, the L/C Issuer and the  Lenders shall be entitled to rely and act upon any notices (including, without limitation, all Requests for  Credit Extensions) purportedly given by or on behalf of the Loan Parties even if (i) such notices were not  made in a manner specified herein, were incomplete or were not preceded or followed by any other form  of  notice  specified  herein,  or  (ii)  the  terms  thereof,  as  understood  by  the  recipient,  varied  from  any  confirmation thereof.  The Loan Parties shall indemnify the Agent, the L/C Issuer, each Lender and the  Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance  by such Person on each notice purportedly given by or on behalf of the Loan Parties (including, without  limitation,  pursuant  to  any  Requests  for  Credit  Extensions).   All  telephonic  communications  with  the  Agent may be recorded by the Agent, and each of the parties hereto hereby consents to such recording.         10.03 No Waiver; Cumulative Remedies         .  No failure by any Credit Party to exercise, and no delay by any such Person in exercising, any  right,  remedy,  power  or  privilege  hereunder  shall  operate  as  a  waiver  thereof;  nor  shall  any  single  or  partial exercise of any right, remedy, power or privilege hereunder or under any other Loan Document  preclude  any  other  or  further  exercise  thereof  or  the  exercise  of  any  other  right,  remedy,  power  or  privilege.  The rights, remedies, powers and privileges provided herein and in the other Loan Documents  are  cumulative  and  not  exclusive  of  any  rights,  remedies,  powers  and  privileges  provided  by  law.   Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit  shall not be construed as a waiver of any Default or Event of Default, regardless of whether any Credit  Party may have had notice or knowledge of such Default or Event of Default at the time.         10.04 Expenses; Indemnity; Damage Waiver.                 (a)   Costs  and  Expenses.  Subject to  the  provisions  of Section  6.10,  the Borrowers  shall pay all Credit Party Expenses.                (b)   Indemnification by the Loan Parties.  The Loan Parties shall indemnify the Agent  (and  any  sub-agent  thereof),  each  other  Credit  Party,  and  each  Related  Party  of  any  of  the  foregoing  Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless (on  an  after  tax  basis)  from,  any  and  all  losses,  claims,  causes  of  action,  damages,  liabilities,  settlement  payments,  costs,  and  related  expenses  (including  the reasonable  and  out-of-pocket fees,  charges  and  disbursements of any counsel for any Indemnitee limited in the case of counsel to one primary counsel to  Agent,  and  to  the  extent appropriate,  one  local  counsel  to  Agent  in  each  relevant  jurisdiction  (it  being  agreed that, in the case of any actual or perceived conflict of interest between or among any Indemnitee,  such Indemnitee shall be deemed not to be similarly situated and each such Indemnitee shall be entitled to  additional counsel)), incurred by any Indemnitee or asserted against any Indemnitee by any third party or  by  any  Borrower  or  any  other  Loan  Party  arising  out  of,  in  connection  with,  or  as  a  result  of  (i) the  execution  or  delivery  of  this  Agreement,  any  other  Loan  Document  or  any  agreement  or  instrument  contemplated  hereby  or  thereby,  the  performance  by  the  parties  hereto  of  their  respective  obligations  hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, or, in  the case of the Agent (and any sub-agents thereof) and their Related Parties only, the administration of  this Agreement and the other Loan Documents, (ii) any Loan or Letter of Credit or the use or proposed  use of the proceeds therefrom (including any refusal by the L/C Issuer to honor a demand for payment  under  a  Letter  of  Credit  if  the  documents  presented  in connection  with  such  demand  do  not  strictly  comply with the terms of such Letter of Credit, any bank advising or confirming a Letter of Credit or any  other  nominated  person  with  respect  to  a  Letter  of  Credit  seeking  to  be  reimbursed  or  indemnified  or  compensated,  and  any  third  party  seeking  to  enforce  the  rights  of  a Borrower,  beneficiary,  nominated  person, transferee, assignee of Letter of Credit proceeds, or holder of an instrument or document related  to any Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from                                        132 

 

         any  property  owned  or  operated  by  any  Loan  Party  or  any  of  its  Subsidiaries,  or  any  Environmental  Liability related in any way to any Loan Party or any of its Subsidiaries, (iv) any claims of, or amounts  paid by any Credit Party to, a Blocked Account Bank or other Person which has entered into a control  agreement with any Credit Party hereunder, or (v) any actual or prospective claim, litigation, investigation  or  proceeding  relating  to  any  of  the  foregoing,  whether  based  on  contract,  tort  or  any  other  theory,  whether brought by a third party or by any Borrower or any other Loan Party or any of the Loan Parties’  directors,  shareholders  or  creditors,  and  regardless  of  whether  any  Indemnitee  is  a  party  thereto,  in  all  cases, whether or not caused by or arising, in whole or in part, out of the comparative, contributory or sole  negligence of the Indemnitee; provided that such indemnity shall not, as to any Indemnitee, be available  to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court  of competent jurisdiction by final and nonappealable judgment to have resulted from the bad faith, gross  negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by a Borrower or  any  other  Loan  Party  against  an  Indemnitee  for a  breach  in  bad  faith  if  such  Indemnitee's  obligations  hereunder or under any other Loan Document, if the Borrowers or such Loan Party has obtained a final  and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.   Paragraph (b) of this Section shall not apply with respect to Taxes other than any Taxes that represent  losses, claims, damages, etc. arising from any non-Tax claim.               (c)   Reimbursement  by  Lenders.   Without  limiting  their  obligations  under Section  9.14 hereof, to the extent that the Loan Parties for any reason fail to indefeasibly pay any amount required  under  subsection (a) or (b) of  this Section  to  be  paid by  it,  each  Lender  severally  agrees  to  pay  to the  Agent (or any such sub-agent), the L/C Issuer or such Related Party, as the case may be, such Lender’s  Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity  payment is sought) of such unpaid amount, provided that the unreimbursed expense or indemnified loss,  claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the  Agent (or any such sub-agent) or the L/C Issuer in its capacity as such, or against any Related Party of  any of the foregoing acting for the Agent (or any such sub-agent) or L/C Issuer in connection with such  capacity.   The  obligations  of  the  Lenders  under  this  subsection (c) are  subject  to  the  provisions  of  Section 2.12(d).               (d)   Waiver  of  Consequential  Damages,  Etc.  To  the  fullest  extent  permitted  by  applicable Law, the Loan Parties shall not assert, and hereby waive, any claim against any Indemnitee, on  any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or  actual  damages)  arising  out  of,  in  connection  with,  or  as  a  result  of,  this  Agreement,  any  other  Loan  Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or  thereby, any Loan or Letter of Credit or the use of the proceeds thereof.  No Indemnitee shall be liable for  any  damages  arising  from  the  use  by  unintended  recipients  of  any  information  or  other  materials  distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or  other information transmission systems in connection with this Agreement or the other Loan Documents  or the transactions contemplated hereby or thereby other than for direct or actual damages resulting from  the gross negligence or willful misconduct of such Indemnitee as determined by a final and nonappealable  judgment of a court of competent jurisdiction.               (e)   Payments.   All  amounts  due  under  this  Section  shall  be  payable  on  demand  therefor.               (f)   Survival.   The  agreements  in  this  Section  shall  survive  the  resignation  of the  Agent and the L/C Issuer, the assignment of any Commitment or Loan by any Lender, the replacement of  any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge  of all the other Obligations.                                        133 

 

               10.05 Payments Set Aside         .  To the extent that any payment by or on behalf of the Loan Parties is made to any Credit Party,  or any Credit Party exercises its right of setoff, and such payment or the proceeds of such setoff or any  part  thereof  is  subsequently  invalidated,  declared  to  be  fraudulent  or  preferential,  set  aside  or  required  (including pursuant to any settlement entered into by such Credit Party in its discretion) to be repaid to a  trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or  otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be  satisfied shall be revived and continued in full force and effect as if such payment had not been made or  such setoff had not occurred, and (b) each Lender and the L/C Issuer severally agrees to pay to the Agent  upon demand its Applicable Percentage (without duplication) of any amount so recovered from or repaid  by the Agent, plus interest thereon from the date of such demand to the date such payment is made at a  rate  per  annum  equal  to  the  Federal  Funds  Rate  from  time  to  time  in  effect.   The  obligations  of  the  Lenders and the L/C Issuer under clause (b) of the preceding sentence shall survive the payment in full of  the Obligations and the termination of this Agreement.         10.06 Successors and Assigns.               (a)   Successors  and  Assigns  Generally.   The  provisions  of  this  Agreement  shall  be  binding upon  and  inure  to  the  benefit  of  the  parties hereto  and  their  respective  successors  and  assigns  permitted  hereby,  except  that  no  Loan  Party  may  assign  or  otherwise  transfer  any  of  its  rights  or  obligations hereunder or under any other Loan Document without the prior written Consent of the Agent  and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder  except (i) to an Eligible Assignee in accordance with the provisions of Section 10.06(b), (ii) by way of  participation in accordance with the provisions of subsection Section 10.06(d), or (iii) by way of pledge or  assignment of a security interest subject to the restrictions of Section 10.06(f) (and any other attempted  assignment or transfer by any party hereto shall be null and void).  Nothing in this Agreement, expressed  or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective  successors  and  assigns  permitted  hereby,  Participants  to  the extent  provided  in  subsection (d) of  this  Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Credit Parties)  any legal or equitable right, remedy or claim under or by reason of this Agreement.               (b)   Assignments  by  Lenders.   Any  Lender may  at  any  time  assign  to  one  or more  Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a  portion  of  its  Commitment(s)  and  the  Loans  (including  for  purposes  of  this Section 10.06(b),  participations in L/C Obligations and in Swing Line Loans) at the time owing to it); provided that any  such assignment shall be subject to the following conditions:                     (i)   Minimum Amounts.                           (A)   In the case of an assignment of the entire remaining amount of        the assigning Lender's Commitment and the Loans at the time owing to it or in the case of an        assignment to a Lender or an Affiliate of a Lender or an Approved Fund with respect to a Lender,        no minimum amount need be assigned; and                           (B)   In any case not described in subsection (b)(i)(A) of this Section,        the aggregate  amount  of  the  Commitment  (which  for  this  purpose  includes  Loans  outstanding        thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the        Loans  of  the  assigning  Lender  subject  to  each  such  assignment, determined  as  of  the  date  the        Assignment  and  Assumption  with  respect  to  such  assignment  is  delivered  to  the  Agent  or,  if        “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be                                        134 

 

               less than $10,000,000 unless each of the Agent and, so long as no Event of Default has occurred        and  is  continuing,  the  Lead  Borrower  otherwise  consents  (each  such  consent  not  to  be        unreasonably  withheld  or  delayed and  shall  be  deemed  given  if  the  Lead  Borrower  has  not        responded to a request for such consent within ten (10) Business Days); provided, however, that        concurrent  assignments  to  members  of  an  Assignee  Group  and  concurrent  assignments  from        members  of  an  Assignee  Group  to  a  single  Eligible  Assignee  (or  to  an  Eligible  Assignee  and        members  of  its  Assignee  Group)  will  be  treated  as  a  single  assignment  for  purposes  of        determining whether such minimum amount has been met;                     (ii)  Proportionate  Amounts.   Each  partial  assignment  shall  be  made  as  an        assignment of a proportionate part of all the assigning Lender's rights and obligations under this        Agreement  with  respect  to  the  Loans  or  the  Commitment  assigned,  except  that  this  clause  (ii)        shall not apply to the Swing Line Lender’s rights and obligations in respect of Swing Line Loans;                      (iii) Required  Consents.   No  consent shall  be  required  for  any  assignment        except to the extent required by subsection (b)(i)(B) of this Section and, in addition:                           (A)   the  consent  of  the  Lead  Borrower  (such  consent  not  to  be        unreasonably withheld or delayed and which shall be deemed given if the Lead Borrower has not        responded to a request for such consent within ten (10) Business Days) shall be required unless        (1) an Event of Default has occurred and is continuing at the time of such assignment or (2) such        assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; and                           (B)   the  consent  of  the  Agent  (such  consent  not  to be  unreasonably        withheld  or  delayed)  shall  be  required  for  assignments  in  respect  of  any  Commitment  if  such        assignment is to a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund        with respect to such Lender; and                           (C)   the  consent  of  the  L/C  Issuer  (such  consent  not  to  be        unreasonably  withheld  or  delayed)  shall  be  required  for  any  assignment  that  increases  the        obligation of the assignee to participate in exposure under one or more Letters of Credit (whether        or not then outstanding); and                           (D)   the  consent  of  the  Swing  Line  Lender  (such consent  not  to  be        unreasonably  withheld  or  delayed)  shall  be  required  for  any  assignment  in  respect  of  the        assignment of any Commitment.                     (iv)  Assignment  and  Assumption.   The  parties  to  each  assignment  shall        execute and deliver to the Agent an Assignment and Assumption, together with a processing and        recordation fee of $3,500, provided, however, that the Agent may, in its sole discretion, elect to        waive such processing and recordation fee in the case of any assignment. The assignee, if it shall        not be a Lender, shall deliver to the Agent an Administrative Questionnaire.   Subject to acceptance and recording thereof by the Agent pursuant to subsection (c) of this Section, from  and  after  the  effective  date  specified  in  each  Assignment  and  Assumption,  the  Eligible  Assignee  thereunder  shall  be  a  party  to  this  Agreement  and,  to  the  extent  of  the  interest  assigned  by  such  Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the  assigning  Lender  thereunder  shall,  to  the  extent  of  the  interest  assigned  by  such  Assignment  and  Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment  and Assumption covering all of the assigning Lender's rights and obligations under this Agreement, such  Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 3.01,                                        135 

 

         3.04, 3.05, and 10.04 with respect to facts and circumstances occurring prior to the effective date of such  assignment.   Upon  request,  the  Borrowers  (at  their  expense)  shall  execute  and  deliver  a  Note  to  the  assignee Lender.  Any assignment or transfer by a Lender of rights or obligations under this Agreement  that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such  Lender of a participation in such rights and obligations in accordance with Section 10.06(d).               (c)   Register.  The Agent, acting solely for this purpose as an agent of the Borrowers,  shall  maintain  at  the  Agent’s  Office  a  copy  of  each Assignment  and  Assumption  delivered  to it  and  a  register  for  the  recordation  of  the  names  and  addresses  of  the  Lenders,  and  the  Commitments  of,  and  principal amounts of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof  from time to time (the “Register”).  The entries in the Register shall be conclusive, absent manifest error,  and the Loan Parties, the Agent and the Lenders may treat each Person whose name is recorded in the  Register  pursuant  to  the  terms  hereof  as  a  Lender  hereunder  for  all  purposes  of  this  Agreement,  notwithstanding  notice  to  the  contrary.   The  Register  shall  be  available  for  inspection  by  the  Lead  Borrower and any Lender at any reasonable time and from time to time upon reasonable prior notice.                 (d)   Participations.  Any Lender may at any time, without the consent of, or notice to,  the Loan Parties or the Agent, sell participations to any Person (other than a natural person or the Loan  Parties or any of the Loan Parties’ Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of  such  Lender's  rights  and/or  obligations  under  this  Agreement  (including  all  or  a  portion  of  its  Commitment and/or the Loans (including such Lender’s participations in L/C Obligations and/or Swing  Line Loans) owing to it); provided that (i) such Lender's obligations under this Agreement shall remain  unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance  of such obligations and (iii) the Loan Parties, the Agent, the Lenders and the L/C Issuer shall continue to  deal solely and directly with such Lender in connection with such Lender's rights and obligations under  this Agreement.  Any Participant shall agree in writing to comply with all confidentiality obligations set  forth in Section 10.07 as if such Participant was a Lender hereunder.         Any agreement or instrument pursuant to which a Lender sells such a participation shall provide  that  such  Lender  shall  retain the  sole  right  to  enforce this  Agreement  and  to  approve  any  amendment,  modification or waiver of any  provision of this Agreement; provided that such agreement or instrument  may provide that such Lender will not, without the consent of the Participant, agree to any amendment,  waiver or other modification described in the first proviso to Section 10.01 that affects such Participant.   Subject to subsection (e) of this Section, the Loan Parties agree that each Participant shall be entitled to  the  benefits  of Sections 3.01 (subject  to  the  requirements  and  limitations  therein,  including  the  requirements under Section 3.01(e) and (f)), 3.04 and 3.05 to the same extent as if it were a Lender and  had acquired its interest by assignment pursuant to Section 10.06(b).  To the extent permitted by law, each  Participant also shall be entitled to the benefits of Section 10.08 as though it were a Lender, provided such  Participant  agrees  to  be  subject  to Section 2.13 as  though  it  were  a  Lender.  Each  Lender  that  sells  a  participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrowers, maintain a  register on which it enters the name and address of each Participant and the principal amounts (and stated  interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the  “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of  the  Participant  Register  (including  the  identity  of  any  Participant  or  any  information  relating  to  a  Participant's interest in any commitments, loans, letters of credit or its other obligations under any Loan  Document)  to  any  Person  except  to  the  extent  that  such  disclosure  is  necessary  to  establish  that  such  commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of  the United States Treasury Regulations.  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                                        136 

 

         contrary.  For the avoidance of doubt, the Agent (in its capacity as Agent) shall have no responsibility for  maintaining a Participant Register.               (e)   Limitations upon Participant Rights.  A Participant shall not be entitled to receive  any greater payment under Section 3.01 or 3.04 than the applicable Lender would have been entitled to  receive  with  respect  to the  participation  sold  to such Participant,  unless the  sale  of  the  participation  to  such Participant is made with the Lead Borrower's prior written consent.  A Participant that would be a  Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 3.01 unless the Lead  Borrower  is  notified  of  the participation  sold  to  such  Participant  and  such  Participant  agrees,  for  the  benefit of the Loan Parties, to comply with Section 3.01(e) as though it were a Lender.               (f)   Certain Pledges.  Any Lender may at any time pledge or assign a security interest  in  all  or  any  portion  of  its  rights  under  this  Agreement  (including  under  its  Note,  if  any)  to  secure  obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve  Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations  hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.               (g)   Electronic  Execution  of  Assignments.   The  words  “execution,”  “signed,”  “signature,”  and  words  of  like  import  in  any  Assignment  and  Assumption  shall  be  deemed  to  include  electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal  effect,  validity  or  enforceability  as  a  manually  executed  signature  or  the  use  of  a  paper-based  recordkeeping  system,  as  the  case  may  be,  to  the  extent  and  as  provided  for  in  any  applicable Law,  including the Federal Electronic Signatures in Global and National Commerce Act, the New York State  Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic  Transactions Act.               (h)   Resignation  as  L/C  Issuer  or  Swing  Line  Lender  after  Assignment.   Notwithstanding anything to the contrary contained herein, if at any time Wells Fargo assigns all of its  Commitment  and  Loans  pursuant to  subsection (b) above, Wells  Fargo  may,  (i)  upon thirty  (30) days’  notice to the Lead Borrower and the Lenders, resign as L/C Issuer and/or (ii) upon thirty (30) days’ notice  to  the  Lead  Borrower,  Wells  Fargo  may  resign  as  Swing  Line  Lender.   In  the  event  of  any  such  resignation  as  L/C  Issuer  or  Swing  Line  Lender,  the  Lead  Borrower  shall  be  entitled  to  appoint  from  among the Lenders a successor L/C Issuer or Swing Line Lender hereunder; provided, however, that no  failure by the Lead Borrower to appoint any such successor shall affect the resignation of Wells Fargo as  L/C Issuer or Swing Line Lender, as the case may be.  If Wells Fargo resigns as L/C Issuer, it shall retain  all  the  rights,  powers,  privileges  and  duties  of  the  L/C  Issuer  hereunder  with  respect  to  all  Letters  of  Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with  respect thereto (including the right to require the Lenders to make Base Rate Loans pursuant to Section  2.03(c)).  If Wells Fargo resigns as Swing Line Lender, it shall retain all the rights of the Swing Line  Lender provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the  effective date of such resignation, including the right to require the Lenders to make Base Rate Loans or  fund  risk  participations  in  outstanding  Swing  Line  Loans  pursuant  to Section 2.04(c).  Upon  the  appointment of a successor L/C Issuer and/or Swing Line Lender, (a) such successor shall succeed to and  become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer or Swing  Line  Lender,  as  the  case  may  be,  and  (b)  the  successor  L/C  Issuer  shall  issue  letters  of  credit  in  substitution  for  the  Letters  of Credit,  if  any,  outstanding  at  the time of  such  succession  or  make  other  arrangements  satisfactory  to  Wells  Fargo  to  effectively  assume  the  obligations  of  Wells  Fargo  with  respect to such Letters of Credit.         10.07 Treatment of Certain Information; Confidentiality                                        137 

 

               .  Each of the Credit Parties agrees to maintain the confidentiality of the Information (as defined  below),  except  that  Information  may  be  disclosed  (a)  to  its  Affiliates  and  to  its  and  its  Affiliates’  respective  partners,  directors,  officers,  employees,  agents,  funding  sources,  attorneys,  advisors  and  representatives (it being understood that the Persons to whom such disclosure is made will be informed of  the confidential nature of such Information and instructed to keep such Information confidential), (b) to  the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self- regulatory  authority,  such  as  the  National  Association  of  Insurance  Commissioners),  (c)  to  the  extent  required by applicable Laws or regulations or by any subpoena or similar legal process, (d) to any other  party  hereto,  (e)  in  connection  with  the  exercise  of  any  remedies  hereunder  or  under  any  other  Loan  Document  or  any  action  or  proceeding  relating  to  this  Agreement  or  any  other  Loan  Document  or  the  enforcement  of  rights  hereunder  or  thereunder,  (f)  subject  to  an  agreement  containing  provisions  substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective  assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or  prospective counterparty (or its advisors) to any swap or derivative transaction relating to any Loan Party  and  its  obligations,  (g)  with  the  consent  of  the  Lead  Borrower, (h)  to  the  extent  such  Information  (x)  becomes publicly available other than as a result of a breach of this Section or (y) becomes available to  any Credit Party or any of their respective Affiliates on a non-confidential basis from a source other than  the Loan Parties, or (i) Information pertaining to this Agreement routinely provided by arrangers to data  service  providers  or  market  data  collectors,  including  league  table  providers,  that  serve  the  lending  industry.           For purposes of this Section, “Information” means all information received from the Loan Parties  or  any  Subsidiary  thereof  relating  to  the  Loan  Parties  or  any  Subsidiary  thereof  or  their  respective  businesses,  other than  any  such  information  that  is  available  to  any Credit  Party  on  a  non-confidential  basis  prior  to  disclosure  by  the  Loan  Parties  or  any  Subsidiary  thereof,  provided  that,  in  the  case  of  information received from any Loan Party or any Subsidiary after the Closing Date, such information is  clearly  identified  at  the  time  of  delivery  as  confidential.   Any  Person  required  to  maintain  the  confidentiality of Information as provided in this Section shall be considered to have complied with its  obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of  such Information as such Person would accord to its own confidential information.         Each of the Credit Parties acknowledges that (a) the Information may include material non-public  information  concerning  the  Loan  Parties  or  a  Subsidiary,  as  the  case  may  be,  (b)  it  has  developed  compliance procedures regarding the use of material non-public information and (c) it will handle such  material non-public information in accordance with applicable Law, including Federal and state securities  Laws.         10.08 Right of Setoff         .  If an Event of Default shall have occurred and be continuing or if any Lender shall have been  served with a trustee process or similar attachment relating to property of a Loan Party, each Lender, the  L/C Issuer and each of their respective Affiliates is hereby authorized at any time and from time to time,  after  obtaining  the  prior  written  consent  of  the  Agent  or  the  Required  Lenders,  to  the  fullest  extent  permitted by applicable Law, to set off and apply any and all deposits (general or special, time or demand,  provisional or final, in whatever currency) at any time held and other obligations (in whatever currency)  at any time owing by such Lender, the L/C Issuer or any such Affiliate to or for the credit or the account  of the Borrowers or any other Loan Party against any and all of the Obligations now or hereafter existing  under this Agreement or any other Loan Document to such Lender or the L/C Issuer, regardless of the  adequacy of the Collateral, and irrespective of whether or not such Lender or the L/C Issuer shall have  made any demand under this Agreement or any other Loan Document and although such obligations of  the Borrowers or such Loan Party may be contingent or unmatured or are owed to a branch or office of                                        138 

 

         such Lender or the L/C Issuer different from the branch or office holding such deposit or obligated on  such indebtedness.  The rights of each Lender, the L/C Issuer and their respective Affiliates under this  Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, the  L/C Issuer or their respective Affiliates may have.  Each Lender and the L/C Issuer agrees to notify the  Lead Borrower and the Agent promptly after any such setoff and application, provided that the failure to  give such notice shall not affect the validity of such setoff and application.         10.09 Interest Rate Limitation         .  Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or  agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest  permitted by applicable Law (the “Maximum Rate”).  If the Agent or any Lender shall receive interest in  an  amount that  exceeds  the  Maximum  Rate,  the  excess interest shall  be  applied  to  the  principal  of  the  Loans  or,  if  it  exceeds  such  unpaid  principal,  refunded  to  the  Borrowers.   In  determining  whether  the  interest contracted for, charged, or received by the Agent or a Lender exceeds the Maximum Rate, such  Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal  as  an  expense,  fee,  or  premium  rather  than  interest,  (b)  exclude  voluntary prepayments  and  the  effects  thereof,  and  (c)  amortize,  prorate,  allocate,  and  spread  in  equal  or  unequal  parts  the  total  amount  of  interest throughout the contemplated term of the Obligations hereunder.         10.10 Counterparts; Integration; Effectiveness         .  This Agreement may be executed in counterparts (and by different parties hereto in different  counterparts),  each  of  which  shall  constitute  an  original,  but  all  of  which  when  taken  together  shall  constitute a single contract.  This Agreement and the other Loan Documents constitute the entire contract  among the parties relating to the subject matter hereof and supersede any and all previous agreements and  understandings, oral or written, relating to the subject matter hereof.  Except as provided in Section 4.01,  this Agreement shall become effective when it shall have been executed by the Agent and when the Agent  shall have received counterparts hereof that, when taken together, bear the signatures of each of the other  parties hereto.  Delivery of an executed counterpart of a signature page of this Agreement by telecopy,  pdf or other electronic transmission shall be as effective as delivery of a manually executed counterpart of  this Agreement.         10.11 Survival         .  All representations and warranties made hereunder and in any other Loan Document or other  document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the  execution  and  delivery  hereof  and  thereof.   Such  representations  and  warranties  have  been  or  will  be  relied upon by the Credit Parties, regardless of any investigation made by any Credit Party or on their  behalf and notwithstanding that any Credit Party may have had notice or knowledge of any Default or  Event of Default at the time of any Credit Extension, and shall continue in full force and effect as long as  any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit  shall remain outstanding.  Further, the provisions of Sections 3.01, 3.04, 3.05 and 10.04 and Article IX  shall  survive  and  remain  in  full  force  and  effect  regardless  of  the  repayment  of  the  Obligations,  the  expiration  or  termination  of  the  Letters  of  Credit  and  the  Commitments  or  the  termination  of  this  Agreement or any provision hereof.  In connection with the termination of this Agreement and the release  and  termination of  the  security  interests in  the  Collateral,  the  Agent  may  require  such  indemnities  and  collateral  security  as  they  shall  reasonably  deem  necessary  or  appropriate  to  protect  the  Credit  Parties  against  (x)  loss  on  account  of  credits  previously  applied  to  the  Obligations  that  may  subsequently  be  reversed or revoked, (y) any obligations that may thereafter arise with respect to the Other Liabilities and  (z) any Obligations that may thereafter arise under Section 10.04.                                        139 

 

               10.12 Severability         .  If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or  unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement  and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor  in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions  the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable  provisions.   The  invalidity  of  a  provision  in  a  particular  jurisdiction  shall  not  invalidate  or  render  unenforceable such provision in any other jurisdiction.         10.13 Replacement of Lenders         .  If any Lender requests compensation under Section 3.04, or if the Borrowers are required to pay  any  additional  amount  to  any  Lender  or  any  Governmental  Authority  for  the  account  of  any  Lender  pursuant to Section 3.01, or if any Lender is a Defaulting Lender or a Non-Consenting Lender, then the  Borrowers may, at their sole expense and effort, upon notice to such Lender and the Agent, require such  Lender  to  assign  and  delegate,  without  recourse  (in  accordance  with  and  subject  to  the  restrictions  contained in, and consents required by, Section 10.06), all of its interests, rights and obligations under this  Agreement  and  the  related  Loan  Documents  to  an  assignee  that  shall  assume  such  obligations  (which  assignee may be another Lender, if a Lender accepts such assignment), provided that:          (a)  the  Borrowers  shall  have  paid  to  the  Agent  the  assignment  fee  specified  in Section         10.06(b);          (b)  such Lender shall have received payment of an amount equal to the outstanding principal         of  its  Loans,  accrued  interest  thereon,  accrued  fees  and  all  other  amounts  payable  to  it         hereunder  and  under  the  other  Loan  Documents  (including  any  amounts  under Section 3.05)         from the assignee (to the extent of such outstanding principal and accrued interest and fees) or         the Borrowers (in the case of all other amounts);          (c)  in the case of any such assignment resulting from a claim for compensation under Section         3.04 or payments required to be made pursuant to Section 3.01, such assignment will result in a         reduction in such compensation or payments thereafter; and          (d)  such assignment does not conflict with applicable Laws.   A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a  waiver by such Lender or otherwise, the circumstances entitling the Borrowers to require such assignment  and delegation cease to apply.         10.14 Governing Law; Jurisdiction; Etc.                 (a)   GOVERNING  LAW.   THIS  AGREEMENT  SHALL  BE  GOVERNED  BY,  AND  CONSTRUED  IN  ACCORDANCE  WITH,  THE  LAWS  OF  THE  STATE  OF  NEW  YORK,  WITHOUT  GIVING  EFFECT  TO  THE  CONFLICTS  OF  LAWS  PRINCIPLES  THEREOF,  BUT  INCLUDING SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.               (b)   SUBMISSION TO JURISDICTION.  EACH LOAN PARTY IRREVOCABLY  AND  UNCONDITIONALLY  SUBMITS,  FOR  ITSELF  AND  ITS  PROPERTY,  TO  THE  NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN  NEW YORK  COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN                                        140 

 

         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 ANY  OTHER  LOAN  DOCUMENT,  OR  FOR  RECOGNITION  OR  ENFORCEMENT  OF  ANY  JUDGMENT,  AND  EACH  OF  THE  LOAN  PARTIES  HERETO  IRREVOCABLY  AND  UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR  PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR,  TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.   EACH OF THE LOAN PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH  ACTION  OR  PROCEEDING  SHALL  BE  CONCLUSIVE  AND  MAY  BE  ENFORCED  IN  OTHER  JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY  LAW.   NOTHING  IN  THIS  AGREEMENT  OR  IN  ANY  OTHER  LOAN  DOCUMENT  SHALL  AFFECT ANY RIGHT THAT ANY CREDIT PARTY MAY OTHERWISE HAVE TO BRING ANY  ACTION  OR  PROCEEDING  RELATING  TO  THIS  AGREEMENT  OR  ANY  OTHER  LOAN  DOCUMENT  AGAINST  ANY  LOAN  PARTY  OR  ITS  PROPERTIES  IN  THE  COURTS  OF  ANY  JURISDICTION.               (c)   WAIVER  OF  VENUE.   EACH  LOAN  PARTY  IRREVOCABLY  AND  UNCONDITIONALLY  WAIVES,  TO  THE  FULLEST  EXTENT  PERMITTED  BY  APPLICABLE  LAW,  ANY  OBJECTION  THAT  IT  MAY  NOW  OR  HEREAFTER  HAVE  TO  THE  LAYING  OF  VENUE  OF  ANY  ACTION  OR  PROCEEDING  ARISING  OUT  OF  OR  RELATING  TO  THIS  AGREEMENT  OR  ANY  OTHER  LOAN  DOCUMENT  IN  ANY  COURT  REFERRED  TO  IN  PARAGRAPH  (B)  OF  THIS  SECTION.   EACH  OF  THE  LOAN  PARTIES  HERETO  HEREBY  IRREVOCABLY  WAIVES,  TO  THE  FULLEST  EXTENT  PERMITTED  BY  APPLICABLE  LAW,  THE  DEFENSE  OF  AN  INCONVENIENT  FORUM  TO  THE  MAINTENANCE  OF  SUCH  ACTION  OR PROCEEDING IN ANY SUCH COURT.               (d)   SERVICE  OF  PROCESS.   EACH  PARTY  HERETO  IRREVOCABLY  CONSENTS  TO  SERVICE  OF  PROCESS  IN  THE  MANNER  PROVIDED  FOR  NOTICES  IN  SECTION 10.02.  NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY  HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.               (e)   ACTIONS  COMMENCED  BY  LOAN  PARTIES.  EACH  LOAN  PARTY  AGREES THAT ANY ACTION COMMENCED BY ANY LOAN PARTY ASSERTING ANY CLAIM  OR  COUNTERCLAIM  ARISING  UNDER  OR  IN  CONNECTION  WITH  THIS  AGREEMENT  OR  ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT SOLELY IN A COURT OF THE STATE  OF NEW  YORK  SITTING  IN NEW  YORK  COUNTY  OR  ANY  FEDERAL  COURT  SITTING  THEREIN AS THE AGENT MAY ELECT IN ITS SOLE DISCRETION AND CONSENTS TO THE  EXCLUSIVE JURISDICTION OF SUCH COURTS WITH RESPECT TO ANY SUCH ACTION.         10.15 Waiver of Jury Trial         .  EACH  PARTY  HERETO  HEREBY  IRREVOCABLY  WAIVES,  TO  THE  FULLEST  EXTENT  PERMITTED  BY  APPLICABLE  LAW,  ANY  RIGHT  IT  MAY  HAVE  TO  A  TRIAL  BY  JURY  IN  ANY  LEGAL  PROCEEDING  DIRECTLY  OR  INDIRECTLY  ARISING  OUT  OF  OR  RELATING  TO  THIS  AGREEMENT  OR  ANY  OTHER  LOAN  DOCUMENT  OR  THE  TRANSACTIONS  CONTEMPLATED  HEREBY  OR  THEREBY  (WHETHER  BASED  ON  CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT  NO  REPRESENTATIVE,  AGENT  OR  ATTORNEY  OF  ANY  OTHER  PERSON  HAS  REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN  THE  EVENT  OF  LITIGATION,  SEEK  TO  ENFORCE THE  FOREGOING  WAIVER  AND  (B)  ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO                                        141 

 

         ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER  THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.         10.16 No Advisory or Fiduciary Responsibility         .  In connection with all aspects of each transaction contemplated hereby, the Loan Parties each  acknowledge  and  agree  that:  (i) the  credit facility provided  for hereunder  and  any  related  arranging  or  other  services  in  connection  therewith  (including  in  connection  with  any  amendment,  waiver  or  other  modification hereof or of any other Loan Document) are an arm’s-length commercial transaction between  the Loan Parties, on the one hand, and the Credit Parties, on the other hand, and each of the Loan Parties  is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of  the  transactions  contemplated  hereby  and  by  the  other  Loan  Documents  (including  any  amendment,  waiver  or  other  modification  hereof  or thereof);  (ii)  in  connection  with  the  process  leading  to  such  transaction,  the  each  Credit  Party  is  and  has  been  acting  solely  as  a  principal  and  is  not  the  financial  advisor,  agent  or  fiduciary,  for  the  Loan  Parties  or  any  of their  respective Affiliates, stockholders,  creditors or employees or any other Person; (iii) none of the Credit Parties has assumed or will assume an  advisory,  agency  or  fiduciary  responsibility  in  favor  of  the  Loan  Parties  with  respect  to  any  of  the  transactions  contemplated  hereby  or  the  process  leading  thereto,  including  with  respect  to  any  amendment, waiver or other modification hereof or of any other Loan Document (irrespective of whether  any of the Credit Parties has advised or is currently advising any Loan Party or any of its Affiliates on  other matters) and none of the Credit Parties has any obligation to any Loan Party or any of its Affiliates  with respect to the transactions contemplated hereby except those obligations expressly set forth herein  and in the other Loan Documents; (iv) the Credit Parties and their respective Affiliates may be engaged in  a broad range of transactions that involve interests that differ from those of the Loan Parties and their  respective Affiliates, and none of the Credit Parties has any obligation to disclose any of such interests by  virtue of any advisory, agency or fiduciary relationship; and (v) the Credit Parties have not provided and  will  not  provide  any  legal,  accounting,  regulatory or tax  advice  with  respect  to  any  of  the  transactions  contemplated  hereby  (including  any  amendment,  waiver  or  other  modification  hereof  or  of  any  other  Loan Document) and each of the Loan Parties has consulted its own legal, accounting, regulatory and tax  advisors to the extent it has deemed appropriate.  Each of the Loan Parties hereby waives and releases, to  the fullest extent permitted by law, any claims that it may have against each of the Credit Parties with  respect to any breach or alleged breach of agency or fiduciary duty.         10.17 Patriot Act Notice         .  Each Lender  that  is  subject  to  the  requirements  of  the  Patriot  Act  hereby  notifies  the  Loan  Parties that pursuant to the requirements of the Patriot Act, and, as applicable, the Canadian Economic  Sanctions and Export Control Laws, it is required to obtain, verify and record information that identifies  each  Loan  Party,  which  information  includes  the  name  and  address  of  each  Loan  Party  and  other  information that will allow such Lender to identify each Loan Party in accordance with the Patriot Act  and, as applicable, the Canadian Economic Sanctions and Export Control Laws.  In addition, Agent and  each Lender shall have the right to periodically conduct due diligence (including, without limitation, in  respect of information and documentation as may reasonably be requested by the Agent or any Lender  from  time  to  time  for  purposes  of  compliance  by  the  Agent  or  such  Lender  with  applicable  Laws  (including,  without  limitation,  the  Patriot  Act  and  other  “know  your  customer”  and  Anti-Money  Laundering  Laws),  and  any  policy  or  procedure  implemented  by  the  Agent  or  such  Lender  to  comply  therewith) on  all  Loan  Parties,  their  senior  management  and  key  principals  and  legal  and  beneficial  owners.  Each Loan Party agrees to cooperate in respect of the conduct of such due diligence and further  agrees that the reasonable costs and charges for any such due diligence by Agent shall constitute Credit  Party Expenses hereunder and be for the account of Borrowers.                                        142 

 

               10.18 Foreign Asset Control Regulations         .  Neither of the advance of the Loans nor the use of the proceeds of any thereof will violate the  Trading With the Enemy Act (50 U.S.C. § 1 et seq., as amended) (the "Trading With the Enemy Act") or  any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle  B,  Chapter  V,  as  amended)  (the  "Foreign  Assets  Control  Regulations")  or  any  enabling  legislation  or  executive order relating thereto (which for the avoidance of doubt shall include, but shall not be limited to  (a) Executive Order 13224 of September 21, 2001 Blocking Property and Prohibiting Transactions With  Persons  Who  Commit,  Threaten  to  Commit,  or  Support  Terrorism  (66  Fed.  Reg.  49079  (2001))  (the  "Executive  Order"), (b)  the Patriot  Act,  and  (c)  as  applicable,  the  Canadian  Economic  Sanctions  and  Export  Control  Laws.   Furthermore,  none  of  the  Borrowers  or  their  Affiliates  (a)  is  or  will  become  a  "blocked person" as described in the Executive Order, the Trading With the Enemy Act or the Foreign  Assets Control Regulations or (b) engages or will engage in any dealings or transactions, or be otherwise  associated, with any such "blocked person" or in any manner violative of any such order.         10.19 Time of the Essence         .  Time is of the essence of the Loan Documents.         10.20 Reserved.         10.21 Tombstone; Press Releases.    Each Loan Party consents to the publication by the Agent, any Lender or their respective representatives  of  advertising  material,  including any  “tombstone,”  press  release  or  comparable  advertising,  on  its  website or in other marketing materials of Agent, relating to the financing transactions contemplated by  this  Agreement  using  any  Loan  Party’s  name,  product  photographs,  logo,  trademark  or  other  insignia.   The  Agent  or  such  Lender  shall  provide  a  draft  reasonably  in  advance  of any  advertising  material,  “tombstone”  or  press  release  to  the  Lead  Borrower  for  review  and  comment  prior  to  the  publication  thereof.  The Agent and the Lenders reserve the right to provide to industry trade organizations and loan  syndication and pricing reporting services information necessary and customary for inclusion in league  table measurements.         10.22 Additional Waivers.               (a)   The Obligations are the joint and several obligation of each Loan Party. To the  fullest extent permitted by applicable Law, the obligations of each Loan Party shall not be affected by  (i) the  failure  of  any  Credit Party to  assert  any  claim or  demand  or  to  enforce  or  exercise  any  right  or  remedy against any other Loan Party under the provisions of this Agreement, any other Loan Document  or otherwise, (ii) any rescission, waiver, amendment or modification of, or any release from any of the  terms  or  provisions  of,  this  Agreement  or  any  other Loan  Document,  or  (iii) the  failure  to  perfect  any  security interest in, or the release of, any of the Collateral or other security held by or on behalf of the  Agent or any other Credit Party.               (b)   The  obligations  of  each  Loan  Party   shall  not  be  subject  to  any  reduction,  limitation, impairment or termination for any reason (other than the indefeasible payment in full in cash  of  the  Obligations  after  the  termination  of  the  Commitments),  including  any  claim  of  waiver,  release,  surrender, alteration or compromise of any of the Obligations, and shall not be subject to any defense or  setoff,  counterclaim,  recoupment  or  termination  whatsoever  by  reason  of  the  invalidity, illegality  or  unenforceability of any of the Obligations or otherwise. Without limiting the generality of the foregoing,  the obligations of each Loan Party hereunder shall not be discharged or impaired or otherwise affected by                                        143 

 

         the failure of the Agent or any other Credit Party to assert any claim or demand or to enforce any remedy  under this Agreement, any other Loan Document or any other agreement, by any waiver or modification  of any provision of any thereof, any default, failure or delay, willful or otherwise, in the performance of  any of the Obligations, or by any other act or omission that may or might in any manner or to any extent  vary the risk of any Loan Party or that would otherwise operate as a discharge of any Loan Party as a  matter of law or equity (other than the indefeasible payment in full in cash of all the Obligations after the  termination of the Commitments).                (c)   To the fullest extent permitted by applicable Law, each Loan Party waives any  defense  based  on  or  arising  out  of  any  defense  of  any other  Loan Party  or  the  unenforceability  of  the  Obligations or any part thereof from any cause, or the cessation from any cause of the liability of any  other  Loan  Party,  other  than  the  indefeasible  payment  in  full  in  cash  of  all  the  Obligations  and  the  termination of the Commitments. The Agent and the other Credit Parties may, at their election, foreclose  on  any  security  held  by  one  or  more  of  them  by  one  or  more  judicial  or  non-judicial  sales,  accept  an  assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Obligations,  make  any  other  accommodation  with  any  other  Loan  Party,  or  exercise  any  other  right  or  remedy  available to them against any other Loan Party, without affecting or impairing in any way the liability of  any Loan Party hereunder except to the extent that all the Obligations have been indefeasibly paid in full  in cash and the Commitments have been terminated.  Each Loan Party waives any defense arising out of  any  such  election  even  though  such  election  operates,  pursuant  to  applicable  Law,  to  impair  or  to  extinguish any right of reimbursement or subrogation or other right or remedy of such Loan Party against  any other Loan Party, as the case may be, or any security.               (d)   Each Borrower is obligated to repay the Obligations as joint and several obligors  under this Agreement.  Upon payment by any Loan Party of any Obligations, all rights of such Loan Party  against  any  other  Loan  Party  arising  as  a  result  thereof  by  way  of  right  of  subrogation,  contribution,  reimbursement, indemnity or otherwise shall in all respects be subordinate and junior in right of payment  to  the  prior  indefeasible  payment  in  full  in  cash  of  all  the  Obligations  and  the  termination  of  the  Commitments. In addition, any indebtedness of any Loan Party now or hereafter held by any other Loan  Party  is  hereby  subordinated  in  right  of  payment  to  the  prior  indefeasible  payment  in  full  of  the  Obligations  and  no  Loan  Party  will  demand,  sue  for  or  otherwise  attempt  to  collect  any  such  indebtedness.   If  any  amount  shall  erroneously  be  paid  to  any  Loan  Party  on  account  of  (i)  such  subrogation, contribution, reimbursement, indemnity or similar right or (ii) any such indebtedness of any  Loan Party, such amount shall be held in trust for the benefit of the Credit Parties and shall forthwith be  paid to the Agent to be credited against the payment of the Obligations, whether matured or unmatured, in  accordance with the terms of this Agreement and the other Loan Documents.  Subject to the foregoing, to  the extent that any Borrower shall, under this Agreement as a joint and several obligor, repay any of the  Obligations constituting Loans made to another Borrower hereunder or other Obligations incurred directly  and primarily by any other Borrower (an "Accommodation Payment"), then the Borrower making such  Accommodation Payment shall be entitled to contribution and indemnification from, and be reimbursed  by, each of the other Borrowers in an amount, for each of such other Borrowers, equal to a fraction of  such  Accommodation Payment,  the  numerator  of  which  fraction  is  such  other  Borrower's  Allocable  Amount and the denominator of which is the sum of the Allocable Amounts of all of the Borrowers.  As  of any date of determination, the "Allocable Amount" of each Borrower shall be equal to the maximum  amount  of  liability  for  Accommodation  Payments  which  could  be  asserted  against  such  Borrower  hereunder without (a) rendering such Borrower "insolvent" within the meaning of Section 101 (31) of the  Bankruptcy  Code,  Section  2  of  the  Uniform  Fraudulent  Transfer  Act  ("UFTA")  or  Section  2  of  the  Uniform  Fraudulent  Conveyance  Act  ("UFCA"),  (b) leaving  such  Borrower  with  unreasonably  small  capital or assets, within the meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA, or  Section 5 of the UFCA, or (c) leaving such Borrower unable to pay its debts as they become due within  the meaning of Section 548 of the Bankruptcy Code or Section 4 of the UFTA, or Section 5 of the UFCA.                                        144 

 

               10.23 No Strict Construction.         The parties hereto have participated jointly in the negotiation and drafting of this Agreement.  In  the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as  if  drafted  jointly  by  the  parties  hereto  and  no  presumption  or  burden  of  proof shall  arise  favoring  or  disfavoring any party by virtue of the authorship of any provisions of this Agreement.         10.24 Attachments.         The exhibits, schedules and annexes attached to this Agreement are incorporated herein and shall  be  considered  a  part  of  this  Agreement  for  the  purposes  stated  herein,  except  that  in  the  event  of  any  conflict  between  any  of  the  provisions  of  such  exhibits  and  the  provisions  of  this  Agreement,  the  provisions of this Agreement shall prevail.         10.25 Keepwell.         Each  Qualified  ECP  Guarantor  hereby jointly  and  severally  absolutely,  unconditionally  and  irrevocably undertakes to provide such funds or other support as may be needed from time to time by  each  other  Loan  Party  to  honor  all  of  its  obligations  under  the  Facility  Guaranty  in  respect  of  Swap  Obligations (provided, however, that each Qualified ECP Guarantor shall only be liable under this Section  10.25  for  the  maximum  amount  of  such  liability  that  can  be  hereby  incurred  without  rendering  its  obligations under this Section 10.25, or otherwise under the Facility Guaranty, voidable under applicable  Law  relating  to  fraudulent  conveyance  or  fraudulent  transfer,  and  not  for  any  greater  amount).  The  obligations of each Qualified ECP Guarantor under this Section shall remain in full force and effect until  payment  in  full  of  the  Obligations.  Each  Qualified  ECP  Guarantor  intends  that  this  Section  10.25  constitute, and this Section 10.25 shall be deemed to constitute, a “keepwell, support, or other agreement”  for the benefit of each other Loan Party for all purposes of Section 1a(18)(A)(v)(II) of the Commodity  Exchange Act.         10.26 Acknowledgment and Consent to Bail-In of Affected Financial Institutions.         Notwithstanding  anything  to  the  contrary  in  any  Loan  Document  or  in  any  other  agreement,  arrangement or understanding among any such parties, each party hereto acknowledges that any liability  of  any Affected Financial  Institution  arising  under  any  Loan  Document,  to  the  extent  such  liability  is  unsecured, may be subject to the write-down and conversion powers of an Affected Resolution Authority  and agrees and consents to, and acknowledges and agrees to be bound by:          (a)  the application of any Write-Down and Conversion Powers by the applicable Resolution         Authority  to  any  such  liabilities  arising  hereunder  which  may  be  payable  to  it  by  any  party         hereto that is an Affected Financial Institution; and          (b)  the effects of any Bail-in Action on any such liability, including, if applicable:                     (i)   a reduction in full or in part or cancellation of any such liability;                     (ii)  a  conversion  of  all,  or  a  portion  of,  such  liability  into  shares  or  other              instruments of ownership in such Affected Financial Institution, its parent undertaking, or              a bridge institution that may be issued to it or otherwise conferred on it, and that such              shares or other instruments of ownership will be accepted by it in lieu of any rights with              respect to any such liability under this Agreement or any other Loan Document; or                                         145 

 

                           (iii) the variation of the terms of such liability in connection with the exercise              of the write-down and conversion powers of the applicable Resolution Authority.         10.27 Acknowledgement  Regarding  Any  Supported  QFCs.  To  the  extent  that  the  Loan  Documents provide support, through a guarantee or otherwise, for Swap Contracts or any other agreement  or  instrument  that  is  a  QFC  (such  support,  “QFC  Credit  Support”  and  each  such  QFC  a  “Supported  QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal  Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank  Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder,  the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with  the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may  in fact be stated to be governed by the laws of the State of New York and/or of the United States or any  other state of the United States):          (a)  In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”)         becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such         Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in         or  under  such  Supported  QFC  and  such  QFC Credit  Support,  and  any  rights  in  property         securing such Supported QFC or such QFC Credit Support) from such Covered Party will be         effective to the same extent as the transfer would be effective under the U.S. Special Resolution         Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation         and rights in property) were governed by the laws of the United States or a state of the United         States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject         to  a  proceeding  under  a  U.S.  Special  Resolution  Regime,  Default  Rights  under  the  Loan         Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that         may be exercised against such Covered Party are permitted to be exercised to no greater extent         than such Default Rights could be exercised under the U.S. Special Resolution Regime if the         Supported QFC and the Loan Documents were governed by the laws of the United States or a         state of the United States. Without limitation of the foregoing, it is understood and agreed that         rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect         the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.          (b)  As used in this Section 10.27, the following terms have the following meanings:                     “BHC  Act  Affiliate”  of  a  party  means  an  “affiliate”  (as  such  term  is  defined                    under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.                     “Covered Entity” means any of the following:                           (i)   a “covered entity” as that term is defined in, and interpreted in                    accordance with, 12 C.F.R. § 252.82(b);                           (ii)  a  “covered  bank”  as  that  term  is  defined  in,  and  interpreted  in                    accordance with, 12 C.F.R. § 47.3(b); or                           (iii) a  “covered  FSI”  as  that  term  is  defined  in,  and  interpreted  in                    accordance with, 12 C.F.R. § 382.2(b).                     “Default Right” has the meaning assigned to that term in, and shall be interpreted                    in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.                                          146 

 

                      “QFC”  has  the  meaning  assigned  to  the term  “qualified  financial  contract”  in,  and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).          [remainder of page intentionally left blank]                      147 

 

               IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by  their respective authorized officers as of the date first above written.                                             CASPER SLEEP INC.,                                             as Lead Borrower and a Borrower                                             By:  /s/ Michael P. Monahan                                            Name:  Michael Monahan                                            Title: Chief Financial Officer                                              CASPER SCIENCE LLC,                                             as a Borrower                                                                                          By:  /s/ Michael P. Monahan                                            Name:  Michael Monahan                                            Title: Treasurer                                              CASPER SLEEP RETAIL LLC,                                             as a Borrower                                                                                          By:  /s/ Michael P. Monahan                                            Name:  Michael Monahan                                            Title: Treasurer                                                                                                                                      

 

                      WELLS FARGO BANK, NATIONAL  ASSOCIATION, as Agent    By:  /s/ Cory Loftus  Name:  Cory Loftus                    Title:  Managing Director                                                                        

 

                      WELLS FARGO BANK, NATIONAL  ASSOCIATION as L/C Issuer, as a Lender and  Swing Line Lender   By:  /s/ Cory Loftus  Name:  Cory Loftus              Title:  Managing Director                                                             

 

                                   Table of Schedules and Exhibits                                             Schedule 1.01        Borrowers  Schedule 1.02        Guarantors  Schedule 1.03        Existing Letters of Credit  Schedule 2.01        Commitments and Applicable Percentages  Schedule 5.01        Loan Parties’ Organizational Information  Schedule 5.06        Litigation  Schedule 5.08(b)(1)  Owned Real Estate  Schedule 5.08(b)(2)  Leased Real Estate  Schedule 5.09        Environmental Matters  Schedule 5.10        Insurance  Schedule 5.13        Subsidiaries; Other Equity Investments  Schedule 5.17        Intellectual Property Matters  Schedule 5.18        Collective Bargaining Agreements  Schedule 5.21(a)     DDAs  Schedule 5.21(b)     Credit Card Arrangements  Schedule 5.24        Material Contracts  Schedule 6.02        Financial and Collateral Reporting  Schedule 7.01        Existing Liens  Schedule 7.02        Existing Investments  Schedule 7.03        Existing Indebtedness  Schedule 7.09        Affiliate Transactions  Schedule 10.02       Agent’s Office; Certain Addresses for Notices  Exhibit A            Form of LIBOR Rate Loan Notice  Exhibit B            Form of Swing Line Loan Notice  Exhibit C-1          Form of Note  Exhibit C-2          Form of Swing Line Note  Exhibit D            Form of Compliance Certificate  Exhibit E            Form of Assignment and Assumption  Exhibit F            Form of Borrowing Base Certificate  Exhibit G            Form of Credit Card Notification  Exhibit H            Form of Facility Guaranty  Exhibit I-1          Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are                            Not Partnerships for U.S. Federal Income Tax Purposes)  Exhibit I-2          Form of U.S. Tax Compliance Certificate (For Foreign Participants That                            Are Not Partnerships for U.S. Federal Income Tax Purposes)  Exhibit I-3          Form of U.S. Tax Compliance Certificate (For Foreign Participants That                            Are Partnerships for U.S. Federal Income Tax Purposes)  Exhibit I-4          Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are                            Partnerships for U.S. Federal Income Tax Purposes)

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