Document:

exhibit103-pncxvircoamen

    Exhibit 10.3    AMENDMENT NO. 2 TO AMENDED AND RESTATED  REVOLVING CREDIT AND SECURITY AGREEMENT AND LIMITED WAIVER  This AMENDMENT NO. 2 TO AMENDED AND RESTATED REVOLVING CREDIT AND  SECURITY AGREEMENT AND LIMITED WAIVER (this “Amendment”) is entered into as of April  15, 2022 by and among VIRCO MFG. CORPORATION, a Delaware corporation (“VMC”), VIRCO  INC., a Delaware corporation (“Virco”, and together with VMC, “Borrowers” and, each individually, a  “Borrower”), the financial institutions from time to time party to the Credit Agreement (as defined below)  as lenders (collectively, “Lenders”), and PNC BANK, NATIONAL ASSOCIATION (“PNC”), as  administrative agent for Lenders (PNC, in such capacity, “Agent”), with respect to the following:  RECITALS  WHEREAS, Borrowers, Lenders and Agent have previously entered into that certain Amended  and Restated Revolving Credit and Security Agreement, dated as of September 28, 2021 (as amended,  restated or otherwise modified from time to time, the “Credit Agreement”);    WHEREAS, an Event of Default has occurred under Section 10.3(a) of the Credit Agreement as  a result of Borrowers’ failure to maintain a Fixed Charge Coverage Ratio of at least 1.00 to 1.00 for the  four fiscal quarter period ended January 31, 2022 as required under Section 6.5(a) of the Credit Agreement  (the “Existing Event of Default”); and  WHEREAS, Borrowers have requested that Lenders and Agent (a) waive the Existing Event of  Default, and (b) amend the Credit Agreement in certain respects, which Lenders and Agent are willing to  do on the terms and subject to the conditions contained in this Amendment.  NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth in the  Credit Agreement, the Other Documents and this Amendment, and other valuable consideration, the receipt  and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:  AGREEMENTS  A. Definitions Incorporated.  Initially capitalized terms used but not otherwise defined in  this Amendment have the respective meanings set forth in the Credit Agreement, as amended hereby.  B. Recitals.  The Recitals above are incorporated herein as though set forth in full and  Borrowers stipulate to the accuracy of each of the Recitals.   C. Amendments to the Credit Agreement.  Subject to the covenants, terms and conditions  set forth herein and in reliance upon the representations and warranties set forth herein, as of the  Amendment No. 2 Effective Date:  (i) The Credit Agreement is hereby amended as set forth in Exhibit A to this  Amendment, with all revisions to the Credit Agreement reflected in Exhibit A in redlined format (i.e., to  delete the stricken text (indicated textually in the same manner as the following example:  stricken text) and  (b) to add the double-underlined text (indicated textually in the same manner as the following example:   double-underlined text).    

 

2    158530707    (ii) Exhibit 1.2(a) [Compliance Certificate] to the Credit Agreement is hereby  amended and restated in its entirety to read as set forth in Exhibit 1.2(a) hereto.  The amendments to the Credit Agreement are limited to the extent specifically set forth above and no other  terms, covenants or provisions of the Credit Agreement are intended to be affected hereby.  D. Limited Waiver of Existing Event of Default.  Subject to the terms and conditions set  forth herein, Agent and Lenders waive the Existing Event of Default.  The foregoing waiver is a one-time  waiver and applies only to the specified circumstance and does not modify or otherwise affect Borrowers’  obligations to comply with such provision of the Credit Agreement or any other provision of the Credit  Agreement in any other instance.  By virtue of the waiver in the immediately preceding sentence, Borrowers  hereby affirm and agree that no other Event of Default has occurred as a result of the Existing Event of  Default.  E. Conditions Precedent.  The obligations of Agent and Lenders hereunder, and this  Amendment, will be effective on the date (the “Amendment No. 2 Effective Date”) of satisfaction of each  of the following conditions precedent, each in a manner in form and substance acceptable to Agent:  1. Amendment.  Borrowers shall have delivered to Agent an executed original of this  Amendment.  2. Revolving Credit Note.  Borrowers shall have delivered to Agent, on behalf of  PNC, as the sole Lender, an executed original of a replacement (amended and restated) Revolving Credit  Note dated the date hereof in form and substance satisfactory to Agent.  3. Amendment to Fee Letter.  Borrowers shall have delivered to Agent an executed  original of an Amendment to Fee Letter dated the date hereof, and shall have paid all fees in connection  therewith that are due on or before the Amendment No. 2 Effective Date.  4. Representations and Warranties. The representations and warranties contained  herein and in the Credit Agreement shall be true and correct in all material respects as of the date hereof as  if made on the date hereof, except for such representations and warranties limited by their terms to a specific  date, in which case each such representation and warranty shall be true and correct in all material respects  as of such specific date;  5. No Default.  After giving effect to this Amendment, no Default or Event of Default  shall have occurred and be continuing; and  6. Other.  All corporate and other proceedings, and all documents, instruments and  other legal matters in connection with the transactions contemplated hereby shall be satisfactory in form  and substance to Agent and its counsel.  F. Representations and Warranties.  To induce Lenders and Agent to enter into this  Amendment, each Borrower represents and warrants to Lenders and Agent as of the date hereof as follows:  1. Such Borrower has full power, authority and legal right to enter into this  Amendment and to perform all its respective Obligations hereunder.  This Amendment has been duly  executed and delivered by such Borrower and the Credit Agreement, as amended by this Amendment  constitutes the legal, valid and binding obligation of such Borrower enforceable in accordance with its  terms, except as such enforceability may be limited by any applicable bankruptcy, insolvency, moratorium  or similar laws affecting creditors’ rights generally.  The execution, delivery and performance of this  

 

3    158530707    Amendment (i) are within such Borrower’s powers, have been duly authorized by all necessary company  action, are not in contravention of law or the terms of such Borrower’s by-laws, certificate of incorporation,  or other applicable documents relating to such Borrower’s formation or to the conduct of such Borrower’s  business or of any material agreement or undertaking to which such Borrower is a party or by which such  Borrower is bound, (ii) will not conflict with or violate any law or regulation, or any judgment, order, writ,  injunction or decree of any court or Governmental Body, (iii) will not require the Consent of any  Governmental Body or any other Person, except those Consents which will have been duly obtained, made  or compiled prior to date hereof and which are in full force and effect, and (iv) will not conflict with, nor  result in any breach in any of the provisions of or constitute a default under or result in the creation of any  Lien except Permitted Encumbrances upon any asset of such Borrower under the provisions of any material  agreement, charter document, instrument, by-law or other instrument to which such Borrower is a party or  by which it or its property is a party or by which it may be bound.  2. After giving effect to this Amendment, the representations and warranties  contained in the Credit Agreement are true and correct in all material respects except to the extent any such  representation or warranty is expressly stated to have been made as of a specific date, in which case each  such representation and warranty is true and correct in all material respects as of such specific date, and no  Default or Event of Default has occurred and is continuing.  G. Reaffirmation.  Except as specifically modified by this Amendment, the Credit Agreement  and the Other Documents remain in full force and effect in accordance with their respective terms and are  hereby ratified, reaffirmed and confirmed by Borrowers.  H. Events of Default.  Any failure to comply with the terms of this Amendment will constitute  an Event of Default under the Credit Agreement.  I. Integration.  This Amendment, together with the Credit Agreement and the Other  Documents, incorporates all negotiations of the parties hereto with respect to the subject matter hereof and  is the final expression and agreement of the parties hereto with respect to the subject matter hereof.  J. Severability.  If any part of this Amendment is contrary to, prohibited by, or deemed  invalid under Applicable Laws, such provision shall be inapplicable and deemed omitted to the extent so  contrary, prohibited or invalid, but the remainder hereof shall not be invalidated thereby and shall be given  effect so far as possible.  K. Submission of Amendment.  The submission of this Amendment to the parties or their  agents or attorneys for review or signature does not constitute a commitment by Agent or Lenders to amend  or otherwise modify any of the provisions of the Credit Agreement and this Amendment shall have no  binding force or effect until the Amendment No. 2 Effective Date.  L. Counterparts; Facsimile Signatures.  This Amendment may be executed in any number  of and by different parties hereto on separate counterparts, all of which, when so executed, shall be deemed  an original, but all such counterparts shall constitute one and the same agreement.  Any signature delivered  by a party by facsimile or other similar form of electronic transmission (e.g., via .pdf) shall be deemed to  be an original signature hereto.  M. Governing Law.  This Amendment is an Other Document and is governed by the  Applicable Law pertaining in the State of New York, other than those conflict of law provisions that would  defer to the substantive laws of another jurisdiction.  This governing law election has been made by the  parties in reliance on, among other things,  Section 5-1401 of the General Obligations Law of the State of  New York, as amended (as and to the extent applicable), and other Applicable Law.  

 

4    158530707    N. Successors and Assigns.  This Amendment shall be binding upon and inure to the benefit  of Borrowers, Lenders, Agent, and all future holders of the Obligations and their respective successors and  assigns, except that no Borrower may assign or transfer any of its rights or obligations under this  Amendment without the prior written consent of Agent.  O. Attorneys’ Fees; Costs.  Borrowers agree to promptly pay, upon written demand, all  reasonable and documented attorneys’ fees and costs incurred in connection with the negotiation,  documentation and execution of this Amendment.  If any legal action or proceeding shall be commenced  at any time by any party to this Amendment in connection with its interpretation or enforcement, the  prevailing party or parties in such action or proceeding shall be entitled to reimbursement of its reasonable  attorneys’ fees and costs in connection therewith, in addition to all other relief to which the prevailing party  or parties may be entitled.  P. Jury Waiver; California Judicial Reference.  WITHOUT LIMITING THE  APPLICABILITY OF ANY OTHER PROVISION OF THE CREDIT AGREEMENT, THE TERMS OF  ARTICLE XII OF THE CREDIT AGREEMENT, INCLUDING WITHOUT LIMITATION SECTION  12.3 REGARDING JURY TRIAL WAIVER AND CALIFORNIA JUDICIAL REFERENCE SHALL  APPLY TO THIS AMENDMENT.   Q. Total Agreement.  This Amendment, the Credit Agreement, and the Other Documents  contain the entire understanding among Borrowers, Lenders and Agent and supersede all prior agreements  and understandings, if any, relating to the subject matter hereof. Any promises, representations, warranties,  or guarantees not herein contained and hereinafter made have no force and effect unless in writing, signed  by Borrowers’ and Agent’s respective officers.  Neither this Amendment nor any portion or provisions  hereof may be changed, modified, amended, waived, supplemented, discharged, cancelled, or terminated  orally or by any course of dealing, or in any manner other than by an agreement in writing, signed by the  party to be charged.  Each Borrower acknowledges that it has been advised by counsel in connection with  the execution of this Amendment and the Other Documents and is not relying upon oral representations or  statements inconsistent with the terms and provisions of this Amendment.  [signature pages follow]  

 

  Signature Page to Amendment No. 2 and Limited Waiver [Virco]  158530707    IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of the date  first written above.  VIRCO MFG. CORPORATION,  a Delaware corporation, as a Borrower  By: /s/ Robert E. Dose  Name: Robert E. Dose  Title:  Senior Vice President Finance, Treasurer and  Secretary    VIRCO INC.,  a Delaware corporation, as a Borrower  By: /s/ Robert E. Dose  Name: Robert E. Dose  Title:  Senior Vice President Finance, Treasurer and  Secretary   

 

   PNC BANK, NATIONAL ASSOCIATION,  as Lender and as Agent  By:    /s/ Christopher Calice  Name:  Christopher Calice  Title:  Vice President         

 

   Exhibit 1.2(a)    Form of Compliance Certificate    COMPLIANCE CERTIFICATE    Dated _____ ___, 20__    This COMPLIANCE CERTIFICATE is executed and delivered under and pursuant to the  terms of that certain Amended and Restated Revolving Credit and Security Agreement, dated as  of September 28, 2021 (as such agreement may be amended, restated, or otherwise modified from  time to time, the “Credit Agreement”), among VIRCO MFG. CORPORATION, a Delaware  corporation (“Borrowing Agent”), VIRCO INC., a Delaware corporation (together with  Borrowing Agent and each other Person that becomes a party joined thereto as a borrower,  collectively “Borrowers”), the financial institutions which are now or which hereafter become a  party thereto (collectively, “Lenders” and individually a “Lender”) and PNC BANK,  NATIONAL ASSOCIATION (“PNC”), as agent for Lenders (PNC, in such capacity, “Agent”).   Initially capitalized terms used but not defined herein have the respective meanings set forth in the  Credit Agreement.  The undersigned, duly appointed and acting [Senior Vice President Finance] [Treasurer]  [Controller] of Borrowing Agent, being duly authorized, hereby delivers this Compliance  Certificate to Agent and Lenders solely in [his/her] capacity as [Senior Vice President Finance]  [Treasurer] [Controller] and on behalf of the Credit Parties and not in [his/her] individual  capacity, pursuant to Section [9.7][9.8][9.9]of the Credit Agreement.   1. Borrowing Agent hereby delivers to Agent and each Lender [check as applicable]:    [  ] the fiscal year end audited financial statements of Borrowers and their Subsidiaries on a  consolidating (if applicable) and consolidated basis and the statements, reports and/or other  management letters thereon from the Accountants to the extent required by Section 9.7 of  the Credit Agreement, dated as of [________ __, ____], which financial statements were  prepared in accordance with GAAP applied on a basis consistent with prior practices and  in reasonable detail and reported upon without a “going concern” or like qualification by  the Accountants;    [  ] an unaudited fiscal quarter end balance sheet of Borrowers and their Subsidiaries on a  consolidating (if applicable) and consolidated basis and unaudited statements of income  and stockholders’ equity and cash flow of Borrowers and their Subsidiaries on a  consolidating (if applicable) and consolidated basis reflecting results of operations from  the beginning of the fiscal year to the end of such quarter and for such quarter, to the extent  required by Section 9.8(i) of the Credit Agreement, dated as of [________, ____],  internally prepared in accordance with GAAP (as applicable) on a basis consistent with  prior practices and fairly representing the financial condition of Borrowers in all material  respects, subject to normal and recurring year end adjustments and to the absence of  footnotes;     [  ] for the fourth fiscal quarter, a summary of the last three month’s profits and losses, and  cash flow of Borrowers and their Subsidiaries to the extent required by Section 9.8(ii) of  the Credit Agreement; or    

 

   [  ] an unaudited month end balance sheet of Borrowers and their Subsidiaries on a  consolidating (if applicable) and consolidated basis and unaudited statements of income  and stockholders’ equity and cash flow of Borrowers and their Subsidiaries on a  consolidating (if applicable) and consolidated basis reflecting results of operations from  the beginning of the fiscal year to the end of such month and for such month, to the extent  required by Section 9.9 of the Credit Agreement, dated as of [________, ____], prepared  in accordance with GAAP (as applicable) on a basis consistent with prior practices and  fairly representing the financial condition of Borrowers in all material respects, subject to  normal and recurring year-end adjustments and to the absence of footnotes that individually  and in the aggregate are not material to Borrowers’ business.     2. Borrowing Agent hereby certifies that, to the best of the applicable officer’s knowledge  [check as applicable]1:      [  ] The Credit Parties are in compliance in all material respects with all federal, state  and local Environmental Laws as of the date of this Compliance Certificate.   [  ] The Credit are not in compliance in all material respects with all federal, state and  local Environmental Laws as of the date of this Compliance Certificate.  The  specific area(s) of non-compliance and the Credit Parties’ proposed action the  Credit Parties will implement to achieve full compliance is listed in Exhibit A.      3. The undersigned officer certifies to Agent and Lenders that, except as may have been  previously or concurrently disclosed to Agent in writing by Borrowing Agent, each of the representations  and warranties made by any Credit Party (or by the Borrowing Agent on their behalf) in or pursuant to the  Credit Agreement, the other Loan Documents and any related agreements, and each of the representations  and warranties contained in any certificate, document or financial or other statement furnished at any time  under or in connection with the Credit Agreement, the other Loan Documents or any related agreement are  true and correct in all material respects on and as of the date of this Compliance Certificate as if made on  and as of such date (except to the extent such representations and warranties relate specifically to an earlier  date, in which case, such representations and warranties are be true and correct in all material respects as  of such earlier date); provided that any Credit Party’s representation and warranty as to any forecast,  projection or other statement regarding future performance, future financial results or other future  development is limited to the fact that such forecast, projection or statement was prepared in good faith on  the basis of information and assumptions that such Credit Party believed to be reasonable as of the date  such material was prepared (it being understood that the projections are subject to uncertainties and  contingencies, many of which are beyond such Credit Party’s control, and that no assurance can be given  that the projections will be realized).       4. The undersigned certifies to Agent and each Lender that, to [his/her] actual knowledge  obtained in the reasonably diligent performance of [his/her] duties, as of the date of this Compliance  Certificate, except as previously or concurrently disclosed to Agent in writing by Borrowing Agent, the  Credit Parties are in compliance with the following negative covenants as indicated by circling yes/no under    1 To be included in Compliance Certificates delivered in connection with the financial statements referred to in  Sections 9.7 and 9.8.  

 

   the “Complies” column below:    Negative Covenants    Complies?    Section 7.4 — Investments  Yes No  Section 7.6 — Capital Expenditures    Yes No  Section 7.7 — Dividends  Yes No  Section 7.8 — Indebtedness  Yes No  Section 7.10 — Transactions with Affiliates   Yes No  Section 7.21 — Leases  Yes No     5. The undersigned officer hereby certifies to Agent and each Lender that, to [his/her] actual  knowledge obtained in the reasonably diligent performance of [his/her] duties [check as applicable]:     [  ] No Default or Event of Default exists as of the date hereof or existed during the period  covered by the financial statements referenced in paragraph 1 of this Compliance  Certificate, except as previously or concurrently disclosed to Agent in writing by  Borrowing Agent.    [  ] One or more Defaults or Events of Default exist as of the date hereof or existed during the  period covered by the financial statements referenced in paragraph 1 of this Compliance  Certificate that have not been previously or concurrently disclosed to Agent in writing by  Borrowing Agent.  Included within Exhibit B attached hereto is a written description  specifying each such Default or Event of Default, its nature, when it occurred, whether it  is continuing as of the date hereof and the steps being taken by the Credit Parties with  respect thereto.  Except as so specified, no other Default or Event of Default exists as of  the date hereof.     6. Attached hereto as Exhibit C is a true and accurate calculation setting forth information  that demonstrates compliance (or non-compliance) with the covenants set forth in Section 6.5 of the Credit  Agreement as of the end of the most recent test period.  The undersigned officer certifies that Borrowers  are in compliance with the following financial covenants as indicated by circling yes/no under the  “Complies” column below:    Financial Covenants  Required  Actual Complies    Section 6.5(a) — Fixed Charge Coverage Ratio2 1.10 to 1.0  ___ to ___ Yes No  Section 6.5(b) — Minimum EBITDA (YTD)3 [insert from  $_________ Yes No     Credit Agreement]    7. [Attached hereto as Exhibit D are updated Schedules to the Credit Agreement, to the extent  required and in accordance with Section 9.17 of the Credit Agreement.  The undersigned officer certifies  that the attached updated Schedules are automatically and immediately deemed to amend and restate the  prior version of such Schedule previously delivered to Agent; provided that the delivery of updated  Schedules shall not cure any Default or Event of Default that exists as a result of the inaccuracy of any  representation or warranty because of inaccurate information in any such Schedule prior to such update.]    2 No measurement of FCCR required for FQs ending 4/20/2022 or 7/31/2022.  3 Complete only for FQs ending 4/20/2022 and 7/31/2022.  

 

    IN WITNESS WHEREOF, the undersigned officer of Borrowing Agent has duly executed this  Compliance Certificate solely in [his/her] capacity as [Senior Vice President Finance] [Treasurer]  [Controller] and on behalf of the Credit Parties and not in [his/her] individual capacity, as of the date first  written above.     _______________________________  [Name], [Senior Vice President Finance] [Treasurer]  [Controller] of VIRCO MFG. CORPORATION    

 

158530707    EXHIBIT A    to    COMPLIANCE CERTIFICATE    dated  _______  ___, 20__        The following is attached to and made a part of the above referenced Compliance Certificate.      [specify non-compliance with Environmental Laws and proposed action] 

 

  158530707  EXHIBIT B    to   COMPLIANCE CERTIFICATE    dated  ______ __, 20__      [specify Defaults or Events of Defaults]    

 

158530707    EXHIBIT C    to   COMPLIANCE CERTIFICATE    dated    ______ __, 20__    [attach calculations]                                    

 

158530707    EXHIBIT D    to   COMPLIANCE CERTIFICATE    dated    ______ __, 20__    [attach updated Schedules]             

 

158530707      Exhibit A  CONFORMED COPY  Conformed through Amendment No. 12  dated as of April 15, 2022          AMENDED AND RESTATED REVOLVING CREDIT  AND  SECURITY AGREEMENT        PNC BANK, NATIONAL ASSOCIATION  (AS LENDER AND AS AGENT)        WITH        VIRCO MFG. CORPORATION,  a Delaware corporation    AND    VIRCO INC.,  a Delaware corporation    (AS BORROWERS)          September 28, 2021  as amended by Amendment No. 1, dated as of December 7, 2021, and  Amendment No. 2, dated as of April 15, 2022  

 

TABLE OF CONTENTS    Page    i  147420493  158492473  I. DEFINITIONS ................................................................................................................................ 1  1.1 Accounting Terms .............................................................................................................. 1  1.2 General Terms .................................................................................................................... 1  1.3 Uniform Commercial Code Terms .............................................................................. 3233  1.4 Certain Matters of Construction ................................................................................... 3233  1.5 LIBORBSBY Notification ........................................................................................... 3334  1.6 Conforming Changes Relating to BSBY ......................................................................... 34  II. ADVANCES, PAYMENTS ..................................................................................................... 3334  2.1 Revolving Advances .................................................................................................... 3334  2.2 Procedures for Requesting Revolving Advances; Procedures for Selection of  Applicable Interest Rates for All Advances ................................................................. 3435  2.3 Equipment Loans ...................................................................................... 36[Reserved] 37  2.4 Swing Loans ................................................................................................................ 3637  2.5 Disbursement of Advance Proceeds ............................................................................ 3738  2.6 Making and Settlement of Advances ........................................................................... 3839  2.7 Maximum Advances .................................................................................................... 3940  2.8 Manner and Repayment of Advances .......................................................................... 3940  2.9 Repayment of Excess Advances .................................................................................. 4041  2.10 Statement of Account ................................................................................................... 4041  2.11 Letters of Credit ............................................................................................................... 41  2.12 Issuance of Letters of Credit ........................................................................................ 4142  2.13 Requirements For Issuance of Letters of Credit .......................................................... 4243  2.14 Disbursements, Reimbursement .................................................................................. 4243  2.15 Repayment of Participation Advances ......................................................................... 4344  2.16 Documentation ................................................................................................................. 44  2.17 Determination to Honor Drawing Request .................................................................. 4445  2.18 Nature of Participation and Reimbursement Obligations ............................................ 4445  2.19 Liability for Acts and Omissions ................................................................................. 4546  2.20 Mandatory Prepayments .............................................................................................. 4647  2.21 Use of Proceeds ............................................................................................................... 47  2.22 Defaulting Lender ........................................................................................................ 4748  2.23 Payment of Obligations ............................................................................................... 4950  III. INTEREST AND FEES ................................................................................................................ 50  3.1 Interest ............................................................................................................................. 50  3.2 Letter of Credit Fees .................................................................................................... 5051  3.3 [Reserved] .................................................................................................................... 5152  3.4 Fee Letter; Appraisals .................................................................................................. 5152  3.5 Computation of Interest and Fees .................................................................................... 52  3.6 Maximum Charges ........................................................................................................... 52  3.7 Increased Costs ............................................................................................................ 5253  3.8 Alternate Rate of Interest ................................................................................................. 53  3.9 Capital Adequacy ......................................................................................................... 6059  3.10 Taxes ............................................................................................................................ 6159  3.11 Replacement of Lenders .............................................................................................. 6361  IV. COLLATERAL:  GENERAL TERMS .................................................................................... 6362  4.1 Security Interest in the Collateral ................................................................................ 6362  

 

TABLE OF CONTENTS  (continued)    Page    ii  147420493  158492473  4.2 Perfection of Security Interest ..................................................................................... 6462  4.3 Preservation of Collateral ............................................................................................ 6463  4.4 Ownership and Location of Collateral ......................................................................... 6463  4.5 Defense of Agent’s and Lenders’ Interests .................................................................. 6564  4.6 Inspection of Premises ................................................................................................. 6664  4.7 Appraisals .................................................................................................................... 6664  4.8 Receivables; Deposit Accounts and Securities Accounts ............................................ 6664  4.9 Inventory ...................................................................................................................... 6867  4.10 Maintenance of Equipment .......................................................................................... 6867  4.11 Exculpation of Liability ............................................................................................... 6967  4.12 Financing Statements ................................................................................................... 6967  4.13 Deposit Accounts ......................................................................................................... 6967  4.14 New and Newly Registered Intellectual Property ........................................................ 6968  V. REPRESENTATIONS AND WARRANTIES ......................................................................... 6968  5.1 Authority ...................................................................................................................... 6968  5.2 Formation and Qualification ........................................................................................ 7068  5.3 Survival of Representations and Warranties ................................................................ 7069  5.4 Tax Returns .................................................................................................................. 7069  5.5 [Reserved] .................................................................................................................... 7069  5.6 Entity Names................................................................................................................ 7069  5.7 O.S.H.A........................................................................................................................ 7169  5.8 Solvency; No Litigation, Violation, Indebtedness or Default; ERISA Compliance .... 7170  5.9 Patents, Trademarks, Copyrights and Licenses ........................................................... 7371  5.10 Licenses and Permits ................................................................................................... 7372  5.11 Default of Indebtedness ............................................................................................... 7372  5.12 No Default.................................................................................................................... 7372  5.13 No Burdensome Restrictions ....................................................................................... 7372  5.14 No Labor Disputes ....................................................................................................... 7372  5.15 Margin Regulations ...................................................................................................... 7372  5.16 Investment Company Act ............................................................................................ 7472  5.17 Disclosure .................................................................................................................... 7472  5.18 [Reserved] .................................................................................................................... 7473  5.19 [Reserved] .................................................................................................................... 7473  5.20 Swaps ........................................................................................................................... 7473  5.21 Business and Property of Borrowers ............................................................................ 7473  5.22 Ineligible Securities ..................................................................................................... 7473  5.23 [Reserved] .................................................................................................................... 7473  5.24 Equity Interests ............................................................................................................ 7473  5.25 Commercial Tort Claims ............................................................................................. 7573  5.26 Letter of Credit Rights ................................................................................................. 7573  5.27 Material Contracts ........................................................................................................ 7573  5.28 Certificate of Beneficial Ownership ............................................................................ 7573  5.29 Sanctions and other Anti-Terrorism Laws ................................................................... 7574  5.30 Anti-Corruption Laws .................................................................................................. 7574  VI. AFFIRMATIVE COVENANTS .............................................................................................. 7574  6.1 Compliance with Laws ................................................................................................ 7574  6.2 Conduct of Business and Maintenance of Existence and Assets ................................. 7674  

 

TABLE OF CONTENTS  (continued)    Page    iii  147420493  158492473  6.3 Books and Records ...................................................................................................... 7674  6.4 Payment of Taxes ......................................................................................................... 7674  6.5 Financial Covenants ..................................................................................................... 7675  6.6 Insurance ...................................................................................................................... 7675  6.7 Payment of Indebtedness and Leasehold Obligations .................................................. 7876  6.8 Environmental Matters ................................................................................................ 7877  6.9 Standards of Financial Statements ............................................................................... 7977  6.10 [Reserved] .................................................................................................................... 7977  6.11 Execution of Supplemental Instruments ...................................................................... 7978  6.12 [Reserved] .................................................................................................................... 7978  6.13 Government Receivables ............................................................................................. 7978  6.14 [Reserved] .................................................................................................................... 7978  6.15 Keepwell ...................................................................................................................... 7978  6.16 Certificate of Beneficial Ownership and Other Additional Information ..................... 8078  6.17 Sanctions and other Anti-Terrorism Laws; Anti-Corruption Laws ............................. 8078  VII. NEGATIVE COVENANTS ..................................................................................................... 8079  7.1 Merger, Consolidation, Acquisition and Sale of Assets .............................................. 8079  7.2 Creation of Liens ......................................................................................................... 8079  7.3 Guarantees ................................................................................................................... 8179  7.4 Investments .................................................................................................................. 8179  7.5 [Reserved] .................................................................................................................... 8280  7.6 Capital Expenditures .................................................................................................... 8280  7.7 Dividends ..................................................................................................................... 8280  7.8 Indebtedness................................................................................................................. 8381  7.9 Nature of Business ....................................................................................................... 8382  7.10 Transactions with Affiliates ......................................................................................... 8382  7.11 [Reserved] .................................................................................................................... 8482  7.12 Subsidiaries .................................................................................................................. 8482  7.13 Fiscal Year and Accounting Changes .......................................................................... 8483  7.14 Pledge of Credit ........................................................................................................... 8483  7.15 Amendment of Organizational Documents 84; Sale-Leaseback Documents .................. 83  7.16 Compliance with ERISA ............................................................................................. 8483  7.17 Prepayment of Funded Debt ........................................................................................ 8584  7.18 Sanctions and other Anti-Terrorism Laws ................................................................... 8584  7.19 Anti-Corruption Laws .................................................................................................. 8584  7.20 Clean Down ................................................................................................................. 8584  7.21 Leases........................................................................................................................... 8584  7.22 Membership / Partnership Interests ............................................................................. 8684  VIII. CONDITIONS PRECEDENT .................................................................................................. 8685  8.1 Conditions to Restatement ........................................................................................... 8685  8.2 Conditions to Each Advance ........................................................................................ 8786  IX. INFORMATION AS TO BORROWERS ................................................................................ 8887  9.1 Disclosure of Material Matters .................................................................................... 8887  9.2 Schedules ..................................................................................................................... 8887  9.3 Environmental Reports ................................................................................................ 8988  9.4 Litigation ...................................................................................................................... 8988  

 

TABLE OF CONTENTS  (continued)    Page    iv  147420493  158492473  9.5 Material Occurrences ................................................................................................... 9088  9.6 Government Receivables ............................................................................................. 9089  9.7 Annual Financial Statements ....................................................................................... 9089  9.8 Quarterly Financial Statements .................................................................................... 9089  9.9 Monthly Financial Statements ..................................................................................... 9089  9.10 Other Reports ............................................................................................................... 9189  9.11 Additional Information ................................................................................................ 9190  9.12 Projected Operating Budget ......................................................................................... 9190  9.13 Variances From Operating Budget .............................................................................. 9190  9.14 Notice of Suits, Adverse Events .................................................................................. 9190  9.15 ERISA Notices and Requests....................................................................................... 9190  9.16 Additional Documents ................................................................................................. 9291  9.17 Updates to Certain Schedules ...................................................................................... 9291  9.18 Financial Disclosure .................................................................................................... 9291  X. EVENTS OF DEFAULT .......................................................................................................... 9291  10.1 Nonpayment ................................................................................................................. 9392  10.2 Breach of Representation ............................................................................................. 9392  10.3 Noncompliance ............................................................................................................ 9392  10.4 Judicial Actions and Seizures ...................................................................................... 9392  10.5 Judgments .................................................................................................................... 9392  10.6 Bankruptcy ................................................................................................................... 9392  10.7 Inability to Pay ............................................................................................................. 9493  10.8 Lien Priority ................................................................................................................. 9493  10.9 Cross-Default ............................................................................................................... 9493  10.10 Breach of Guaranty or Pledge Agreement ................................................................... 9493  10.11 Change of Control ........................................................................................................ 9493  10.12 Invalidity ...................................................................................................................... 9493  10.13 Licenses ....................................................................................................................... 9493  10.14 Operations .................................................................................................................... 9493  10.15 Pension Plans ............................................................................................................... 9594  10.16 Anti-Money Laundering/International Trade Law Compliance .................................. 9594  10.17  ......................................................................................................................................... 94  XI. LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT ................................................ 9594  11.1 Rights and Remedies ................................................................................................... 9594  11.2 Agent’s Discretion ....................................................................................................... 9695  11.3 Setoff ............................................................................................................................ 9695  11.4 Rights and Remedies not Exclusive ............................................................................. 9796  11.5 Allocation of Payments After Event of Default ........................................................... 9796  XII. WAIVERS AND JUDICIAL PROCEEDINGS ....................................................................... 9897  12.1 Waiver of Notice .......................................................................................................... 9897  12.2 Delay ............................................................................................................................ 9897  12.3 Jury Waiver; California Judicial Reference ................................................................. 9897  XIII. EFFECTIVE DATE AND TERMINATION ......................................................................... 10099  13.1 Term; Prepayment ...................................................................................................... 10099  13.2 Termination ................................................................................................................ 10099  

 

TABLE OF CONTENTS  (continued)    Page    v  147420493  158492473  XIV. REGARDING AGENT ........................................................................................................ 101100  14.1 Appointment ............................................................................................................ 101100  14.2 Nature of Duties ....................................................................................................... 101100  14.3 Lack of Reliance on Agent ...................................................................................... 101100  14.4 Resignation of Agent; Successor Agent .................................................................. 102101  14.5 Certain Rights of Agent ........................................................................................... 102101  14.6 Reliance ................................................................................................................... 102101  14.7 Notice of Default ..................................................................................................... 103102  14.8 Indemnification ........................................................................................................ 103102  14.9 Agent in its Individual Capacity .............................................................................. 103102  14.10 Delivery of Documents ............................................................................................ 103102  14.11 Borrowers’ Undertaking to Agent ........................................................................... 103102  14.12 No Reliance on Agent’s Customer Identification Program ..................................... 104102  14.13 Other Agreements .................................................................................................... 104103  14.14 Erroneous Payments ................................................................................................ 104103  XV. BORROWING AGENCY .................................................................................................... 106105  15.1 Borrowing Agency Provisions ................................................................................. 106105  15.2 Joint and Several Liability of Borrowers ................................................................. 107106  15.3 Waiver of Subrogation ............................................................................................. 107106  15.4 Common Enterprise ................................................................................................. 107106  XVI. MISCELLANEOUS ............................................................................................................. 108107  16.1 Governing Law ........................................................................................................ 108107  16.2 Entire Understanding ............................................................................................... 108107  16.3 Successors and Assigns; Participations; New Lenders ............................................ 111110  16.4 Application of Payments .......................................................................................... 113112  16.5 Indemnity ................................................................................................................. 113112  16.6 Notice ....................................................................................................................... 114113  16.7 Survival .................................................................................................................... 116114  16.8 Severability .............................................................................................................. 116115  16.9 Expenses .................................................................................................................. 116115  16.10 Injunctive Relief ...................................................................................................... 116115  16.11 Consequential Damages ........................................................................................... 116115  16.12 Captions ................................................................................................................... 117115  16.13 Counterparts; Facsimile Signatures ......................................................................... 117115  16.14 Construction ............................................................................................................. 117116  16.15 Confidentiality; Sharing Information ....................................................................... 117116  16.16 Publicity ................................................................................................................... 117116  16.17 Certifications From Banks and Participants; USA PATRIOT Act .......................... 118116  16.18 Amendment and Restatement .................................................................................. 118117       

 

TABLE OF CONTENTS  (continued)    Page    vi  147420493  158492473  LIST OF EXHIBITS AND SCHEDULES  Exhibits  Exhibit 1.2 Borrowing Base Certificate  Exhibit 1.2(a) Compliance Certificate  Exhibit 16.3  Commitment Transfer Supplement    Schedules  Schedule 1.2  Permitted Encumbrances  Schedule 4.4  Equipment and Inventory Locations; Place of Business, Chief Executive Office,  Real Property  Schedule 4.8(j) Deposit and Investment Accounts  Schedule 5.1 Consents  Schedule 5.2(a)  States of Qualification and Good Standing  Schedule 5.2(b)  Subsidiaries  Schedule 5.4 Federal Tax Identification Number  Schedule 5.6  Prior Names  Schedule 5.7  Environmental  Schedule 5.8(b)(i)  Litigation  Schedule 5.8(d)  Plans  Schedule 5.9  Intellectual Property, Source Code Escrow Agreements  Schedule 5.10  Licenses and Permits  Schedule 5.14  Labor Disputes  Schedule 5.24 Equity Interests  Schedule 5.25 Commercial Tort Claims  Schedule 5.26 Letter of Credit Rights  Schedule 5.27  Schedule 7.3  Schedule 7.4  Material Contracts  Guaranties  Investments  Schedule 7.8  Indebtedness    

 

    147420493  158492473  AMENDED AND RESTATED REVOLVING CREDIT AND SECURITY AGREEMENT  This Amended and Restated Revolving Credit and Security Agreement dated as of September 28,  2021 among VIRCO MFG. CORPORATION, a corporation organized under the laws of the State of  Delaware (“VMC”), VIRCO INC., a corporation organized under the laws of the State of Delaware  (“Virco”) (VMC, Virco and each Person joined hereto as a borrower from time to time, collectively, the  “Borrowers”, and each a “Borrower”), the financial institutions which are now or which hereafter become  a party hereto (collectively, the “Lenders” and each individually a “Lender”) and PNC BANK, NATIONAL  ASSOCIATION (“PNC”), as agent for Lenders (PNC, in such capacity, “Agent”).  IN CONSIDERATION of the mutual covenants and undertakings herein contained, Borrowers,  Lenders and Agent hereby agree as follows:  I. DEFINITIONS.  1.1 Accounting Terms  .  As used in this Agreement, the Other Documents or any certificate, report or other document made or  delivered pursuant to this Agreement, accounting terms not defined in Section 1.2 or elsewhere in this  Agreement and accounting terms partly defined in Section 1.2 to the extent not defined shall have the  respective meanings given to them under GAAP; provided, however that, whenever such accounting terms  are used for the purposes of determining compliance with financial covenants in this Agreement, such  accounting terms shall be defined in accordance with GAAP as applied in preparation of the audited  financial statements of Borrowers for the fiscal year ended January 31, 2021.  If there occurs after the  Restatement Date any change in GAAP that affects in any respect the calculation of any covenant contained  in this Agreement or the definition of any term defined under GAAP used in such calculations, Agent,  Lenders and Borrowers shall negotiate in good faith to amend the provisions of this Agreement that relate  to the calculation of such covenants with the intent of having the respective positions of Agent, Lenders  and Borrowers after such change in GAAP conform as nearly as possible to their respective positions as of  the Restatement Date, provided, that, until any such amendments have been agreed upon, the covenants in  this Agreement shall be calculated as if no such change in GAAP had occurred and Borrowers shall provide  additional financial statements or supplements thereto, attachments to Compliance Certificates and/or  calculations regarding financial covenants as Agent may reasonably require in order to provide the  appropriate financial information required hereunder with respect to Borrowers both reflecting any  applicable changes in GAAP and as necessary to demonstrate compliance with the financial covenants  before giving effect to the applicable changes in GAAP.  1.2 General Terms  .  For purposes of this Agreement the following terms shall have the following meanings:  “Accountants” shall have the meaning set forth in Section 9.7 hereof.  “Administrative Questionnaire” shall mean an administrative questionnaire in a form supplied by  the Agent.  “Advance Rates” shall mean, collectively, the Receivables Advance Rate and the Inventory  Advance Rate.  “Advances” shall mean and include the Revolving Advances, the Letters of Credit, and the Swing  Loans and the Equipment Loans.  

 

  2  147420493  158492473  “Affected Lender” shall have the meaning set forth in Section 3.11 hereof.  “Affiliate” of any Person shall mean (a) any Person which, directly or indirectly, is in control of, is  controlled by, or is under common control with such Person, or (b) any Person who is a director, manager,  member, managing member, general partner or officer (i) of such Person, (ii) of any Subsidiary of such  Person or (iii) of any Person described in clause (a) above.  For purposes of this definition, control of a  Person shall mean the power, direct or indirect, (x) to vote 10.0% or more of the Equity Interests having  ordinary voting power for the election of directors of such Person or other Persons performing similar  functions for any such Person, or (y) to direct or cause the direction of the management and policies of such  Person whether by ownership of Equity Interests, contract or otherwise.  “Agent” shall have the meaning set forth in the preamble to this Agreement and shall include its  successors and assigns.  “Agreement” shall mean this Amended and Restated Revolving Credit and Security Agreement, as  the same may be amended, restated, extended, supplemented or otherwise modified from time to time,  including all schedules and exhibits.  “Alternate Base Rate” shall mean, for any day, a rate per annum equal to the highest of (a) the Base  Rate in effect on such day, (b) the sum of the Overnight Bank Funding Rate in effect on such day plus one  half of one percent (0.5%), and (c) the sum of the Daily LIBORBSBY Floating Rate in effect on such day  plus one percent (1.0%), so long as a Daily LIBORBSBY Floating Rate is offered, ascertainable and not  unlawful; provided, however, if the Alternate Base Rate as determined above would be less than zero, then  such rate shall be deemed to be zero. Any change in the Alternate Base Rate (or any component thereof)  shall take effect at the opening of business on the day such change occurs.  “Alternate Source” shall have the meaning set forth in the definition of Overnight Bank Funding  Rate.  “Amendment No. 1” shall mean that certain Amendment No. 1 to Amended and Restated  Revolving Credit and Security Agreement and Limited Waiver dated as of December 7, 2021 among  Borrowers, the Lenders party thereto and Agent.  “Amendment No. 1 Effective Date” has the meaning specified for such term in Amendment No. 1.  “Amendment No. 2” shall mean that certain Amendment No. 2 to Amended and Restated  Revolving Credit and Security Agreement and Limited Waiver dated as of April 15, 2022 among  Borrowers, the Lenders party thereto and Agent.  “Amendment No. 2 Effective Date” has the meaning specified for such term in Amendment No. 2.  “Anti-Corruption Laws” shall mean the United States Foreign Corrupt Practices Act of 1977, as  amended, the UK Bribery Act 2010, and any other similar anti-corruption laws or regulations administered  or enforced in any jurisdiction in which the Borrower or any of its Subsidiaries conduct business.  “Anti-Terrorism Law” shall mean any Law in force or hereinafter enacted related to terrorism,  money laundering, or economic sanctions, including Executive Order No. 13224, the USA PATRIOT Act,  the International Emergency Economic Powers Act, 50 U.S.C. 1701, et. seq., the Trading with the Enemy  Act, 50 U.S.C. App. 1, et seq., 18 U.S.C. § 2332d, and 18 U.S.C. § 2339b, and any regulations or directives  promulgated under these provisions.  

 

  3  147420493  158492473  “Applicable Law” shall mean all Laws applicable to the Person, conduct, transaction, covenant,  Other Document or contract in question, all provisions of all applicable state, federal and foreign  constitutions, statutes, rules, regulations, treaties, directives and orders of any Governmental Body, and all  orders, judgments and decrees of all courts and arbitrators.  “Applicable Margin” shall mean, as of any date of determination, the number of percentage points  set forth below opposite the level then in effect, it being understood that the Applicable Margin for (i)  Advances that are Domestic Rate Loans shall be the percentage set forth under the column “Domestic Rate  Loans” and (ii) Advances that are LIBORBSBY Rate Loans shall be the percentage set forth under the  column “LIBORBSBY Rate Loans”:    Notwithstanding anything to the contrary contained herein, (i) no downward adjustment in any Applicable  Margin shall be made on any applicable date on which any Event of Default shall have occurred and be  continuing, and (ii) upon and after the occurrence of an Event of Default, and during the continuation  thereof, at the option of Agent or at the direction of Required Lenders (or, in the case of any Event of  Default under Section 10.6, immediately and automatically upon the occurrence of any such Event of  Default without the requirement of any affirmative action by any party), each Applicable Margin shall  increase to and equal the highest Applicable Margin specified in the pricing table set forth above and shall  continue at such highest Applicable Margin until the date (if any) on which such Event of Default shall be  waived in accordance with the provisions of this Agreement, at which time the rate will be adjusted based  upon whether the Seasonal Advance Period is or is not in effect. Any increase in interest rates and/or other  fees payable by Borrowers under this Agreement and the Other Documents pursuant to the provisions of  the foregoing sentence shall be in addition to and independent of any increase in such interest rates and/or  other fees resulting from the occurrence of any Event of Default and/or the effectiveness of the Default  Rate provisions of Section 3.1 hereof or the default fee rate provisions of Section 3.2 hereof.  “Application Date” shall have the meaning set forth in Section 2.8(b) hereof.  “Approvals” shall have the meaning set forth in Section 5.7(b) hereof.  “Approved Electronic Communication” shall mean each notice, demand, communication,  information, document and other material transmitted, posted or otherwise made or communicated by e- mail, E-Fax, the Credit Management Module of PNC’s PINACLE® system, or any other equivalent  electronic service agreed to by Agent, whether owned, operated or hosted by Agent, any Lender, any of  their Affiliates or any other Person, that any party is obligated to, or otherwise chooses to, provide to Agent  pursuant to this Agreement or any Other Document, including any financial statement, financial and other  Level Applicable Trigger  Period  Domestic Rate  Loans  LIBORBSBY Rate  Loans    Revolving  Advances  Equipment  Loans  Revolving  Advances  Equipment  Loans    I    during the Seasonal   Overadvance Period (as  defined in Section  2.1(a)(iii))      1.75  1.25   2.75  2.25    II    at all other times    1.25    1.25 2.25   2.25  

 

  4  147420493  158492473  report, notice, request, certificate and other information material; provided that Approved Electronic  Communications shall not include any notice, demand, communication, information, document or other  material that Agent specifically instructs a Person to deliver in physical form.  “ATS Inventory” shall mean Inventory that constitutes “assemble-to-ship” Inventory  “Availability” means, as of any date of determination, (a) the Maximum Revolving Advance  Availability as of such date minus (b) the aggregate amount of all outstanding Revolving Advances as of  such date.  “Base Rate” shall mean the base commercial lending rate of PNC as publicly announced to be in  effect from time to time, such rate to be adjusted automatically, without notice, on the effective date of any  change in such rate.  This rate of interest is determined from time to time by PNC as a means of pricing  some loans to its customers and is neither tied to any external rate of interest or index nor does it necessarily  reflect the lowest rate of interest actually charged by PNC to any particular class or category of customers  of PNC.  “Benchmark Replacement” means as is specified in Section 3.8.2 hereof.  “Beneficial Owner” shall mean, for each Borrower, each of the following: (a) each individual, if  any, who, directly or indirectly, owns 25% or more of such Borrower’s Equity Interests; and (b) a single  individual with significant responsibility to control, manage, or direct such Borrower.  “Benefited Lender” shall have the meaning set forth in Section 2.6(e) hereof.  “Blocked Account Bank” shall have the meaning set forth in Section 4.8(h) hereof.  “Blocked Accounts” shall have the meaning set forth in Section 4.8(h) hereof.  “Bloomberg” means Bloomberg Index Services Limited (or a successor administrator of the BSBY  Screen Rate).  “Borrower” or “Borrowers” shall have the meaning set forth in the preamble to this Agreement and  shall extend to all permitted successors and assigns of such Persons.  “Borrowers on a Consolidated Basis” shall mean the consolidation in accordance with GAAP of  the accounts or other items of Borrowers and their respective Subsidiaries.  “Borrowers’ Account” shall have the meaning set forth in Section 2.10 hereof.  “Borrowing Agent” shall mean VMC.  “Borrowing Base Certificate” shall mean a certificate in substantially the form of Exhibit 1.2 hereto  duly executed by the President, Vice President Finance or Controller of the Borrowing Agent and delivered  to the Agent, appropriately completed, by which such officer shall certify to Agent the Formula Amount  and calculation thereof as of the date of such certificate.  “BSBY Floor” means a rate of interest equal to zero basis points (0.00%).  “BSBY Rate” means, for any BSBY Rate Loan for any Interest Period, the rate per annum  determined by the Agent by dividing (the resulting quotient rounded upwards, at the Agent’s discretion, to  the nearest 1/100th of 1%) (a) the  BSBY Screen Rate two (2) Business Days prior to the first day of such  

 

  5  147420493  158492473  Interest Period and having a term comparable to such Interest Period; provided that if the rate is not  published on such determination date, then the rate per annum for purposes of this clause (a) shall be the  BSBY Screen Rate on the first Business Day immediately prior thereto, so long as such first preceding  Business Day is not more than three (3) Business Days prior to such determination date, by (b)  a number  equal to 1.00 minus the BSBY Reserve Percentage; provided, further, that if the BSBY Rate, determined  as provided above, would be less than the BSBY Floor, then the BSBY Rate shall be deemed to be the  BSBY Floor.    The BSBY Rate shall be adjusted with respect to any BSBY Rate Loan that is outstanding on the  effective date of any change in the BSBY Reserve Percentage as of such effective date and the Agent shall  give prompt notice to the Borrowers of the BSBY Rate as determined or adjusted in accordance herewith,  which determination shall be conclusive absent manifest error.  “BSBY Rate Loan” means an Advance that bears interest based on BSBY Rate.  “BSBY Reserve Percentage” shall mean, as of any day, the maximum effective percentage in effect  on such day, if any, as prescribed by the Board of Governors of the Federal Reserve System of the United  States (or any successor) for determining the reserve requirements (including, without limitation,  supplemental, marginal and emergency reserve requirements) with respect to BSBY Screen Rate funding.  “BSBY Screen Rate” means the Bloomberg Short-Term Bank Yield Index rate administered by  Bloomberg and published by Bloomberg (or such other commercially available source providing such  quotations as may be designated by the Agent from time to time)  “Business Day” shall mean any day other than Saturday or Sunday or a legal holiday on which  commercial banks are authorized or required by Law to be closed for business in East Brunswick, New  Jersey and, if the applicable ; provided that, for purposes of any direct or indirect calculation or  determination of the BSBY Screen Rate, the term “Business Day relates to” means any LIBOR Rate Loans,  such day mustthat is also be a day on which dealings are carried on in the London interbank marketU.S.  Government Securities Business Day.  “Capital Expenditures” shall mean expenditures made or liabilities incurred for the acquisition of  any fixed assets or improvements (or of any replacements or substitutions thereof or additions thereto)  which have a useful life of more than one year and which, in accordance with GAAP, would be classified  as capital expenditures, excluding, however, any such expenditure (a) constituting leasehold improvement  expenditures that are actually paid for or reimbursed by unaffiliated third parties and (b) made to restore,  replace or rebuild property to the condition of such property immediately prior to any damage, loss,  destruction or condemnation of such property, to the extent such expenditure is (i) not in excess of the  amount of insurance proceeds or condemnation awards received in cash by Borrowers relating to any such  damage, loss, destruction or condemnation and (ii) made within one hundred and eighty (180) days of the  date of receipt of such insurance proceeds or condemnation awards.  Capital Expenditures shall include the  total principal portion of Capitalized Lease Obligations.  “Capitalized Lease Obligation” shall mean any Indebtedness of any Borrower represented by  obligations under a lease that is required to be capitalized for financial reporting purposes in accordance  with GAAP.   “Cash Management Liabilities” shall have the meaning provided in the definition of “Cash  Management Products and Services.”  

 

  6  147420493  158492473  “Cash Management Products and Services” shall mean agreements or other arrangements under  which Agent or any Lender or any Affiliate of Agent or a Lender provides any of the following products or  services to any Borrower:  (a) credit cards; (b) credit card processing services; (c) debit cards and stored  value cards; (d) commercial cards (purchase cards); (e) ACH transactions; and (f) cash management and  treasury management services and products, including without limitation controlled disbursement accounts  or services, lockboxes, automated clearinghouse transactions, overdrafts, interstate depository network  services.  The indebtedness, obligations and liabilities of any Borrower to the provider of any Cash  Management Products and Services (including all obligations and liabilities owing to such provider in  respect of any returned items deposited with such provider) (the “Cash Management Liabilities”) shall be  “Obligations” hereunder, guaranteed obligations under any Guaranty and secured obligations under any  Guarantor Security Agreement, as applicable, and otherwise treated as Obligations for purposes of each of  the Other Documents.  The Liens securing the Cash Management Products and Services shall be pari passu  with the Liens securing all other Obligations under this Agreement and the Other Documents, subject to  the express provisions of Section 11.5.   “CEA” shall mean the Commodity Exchange Act (7 U.S.C.§1 et seq.), as amended from time to  time, and any successor statute.  “CFTC” shall mean the Commodity Futures Trading Commission.  “CERCLA” shall mean the Comprehensive Environmental Response, Compensation and Liability  Act of 1980, as amended, 42 U.S.C. §§9601 et seq.  “Certificate of Beneficial Ownership” shall mean, for each Borrower, a certificate in form and  substance acceptable to Agent (as amended or modified by Agent from time to time in its sole discretion),  certifying, among other things, the Beneficial Owner of such Borrower.  “Change in Law” shall mean the occurrence, after the Restatement Date, of any of the following:  (a) the adoption or taking effect of any Applicable Law; (b) any change in any Applicable Law or in the  administration, implementation, interpretation or application thereof by any Governmental Body; or (c) the  making or issuance of any request, rule, guideline or directive (whether or not having the force of Law) by  any Governmental Body; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank  Wall Street Reform and Consumer Protection Act and all requests, rules, regulations, guidelines,  interpretations or directives thereunder or issued in connection therewith (whether or not having the force  of Applicable Law) and (y) all requests, rules, regulations, guidelines, interpretations 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 (whether or not  having the force of Law), 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, issued, promulgated or implemented.  “Change of Control” shall mean 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), other than members of the Virtue Family, 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 (such  right, an “option right”), whether such right is exercisable immediately or only after the passage of time),  directly or indirectly, of 20% or more of the equity securities of VMC entitled to vote for members of the  board of directors or equivalent governing body of VMC on a fully-diluted basis (i.e., taking into account  

 

  7  147420493  158492473  all such securities that such person or group has the right to acquire pursuant to any option right), provided  that in no event may the Virtue Family hold more than 45% in the aggregate of such equity securities of  VMC; or  (b) VMC fails to own directly or indirectly 100% of the issued and outstanding Equity  Interests of any of its Subsidiaries (other than pursuant to any merger, transaction or other event expressly  permitted by Section 7.1).  “Charges” shall mean all taxes, charges, fees, imposts, levies or other assessments, including all  net income, gross income, gross receipts, sales, use, ad valorem, value added, transfer, franchise, profits,  inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise,  severance, stamp, occupation and property taxes, custom duties, fees, assessments, liens, claims and charges  of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts,  imposed by any taxing or other authority, domestic or foreign (including the Pension Benefit Guaranty  Corporation or any environmental agency or superfund), upon the Collateral, any Borrower or any of its  Affiliates.  “CIP Regulations” shall have the meaning set forth in Section 14.12 hereof.  “Closing” means the consummation or waiver by the Agent and the Lenders of all requirements set  forth in this Agreement (including, without limitation, those set forth in Section 8.1 hereof).  “Closing Date” shall mean June 15, 2012.  “Code” shall mean the Internal Revenue Code of 1986, as the same may be amended or  supplemented from time to time, and any successor statute of similar import, and the rules and regulations  thereunder, as from time to time in effect.  “Collateral” shall mean and include all right, title and interest of each Borrower in all of the  following property and assets of such Borrower, in each case whether now existing or hereafter arising or  created and whether now owned or hereafter acquired and wherever located:  (a) all Receivables and all supporting obligations relating thereto;  (b) all equipment and fixtures;  (c) all general intangibles (including all payment intangibles and all software) and all  supporting obligations related thereto;  (d) all Inventory;  (e) all Subsidiary Stock, securities, investment property, and financial assets;  (f) all Real Property described in a Mortgage;  (g) all Leasehold Interests described in a Mortgage;  (h) (i) its respective goods and other property including all merchandise returned or  rejected by Customers, relating to or securing any of the Receivables; (ii) all of such Borrower’s rights as  a consignor, a consignee, an unpaid vendor, mechanic, artisan, or other lienor, including stoppage in transit,  setoff, detinue, replevin, reclamation and repurchase; (iii) all additional amounts due to such Borrower from  

 

  8  147420493  158492473  any Customer relating to the Receivables; (iv) other property, including warranty claims, relating to any  goods securing the Obligations; (v) all of such Borrower’s contract rights, rights of payment that have been  earned under a contract right, instruments (including promissory notes), documents, chattel paper (including  electronic chattel paper), warehouse receipts, deposit accounts, letters of credit and money; (vi) all  commercial tort claims (whether now existing or hereafter arising); (vii) if and when obtained by such  Borrower, all real and personal property of third parties in which such Borrower has been granted a lien or  security interest as security for the payment or enforcement of Receivables; (viii) all letter of credit rights  (whether or not the respective letter of credit is evidenced by a writing); (ix) all supporting obligations; and  (x) any other goods, personal property or real property now owned or hereafter acquired in which such  Borrower has expressly granted a security interest or may in the future grant a security interest to Agent  hereunder, or in any amendment or supplement hereto or thereto, or under any other agreement between  Agent and such Borrower;  (i) all ledger sheets, ledger cards, files, correspondence, records, books of account,  business papers, computers, computer software (owned by any Borrower or in which it has an interest),  computer programs, tapes, disks and documents, including all of such property relating to the property  described in clauses (a) through (h) of this definition; and  (j) all proceeds and products of the property described in clauses (a) through (i) of  this definition, in whatever form. It is the intention of the parties that if Agent shall fail to have a perfected  Lien in any particular property or assets of any Borrower for any reason whatsoever, but the provisions of  this Agreement and/or of the Other Documents, together with all financing statements and other public  filings relating to Liens filed or recorded by Agent against Borrowers, would be sufficient to create a  perfected Lien in any property or assets that such Borrower may receive upon the sale, lease, license,  exchange, transfer or disposition of such particular property or assets, then all such “proceeds” of such  particular property or assets shall be included in the Collateral as original collateral that is the subject of a  direct and original grant of a security interest as provided for herein and in the Other Documents (and not  merely as proceeds (as defined in Article 9 of the Uniform Commercial Code) in which a security interest  is created or arises solely pursuant to Section 9-315 of the Uniform Commercial Code).  Notwithstanding the foregoing, Collateral shall not include, and no Borrower shall be deemed to have  granted a security interest in:  (A) any rights or interests in any license, contract or agreement to which such  Borrower is a party to the extent, but only to the extent, that such a grant would, under the terms of such  license, contract or agreement, result in a breach of the terms of, or constitute a default under, such license,  lease, contract or agreement; (B) property owned by such Borrower that is subject to a purchase money  Lien or Capitalized Lease Obligation permitted under this Agreement if the lease, license, contract, property  right or agreement to which such Lien is granted prohibits or requires the consent of any Person other than  such Borrower or its Affiliates as a condition to the creation of any other Lien on such property; (C) any  voting stock of a Foreign Subsidiary in excess of 65% of all outstanding voting stock of such Foreign  Subsidiary; (D) any rights or property, including any intent-to-use trademark applications to the extent that  any valid and enforceable law or regulation applicable to such rights or property prohibits the creation of a  security interest in such rights or property or would otherwise result in a material loss of rights from the  creation of such security interest therein; or (E) any rights or interests in the Leasehold Interest for the  leased Real Property of the Borrowers located at 2027 Harpers Way and Torrance, CA 90501, other than  in each case of the foregoing clauses (A) and (B), to the extent the terms of any of the foregoing could be  rendered ineffective pursuant to 9-406, 9-407 or 9-408 of the UCC or other Applicable Law; provided, that  immediately upon the ineffectiveness, lapse or termination of any such restriction, the Collateral shall  include, and each Borrower shall be deemed to have granted a security interest in, all such rights and  interests or other assets, as the case may be, as if such provision had never been in effect; and provided,  further, that notwithstanding any such restriction, Collateral shall, to the extent such restriction does not by  its terms apply thereto, include all rights incident or appurtenant to any such rights or interests and the right  

 

  9  147420493  158492473  to receive all proceeds derived from or in connection with the sale, assignment or transfer of such rights  and interests (all of the foregoing to the extent excluded from “Collateral” pursuant to this paragraph being  referred to herein as “Excluded Property”).  “Commitment Transfer Supplement” shall mean a document in the form of Exhibit 16.3 hereto,  properly completed and otherwise in form and substance satisfactory to Agent by which the Purchasing  Lender purchases and assumes a portion of the obligation of Lenders to make Advances under this  Agreement.  “Compliance Certificate” shall mean a compliance certificate substantially in the form of Exhibit  1.2(a) hereto to be signed by the Vice President Finance, Treasurer or Controller of Borrowing Agent.  “Conforming Changes” means, with respect to the BSBY Screen Rate or any Benchmark  Replacement, any technical, administrative or operational changes (including changes to the definition of  “Alternate Base Rate,” the definition of “Business Day,” the definition of “Interest Period,” the definition  of “U.S. Government Securities Business Day,” timing and frequency of determining rates and making  payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the  applicability and length of lookback periods, the applicability of breakage provisions, and other technical,  administrative or operational matters) that the Agent decides may be appropriate to reflect the adoption and  implementation of the BSBY Screen Rate or 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 BSBY Screen Rate or the Benchmark  Replacement exists, in such other manner of administration as the Agent decides is reasonably necessary  in connection with the administration of this Agreement and the Other Documents).  “Consents” shall mean all filings and all licenses, permits, consents, approvals, authorizations,  qualifications and orders of Governmental Bodies and other third parties, domestic or foreign, necessary to  carry on any Borrower’s business or necessary (including to avoid a conflict or breach under any agreement,  instrument, other document, license, permit or other authorization) for the execution, delivery or  performance of this Agreement, the Other Documents, including any Consents required under all applicable  federal, state or other Applicable Law.  “Consigned Inventory” shall mean Inventory of any Borrower that is in the possession of another  Person on a consignment, sale or return, sale on approval, or other basis that does not constitute a final sale  and acceptance of such Inventory.  “Contract Rate” shall have the meaning set forth in Section 3.1 hereof.  “Controlled Group” shall mean, at any time, each Borrower and all members of a controlled group  of corporations and all trades or businesses (whether or not incorporated) under common control and all  other entities which, together with any Borrower, are treated as a single employer under Section 414 of the  Code.  “Conway Indebtedness” shall mean the Indebtedness of VMC in favor of SHARON DAVIS,  TRUSTEE OF THE DEWAYNE DAVIS CHILDREN’S TRUST, U/A DATED AUGUST 1, 1988, in an  aggregate original principal amount of $5,760,000, as evidenced by the Conway Seller Note.  “Conway Mortgage” shall mean the mortgage dated August 7, 2017, by VMC, as the Mortgagor in  favor of SHARON DAVIS, TRUSTEE OF THE DEWAYNE DAVIS CHILDREN’S TRUST, U/A  DATED AUGUST 1, 1988, as the Mortgagee.  

 

  10  147420493  158492473  “Conway Mortgagee Waiver Agreement” shall mean the Mortgagee Waiver Agreement dated  August 7, 2017 by and between SHARON DAVIS, TRUSTEE OF THE DEWAYNE DAVIS  CHILDREN’S TRUST, U/A DATED AUGUST 1, 1988 and PNC.  “Conway Property” shall mean the Real Property located at 1655 Amity Road, Conway, Arkansas  72034.  “Conway Seller Note” shall mean that certain promissory note made by VMC to SHARON DAVIS,  TRUSTEE OF THE DEWAYNE DAVIS CHILDREN’S TRUST, U/A DATED AUGUST 1, 1988, dated  August 7, 2017 in the original principal amount of $5,760,000.  “Conway Transaction” shall mean the acquisition by VMC of the Conway Real Property, with an  aggregate purchase price of Seven Million Two Hundred Thousand Dollars ($7,200,000), of which Five  Million Seven Hundred Sixty Thousand Dollars ($5,760,000) will be evidenced by the Conway Seller Note.  “Conway Transaction Documents” shall mean the (a) Conway Mortgage, (b) Conway Mortgagee  Waiver Agreement, and (c) Conway Seller Note.  “Covered Entity” shall mean (a) each Borrower, each of Borrower’s Subsidiaries, all Guarantors  and all pledgors of Collateral, and (b) each Person that, directly or indirectly, is in control of a Person  described in clause (a) above.  For purposes of this definition, control of a Person shall mean the direct or  indirect (x) ownership of, or power to vote, 25% or more of the issued and outstanding equity interests  having ordinary voting power for the election of directors of such Person or other Person or other Persons  performing similar functions for such Person, or (y) power to direct or cause the direction of the  management and policies of such Person whether by ownership of equity interests, contract or otherwise.  “Customer” shall mean and include the account debtor with respect to any Receivable and/or the  prospective purchaser of goods, services or both with respect to any contract or contract right, and/or any  party who enters into or proposes to enter into any contract or other arrangement with any Borrower,  pursuant to which such Borrower is to deliver any personal property or perform any services.  “Daily LIBORBSBY Floating Rate” shall meanmeans, for any day, the rate per annum determined  by the Agent by dividing (xthe resulting quotient rounded upwards, at the Agent’s discretion, to the nearest  1/100th of 1%) (a) the PublishedBSBY Screen Rate for such day for a one (1) month period, by (yb) a  number equal to 1.00 minus the BSBY Reserve Percentage; provided, however, that if the Daily  LIBORBSBY Floating Rate, determined as provided above, would be less than zero, such ratethe BSBY  Floor, then the Daily BSBY Floating Rate shall be deemed to be zero for purposes of this Agreementthe  BSBY Floor.  The rate of interest will be adjusted automatically as of each Business Day based on changes  in the Daily BSBY Rate without notice to the Borrowers.  “Default” shall mean an event, circumstance or condition which, with the giving of notice or  passage of time or both, would constitute an Event of Default.  “Default Rate” shall have the meaning set forth in Section 3.1 hereof.  “Defaulting Lender” shall mean any Lender that: (a) has failed, within two (2) Business Days of  the date required to be funded or paid, to (i) fund any portion of its Revolving Commitment Percentage or  Equipment Loan Commitment Percentage, as applicable, of Advances, (ii) if applicable, fund any portion  of its Participation Commitment in Letters of Credit or (iii) pay over to Agent, Issuer, Swing Loan Lender  or any Lender any other amount required to be paid by it hereunder, unless, in the case of clause (i) above,  such Lender notifies Agent in writing that such failure is the result of such Lender’s good faith  

 

  11  147420493  158492473  determination that a condition precedent to funding (specifically identified and including a particular  Default or Event of Default, if any) has not been satisfied; (b) has notified Borrowers or Agent in writing,  or has made a public statement to the effect, that it does not intend or expect to comply with any of its  funding obligations under this Agreement (unless such writing or public statement indicates that such  position is based on such Lender’s good faith determination that a condition precedent (specifically  identified and including a particular Default or Event of Default, if any) to funding a loan under this  Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit;  (c) has failed, within two (2) Business Days after request by Agent, acting in good faith, to provide a  certification in writing from an authorized officer of such Lender that it will comply with its obligations  (and is financially able to meet such obligations) to fund prospective Advances and, if applicable,  participations in then outstanding Letters of Credit and Swing Loans under this Agreement, provided that  such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon Agent’s receipt of such  certification in form and substance satisfactory to the Agent; (d) has become the subject of an Insolvency  Event; or (e) has failed at any time to comply with the provisions of Section 2.6(e) with respect to  purchasing participations from the other Lenders, whereby such Lender’s share of any payment received,  whether by setoff or otherwise, is in excess of its pro rata share of such payments due and payable to all of  the Lenders.  “Depository Accounts” shall have the meaning set forth in Section 4.8(h) hereof.  “Designated Lender” shall have the meaning set forth in Section 16.2(d) hereof.  “Dilution Percent” shall mean the percentage obtained by dividing (a) bad debt write-downs or  write-offs, discounts, returns, promotions, credits, credit memos and other dilutive items with respect to all  Receivables, by (b) gross sales.  “Dilution Reserve” shall mean a reserve against the Formula Amount in an amount equivalent to a  1.00% reduction in the Receivables Advance Rate for each percentage point (or portion thereof) by which  the Dilution Percent exceeds 5.00%.  “Disqualified Equity Interests” shall mean any Equity Interests which, by their terms (or by the  terms of any security or other Equity Interests into which they are convertible or for which they are  exchangeable), or upon the happening of any event or condition, (a) mature or are mandatorily redeemable,  pursuant to a sinking fund obligation or otherwise, or are redeemable at the option of the holder thereof (in  each case, other than solely for Equity Interests that do not constitute Disqualified Equity Interests and cash  in lieu of fractional shares of such Equity Interests), in whole or in part, on or prior to the date that is ninety- one (91) days following the final maturity date of this Agreement (excluding any provisions requiring  redemption upon a “change of control” or similar event; provided that such “change of control” or similar  event results in the occurrence of the repayment or repurchase in full in cash of the Revolving Advances),  (b) are convertible into or exchangeable for (i) debt securities or (ii) any Equity Interests referred to in  clause (a) above, in each case, at any time on or prior to the date that is ninety-one (91) days following the  final maturity date of this Agreement at the time such Equity Interests were issued, or (c) are entitled to  receive scheduled dividends or distributions in cash prior to the date that is ninety-one (91) days following  the final maturity date of this Agreement; provided that if such Equity Interests are issued pursuant to a  plan for the benefit of employees of Borrowers and their Subsidiaries or by any such plan to such  employees, such Equity Interests shall not constitute Disqualified Equity Interests solely because they may  be required to be repurchased by any Borrower or its Subsidiaries in order to satisfy applicable statutory or  regulatory obligations (unless such repurchase requirement is expressly required (for any reason other than  being required by such a statutory or regulatory obligation) within the applicable documents to occur at any  time on or prior to the date that is ninety-one (91) days following the final maturity date of this Agreement).  

 

  12  147420493  158492473  “Document” shall have the meaning given to the term “document” in the Uniform Commercial  Code.  “Dollar” and the sign “$” shall mean lawful money of the United States of America.  “Domestic Rate Loan” shall mean any Advance that bears interest based upon the Alternate Base  Rate.  “Drawing Date” shall have the meaning set forth in Section 2.14(b) hereof.  “Early Termination Date” shall have the meaning set forth in Section 13.1 hereof.  “Earnings Before Interest and Taxes” shall mean for any period the sum of (a) net income (or loss)  of Borrowers on a Consolidated Basis for such period (excluding extraordinary gains and losses), provided,  however, that for purposes of calculating net income for any relevant period, any gain (or loss) resulting  from the Permitted Conway Property Sale-Leaseback shall be disregarded, plus (b) all interest expense of  Borrowers on a Consolidated Basis for such period, plus (c) all charges against income of Borrowers on a  Consolidated Basis for such period for federal, state and local taxes actually expensed for such period.  “EBITDA” shall mean for any period, with respect to Borrowers on a Consolidated Basis, the sum  of (a) Earnings Before Interest and Taxes for such period, plus (b) depreciation expenses for such period,  plus (c) amortization expenses for such period, plus (d) reasonable and documented extraordinary expenses  directly related to the impacts of the COVID-19 on the business and operations of Borrowers and actually  incurred by Borrowers during the period from May 1, 2020 through and including April 30, 2021, to the  extent such expenses are approved by Agent and Lenders in their Permitted Discretion, in an amount not to  exceed $2,000,000 for any trailing twelve month period, plus (e) to the extent deducted in determining net  income of the Borrowers on a Consolidated Basis, non-cash compensation expense (including deferred non- cash compensation expense), other non-cash expenses, or charges arising from the sale or issuance of stock,  the granting of stock options, and the granting of stock appreciation rights and similar arrangements  (including any repricing, amendment, modification, substitution or change of any such stock, stock option,  stock appreciation rights or similar arrangements) or non-cash interest and accretion charges related to  pension plan adjustments, plus (f) to the extent deducted in determining net income of the Borrowers on a  Consolidated Basis, non-recurring expenses incurred by Borrowers during the period from February 1, 2022  through and including January 31, 2023 in connection with an unsolicited bid for a purchase of VMC, in  an aggregate amount not to exceed $2,000,000 for any trailing twelve month period.  “Effective Date” means the date indicated in a document or agreement to be the date on which such  document or agreement becomes effective, or, if there is no such indication, the date of execution of such  document or agreement.  “Effective Federal Funds Rate” means for any day the rate per annum (based on a year of 360 days  and actual days elapsed and rounded upward to the nearest 1/100 of 1% announced by the Federal Reserve  Bank of New York (or any successor) on such day as being the weighted average of the rates on overnight  federal funds transactions arranged by federal funds brokers on the previous trading day, as computed and  announced by such Federal Reserve Bank (or any successor) in substantially the same manner as such  Federal Reserve Bank computes and announces the weighted average it refers to as the “Effective Federal  Funds Rate” as of the date of this Agreement; provided that if such Federal Reserve Bank (or its successor)  does not announce such rate on any day, the “Effective Federal Funds Rate” for such day shall be the  Effective Federal Funds Rate for the last day on which such rate was announced.  Notwithstanding the  foregoing, if the Effective Federal Funds Rate as determined under any method above would be less than  zero percent (0.00%), such rate shall be deemed to be zero percent (0.00%) for purposes of this Agreement.  

 

  13  147420493  158492473  “Eligible Assignee” shall mean (a) a commercial bank, or any Affiliate thereof, organized under  the laws of the United States, or any state thereof, which has total assets in excess of $500,000,000 and (b)  a commercial bank, or any Affiliate thereof, organized under the laws of any other country which is a  member of the Organization for Economic Cooperation and Development or a political subdivision of any  such country and which (i) is acting through a branch or agency located in the United States, and (ii) has  total assets in excess of $500,000,000, (c) any Lender or Affiliate (other than a natural Person) of a Lender,  (d) so long as no Default or Event of Default has occurred and is continuing, any other Person (other than  a natural Person) approved by Borrowing Agent (which approval of Borrowing Agent shall not be  unreasonably withheld, conditioned or delayed), and (e) during the continuation of a Default or an Event  of Default, any other Person.  “Eligible ATS Inventory” means ATS Inventory that otherwise qualifies as Eligible Finished  Goods Inventory except for the fact that such Inventory constitutes “assemble-to-ship” Inventory.  “Eligible Contract Participant” shall mean an “eligible contract participant” as defined in the CEA  and regulations thereunder.  “Eligibility Date” shall mean, with respect to each Borrower and Guarantor and each Swap, the  date on which this Agreement or any Other Document becomes effective with respect to such Swap (for  the avoidance of doubt, the Eligibility Date shall be the Effective Date of such Swap if this Agreement or  any Other Document is then in effect with respect to such Borrower or Guarantor, and otherwise it shall be  the Effective Date of this Agreement and/or such Other Document(s) to which such Borrower or Guarantor  is a party).  “Eligible Inventory” shall mean Eligible ATS Inventory, Eligible Finished Goods Inventory and  Eligible Work In Process Inventory.  “Eligible Finished Goods Inventory” shall mean and includes Inventory, excluding work in process  and ATS Inventory, with respect to each Borrower, valued at the lower of cost or market value, determined  on a first-in-first-out basis, that is not, in Agent’s Permitted Discretion, obsolete, slow moving or  unmerchantable and that Agent, in its Permitted Discretion, does not deem to be ineligible Inventory, based  on such considerations as Agent may from time to time deem appropriate in its Permitted Discretion,  including whether the Inventory is subject to a perfected, first priority security interest in favor of Agent  and no other Lien (other than a Permitted Encumbrance).  In addition, Inventory shall not be Eligible  Finished Goods Inventory if it:  (a) does not conform to all applicable standards imposed by any  Governmental Body that has regulatory authority over such goods or the use or sale thereof; (b) is in transit  (other than in transit between locations of the Borrowers and/or Guarantors, which locations are in the  United States); (c) is located outside the United States or at a location that is not otherwise in compliance  with this Agreement; (d) constitutes Consigned Inventory; (e) is the subject of an Intellectual Property  Claim that Agent determines in its Permitted Discretion could have an adverse impact on the ability to sell  or otherwise dispose of or realize upon such Inventory or the value thereof; (f) is subject to a License  Agreement or other agreement that limits, conditions or restricts any Borrower’s or Agent’s right to sell or  otherwise dispose of such Inventory, unless Agent is a party to a Licensor/Agent Agreement with the  Licensor under such License Agreement; or (g) is situated at a location not owned by a Borrower unless (i)  the owner or occupier of such location has executed a Lien Waiver Agreement or (ii) Agent, in its sole  discretion, establishes a Landlord Reserve in lieu of a Lien Waiver Agreement.  “Eligible Receivables” shall mean and include, each Receivable of a Borrower arising in the  Ordinary Course of Business and which Agent, in its Permitted Discretion, does not deem an ineligible  Receivable, based on such considerations as Agent may from time to time deem appropriate.  A Receivable  shall not be deemed eligible unless such Receivable is subject to Agent’s first priority perfected security  

 

  14  147420493  158492473  interest and no other Lien (other than Permitted Encumbrances), and is evidenced by an invoice or other  documentary evidence satisfactory to Agent.  In addition, no Receivable shall be an Eligible Receivable if:  (a) it arises out of a sale made by any Borrower to an Affiliate of any Borrower or to  a Person controlled by an Affiliate of any Borrower;  (b) it is subject to a factoring arrangement;  (c) it is due or unpaid more than (i) sixty (60) days after the original due date or (ii)  ninety (90) days after the original invoice date ;  (d) fifty percent (50%) or more of the Receivables from such Customer are not deemed  Eligible Receivables hereunder (such percentage may, in Agent’s Permitted Discretion, be increased or  decreased from time to time);  (e) any covenant, representation or warranty contained in this Agreement with respect  to such Receivable has been breached;  (f) an Insolvency Event shall have occurred with respect to such Customer;  (g) the sale is to a Customer outside the United States of America or Canada, unless  the sale is (i) on letter of credit, guaranty or acceptance terms, in each case acceptable to Agent in its  Permitted Discretion or (ii) insured pursuant to credit insurance acceptable to Agent in its sole discretion  that is issued by a credit insurer and pursuant to documentation (including an assignment to Agent of such  credit insurance and the proceeds thereof) that is, in each case, acceptable to Agent in its sole discretion,  provided, that the aggregate amount of Receivables included pursuant to this clause (g)(ii) shall not exceed  a sublimit to be established by Agent from time to time in its sole discretion;  (h) the sale to the Customer is on a bill-and-hold, guaranteed sale, sale-and-return, sale  on approval, consignment or any other repurchase or return basis or is evidenced by chattel paper;  (i) Agent believes, in its Permitted Discretion, that collection of such Receivable is  insecure or that such Receivable may not be paid by reason of the Customer’s financial inability to pay;  (j) the Customer is the United States of America, any state or any department, agency  or instrumentality of any of them, unless the applicable Borrower assigns its right to payment of such  Receivable to Agent pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section  3727 et seq. and 41 U.S.C. Sub-Section 15 et seq.) or has otherwise complied with other applicable statutes  or ordinances;  (k) the goods giving rise to such Receivable have not been delivered to and accepted  by the Customer or the services giving rise to such Receivable have not been performed by the applicable  Borrower and accepted by the Customer or the Receivable otherwise does not represent a final sale;  (l) the Receivables of the Customer exceed fifteen percent (15%) of the amount of all  Receivables of the Borrowers;  (m) the Receivable is subject to any offset, deduction, defense, dispute, credits or  counterclaim (but such Receivable shall only be ineligible to the extent of such offset, deduction, defense  or counterclaim), the Customer is also a creditor or supplier of a Borrower or the Receivable is contingent  in any respect or for any reason;  

 

  15  147420493  158492473  (n) the applicable Borrower has made any agreement with any Customer for any  deduction therefrom, except for discounts or allowances made in the Ordinary Course of Business, but only  to the extent of such discount, all of which discounts or allowances are reflected in the calculation of the  face value of each respective invoice related thereto;  (o) any return, rejection or repossession of the merchandise has occurred or the  rendition of services has been disputed, but only to the extent of such return, rejection, repossession, or  dispute;  (p) such Receivable is not payable to a Borrower; or  (q) such Receivable is not otherwise satisfactory to Agent as determined by Agent in  its Permitted Discretion.  “Eligible Work In Process Inventory” shall mean Inventory that otherwise qualifies as Eligible  Finished Goods Inventory except for the fact that such Inventory constitutes “work in process” Inventory  (excluding (i) Eligible ATS Inventory and (ii) any such Inventory at or in transit to a third party processor   for finishing such Inventory (other than Valley Plating located in Conway, Arkansas for same day or next  day finishing), including to any third party for processor for chrome plating or otherwise, provided that  such Inventory may be included as “Eligible Work In Process Inventory” upon return of such Inventory by  such third party to the Borrowers).  “Embargoed Property” means any property (a) in which a Sanctioned Person holds an interest; (b)  beneficially owned, directly or indirectly, by a Sanctioned Person; (c) that is due to or from a Sanctioned  Person; (d) that is located in a Sanctioned Jurisdiction; or (e) that would otherwise cause any actual or  possible violation by the Lenders or Agent of any  applicable Anti-Terrorism Law if the Lenders were to  obtain an encumbrance on, lien on, pledge of or security interest in such property or provide services in  consideration of such property.  “Environmental Complaint” shall have the meaning set forth in Section 9.3(b) hereof.  “Environmental Laws” shall mean all federal, state and local environmental, land use, zoning,  health, chemical use, safety and sanitation Laws relating to the protection of the environment, human health  and/or governing the use, storage, treatment, generation, transportation, processing, handling, production  or disposal of Hazardous Materials and the rules, regulations, policies, guidelines, interpretations, decisions,  orders and directives of federal, state, international and local governmental agencies and authorities with  respect thereto.  “Equipment Loan Commitment Percentage” shall mean, as to any Lender, the Equipment Loan  Commitment Percentage (if any) set forth below such Lender’s name on the signature page hereof (or, in  the case of any Lender that became party to this Agreement after the Restatement Date pursuant to Section  16.3(c) or (d) hereof, the Equipment Loan Commitment Percentage (if any) of such Lender as set forth in  the applicable Commitment Transfer Supplement), as the same may be adjusted upon any assignment by  or to such Lender pursuant to Section 16.3(c) or (d) hereof.  “Equipment Loan Rate” shall mean (a) with respect to Equipment Loans that are Domestic Rate  Loans, an interest rate per annum equal to the sum of the Applicable Margin for Equipment Loans plus the  Alternate Base Rate and (b) with respect to Equipment Loans that are LIBOR Rate Loans, the sum of the  Applicable Margin for Equipment Loans plus the LIBOR Rates.  “Equipment Loans” shall have the meaning set forth in Section 2.3(b) hereof.  

 

  16  147420493  158492473  “Equipment Note” shall mean, collectively, the promissory notes referred to in Section 2.3(b)  hereof.  “Equity Interests” shall mean, with respect to any Person, any and all shares, rights to purchase,  options, warrants, general, limited or limited liability partnership interests, member interests, participation  or other equivalents of or interest in (regardless of how designated) equity of such Person, whether voting  or nonvoting, including common stock, preferred stock, convertible securities or any other “equity security”  (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC  under the Exchange Act), including in each case all of the following rights relating to such Equity Interests,  whether arising under the Organizational Documents of the Person issuing such Equity Interests (the  “issuer”) or under the applicable Laws of such issuer’s jurisdiction of organization relating to the formation,  existence and governance of corporations, limited liability companies or partnerships or business trusts or  other legal entities, as the case may be: (i) all economic rights (including all rights to receive dividends and  distributions) relating to such Equity Interests; (ii) all voting rights and rights to consent to any particular  action(s) by the applicable issuer; (iii) all management rights with respect to such issuer; (iv) in the case of  any Equity Interests consisting of a general partner interest in a partnership, all powers and rights as a  general partner with respect to the management, operations and control of the business and affairs of the  applicable issuer; (v) in the case of any Equity Interests consisting of the membership/limited liability  company interests of a managing member in a limited liability company, all powers and rights as a  managing member with respect to the management, operations and control of the business and affairs of  the applicable issuer; (vi) all rights to designate or appoint or vote for or remove any officers, directors,  manager(s), general partner(s) or managing member(s) of such issuer and/or any members of any board of  members/managers/partners/directors that may at any time have any rights to manage and direct the  business and affairs of the applicable issuer under its Organizational Documents as in effect from time to  time or under Applicable Law; (vii) all rights to amend the Organizational Documents of such issuer, (viii)  in the case of any Equity Interests in a partnership or limited liability company, the status of the holder of  such Equity Interests as a “partner”, general or limited, or “member” (as applicable) under the applicable  Organizational Documents and/or Applicable Law; and (ix) all certificates evidencing such Equity Interests.  “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the same may be  amended or supplemented from time to time and the rules and regulations promulgated thereunder.  “Erroneous Payment” has the meaning assigned to it in Section 14.14(a).  “Erroneous Payment Deficiency Assignment” has the meaning assigned to it in Section 14.14(d).  “Erroneous Payment Impacted Class” has the meaning assigned to it in Section 14.14(d).  “Erroneous Payment Return Deficiency” has the meaning assigned to it in Section 14.14(d).  “Erroneous Payment Subrogation Rights” has the meaning assigned to it in Section 14.14(d).  “Event of Default” shall have the meaning set forth in Article X hereof.  “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.  “Excluded Hedge Liability or Liabilities” shall mean, with respect to each Borrower and Guarantor,  each of its Swap Obligations if, and only to the extent that, all or any portion of this Agreement or any  Other Document that relates to such Swap Obligation is or becomes illegal under the CEA, or any rule,  regulation or order of the CFTC, solely by virtue of such Borrower’s and/or Guarantor’s failure to qualify  as an Eligible Contract Participant on the Eligibility Date for such Swap. Notwithstanding anything to the  

 

  17  147420493  158492473  contrary contained in the foregoing or in any other provision of this Agreement or any Other Document,  the foregoing is subject to the following provisos: (a) if a Swap Obligation arises under a master agreement  governing more than one Swap, this definition shall apply only to the portion of such Swap Obligation that  is attributable to Swaps for which such guaranty or security interest is or becomes illegal under the CEA,  or any rule, regulations or order of the CFTC, solely as a result of the failure by such Borrower or Guarantor  for any reason to qualify as an Eligible Contract Participant on the Eligibility Date for such Swap; (b) if a  guarantee of a Swap Obligation would cause such obligation to be an Excluded Hedge Liability but the  grant of a security interest would not cause such obligation to be an Excluded Hedge Liability, such Swap  Obligation shall constitute an Excluded Hedge Liability for purposes of the guaranty but not for purposes  of the grant of the security interest; and (c) if there is more than one Borrower or Guarantor executing this  Agreement or the Other Documents and a Swap Obligation would be an Excluded Hedge Liability with  respect to one or more of such Persons, but not all of them, the definition of Excluded Hedge Liability or  Liabilities with respect to each such Person shall only be deemed applicable to (i) the particular Swap  Obligations that constitute Excluded Hedge Liabilities with respect to such Person, and (ii) the particular  Person with respect to which such Swap Obligations constitute Excluded Hedge Liabilities.  “Excluded Property” has the meaning assigned to it in the definition of “Collateral”.  “Excluded Taxes” shall mean, with respect to Agent, any Lender, Participant, Swing Loan Lender,  Issuer or any other recipient of any payment to be made by or on account of any Obligations, (a) taxes  imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on  it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the Laws of  which such recipient is organized or in which its principal office or applicable lending office is located or,  in the case of any Lender, Participant, Swing Loan Lender or Issuer, in which its applicable lending office  is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed  by any other jurisdiction in which any Borrower is located, (c) in the case of a Foreign Lender, any  withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender  becomes a party hereto (or designates a new lending office) or is attributable to such Foreign Lender’s  failure or inability (other than as a result of a Change in Law) to comply with Section 3.10(e), except to the  extent that such Foreign Lender or Participant (or its assignor or seller of a participation, if any) was entitled,  at the time of designation of a new lending office (or assignment or sale of a participation), to receive  additional amounts from Borrowers with respect to such withholding tax pursuant to Section 3.10(a), or (d)  any Taxes imposed on any “withholding payment” payable to such recipient as a result of the failure of  such recipient to satisfy the requirements set forth in the FATCA after December 31, 2012.  “Existing Credit Agreement” shall mean that certain Revolving Credit and Security Agreement  dated as of December 22, 2011 by and among Agent, the Borrowers party thereto and Existing Lenders, as  the same has been amended or otherwise modified prior to the Restatement Date.  “Existing Lenders” shall mean the “Lenders” (as defined in the Existing Credit Agreement) party  to the Existing Credit Agreement.  “Existing Obligations” shall mean the “Obligations” as defined in the Existing Credit Agreement.  “Extraordinary Receipts” shall mean all Net Cash Proceeds received by Borrowers or Guarantors  not in the Ordinary Course of Business, including:  (a) foreign, United States, state or local tax refunds; (b)  pension plan reversions; (c) proceeds of business interruption insurance; (d) judgments, proceeds of  settlements or other consideration of any kind in connection with any cause of action; (e) indemnity  payments; (f) (i) 50% of the net proceeds for the issuance of Equity Interests expressly permitted hereunder  (other than issuances to a Borrower) and (ii) 100% of all other Equity Issuances; and (g) proceeds of any  

 

  18  147420493  158492473  issuance of Funded Debt (other than Funded Debt permitted pursuant to Section 7.8); and (h) any purchase  price adjustment received in connection with any purchase agreement.  “FATCA” shall mean 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 any current or future regulations thereunder or official interpretations thereof.  “Fee Letter” shall mean that certain amended and restated fee letter dated as of September 28, 2021  among Borrowers and PNC, as amended, restated, or otherwise modified from time to time.   “Fixed Charge Coverage Ratio” shall mean, for Borrowers on a Consolidated Basis, with respect  to any fiscal period, the ratio of:  (a) EBITDA, plus capitalized lease payments during such period, minus Unfinanced  Capital Expenditures made during such period, minus cash taxes paid during such period; to  (b) the sum of all cash actually expended to make (i) interest payments on any  Advances hereunder (other than amortization of fees and other non-interest expense hereunder), plus (ii)  payments with respect to any other Funded Debt (other than principal payments in respect of Revolving  Advances that are not made in connection with a permanent reduction to the Maximum Revolving Advance  Amount), plus (iii) payments for all fees, commissions and charges set forth herein and with respect to any  Advances, plus (iv) capitalized lease payments on Capitalized Lease Obligations (to the extent not included  in clause (ii) above), plus (v) Restricted Payments.  “Flood Laws” shall mean all Applicable Laws relating to policies and procedures that address  requirements placed on federally regulated lenders under the National Flood Insurance Reform Act of 1994  and other Applicable Laws related thereto.  “Foreign Currency Hedge” shall mean any foreign exchange transaction, including spot and  forward foreign currency purchases and sales, listed or over-the-counter options on foreign currencies, non- deliverable forwards and options, foreign currency swap agreements, currency exchange rate price hedging  arrangements, and any other similar transaction providing for the purchase of one currency in exchange for  the sale of another currency entered into by any Borrower, Guarantor and/or any of their respective  Subsidiaries.  “Foreign Currency Hedge Liabilities” shall have the meaning assigned in the definition of Lender- Provided Foreign Currency Hedge.  “Foreign Lender” shall mean any Lender that is organized under the Laws of a jurisdiction other  than that in which Borrowers are resident for tax purposes.  For purposes of this definition, the United States  of America, each State thereof and the District of Columbia shall be deemed to constitute a single  jurisdiction.  “Foreign Subsidiary” shall mean any Subsidiary of any Person that is not organized or incorporated  in the United States, any State or territory thereof or the District of Columbia.  “Formula Amount” shall have the meaning set forth in Section 2.1(a) hereof.  “Funded Debt” shall mean, with respect to any Person, without duplication, all Indebtedness for  borrowed money evidenced by notes, bonds, debentures, or similar evidences of Indebtedness that by its  terms matures more than one year from, or is directly or indirectly renewable or extendible at such Person’s  

 

  19  147420493  158492473  option under a revolving credit or similar agreement obligating the lender or lenders to extend credit over  a period of more than one year from the date of creation thereof, and specifically including Capitalized  Lease Obligations, current maturities of long-term debt, revolving credit and short term debt extendible  beyond one year at the option of the debtor, and also including, in the case of each Borrower, the Obligations  and, without duplication, Indebtedness consisting of guaranties of Funded Debt of other Persons.  “GAAP” shall mean generally accepted accounting principles in the United States of America in  effect from time to time.  “Governmental Acts” shall mean any act or omission, whether rightful or wrongful, of any present  or future de jure or de facto Governmental Body.  “Governmental Body” shall mean any nation or government, any state or other political subdivision  thereof or any entity, authority, agency, division or department exercising the executive, legislative,  judicial, taxing, regulatory or administrative powers or functions of or pertaining to a government  (including any supra-national bodies such as the European Union or the European Central Bank) and any  group or body charged with setting financial accounting or regulatory capital rules or standards (including,  without limitation, the Financial Accounting Standards Board, the Bank for International Settlements or the  Basel Committee on Banking Supervision or any successor or similar authority to any of the foregoing).  “Guarantor” shall mean any Person who may hereafter guarantee, as surety, payment or  performance of the whole or any part of the Obligations and “Guarantors” means collectively all such  Persons.  “Guarantor Security Agreement” shall mean any security agreement executed by any Guarantor in  favor of Agent securing the Obligations or the Guaranty of such Guarantor, in form and substance  satisfactory to Agent.  “Guaranty” shall mean any guaranty of the Obligations executed by a Guarantor in favor of Agent  for its benefit and for the ratable benefit of Lenders, in form and substance satisfactory to Agent.  “Hazardous Discharge” shall have the meaning set forth in Section 9.3(b) hereof.  “Hazardous Materials” shall mean, without limitation, any flammable explosives, radon,  radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum  and petroleum products, methane, hazardous materials, Hazardous Wastes, hazardous or Toxic Substances  or related materials as defined in or subject to regulation under Environmental Laws.  “Hazardous Wastes” shall mean all waste materials subject to regulation under CERCLA, RCRA  or applicable state Law, and any other applicable Federal and state Laws now in force or hereafter enacted  relating to hazardous waste disposal.  “Hedge Liabilities” shall mean the Interest Rate Hedge Liabilities.  “Inchoate Obligations” shall mean contingent indemnification or expense reimbursement  Obligations other than those related to claims, causes of action, or liabilities that have been asserted or  threatened or that otherwise can be reasonably identified by the Agent or any Lender based on the then- known facts and circumstances.   “Indebtedness” shall mean, as to any Person at any time, any and all indebtedness, obligations or  liabilities (whether matured or unmatured, liquidated or unliquidated, direct or indirect, absolute or  

 

  20  147420493  158492473  contingent, or joint or several) of such Person for or in respect of:  (a) borrowed money; (b) amounts  received under or liabilities in respect of any note purchase or acceptance credit facility, and all obligations  of such Person evidenced by bonds, debentures, notes or other similar instruments; (c) all Capitalized Lease  Obligations; (d) reimbursement obligations (contingent or otherwise) under any letter of credit agreement,  banker’s acceptance agreement or similar arrangement; (e) obligations under any Interest Rate Hedge,  Foreign Currency Hedge, or other interest rate management device, foreign currency exchange agreement,  currency swap agreement, commodity price protection agreement or other interest or currency exchange  rate or commodity price hedging arrangement; (f) any other advances of credit made to or on behalf of such  Person or other transaction (including forward sale or purchase agreements, capitalized leases and  conditional sales agreements) having the commercial effect of a borrowing of money entered into by such  Person to finance its operations or capital requirements including to finance the purchase price of property  or services and all obligations of such Person to pay the deferred purchase price of property or services (but  not including trade payables and accrued expenses incurred in the Ordinary Course of Business which are  not represented by a promissory note or other evidence of indebtedness and which are not more than sixty  (60) days past due); (g) all Equity Interests of such Person subject to repurchase or redemption rights or  obligations (excluding repurchases or redemptions (i) at the sole option of such Person or (ii) that must be  satisfied with Equity Interests (other than Disqualified Equity Interests) of such Person); (h) all  indebtedness, obligations or liabilities secured by a Lien on any asset of such Person, whether or not such  indebtedness, obligations or liabilities are otherwise an obligation of such Person; (i) all obligations of such  Person for “earnouts”, purchase price adjustments, profit sharing arrangements, deferred purchase money  amounts and similar payment obligations or continuing obligations of any nature of such Person arising out  of purchase and sale contracts; (j) off-balance sheet liabilities and/or pension plan liabilities of such Person;  (k) obligations arising under bonus, deferred compensation, incentive compensation or similar  arrangements, other than those arising in the Ordinary Course of Business; and (l) any guaranty of any  indebtedness, obligations or liabilities of a type described in the foregoing clauses (a) through (k).  “Indemnified Taxes” shall mean Taxes other than Excluded Taxes.  “Ineligible Security” shall mean any security which may not be underwritten or dealt in by member  banks of the Federal Reserve System under Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24,  Seventh), as amended.  “Insolvency Event” shall mean, with respect to any Person, including without limitation any  Lender, such Person or such Person’s direct or indirect parent company (a) becomes the subject of a  bankruptcy or insolvency proceeding (including any proceeding under Title 11 of the United States Code),  or regulatory restrictions, (b) has had a receiver, conservator, trustee, administrator, custodian, assignee for  the benefit of creditors or similar Person charged with the reorganization or liquidation of its business  appointed for it or has called a meeting of its creditors, (c) admits in writing its inability, or be generally  unable, to pay its debts as they become due or cease operations of its present business, (d) with respect to a  Lender, such Lender is unable to perform hereunder due to the application of Applicable Law, or (e) in the  good faith determination of Agent, has taken any action in furtherance of, or indicating its consent to,  approval of, or acquiescence in, any such proceeding or appointment of a type described in clauses (a) or  (b), provided that an Insolvency Event shall not result solely by virtue of any ownership interest, or the  acquisition of any ownership interest, in such Person or such Person’s direct or indirect parent company by  a Governmental Body or instrumentality thereof if, and only if, such ownership interest does not result in  or provide such Person with immunity from the jurisdiction of courts within the United States or from the  enforcement of judgments or writs of attachment on its assets or permit such Person (or such Governmental  Body or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by  such Person.  

 

  21  147420493  158492473  “Intellectual Property” shall mean property constituting a patent, copyright, trademark (or any  application in respect of the foregoing), service mark, trade name, mask work, trade secrets, design right,  assumed name or license or other right to use any of the foregoing under Applicable Law.  “Intellectual Property Claim” shall mean the assertion, by any means, by any Person of a claim that  any Borrower’s ownership, use, marketing, sale or distribution of any Inventory, equipment, Intellectual  Property or other property or asset is violative of any ownership of or right to use any Intellectual Property  of such Person.  “Intellectual Property Security Agreements” shall mean, collectively, the following: (a) the  Trademark Security Agreement, dated as of the Closing Date, between Borrowers and Agent, (b) the Patent  Security Agreement, dated as of the Closing Date, between Borrowers and Agent, and (c) any other security,  pledge or similar collateral agreement executed from time to time by any Borrower or Guarantor in favor  of Agent which encumbers Intellectual Property.  “Interest Period” shall mean the period provided for any LIBORBSBY Rate Loan pursuant to  Section 2.2(b) hereof.  “Interest Rate Hedge” shall mean an interest rate exchange, collar, cap, swap, floor, adjustable  strike cap, adjustable strike corridor, cross-currency swap or similar agreements entered into by any  Borrower, Guarantor and/or their respective Subsidiaries in order to provide protection to, or minimize the  impact upon, such Borrower, any Guarantor and/or their respective Subsidiaries of increasing floating rates  of interest applicable to Indebtedness.  “Interest Rate Hedge Liabilities” shall have the meaning assigned in the definition of Lender- Provided Interest Rate Hedge.  “Inventory” shall mean and include as to each Borrower all of such Borrower’s inventory (as  defined in Article 9 of the Uniform Commercial Code) and all of such Borrower’s goods, merchandise and  other personal property, wherever located, to be furnished under any consignment arrangement, contract of  service or held for sale or lease, all raw materials, work in process, finished goods and materials and supplies  of any kind, nature or description which are or might be used or consumed in such Borrower’s business or  used in selling or furnishing such goods, merchandise and other personal property, and all Documents.  “Inventory Advance Rate” shall have the meaning set forth in Section 2.1(a)(y)(ii) hereof.  “Inventory Sublimit” shall mean (a) during the period commencing on December 1 of each fiscal  year of VMC and ending on January 31 of the next fiscal year, $30,000,000, (b) during the period  commencing on February 1 of each fiscal year of VMC and ending on August 31 of such fiscal year,  $33,000,000, (c) during the period commencing on September 1 of each fiscal year of VMC and ending on  October 31 of such fiscal year, $20,000,000 and (c) during the period commencing on November 1 of each  fiscal year of VMC and ending on the last day of November in such fiscal year, $12,500,000.  “Issuer” shall mean (i) Agent in its capacity as the issuer of Letters of Credit under this Agreement  and (ii) any other Person which Agent in its discretion shall designate as the issuer of and cause to issue  any particular Letter of Credit under this Agreement in place of Agent as issuer.  “Landlord Reserve” shall mean, as to each location at which a Borrower has Inventory or books  and records located and as to which a Lien Waiver Agreement has not been received by Agent, a reserve in  an amount equal to three months’ rent or expense, as applicable, for such location; provided, that for  

 

  22  147420493  158492473  Borrowers’ leased location at 2027 Harpers Way, Torrance, California, in lieu of a Landlord Waiver  Agreement, Agent will implement a three month rent reserve.   “Law(s)” shall mean any law(s) (including common law and equitable principles), constitution,  statute, treaty, regulation, rule, ordinance, opinion, issued guidance, code, release, ruling, order, executive  order, injunction, writ, decree, bond, judgment, authorization or approval, lien or award of or any settlement  arrangement, by agreement, consent or otherwise, with any Governmental Body, foreign or domestic.  “Leasehold Interests” shall mean all of each Borrower’s right, title and interest in and to the premise  located at 2027 Harpers Way, Torrance, CA 90501.  “Lender” and “Lenders” shall have the meaning ascribed to such term in the preamble to this  Agreement and shall include each Person which becomes a transferee, successor or assign of any Lender.   For the purpose of provision of this Agreement or any Other Document which provides for the granting of  a security interest or other Lien to the Agent for the benefit of Lenders as security for the Obligations,  “Lenders” shall include any Affiliate of a Lender to which such Obligation (specifically including any  Hedge Liabilities and any Cash Management Liabilities) is owed.  “Lender-Provided Interest Rate Hedge” shall mean an Interest Rate Hedge which is provided by  any Lender and with respect to which such Lender confirms to Agent in writing prior to the execution  thereof that it: (a) is documented in a standard International Swap Dealers Association, Inc. Master  Agreement or another reasonable and customary manner; (b) provides for the method of calculating the  reimbursable amount of the provider’s credit exposure in a reasonable and customary manner; and (c) is  entered into for hedging (rather than speculative) purposes.  The liabilities owing to the provider of any  Lender-Provided Interest Rate Hedge (the “Interest Rate Hedge Liabilities”) by any Borrower, Guarantor,  or any of their respective Subsidiaries that is party to such Lender-Provided Interest Rate Hedge shall, for  purposes of this Agreement and all Other Documents be “Obligations” of such Person and of each other  Borrower and Guarantor, be guaranteed obligations under any Guaranty and secured obligations under any  Guarantor Security Agreement, as applicable, and otherwise treated as Obligations for purposes of the Other  Documents, except to the extent constituting Excluded Hedge Liabilities of such Person. The Liens securing  the Interest Rate Hedge Liabilities shall be pari passu with the Liens securing all other Obligations under  this Agreement and the Other Documents, subject to the express provisions of Section 11.5 hereof.  “Letter of Credit Application” shall have the meaning set forth in Section 2.12(a) hereof.  “Letter of Credit Borrowing” shall have the meaning set forth in Section 2.14(d) hereof.  “Letter of Credit Fees” shall have the meaning set forth in Section 3.2 hereof.  “Letter of Credit Sublimit” shall mean $3,000,000.  “Letters of Credit” shall have the meaning set forth in Section 2.11 hereof.  “LIBOR Alternate Source” shall have the meaning set forth in the definition of LIBOR Rate.  “LIBOR Rate” shall mean for any LIBOR Rate Loan for the then current Interest Period relating  thereto, the interest rate per annum determined by Agent by dividing (the resulting quotient rounded  upwards, if necessary, to the nearest 1/100th of 1% per annum) (a) the rate which appears on the Bloomberg  Page BBAM1 (or on such other substitute Bloomberg page that displays rates at which U.S. dollar deposits  are offered by leading banks in the London interbank deposit market), or the rate which is quoted by another  source selected by Agent as an authorized information vendor for the purpose of displaying rates at which  

 

  23  147420493  158492473  U.S. dollar deposits are offered by leading banks in the London interbank deposit market (a “LIBOR  Alternate Source”), at approximately 11:00 a.m., London time, two (2) Business Days prior to the  commencement of such Interest Period as the London interbank offered rate for U.S. Dollars for an amount  comparable to such LIBOR Rate Loan and having a borrowing date and a maturity comparable to such  Interest Period (or (x) if there shall at any time, for any reason, no longer exist a Bloomberg Page BBAM1  (or any substitute page) or any LIBOR Alternate Source, a comparable replacement rate determined by  Agent at such time (which determination shall be conclusive absent manifest error), (y) if the LIBOR Rate  is unascertainable as set forth in Section 3.8.2 Successor LIBOR Rate Index, a comparable replacement rate  determined in accordance with Section 3.8.2), by (b) a number equal to 1.00 minus the Reserve Percentage;  provided, however, that if the LIBOR Rate determined as provided above would be less than zero, such  rate shall be deemed to be zero for purposes of this Agreement.  The LIBOR Rate shall be adjusted with respect to any LIBOR Rate Loan that is outstanding on the  effective date of any change in the Reserve Percentage as of such effective date.  Agent shall give  reasonably prompt notice to the Borrowing Agent of the LIBOR Rate as determined or adjusted in  accordance herewith, which determination shall be conclusive absent manifest error.  “LIBOR Rate Loan” shall mean any Advance that bears interest based on the LIBOR Rate.  “License Agreement” shall mean any agreement between any Borrower and a Licensor pursuant to  which such Borrower is authorized to use any Intellectual Property in connection with the manufacturing,  marketing, sale or other distribution of any Inventory of such Borrower or otherwise in connection with  such Borrower’s business operations (other than any off-the-shelf, shrink wrap or other generally  commercially available pre-packaged software products or licenses).  “Licensor” shall mean any Person from whom any Borrower obtains the right to use (whether on  an exclusive or non-exclusive basis) any Intellectual Property in connection with such Borrower’s  manufacture, marketing, sale or other distribution of any Inventory or otherwise in connection with such  Borrower’s business operations.  “Licensor/Agent Agreement” shall mean an agreement between Agent and a Licensor, in form and  substance satisfactory to Agent in its Permitted Discretion, by which Agent is given the unqualified right,  vis-á-vis such Licensor, to enforce Agent’s Liens with respect to complete manufacture of and dispose of  any Borrower’s Inventory with the benefit of any Intellectual Property applicable thereto, irrespective of  such Borrower’s default under any License Agreement with such Licensor.  “Lien” shall mean any mortgage, deed of trust, pledge, hypothecation, assignment, security interest,  lien (whether statutory or otherwise), Charge, claim or encumbrance, or preference, priority or other  security agreement or preferential arrangement held or asserted in respect of any asset of any kind or nature  whatsoever including any conditional sale or other title retention agreement, any lease having substantially  the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing  statement under the Uniform Commercial Code or comparable law of any jurisdiction.  “Lien Waiver Agreement” shall mean an agreement, in form and substance acceptable to Agent,  executed in favor of Agent in its Permitted Discretion by a Person who owns or occupies premises at which  any Collateral may be located from time to time and by which such Person shall waive any Lien that such  Person may ever have with respect to any of the Collateral and shall authorize Agent from time to time to  enter upon the premises to inspect or remove the Collateral from such premises or to use such premises to  store or dispose of such Inventory.  

 

  24  147420493  158492473  “LLC Division” shall mean, in the event a Borrower or Guarantor is a limited liability company,  (a) the division of any such Borrower or Guarantor into two or more newly formed limited liability  companies (whether or not such Borrower or Guarantor is a surviving entity following any such division)  pursuant to Section 18-217 of the Delaware Limited Liability Company Act or any similar provision under  any similar act governing limited liability companies organized under the laws of any other State or  Commonwealth or of the District of Columbia, or (b) the adoption of a plan contemplating, or the filing of  any certificate with any applicable Governmental Body that results or may result in, any such division.  “Material Adverse Effect” shall mean a material adverse effect on (a) the condition (financial or  otherwise), results of operations, assets, business, properties or prospects of any Borrower or any Guarantor,  (b) any Borrower’s ability to duly and punctually pay or perform the Obligations in accordance with the  terms thereof, (c) the value of the Collateral, or Agent’s Liens on the Collateral or the priority of any such  Lien or (d) the practical realization of the benefits of Agent’s and each Lender’s rights and remedies under  this Agreement and the Other Documents.  “Material Contract” shall mean any contract, agreement, instrument, permit, lease or license,  written or oral, of any Borrower, which is material to any Borrower’s business or which the failure to  comply with could reasonably be expected to result in a Material Adverse Effect.  “Maximum Face Amount” shall mean, with respect to any outstanding Letter of Credit, the face  amount of such Letter of Credit including all automatic increases provided for in such Letter of Credit,  whether or not any such automatic increase has become effective.  “Maximum Revolving Advance Amount” shall mean (a) during the period commencing on June 1  of each fiscal year of VMC and ending on August 31 of such fiscal year, $65,000,000 (other than during  July and August 2022, during which months the Maximum Revolving Advance Amount shall be  $70,000,000), (b) during the period (i) commencing on February 1 of each fiscal year of VMC and ending  on May 31 of such fiscal year and (ii) commencing on September 1 of each fiscal year of VMC and ending  on September 30 of such fiscal year, $60,000,000 (c) during the period commencing on October 1 of each  fiscal year of VMC and ending on November 30 of such fiscal year, $40,000,000 (other than during October  2022, during which month the Maximum Revolving Advance Amount shall be $45,000,000) and (d) during  the period commencing on December 1 of each fiscal year of VMC and ending on the last day of January  in such fiscal year, $30,000,000.  “Maximum Revolving Advance Availability” shall mean, as of any date of determination, the lesser  of (a) the Maximum Revolving Advance Amount, minus the aggregate Maximum Undrawn Amount of all  outstanding Letters of Credit, or (b) the Formula Amount.  “Maximum Swing Loan Advance Amount” shall mean $5,000,000.  “Maximum Undrawn Amount” shall mean with respect to any outstanding Letter of Credit, the  amount of such Letter of Credit that is or may become available to be drawn (whether or not any of the  circumstances permitting the beneficiary to so draw exist at the time of determination), including all  automatic increases provided for in such Letter of Credit, whether or not any such automatic increase has  become effective.   “Modified Commitment Transfer Supplement” shall have the meaning set forth in Section 16.3(d)  hereof.  

 

  25  147420493  158492473  “Mortgage” shall mean the mortgage or deed of trust on the Real Property securing the Obligations,  together with all extensions, renewals, amendments, supplements, modifications, substitutions and  replacements thereto and thereof.  “Multiemployer Plan” shall mean a “multiemployer plan” as defined in Sections 3(37) or  4001(a)(3) of ERISA to which contributions are required or, within the preceding five plan years, were  required by any Borrower or any member of the Controlled Group.  “Multiple Employer Plan” shall mean a Plan which has two or more contributing sponsors  (including any Borrower or any member of the Controlled Group) at least two of whom are not under  common control, as such a plan is described in Section 4064 of ERISA.  “Negotiable Document” shall mean a Document that is “negotiable” within the meaning of Article  7 of the Uniform Commercial Code.  “Net Cash Proceeds” shall mean gross cash proceeds less (a) bona fide direct costs incurred to non- Affiliates of any Borrower in connection with obtaining such proceeds, including (i) legal fees and fees of  accountants and consultants, and (ii) transfer or similar taxes actually payable by such Borrower with  respect thereto and (b) the amounts necessary to discharge any Permitted Encumbrances with respect  thereto which have priority over Agent’s Liens.  “Net Invoice Cost” shall mean, with respect to equipment, the net invoice cost of such equipment  (excluding taxes, shipping, delivery, handling, installation, overhead and other so called “soft” costs).  “Non-Defaulting Lender” shall mean, at any time, any Lender holding a Revolving Commitment  that is not a Defaulting Lender at such time.  “Non-Qualifying Party” shall mean any Borrower or any Guarantor that on the Eligibility Date fails  for any reason to qualify as an Eligible Contract Participant.  “Notes” shall mean collectively, the Equipment Notes, the Revolving Credit Notes and the Swing  Loan Note.  “Obligations” shall mean and include any and all loans (including without limitation, all Advances  and Swing Loans), advances, debts, liabilities, obligations (including without limitation all reimbursement  obligations and cash collateralization obligations with respect to Letters of Credit issued hereunder),  covenants and duties owing by any Borrower or Guarantor or any Subsidiary of any Borrower or any  Guarantor under this Agreement or any Other Document (and any amendments, extensions, renewals or  increases thereto),  to Issuer, Swing Loan Lender, Lenders or Agent (or to any other direct or indirect  subsidiary or affiliate of Issuer, Swing Loan Lender, any Lender or Agent) of any kind or nature, present  or future (including any interest or other amounts accruing thereon, any fees accruing under or in connection  therewith, any costs and expenses of any Person payable by any Borrower and any indemnification  obligations payable by any Borrower arising or payable after maturity, or after the filing of any petition in  bankruptcy, or the commencement of any insolvency, reorganization or like proceeding relating to any  Borrower, whether or not a claim for post-filing or post-petition interest, fees or other amounts is allowable  or allowed in such proceeding), whether direct or indirect (including those acquired by assignment or  participation), absolute or contingent, joint or several, due or to become due, now existing or hereafter  arising, contractual or tortious, liquidated or unliquidated, regardless of how such indebtedness or liabilities  arise including all costs and expenses of Agent, Issuer, Swing Loan Lender and any Lender incurred in the  documentation, negotiation, modification, enforcement, collection or otherwise in connection with any of  the foregoing, including but not limited to reasonable attorneys’ fees and expenses and all obligations of  

 

  26  147420493  158492473  any Borrower to Agent, Issuer, Swing Loan Lender or Lenders to perform acts or refrain from taking any  action, (ii) all Hedge Liabilities and (iii) all Cash Management Liabilities. Notwithstanding anything to the  contrary contained in the foregoing, the Obligations shall not include any Excluded Hedge Liabilities.  “Ordinary Course of Business” shall mean, with respect to any Borrower, the ordinary course of  such Borrower’s business as conducted on the Restatement Date, including any reasonably related  extensions thereof in the same line of business conducted by such Borrower on the Restatement Date.  “Organizational Documents” shall mean, with respect to any Person, any charter, articles or  certificate of incorporation, certificate of organization, registration or formation, certificate of partnership  or limited partnership, bylaws, operating agreement, limited liability company agreement, or partnership  agreement of such Person and any and all other applicable documents relating to such Person’s formation,  organization or entity governance matters (including any shareholders’ or equity holders’ agreement or  voting trust agreement) and specifically includes, without limitation, any certificates of designation for  preferred stock or other forms of preferred equity.  “Other Documents” shall mean the Notes, the Fee Letter, any Guaranty, any Guarantor Security  Agreement, any Pledge Agreement, any Lender-Provided Interest Rate any Cash Management Products  and Services, any Intellectual Property Security Agreement and any and all other agreements, instruments  and documents, including intercreditor agreements, guaranties, pledges, powers of attorney, consents,  interest or currency swap agreements or other similar agreements and all other writings heretofore, now or  hereafter executed by any Borrower or any Guarantor and/or delivered to Agent or any Lender in respect  of the transactions contemplated by this Agreement, in each case together with all extensions, renewals,  amendments, supplements, modifications, substitutions and replacements thereto and thereof.  Without  limitation on the foregoing, each of the “Loan Documents” (as such term is used and defined in the Existing  Credit Agreement) in effect on the Restatement Date not otherwise amended, amended and restated or  otherwise replaced on the Restatement Date, shall (a) constitute an Other Document and (b) continue in full  force and effect as the same may be modified by the terms of this Agreement, including pursuant to Section  16.18 hereof.  “Other Taxes” shall mean all present or future stamp or documentary taxes or any other excise or  property taxes, charges or similar levies arising from any payment made hereunder or under any Other  Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement  or any Other Document.  “Out-of-Formula Loans” shall have the meaning set forth in Section 16.2(e) hereof.  “Overadvance Threshold Amount” shall have the meaning set forth in Section 16.2(e) hereof.  “Overnight Bank Funding Rate” shall mean, for any, day the rate per annum (based on a year of  360 days and actual days elapsed) comprised of both overnight federal funds and overnight Eurocurrency  borrowings by  U.S.-managed banking offices of depository institutions, as such composite rate shall be  determined by the Federal Reserve Bank of New York, as set forth on its public website from time to time,   and as published on the next succeeding Business Day as the overnight bank funding rate by such Federal  Reserve Bank  (or by such other recognized electronic source (such as Bloomberg) selected by the Agent  for the purpose of displaying such rate) (an “Alternate Source”); provided, that if such day is not a Business  Day, the Overnight Bank Funding Rate for such day shall be such rate on the immediately preceding  Business Day; provided, further,  that if such rate shall at any time, for any reason, no longer exist, a  comparable replacement rate determined by the Agent at such time (which determination shall be  conclusive absent manifest error).  If the Overnight Bank Funding Rate determined as above would be less  

 

  27  147420493  158492473  than zero, then such rate shall be deemed to be zero. The rate of interest charged shall be adjusted as of  each Business Day based on changes in the Overnight Bank Funding Rate without notice to the Borrower.  “Parent” of any Person shall mean a corporation or other entity owning, directly or indirectly, 50%  or more of the Equity Interests issued by such Person having ordinary voting power to elect a majority of  the directors of such Person, or other Persons performing similar functions for any such Person.  “Participant” shall mean each Person who shall be granted the right by any Lender to participate in  any of the Advances and who shall have entered into a participation agreement in form and substance  satisfactory to such Lender.  “Participation Advance” shall have the meaning set forth in Section 2.14(d) hereof.  “Participation Commitment” shall mean the obligation hereunder of each Lender holding a  Revolving Commitment to buy a participation equal to its Revolving Commitment Percentage (subject to  any reallocation pursuant to Section 2.22(b)(iii) hereof) in the Swing Loans made by Swing Loan Lender  hereunder as provided for in Section 2.4(c) hereof and in the Letters of Credit issued hereunder as provided  for in Section 2.14(a) hereof.  “Payment Office” shall mean initially Two Tower Center Boulevard, East Brunswick, New Jersey  08816; thereafter, such other office of Agent, if any, which it may designate by notice to Borrowing Agent  and to each Lender to be the Payment Office.  “Payment Recipient” has the meaning assigned to it in Section 14.14(a).  “PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A  of Title IV of ERISA or any successor.  “Peak Season” shall mean the period from December 1 through August 31 of each fiscal year of  the Borrowers.  “Pension Benefit Plan” shall mean at any time any “employee pension benefit plan” as defined in  Section 3(2) of ERISA (including a Multiple Employer Plan, but not a Multiemployer Plan) which is  covered by Title IV of ERISA or is subject to the minimum funding standards under Sections 412, 430 or  436 of the Code and either (i) is maintained or to which contributions are required by Borrower or any  member of the Controlled Group or (ii) has at any time within the preceding five years been maintained or  to which contributions have been required by a Borrower or any entity which was at such time a member  of the Controlled Group.  “Permitted Conway Property Sale-Leaseback” shall mean a sale-leaseback transaction (the  “Transaction”) with respect to all or substantially all of the Conway Property pursuant to terms and  conditions acceptable to Agent in its Permitted Discretion.  Without limiting the foregoing and Agent’s  Permitted Discretion in connection with any proposed Transaction, each of the following conditions and  other terms shall be satisfied (or waived or amended in writing by Agent, in its reasonable discretion) in  connection with the Transaction:  (a) the Transaction shall yield Net Cash Proceeds to VMC of not less  than $3,000,000, (b) the Borrowers’ base rent obligations under the resulting lease shall not exceed  $800,000 per year, with any rental obligation escalator provisions therein to be reasonably acceptable to  Agent, (c) the Transaction shall be consummated pursuant to sale-leaseback and related transaction  documents in form and substance reasonably acceptable to Agent (collectively, the “Permitted Sale- Leaseback Documentation”), (d) the purchaser/landlord under the Permitted Sale-Leaseback  Documentation shall enter into a landlord agreement in favor of Agent in form and substance reasonably  

 

  28  147420493  158492473  acceptable to Agent, and (e) the Conway Indebtedness (including all principal, accrued interest and any  other amounts attributable thereto) shall be repaid in full with the proceeds of the Transaction and the  Conway Mortgage (and any and all other collateral documentation) shall be reconveyed, released and  terminated in all respects.    “Permitted Conway Property Special Distribution” means, collectively, one or more share  repurchases made by VMC, on or within thirty (30) days following the date on which the Permitted Conway  Property Sale-Leaseback shall occur, in an aggregate amount not to exceed the Net Cash Proceeds received  by VMC in connection the Permitted Conway Property Sale-Leaseback, subject to the terms and conditions  set forth herein.  “Permitted Discretion” means a determination made in the exercise of reasonable (from the  perspective of a secured asset-based lender) business judgment.  “Permitted Encumbrances” shall mean: (a) Liens in favor of Agent for the benefit of Agent and  Lenders, including without limitation, Liens securing Hedge Liabilities and Cash Management Products  and Services; (b) Liens for taxes, assessments, levies or other governmental charges not delinquent or being  Properly Contested; (c) deposits or pledges to secure obligations under worker’s compensation, social  security or similar laws, or under unemployment insurance; (d) deposits or pledges to secure bids, tenders,  contracts (other than contracts for the payment of money), leases, statutory obligations, surety and appeal  bonds and other obligations of like nature arising in the Ordinary Course of Business; (e) Liens arising by  virtue of the rendition, entry or issuance against any Borrower or Subsidiary thereof, or any property of any  Borrower or any Subsidiary thereof, of any judgment, writ, order, or decree for so long as each such Lien  (i) is in existence for less than 20 consecutive days after it first arises or is being Properly Contested and  (ii) is at all times junior in priority to any Liens in favor of Agent; (f) mechanics’, workers’, materialmen’s,  carriers, laborers, landlords or suppliers, or other like Liens arising by operation of law in the Ordinary  Course of Business with respect to obligations that are not delinquent or that are being Properly Contested;  (g) Liens placed upon fixed assets hereafter acquired to secure a portion of the purchase price thereof or the  interests of lessors under Capital Leases, provided that (i) any such lien shall not encumber any other  property of the applicable Borrower or Subsidiary and (ii) the aggregate amount of Indebtedness secured  by such Liens incurred as a result of such purchases during any fiscal year shall not exceed the amount  provided for in Section 7.6; (h) the interests of lessors under operating leases and non-exclusive licensors  under license agreements that do not materially interfere with or impair the use of the assets or rights of the  Borrowers or their Subsidiaries subject to such leases or license agreements, (i) with respect to any Real  Property, easements, rights of way, and zoning restrictions that do not materially interfere with or impair  the use or operation thereof, (j) non-exclusive licenses of patents, trademarks, copyrights, and other  intellectual property rights in the Ordinary Course of Business, (k) Liens securing Refinancing Indebtedness  permitted hereunder that are replacements of Permitted Encumbrances securing Indebtedness permitted  hereunder existing on the Restatement Date so long as such replacement Liens only encumber those assets  that secured the original Indebtedness, (l) rights of setoff or, bankers’ liens and other Liens upon deposits  of cash in favor of banks or other depository institutions, solely to the extent incurred in connection with  the maintenance of such deposit accounts or the provision of services described in the definition of Cash  Management Products and Services in each case in the Ordinary Course of Business, (m) Liens granted in  the Ordinary Course of Business on the unearned portion of insurance premiums securing the financing of  insurance premiums to the extent the financing is expressly permitted hereby, (n) Liens in favor of customs  and revenue authorities arising as a matter of law in the Ordinary Course of Business to secure payment of  customs duties in connection with the importation of goods, (o) Liens on assets of a Person (and its  Subsidiaries) existing at the time such Person (and its Subsidiaries) is acquired by a Borrower or any of its  Subsidiaries (and not created in anticipation or contemplation thereof) in a transaction expressly permitted  hereby, (p) customary assignments of insurance or condemnation proceeds provided to landlords (or their  mortgagees) pursuant to the terms of any lease; (q) Liens and rights reserved in any lease for rent granted  

 

  29  147420493  158492473  in the Ordinary Course of Business with respect to rent that is not delinquent, (r) Liens disclosed on  Schedule 1.2; provided that such Liens shall secure only those obligations which they secure on the  Restatement Date and shall not subsequently apply to any other property or assets of any Borrower, (s)  other Liens securing amounts not exceeding $250,000 in the aggregate at any one time and which (i) are  incidental to the conduct of the business or the ownership of the property and assets of the Borrowers and  their Subsidiaries, (ii) were not incurred in connection with the incurrence of Funded Debt, (iii) do not  constitute blanket liens on the assets of any Borrower or Subsidiary and (iv) do not materially impair the  use of such assets in the operation of the business of any Borrower or Subsidiary, and (t) so long as the  Permitted Conway Property Sale-Leaseback shall not have occurred, the Conway Mortgage, subject to the  Conway Mortgagee Waiver Agreement, and (u) should the Permitted Conway Property Sale-Leaseback  occur, to the extent the Permitted Conway Property Sale-Leaseback is or may be characterized as a secured  transaction, the Liens of the Conway Property landlord created pursuant to the applicable Permitted Sale- Leaseback Documentation (it being understood and agreed that except for the Conway Mortgage or, if  applicable, the Permitted Sale-Leaseback Documentation relating to the Permitted Conway Property Sale- Leaseback, and the Liens described in the foregoing clauses (a), (b), (f) and (i) of this definition of  “Permitted Encumbrances”, no other Lien shall be permitted to exist on or with respect to the Conway  Property).  “Permitted Sale-Leaseback Documentation” shall have the meaning set forth for such term in the  definition of “Permitted Conway Property Sale-Leaseback”.  “Person” shall mean any individual, sole proprietorship, partnership, corporation, business trust,  joint stock company, trust, unincorporated organization, association, limited liability company, limited  liability partnership, institution, public benefit corporation, joint venture, entity or Governmental Body  (whether federal, state, county, city, municipal or otherwise, including any instrumentality, division,  agency, body or department thereof).  “Plan” shall mean any employee benefit plan within the meaning of Section 3(3) of ERISA  (including a Pension Benefit Plan and a Multiemployer Plan, as defined herein) maintained by any  Borrower or any member of the Controlled Group or to which any Borrower or any member of the  Controlled Group is required to contribute.  “Pledge Agreement” shall mean any pledge agreement executed by a Borrower or any other Person  in favor of Agent to secure the Obligations.  “PNC” shall have the meaning set forth in the preamble to this Agreement and shall extend to all  of its successors and assigns.  “Properly Contested” shall mean, in the case of any Indebtedness, Lien or Taxes, as applicable, of  any Person that are not paid as and when due or payable by reason of such Person’s bona fide dispute  concerning its liability to pay the same or concerning the amount thereof: (a) such Indebtedness, Lien or  Taxes, as applicable, are being properly contested in good faith by appropriate proceedings promptly  instituted and diligently conducted; (b) such Person has established appropriate reserves as shall be required  in conformity with GAAP; (c) the non-payment of such Indebtedness or Taxes will not have a Material  Adverse Effect or will not result in the forfeiture of any assets of such Person; (d) no Lien is imposed upon  any of such Person’s assets with respect to such Indebtedness or taxes unless such Lien (i) is at all times  junior and subordinate in priority to the Liens in favor of the Agent (except only with respect to property  Taxes that have priority as a matter of applicable state law) and, (ii) enforcement of such Lien is stayed  during the period prior to the final resolution or disposition of such dispute; (e) if such Indebtedness or  Lien, as applicable, results from, or is determined by the entry, rendition or issuance against a Person or  any of its assets of a judgment, writ, order or decree, enforcement of such judgment, writ, order or decree  

 

  30  147420493  158492473  is stayed pending a timely appeal or other judicial review; and (f) if such contest is abandoned, settled or  determined adversely (in whole or in part) to such Person, such Person forthwith pays such Indebtedness  and all penalties, interest and other amounts due in connection therewith.  “Protective Advances” shall have the meaning set forth in Section 16.2(f) hereof.  “Published Rate” shall mean the rate of interest published each Business Day in the Wall Street  Journal “Money Rates” listing under the caption “London Interbank Offered Rates” for a one month period  (or, if no such rate is published therein for any reason, then the Published Rate shall be the LIBOR Rate for  a one month period as published in another publication selected by the Agent).  “Purchasing CLO” shall have the meaning set forth in Section 16.3(d) hereof.  “Purchasing Lender” shall have the meaning set forth in Section 16.3(c) hereof.  “Qualified ECP Loan Party” shall mean each Borrower or Guarantor that on the Eligibility Date is  (a) a corporation, partnership, proprietorship, organization, trust, or other entity other than a “commodity  pool” as defined in Section 1a(10) of the CEA and CFTC regulations thereunder that has total assets  exceeding $10,000,000 or (b) an Eligible Contract Participant that can cause another person to qualify as  an Eligible Contract Participant on the Eligibility Date under Section 1a(18)(A)(v)(II) of the CEA by  entering into or otherwise providing a “letter of credit or keepwell, support, or other agreement” for  purposes of Section 1a(18)(A)(v)(II) of the CEA.  “RCRA” shall mean the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., as  same may be amended from time to time.  “Real Property” shall mean all of the owned and leased premises identified on Schedule 4.4 hereto  or in and to any other premises or real property that are hereafter owned or leased by any Borrower.  “Receivables” shall mean and include, as to each Borrower, all of such Borrower’s accounts (as  defined in Article 9 of the Uniform Commercial Code) and all of such Borrower’s contract rights,  instruments (including those evidencing indebtedness owed to such Borrower by its Affiliates), documents,  chattel paper (including electronic chattel paper), general intangibles relating to accounts, contract rights,  instruments, documents and chattel paper, and drafts and acceptances, credit card receivables and all other  forms of obligations owing to such Borrower arising out of or in connection with the sale or lease of  Inventory or the rendition of services, all supporting obligations, guarantees and other security therefor,  whether secured or unsecured, now existing or hereafter created, and whether or not specifically sold or  assigned to Agent hereunder.  “Receivables Advance Rate” shall have the meaning set forth in Section 2.1(a)(y)(i) hereof.  “Refinancing Indebtedness” means refinancings, renewals, replacements, or extensions of Funded  Debt so long as: (a) such refinancings, renewals, replacements or extensions do not result in an increase in  the principal amount (including the amount of unfunded commitments with respect thereto) of the Funded  Debt so refinanced, renewed, replaced or extended, other than by the amount of premiums paid thereon and  the fees and expenses incurred in connection therewith and (b) such refinancings, renewals, replacements  or extensions do not result in a shortening of the average weighted maturity (measured as of the refinancing,  renewal, or extension) of the Funded Debt so refinanced, renewed, replaced or extended.  “Register” shall have the meaning set forth in Section 16.3(e) hereof.  

 

  31  147420493  158492473  “Reimbursement Obligation” shall have the meaning set forth in Section 2.14(b) hereof.  “Release” shall have the meaning set forth in Section 5.7(c)(i) hereof.  “Reportable Compliance Event” shall mean that (1) any Covered Entity becomes a Sanctioned  Person, or is charged by indictment, criminal complaint or similar charging instrument, arraigned,  custodially detained, penalized or the subject of an assessment for a penalty or enters into a settlement with  an Governmental Body in connection with any sanctions or other Anti-Terrorism Law or Anti-Corruption  law, or any predicate crime to any Anti-Terrorism Law or Anti-Corruption Law, or has knowledge of facts  or circumstances to the effect that it is reasonably likely that any aspect of its operations represents a  violation  of any Anti-Terrorism Law or Anti-Corruption Law; (2) any Covered Entity engages in a  transaction that has caused or may cause the Lenders or Agent to be in violation of any Anti-Terrorism  Law, including a Covered Entity’s use of any proceeds of the credit facility to fund any operations in,  finance any investments or activities in, or, make any payments to, directly or indirectly, a Sanctioned  Jurisdiction or Sanctioned Person; or (3) any Collateral becomes Embargoed Property.  “Reportable ERISA Event” shall mean a reportable event described in Section 4043(c) of ERISA  or the regulations promulgated thereunder.  “Required Lenders” shall mean Lenders (not including Swing Loan Lender (in its capacity as such  Swing Loan Lender) or any Defaulting Lender) holding more than fifty percent (50%) of either (a) the  aggregate of (y) the Revolving Commitment Amounts of all Lenders (excluding any Defaulting Lender)  and (y) the outstanding principal amount of the Equipment Loans, or (b) after the termination of all  commitments of Lenders hereunder, the sum of (x) the outstanding Revolving Advances, and Swing Loans  and Equipment Loans, plus the Maximum Undrawn Amount of all outstanding Letters of Credit; provided,  however, if there are fewer than three (3) Lenders, Required Lenders shall mean all Lenders (excluding any  Defaulting Lender).  “Reserve Percentage” shall mean as of any day the maximum effective percentage in effect on such  day as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for  determining the reserve requirements (including supplemental, marginal and emergency reserve  requirements) with respect to eurocurrency funding (currently referred to as “Eurocurrency Liabilities”).  “Reserves” means reserves against the Formula Amount, including the Dilution Reserve and the  Landlord Reserve, established and adjusted by Agent from time to time in its Permitted Discretion.  “Restatement Date” shall mean September 28, 2021 or such other date as may be agreed to in  writing by the parties hereto.  “Restricted Payments” shall have the meaning set forth in Section 7.7 hereof.  “Revolving Advances” shall mean Advances other than Letters of Credit, Equipment Loans and  the Swing Loans.  “Revolving Commitment” shall mean, as to any Lender, the obligation of such Lender (if  applicable), to make Revolving Advances and participate in Swing Loans and Letters of Credit, in an  aggregate principal and/or face amount not to exceed the Revolving Commitment Amount (if any) of such  Lender.  “Revolving Commitment Amount” shall mean, as to any Lender, the Revolving Commitment  amount (if any) set forth below such Lender’s name on the signature page hereto (or, in the case of any  

 

  32  147420493  158492473  Lender that became party to this Agreement after the Restatement Date pursuant to Section 16.3(c) or (d)  hereof, the Revolving Commitment amount (if any) of such Lender as set forth in the applicable  Commitment Transfer Supplement).  “Revolving Commitment Percentage” shall mean, as to any Lender, the Revolving Commitment  Percentage (if any) set forth below such Lender’s name on the signature page hereof (or, in the case of any  Lender that became party to this Agreement after the Restatement Date pursuant to Section 16.3(c) or (d)  hereof, the Revolving Commitment Percentage (if any) of such Lender as set forth in the applicable  Commitment Transfer Supplement).  “Revolving Credit Note” shall mean, collectively, the promissory notes referred to in Section 2.1(a)  hereof.  “Revolving Interest Rate” shall mean (a) with respect to Revolving Advances that are Domestic  Rate Loans and Swing Loans, an interest rate per annum equal to the sum of the Applicable Margin plus  the Alternate Base Rate and (b) with respect to Revolving Advances that are LIBORBSBY Rate Loans, the  sum of the Applicable Margin plus the LIBORBSBY Rate.  “Sanctioned Jurisdiction” shall mean a country subject to a sanctions program maintained under  any Anti-Terrorism Law.  “Sanctioned Person” shall mean (a) a Person that is the subject of sanctions administered by OFAC  or the U.S. Department of State (“State”), including by virtue of being (i) named on OFAC’s list of  “Specially Designated Nationals and Blocked Persons”; (ii) organized under the laws of, ordinarily resident  in, or physically located in a Sanctioned Jurisdiction; (iii) owned or controlled 50% or more in the  aggregate, by one or more Persons that are the subject of sanctions administered by OFAC; (b) a Person  that is the subject of sanctions maintained by the European Union (“E.U.”), including by virtue of being  named on the E.U.’s “Consolidated list of persons, groups and entities subject to E.U. financial sanctions”  or other, similar lists; (c) a Person that is the subject of sanctions maintained by the United Kingdom  (“U.K.”), including by virtue of being named on the “Consolidated List Of Financial Sanctions Targets in  the U.K.” or other, similar lists; or (d) a Person that is the subject of sanctions imposed by any Governmental  Body of a jurisdiction whose laws apply to this Agreement.  “SEC” shall mean the Securities and Exchange Commission or any successor thereto.  “Secured Parties” shall mean, collectively, Agent, Issuer, Swing Loan Lender and Lenders, together  with any Affiliates of Agent or any Lender to whom any Hedge Liabilities or Cash Management Liabilities  are owed and with each other holder of any of the Obligations, and the respective successors and assigns of  each of them.  “Securities Act” shall mean the Securities Act of 1933, as amended.  “Settlement” shall have the meaning set forth in Section 2.6(d) hereof.  “Settlement Date” shall have the meaning set forth in Section 2.6(d) hereof.  “Subsidiary” shall mean of any Person a corporation or other entity of whose Equity Interests  having ordinary voting power (other than Equity Interests having such power only by reason of the  happening of a contingency) to elect a majority of the directors of such corporation, or other Persons  performing similar functions for such entity, are owned, directly or indirectly, by such Person.  

 

  33  147420493  158492473  “Subsidiary Stock” shall mean (a) with respect to the Equity Interests issued to a Borrower by any  Subsidiary (other than a Foreign Subsidiary), 100% of such issued and outstanding Equity Interests, and  (b) with respect to any Equity Interests issued to a Borrower by any Foreign Subsidiary (i) 100% of such  issued and outstanding Equity Interests not entitled to vote (within the meaning of Treas. Reg. Section  1.956(c)(2)) and (ii) 66% (or such greater percentage that, due to a change in an Applicable Law after the  date hereof, (x) could not reasonably be expected to cause the undistributed earnings of such  Foreign  Subsidiary as determined for United States federal income tax purposes to be treated as a deemed dividend  to such Borrower and (y) could not reasonably be expected to cause any material adverse tax consequences)  of such issued and outstanding Equity Interests entitled to vote (within the meaning of Treas. Reg. Section  1.956 2(c)(2)).  “Swap” shall mean any “swap” as defined in Section 1a(47) of the CEA and regulations thereunder  other than (a) a swap entered into on, or subject to the rules of, a board of trade designated as a contract  market under Section 5 of the CEA, or (b) a commodity option entered into pursuant to CFTC Regulation  32.3(a).  “Swap Obligation” means any obligation to pay or perform under any agreement, contract or  transaction that constitutes a Swap which is also a Lender-Provided Interest Rate Hedge, or a Lender- Provided Foreign Currency Hedge.  “Swing Loan Lender” shall mean PNC, in its capacity as lender of the Swing Loans.  “Swing Loan Note” shall mean the promissory note described in Section 2.4(a) hereof.  “Swing Loans” shall mean the Advances made pursuant to Section 2.4 hereof.  “Taxes” shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings,  assessments, fees or other charges imposed by any Governmental Body, including any interest, additions  to tax or penalties applicable thereto.  “Term” shall have the meaning set forth in Section 13.1 hereof  “Termination Event” shall mean: (a) a Reportable ERISA Event with respect to any Plan; (b) the  withdrawal of any Borrower or any member of the Controlled Group from a Plan during a plan year in  which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation  of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) the providing of  notice of intent to terminate a Plan in a distress termination described in Section 4041(c) of ERISA; (d) the  commencement of proceedings by the PBGC to terminate a Plan; (e) any event or condition (a) which might  constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to  administer, any Plan, or (b) that may result in termination of a Multiemployer Plan pursuant to Section  4041A of ERISA; (f) the partial or complete withdrawal within the meaning of Section 4203 or 4205 of  ERISA, of any Borrower or any member of the Controlled Group from a Multiemployer Plan; (g) notice  that a Multiemployer Plan is subject to Section 4245 of ERISA; or (h) the imposition of any liability under  Title IV of ERISA, other than for PBGC premiums due but not delinquent, upon any Borrower or any  member of the Controlled Group.  “Toxic Substance” shall mean and include any material present on the Real Property (including the  Leasehold Interests) which has been shown to have significant adverse effect on human health or which is  subject to regulation under the Toxic Substances Control Act (TSCA), 15 U.S.C. §§ 2601 et seq., applicable  state law, or any other applicable Federal or state laws now in force or hereafter enacted relating to toxic  

 

  34  147420493  158492473  substances.  “Toxic Substance” includes but is not limited to asbestos, polychlorinated biphenyls (PCBs)  and lead-based paints.  “Transferee” shall have the meaning set forth in Section 16.3(d) hereof.  “Unfinanced Capital Expenditures” shall mean all Capital Expenditures of Borrowers on a  Consolidated Basis, other than those made utilizing financing provided by the applicable seller or third  party lenders.  For the avoidance of doubt, Capital Expenditures made by Borrowers and their Subsidiaries  utilizing an Equipment Loan shall be deemed to be financed Capital Expenditures  “Uniform Commercial Code” shall have the meaning set forth in Section 1.3 hereof.  “USA PATRIOT Act” shall mean the Uniting and Strengthening America by Providing  Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107 56, as the  same has been, or shall hereafter be, renewed, extended, amended or replaced.  “U.S. Government Securities Business Day” means any day except for (a) a Saturday or Sunday or  (b) a day on which the Securities Industry and Financial Markets Association recommends that the fixed  income departments of its members be closed for the entire day for purposes of trading in United States  government securities.  1.3 Uniform Commercial Code Terms  .  All terms used herein and defined in the Uniform Commercial Code as adopted in the State of New York  from time to time (the “Uniform Commercial Code”) shall have the meaning given therein unless otherwise  defined herein.  Without limiting the foregoing, the terms “accounts”, “chattel paper” (and “electronic  chattel paper” and “tangible chattel paper”), “commercial tort claims”, “deposit accounts”, “documents”,  “equipment”, “financial asset”, “fixtures”, “general intangibles”, “goods”, “instruments”, “inventory”,  “investment property”, “letter-of-credit rights”, “payment intangibles”, “proceeds”, “promissory note”  “securities”, “software” and “supporting obligations” as and when used in the description of Collateral shall  have the meanings given to such terms in Articles 8 or 9 of the Uniform Commercial Code.  To the extent  the definition of any category or type of collateral is expanded by any amendment, modification or revision  to the Uniform Commercial Code, such expanded definition will apply automatically as of the date of such  amendment, modification or revision.  1.4 Certain Matters of Construction  .  The terms “herein”, “hereof” and “hereunder” and other words of similar import refer to this Agreement  as a whole and not to any particular section, paragraph or subdivision.  All references herein to Articles,  Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and  Schedules to, this Agreement.  Any pronoun used shall be deemed to cover all genders.  Wherever  appropriate in the context, terms used herein in the singular also include the plural and vice versa.  All  references to statutes and related regulations shall include any amendments of same and any successor  statutes and regulations.  Unless otherwise provided, all references to any instruments or agreements to  which Agent is a party, including references to any of the Other Documents, shall include any and all  modifications, supplements or amendments thereto, any and all restatements or replacements thereof and  any and all extensions or renewals thereof.  All references herein to the time of day shall mean the time in  New York, New York.  Whenever the words “including” or “include” shall be used, such words shall be  understood to mean “including, without limitation” or “include, without limitation”.  A Default or an Event  of Default shall be deemed to exist at all times during the period commencing on the date that such Default  or Event of Default occurs to the date on which such Default or Event of Default is waived in writing  

 

  35  147420493  158492473  pursuant to this Agreement or, in the case of a Default, is cured within any period of cure expressly provided  for in this Agreement; and an Event of Default shall “continue” or be “continuing” until such Event of  Default has been waived in writing by Required Lenders.  Any Lien referred to in this Agreement or any  of the Other Documents as having been created in favor of Agent, any agreement entered into by Agent  pursuant to this Agreement or any of the Other Documents, any payment made by or to or funds received  by Agent pursuant to or as contemplated by this Agreement or any of the Other Documents, or any act taken  or omitted to be taken by Agent, shall, unless otherwise expressly provided, be created, entered into, made  or received, or taken or omitted, for the benefit or account of Agent and Lenders.  Wherever the phrase “to  the best of Borrowers’ knowledge” or words of similar import relating to the knowledge or the awareness  of any Borrower are used in this Agreement or Other Documents, such phrase shall mean and refer to (i)  the actual knowledge of a senior officer of any Borrower or (ii) the knowledge that a senior officer would  have obtained if he/she had engaged in a good faith and diligent performance of his/her duties, including  the making of such reasonably specific inquiries as may be necessary of the employees or agents of such  Borrower and a good faith attempt to ascertain the existence or accuracy of the matter to which such phrase  relates.  All covenants hereunder shall be given independent effect so that if a particular action or condition  is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or otherwise  within the limitations of, another covenant shall not avoid the occurrence of a default if such action is taken  or condition exists.  In addition, all representations and warranties hereunder shall be given independent  effect so that if a particular representation or warranty proves to be incorrect or is breached, the fact that  another representation or warranty concerning the same or similar subject matter is correct or is not  breached will not affect the incorrectness of a breach of a representation or warranty hereunder.  1.5 LIBORBSBY Notification  .  Section 3.8.2 of this Agreement provides a mechanism for determining an alternate rate of interest in the  event that the London interbank offered rateBSBY Screen Rate is no longer available or in certain other  circumstances.  The Agent does not warrant or accept any responsibility for and shall not have any liability  with respect to, the administration, submission or any other matter related to the London interbank offered  rateBSBY Screen Rate or other rates in the definition of “LIBORBSBY Rate” or with respect to any  alternative or successor rate thereto, or replacement rate therefor.  1.6 Conforming Changes Relating to BSBY.  With respect to the BSBY Screen Rate, the  Agent will have the right to make Conforming Changes from time to time and, notwithstanding anything  to the contrary herein or in any other Loan Document, any amendments implementing such Conforming  Changes will become effective without any further action or consent of any other party to this Agreement  or any Other Document; provided that, with respect to any such amendment effected, the Agent shall  provide notice to the Borrowers and the Lenders each such amendment implementing such Conforming  Changes reasonably promptly after such amendment becomes effective.   II. ADVANCES, PAYMENTS.  2.1 Revolving Advances.  (a) Amount of Revolving Advances.  Subject to the terms and conditions set forth in  this Agreement specifically including Section 2.1(b), each Lender, severally and not jointly, will make  Revolving Advances to Borrowers in aggregate amounts outstanding at any time equal to such Lender’s  Revolving Commitment Percentage of the lesser of (x) the Maximum Revolving Advance Amount, less the  outstanding amount of Swing Loans, less the aggregate Maximum Undrawn Amount of all outstanding  Letters of Credit, less Reserves established hereunder or (y) an amount equal to the sum of:  

 

  36  147420493  158492473  (i) up to 85%, subject to the provisions of Section 2.1(b) (“Receivables  Advance Rate”), of Eligible Receivables, plus  (ii) the lesser of (A) 60%, subject to the provisions of Section 2.1(b) hereof,  of the value of the Eligible Inventory (“Inventory Advance Rate” and together with the Receivables  Advance Rate, collectively, the “Advance Rates”), (B) 85% of the appraised net orderly liquidation value  of Eligible Inventory (as evidenced by an Inventory appraisal satisfactory to Agent in its discretion,  reasonably exercised) or (C) the applicable Inventory Sublimit (provided, that (A) the amount of Eligible  ATS Inventory included in this clause (ii) shall not exceed $10,000,000 and (B) the amount of Eligible  Work In Process Inventory included in this clause (ii) shall not exceed $1,000,000), plus  (iii) with respect to each fiscal year of the Borrowers, during the respective  period set forth below for such fiscal year, the amount applicable to such period (which period set forth  below shall be referred to as the “Seasonal Overadvance Period”) :  Period Amount  January $15,000,000  February $15,000,000  March $15,000,000  April $15,000,000  May $15,000,000  June $15,000,000  July $15,000,000    , minus  (iv) the aggregate Maximum Undrawn Amount of all outstanding Letters of  Credit, minus  (v) Reserves established hereunder.  The amount derived from the sum of (x) Sections 2.1(a)(y)(i), (ii), and (iii) minus (y) Section  2.1(a)(y)(iv) and (v) at any time and from time to time shall be referred to as the “Formula Amount”.  The  Revolving Advances shall be evidenced by one or more secured promissory notes (collectively, the  “Revolving Credit Notes”) in form and substance satisfactory to Agent.  Notwithstanding anything to the  contrary contained in the foregoing or otherwise in this Agreement, the outstanding aggregate principal  amount of Swing Loans and the Revolving Advances at any one time outstanding shall not exceed an  amount equal to the lesser of (i) the Maximum Revolving Advance Amount less the Maximum Undrawn  Amount of all outstanding Letters of Credit less Reserves established hereunder or (ii) the Formula Amount.  (b) Discretionary Rights.  The Advance Rates may be increased or decreased by Agent  at any time and from time to time in its Permitted Discretion, reasonably exercised.  Each Borrower consents  to any such increases or decreases and acknowledges that decreasing the Advance Rates or increasing or  imposing Reserves may limit or restrict Advances requested by Borrowing Agent.  The rights of Agent  under this subsection are subject to the provisions of Section 16.2(b).  2.2 Procedures for Requesting Revolving Advances; Procedures for Selection of Applicable  Interest Rates for All Advances.  (a) Borrowing Agent on behalf of any Borrower may notify Agent prior to 3:00 p.m.  Eastern Standard Time on a Business Day of a Borrower’s request to incur, on that day, a Revolving  

 

  37  147420493  158492473  Advance hereunder.  Should any amount required to be paid as interest hereunder, or as fees or other charges  under this Agreement or any other agreement with Agent or Lenders, or with respect to any other Obligation  under this Agreement, become due, the same shall be deemed a request for a Revolving Advance maintained  as a Domestic Rate Loan as of the date such payment is due, in the amount required to pay in full such  interest, fee, charge or Obligation, and such request shall be irrevocable. If the Borrowers enter into a  separate written agreement with Agent regarding Agent’s auto-advance service, then each Advance made  pursuant to such service (including Advances made for the payment of interest, fees, charges or Obligations)  shall be deemed an irrevocable request for a Revolving Advance maintained as a Domestic Rate Loan as  of the date such auto-advance is made.   (b) Notwithstanding the provisions of subsection (a) above, in the event any Borrower  desires to obtain a LIBORBSBY Rate Loan for any Advance (other than a Swing Loan), Borrowing Agent  shall give Agent written notice by no later than 3:00 p.m. Eastern Standard Time on the day which is three  (3) Business Days prior to the date such LIBORBSBY Rate Loan is to be borrowed, specifying (i) the date  of the proposed borrowing (which shall be a Business Day), (ii) the type of borrowing and the amount of  such Advance to be borrowed, which amount shall be in a minimum amount of $1,000,000 and in integral  multiples of $500,000 thereafter, and (iii) the duration of the first Interest Period therefor.  Interest Periods  for LIBORBSBY Rate Loans shall be for one or three months; provided that, if an Interest Period would  end on a day that is not a Business Day, it shall end on the next succeeding Business Day unless such day  falls in the next succeeding calendar month in which case the Interest Period shall end on the next preceding  Business Day.  Any Interest Period that begins on the last Business Day of a calendar month (or a day for  which there is no numerically corresponding day in the last calendar month of such Interest Period) shall  end on the last Business Day of the last calendar month of such Interest Period. Upon and after the  occurrence of an Event of Default, and during the continuation thereof, at the option of Agent or at the  direction of Required Lenders, no LIBORBSBY Rate Loan shall be made available to any Borrower.  After  giving effect to each requested LIBORBSBY Rate Loan, including those which are converted from a  Domestic Rate Loan under Section 2.2(e), there shall not be outstanding more than five (5) LIBORBSBY  Rate Loans, in the aggregate.  (c) Each Interest Period of a LIBORBSBY Rate Loan shall commence on the date  such LIBORBSBY Rate Loan is made and shall end on such date as Borrowing Agent may elect as set forth  in subsection (b)(iii) above, provided that the exact length of each Interest Period shall be determined in  accordance with the practice of the interbank market for offshore Dollar deposits and no Interest Period  shall end after the last day of the Term.  (d) Borrowing Agent shall elect the initial Interest Period applicable to a LIBORBSBY  Rate Loan by its notice of borrowing given to Agent pursuant to Section 2.2(b) or by its notice of conversion  given to Agent pursuant to Section 2.2(e), as the case may be.  Borrowing Agent shall elect the duration of  each succeeding Interest Period by giving irrevocable written notice to Agent of such duration not later than  3:00 p.m. Eastern Standard Time on the day which is three (3) Business Days prior to the last day of the  then current Interest Period applicable to such LIBORBSBY Rate Loan.  If Agent does not receive timely  notice of the Interest Period elected by Borrowing Agent, Borrowing Agent shall be deemed to have elected  to convert such LIBORBSBY Rate Loan to a Domestic Rate Loan subject to Section 2.2(e) below.  (e) Provided that no Default or Event of Default shall have occurred and be continuing  (unless Agent otherwise permits, at the direction of the Required Lenders), Borrowing Agent may, on the  last Business Day of the then current Interest Period applicable to any outstanding LIBORBSBY Rate Loan,  or on any Business Day with respect to Domestic Rate Loans, convert any such loan into a loan of another  type in the same aggregate principal amount provided that any conversion of a LIBORBSBY Rate Loan  shall be made only on the last Business Day of the then current Interest Period applicable to such  LIBORBSBY Rate Loan.  If Borrowing Agent desires to convert a loan, Borrowing Agent shall give Agent  

 

  38  147420493  158492473  written notice by no later than 3:00 p.m. Eastern Standard Time (i) on the day which is three (3) Business  Days prior to the date on which such conversion is to occur with respect to a conversion from a Domestic  Rate Loan to a LIBORBSBY Rate Loan, or (ii) on the day which is one (1) Business Day prior to the date  on which such conversion is to occur (which date shall be the last Business Day of the Interest Period for  the applicable LIBORBSBY Rate Loan) with respect to a conversion from a LIBORBSBY Rate Loan to a  Domestic Rate Loan, specifying, in each case, the date of such conversion, the loans to be converted and if  the conversion is to a LIBORBSBY Rate Loan, the duration of the first Interest Period therefor.  (f) At its option and upon written notice given prior to 3:00 p.m. Eastern Standard  Time at least three (3) Business Days prior to the date of such prepayment, any Borrower may, subject to  Section 2.2(g) hereof, prepay the LIBORBSBY Rate Loans in whole at any time or in part from time to  time with accrued interest on the principal being prepaid to the date of such repayment.  Such Borrower  shall specify the date of prepayment of Advances which are LIBORBSBY Rate Loans and the amount of  such prepayment.  In the event that any prepayment of a LIBORBSBY Rate Loan is required or permitted  on a date other than the last Business Day of the then current Interest Period with respect thereto, such  Borrower shall indemnify Agent and Lenders therefor in accordance with Section 2.2(g) hereof.  (g) Each Borrower shall indemnify Agent and Lenders and hold Agent and Lenders  harmless from and against any and all losses (other than any loss of anticipated profits) or expenses that  Agent and Lenders may sustain or incur as a consequence of any prepayment, conversion of or any default  by any Borrower in the payment of the principal of or interest on any LIBORBSBY Rate Loan or failure  by any Borrower to complete a borrowing of, a prepayment of or conversion of or to a LIBORBSBY Rate  Loan after notice thereof has been given, including, but not limited to, any interest payable by Agent or  Lenders to lenders of funds obtained by it in order to make or maintain its LIBORBSBY Rate Loans  hereunder.  A certificate as to any additional amounts payable pursuant to the foregoing sentence submitted  by Agent or any Lender to Borrowing Agent shall be conclusive absent manifest error.  (h) Notwithstanding any other provision hereof, if any Applicable Law, treaty,  regulation or directive, or any change therein or in the interpretation or application thereof, including  without limitation any Change in Law, shall make it unlawful for Lenders or any Lender (for purposes of  this subsection (h), the term “Lender” shall include any Lender and the office or branch where any Lender  or any Person controlling such Lender makes or maintains any LIBORBSBY Rate Loans) to make or  maintain its LIBORBSBY Rate Loans, the obligation of Lenders (or such affected Lender) to make  LIBORBSBY Rate Loans hereunder shall forthwith be cancelled and Borrowers shall, if any affected  LIBORBSBY Rate Loans are then outstanding, promptly upon request from Agent, either pay all such  affected LIBORBSBY Rate Loans or convert such affected LIBORBSBY Rate Loans into loans of another  type.  If any such payment or conversion of any LIBORBSBY Rate Loan is made on a day that is not the  last day of the Interest Period applicable to such LIBORBSBY Rate Loan, Borrowers shall pay Agent, upon  Agent’s request, such amount or amounts set forth in clause (g) above.  A certificate as to any additional  amounts payable pursuant to the foregoing sentence submitted by Lenders to Borrowing Agent shall be  conclusive absent manifest error.  (i) Anything to the contrary contained herein notwithstanding, neither Agent nor any  Lender, nor any of their participants, is required actually to acquire LIBORBSBY deposits to fund or  otherwise match fund any Obligation as to which interest accrues based on the LIBORBSBY Rate.  The  provisions set forth herein shall apply as if each Lender or its participants had match funded any Obligation  as to which interest is accruing based on the LIBORBSBY Rate by acquiring LIBORBSBY deposits for  each Interest Period in the amount of the LIBORBSBY Rate Loans.  2.3 Equipment Loans.[Reserved].  

 

  39  147420493  158492473  (a) Prior to the Restatement Date and otherwise pursuant to the Existing Credit  Agreement, Lenders, severally and not jointly, have made equipment loans from time to time to Borrowers  in the original principal sum not exceeding $2,000,000 (the “Existing Equipment Loans”).  The outstanding  principal balance of the Existing Equipment Loans as of the date of this Agreement is $333,333.20.  Subject  to the terms and conditions hereof, each Lender, severally and not jointly, shall continue to provide the  Existing Equipment Loans to Borrowers (the Existing Equipment Loans shall be referred to herein as the  “Equipment Loans”).  (b) The principal amount of the Equipment Loans shall be payable as follows, subject  to acceleration upon the occurrence of an Event of Default under this Agreement, termination of this  Agreement, mandatory prepayments as otherwise set forth in this Agreement, and payment in full of the  Equipment Loans:  monthly principal payments of $55,555.56; each commencing October 1, 2021 and  continuing on the first day of each month thereafter until the maturity date of the Equipment Loans.  The  Equipment Loans shall be evidenced by one or more secured promissory notes (each, an “Equipment Note”)  in form and substance satisfactory to Agent. The Equipment Loans may consist of Domestic Rate Loans or  LIBOR Rate Loans, or a combination thereof, as Borrowing Agent may request; and in the event that  Borrowers desire to obtain or extend any Equipment Loan (or any portion thereof) as a LIBOR Rate Loan  or to convert any Equipment Loan (or any portion thereof) from a Domestic Rate Loan to a LIBOR Rate  Loan, Borrowing Agent shall comply with the notification requirements set forth in Sections 2.2(b) and/or  (e) and the provisions of Sections 2.2(b) through (i) shall apply.  2.4 Swing Loans  .  As of the Restatement Date, PNC is the sole Lender hereunder.  If at any time after the Restatement Date,  one or more additional Lenders shall be party to this Agreement, from and after such date and so long as  there shall be more than one Lender,  the following provisions of this Section 2.4 (and provisions contained  elsewhere in this Agreement with respect to Swing Loans and the Swing Loan Lender, including without  limitation, Section 2.6 hereof) shall apply (it being understood and agreed that until such time and only  during such times as there shall be more than one Lender, the provisions of this Agreement with respect to  Swing Loans and the Swing Loan Lender shall have no application):  (a) Subject to the terms and conditions set forth in this Agreement, and in order to  minimize the transfer of funds between Lenders and Agent for administrative convenience, Agent, Lenders  holding Revolving Commitments and Swing Loan Lender agree that in order to facilitate the administration  of this Agreement, Swing Loan Lender may, at its election and option made in its sole discretion cancelable  at any time for any reason whatsoever, make swing loan advances (“Swing Loans”) available to Borrowers  as provided for in this Section 2.4 at any time or from time to time after the date hereof to, but not including,  the expiration of the Term, in an aggregate principal amount up to but not in excess of the Maximum Swing  Loan Advance Amount, provided that the outstanding aggregate principal amount of Swing Loans and the  Revolving Advances at any one time outstanding shall not exceed an amount equal to the lesser of (i) the  Maximum Revolving Advance Amount, less Reserves established hereunder, less the Maximum Undrawn  Amount of all outstanding Letters of Credit or (ii) the Formula Amount.  All Swing Loans shall be Domestic  Rate Loans only.  Borrowers may borrow (at the option and election of Swing Loan Lender), repay and  reborrow (at the option and election of Swing Loan Lender) Swing Loans and Swing Loan Lender may  make Swing Loans as provided in this Section 2.4 during the period between Settlement Dates.  All Swing  Loans shall be evidenced by a secured promissory note (the “Swing Loan Note”) in form and substance  satisfactory to Agent and Swing Loan Lender.  Swing Loan Lender’s agreement to make Swing Loans  under this Agreement is cancelable at any time for any reason whatsoever and the making of Swing Loans  by Swing Loan Lender from time to time shall not create any duty or obligation, or establish any course of  conduct, pursuant to which Swing Loan Lender shall thereafter be obligated to make Swing Loans in the  future  

 

  40  147420493  158492473  (b) Upon either (i) any request by Borrowing Agent for a Revolving Advance made  pursuant to Section 2.2(a) hereof or (ii) the occurrence of any deemed request by Borrowers for a Revolving  Advance pursuant to the provisions of Section 2.2(a) hereof, Swing Loan Lender may elect, in its sole  discretion, to have such request or deemed request treated as a request for a Swing Loan, and may advance  same day funds to Borrowers as a Swing Loan; provided that notwithstanding anything to the contrary  provided for herein, Swing Loan Lender may not make Swing Loans if Swing Loan Lender has been  notified by Agent or by Required Lenders that one or more of the applicable conditions set forth in Section  8.2 of this Agreement have not been satisfied or the Revolving Commitments have been terminated for any  reason.  (c) Upon the making of a Swing Loan (whether before or after the occurrence of a  Default or an Event of Default and regardless of whether a Settlement has been requested with respect to  such Swing Loan), each Lender holding a Revolving Commitment shall be deemed, without further action  by any party hereto, to have unconditionally and irrevocably purchased from Swing Loan Lender, without  recourse or warranty, an undivided interest and participation in such Swing Loan in proportion to its  Revolving Commitment Percentage.  Swing Loan Lender or Agent may, at any time, require the Lenders  holding Revolving Commitments to fund such participations by means of a Settlement as provided for in  Section 2.6(d) below.  From and after the date, if any, on which any Lender holding a Revolving  Commitment is required to fund, and funds, its participation in any Swing Loans purchased hereunder,  Agent shall promptly distribute to such Lender its Revolving Commitment Percentage of all payments of  principal and interest and all proceeds of Collateral received by Agent in respect of such Swing Loan;  provided that no Lender holding a Revolving Commitment shall be obligated in any event to make  Revolving Advances in an amount in excess of its Revolving Commitment Amount minus its Participation  Commitment (taking into account any reallocations under Section 2.22) of the Maximum Undrawn Amount  of all outstanding Letters of Credit.  2.5 Disbursement of Advance Proceeds  .  All Advances shall be disbursed from whichever office or other place Agent may designate from time to  time and, together with any and all other Obligations of Borrowers to Agent or Lenders, shall be charged  to Borrowers’ Account on Agent’s books.  The proceeds of each Revolving Advance or Swing Loan  requested by Borrowing Agent on behalf of any Borrower or deemed to have been requested by any  Borrower under Sections 2.2(a), 2.6(b) or 2.14 hereof shall, (i) with respect to requested Revolving  Advances, to the extent Lenders make such Revolving Advances in accordance with Section 2.2(a), 2.6(b)  or 2.14 hereof, and with respect to Swing Loans made upon any request or deemed request by Borrowing  Agent for a Revolving Advance to the extent Swing Loan Lender makes such Swing Loan in accordance  with Section 2.4(b) hereof, be made available to the applicable Borrower on the day so requested by way  of credit to such Borrower’s operating account at PNC, or such other bank as Borrowing Agent may  designate following notification to Agent, in immediately available federal funds or other immediately  available funds or, (ii) with respect to Revolving Advances deemed to have been requested by any Borrower  or Swing Loans made upon any deemed request for a Revolving Advance by any Borrower, be disbursed  to Agent to be applied to the outstanding Obligations giving rise to such deemed request.  During the Term,  Borrowers may use the Revolving Advances and Swing Loans by borrowing, prepaying and reborrowing,  all in accordance with the terms and conditions hereof.  2.6 Making and Settlement of Advances.  (a) Each borrowing of Revolving Advances shall be advanced according to the  applicable Revolving Commitment Percentages of Lenders holding the Revolving Commitments (subject  to any contrary terms of Section 2.22).  Each borrowing of Swing Loans shall be advanced by Swing Loan  Lender alone.  

 

  41  147420493  158492473  (b) Promptly after receipt by Agent of a request or a deemed request for a Revolving  Advance pursuant to Section 2.2(a) and, with respect to Revolving Advances, to the extent Agent elects not  to provide a Swing Loan or the making of a Swing Loan would result in the aggregate amount of all  outstanding Swing Loans exceeding the maximum amount permitted in Section 2.4(a), Agent shall notify  Lenders holding the Revolving Commitments of its receipt of such request specifying the information  provided by Borrowing Agent and the apportionment among Lenders of the requested Revolving Advance   as determined by Agent in accordance with the terms hereof.  Each Lender shall remit the principal amount  of each Revolving Advance to Agent such that Agent is able to, and Agent shall, to the extent the applicable  Lenders have made funds available to it for such purpose and subject to Section 8.2, fund such Revolving  Advance to Borrowers in U.S. Dollars and immediately available funds at the Payment Office prior to the  close of business, on the applicable borrowing date; provided that if any applicable Lender fails to remit  such funds to Agent in a timely manner, Agent may elect in its sole discretion to fund with its own funds  the Revolving Advance of such Lender on such borrowing date, and such Lender shall be subject to the  repayment obligation in Section 2.6(c) hereof.  (c) Unless Agent shall have been notified by telephone, confirmed in writing, by any  Lender holding a Revolving Commitment that such Lender will not make the amount which would  constitute its applicable Revolving Commitment Percentage of the requested Revolving Advance available  to Agent, Agent may (but shall not be obligated to) assume that such Lender has made such amount  available to Agent on such date in accordance with Section 2.6(b) and may, in reliance upon such  assumption, make available to Borrowers a corresponding amount.  In such event, if a Lender has not in  fact made its applicable Revolving Commitment Percentage of the requested Revolving Advance available  to Agent, then the applicable Lender and Borrowers severally agree to pay to Agent on demand such  corresponding amount with interest thereon, for each day from and including the date such amount is made  available to Borrowers through but excluding the date of payment to Agent, at (i) in the case of a payment  to be made by such Lender, the greater of (A) (x) the daily average Effective Federal Funds Rate (computed  on the basis of a year of 360 days) during such period as quoted by Agent, times (y) such amount or (B) a  rate determined by Agent in accordance with banking industry rules on interbank compensation, and (ii) in  the case of a payment to be made by Borrowers, the Revolving Interest Rate for Revolving Advances that  are Domestic Rate Loans.  If such Lender pays its share of the applicable Revolving Advance to Agent,  then the amount so paid shall constitute such Lender’s Revolving Advance.  Any payment by Borrowers  shall be without prejudice to any claim Borrowers may have against a Lender holding a Revolving  Commitment that shall have failed to make such payment to Agent.  A certificate of Agent submitted to  any Lender or Borrowing Agent/Borrowers with respect to any amounts owing under this paragraph (c)  shall be conclusive, in the absence of manifest error.  (d) Agent, on behalf of Swing Loan Lender, shall demand settlement (a “Settlement”)  of all or any Swing Loans with Lenders holding the Revolving Commitments on at least a weekly basis, or  on any more frequent date that Agent elects or that Swing Loan Lender at its option exercisable for any  reason whatsoever may request, by notifying Lenders holding the Revolving Commitments of such  requested Settlement by facsimile, telephonic or electronic transmission no later than 3:00 p.m. Eastern  Standard Time on the date of such requested Settlement (the “Settlement Date”).  Subject to any contrary  provisions of Section 2.22, each Lender holding a Revolving Commitment shall transfer the amount of such  Lender’s Revolving Commitment Percentage of the outstanding principal amount (plus interest accrued  thereon to the extent requested by Agent) of the applicable Swing Loan with respect to which Settlement is  requested by Agent, to such account of Agent as Agent may designate not later than 5:00 p.m. Eastern  Standard Time on such Settlement Date if requested by Agent by 3:00 p.m. Eastern Standard Time,  otherwise not later than 5:00 p.m. Eastern Standard Time on the next Business Day.  Settlements may occur  at any time notwithstanding that the conditions precedent to making Revolving Advances set forth in  Section 8.2 have not been satisfied or the Revolving Commitments shall have otherwise been terminated at  such time.  All amounts so transferred to Agent shall be applied against the amount of outstanding Swing  

 

  42  147420493  158492473  Loans and, when so applied shall constitute Revolving Advances of such Lenders accruing interest as  Domestic Rate Loans.  If any such amount is not transferred to Agent by any Lender holding a Revolving  Commitment on such Settlement Date, Agent shall be entitled to recover such amount on demand from  such Lender together with interest thereon as specified in Section 2.6(c).  (e) If any Lender or Participant (a “Benefited Lender”) shall at any time receive any  payment of all or part of its Advances, or interest thereon, or receive any Collateral in respect thereof  (whether voluntarily or involuntarily or by set-off) in a greater proportion than any such payment to and  Collateral received by any other Lender, if any, in respect of such other Lender’s Advances, or interest  thereon, and such greater proportionate payment or receipt of Collateral is not expressly permitted  hereunder, such Benefited Lender shall purchase for cash from the other Lenders a participation in such  portion of each such other Lender’s Advances, or shall provide such other Lender with the benefits of any  such Collateral, or the proceeds thereof, as shall be necessary to cause such Benefited Lender to share the  excess payment or benefits of such Collateral or proceeds ratably with each of the other Lenders; provided,  however, that if all or any portion of such excess payment or benefits is thereafter recovered from such  Benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the  extent of such recovery, but without interest.  Each Borrower consents to the foregoing and agrees, to the  extent it may effectively do so under Applicable Law, that each Lender so purchasing a portion of another  Lender’s Advances may exercise all rights of payment (including rights of set-off) with respect to such  portion as fully as if such Lender were the direct holder of such portion, and the obligations owing to each  such purchasing Lender in respect of such participation and such purchased portion of any other Lender’s  Advances shall be part of the Obligations secured by the Collateral, and the obligations owing to each such  purchasing Lender in respect of such participation and such purchased portion of any other Lender’s  Advances shall be part of the Obligations secured by the Collateral.  2.7 Maximum Advances  .  The aggregate balance of Revolving Advances and Letters of Credit and Swing Loans outstanding at any  time shall not cause Availability to be less than zero.  2.8 Manner and Repayment of Advances.  (a) The Revolving Advances and Swing Loans shall be due and payable in full on the  last day of the Term subject to earlier prepayment as herein provided.  The Equipment Loans shall be due  and payable as provided in Section 2.3 hereof and shall be due and payable in full on the last day of the  Term, subject to mandatory prepayments as herein provided.  Notwithstanding the foregoing, all Advances  shall be subject to earlier repayment upon (x) acceleration upon the occurrence of an Event of Default under  this Agreement or (y) termination of this Agreement.  Each payment (including each prepayment) by any  Borrower on account of the principal of and interest on the Advances (other than Equipment Loans) shall  be applied, first to the outstanding Swing Loans and next, pro rata according to the applicable Revolving  Commitment Percentages of Lenders, to the outstanding Revolving Advances (subject to any contrary  provisions of Section 2.22).  Each payment (including each prepayment) by any Borrower on account of  the principal of and interest on the Equipment Loans shall be applied to the applicable Equipment Loan pro  rata according to the Equipment Loan Commitment Percentages of Lenders in the inverse order of  maturities thereof.  (b) Each Borrower recognizes that the amounts evidenced by checks, notes, drafts or  any other items of payment relating to and/or proceeds of Collateral may not be collectible by Agent on the  date received by Agent.  Agent shall conditionally credit Borrowers’ Account for each item of payment on  the next Business Day after the Business Day on which such item of payment is received by Agent (and the  Business Day on which each such item of payment is so credited shall be referred to, with respect to such  

 

  43  147420493  158492473  item, as the “Application Date”)  Agent is not, however, required to credit Borrowers’ Account for the  amount of any item of payment which is unsatisfactory to Agent and Agent may charge Borrowers’ Account  for the amount of any item of payment which is returned, for any reason whatsoever, to Agent unpaid.   Subject to the foregoing, Borrowers agree that for purposes of computing the interest charges under this  Agreement, each item of payment received by Agent shall be deemed applied by Agent on account of the  Obligations on its respective Application Date.  Borrowers further agree that there is a monthly float charge  payable to Agent for Agent’s sole benefit, in an amount equal to (y) the face amount of all items of payment  received each day during the prior month (including items of payment received by Agent as a wire transfer  or electronic depository check) multiplied by (z) the Revolving Interest Rate with respect to Domestic Rate  Loans for one day (i.e. Revolving Interest Rate divided by 360 or 365/366 as applicable)  The monthly float  charge shall be calculated daily and charged once per month, relating to all payments collected in the prior  month. All proceeds received by Agent shall be applied to the Obligations in accordance with Section  4.8(h).  (c) All payments of principal, interest and other amounts payable hereunder, or under  any of the Other Documents shall be made to Agent at the Payment Office not later than 1:00 p.m. Eastern  Standard Time on the due date therefor in Dollars in federal funds or other funds immediately available to  Agent.  Agent shall have the right to effectuate payment of any and all Obligations due and owing hereunder  by charging Borrowers’ Account or by making Advances as provided in Section 2.2 hereof.  (d) Except as expressly provided herein, all payments (including prepayments) to be  made by any Borrower on account of principal, interest, fees and other amounts payable hereunder shall be  made without deduction, setoff or counterclaim and shall be made to Agent on behalf of Lenders to the  Payment Office, in each case on or prior to 1:00 p.m. Eastern Standard Time, in Dollars and in immediately  available funds.  2.9 Repayment of Excess Advances  .  If at any time the aggregate balance of outstanding Revolving Advances, Swing Loans, Equipment Loans  and/or Advances taken as a whole exceeds the maximum amount of such type of Advances and/or Advances  taken as a whole (as applicable) permitted hereunder, such excess Advances shall be immediately due and  payable without the necessity of any demand, at the Payment Office, whether or not a Default or an Event  of Default has occurred, including as a result of a change in the applicable Maximum Revolving Advance  Amount.  2.10 Statement of Account  .  Agent shall maintain, in accordance with its customary procedures, a loan account (“Borrowers’  Account”) in the name of Borrowers in which shall be recorded the date and amount of each Advance made  by Agent or Lenders and the date and amount of each payment in respect thereof; provided, however, the  failure by Agent to record the date and amount of any Advance shall not adversely affect Agent or any  Lender.  Each month, Agent shall send to Borrowing Agent a statement showing the accounting for the  Advances made, payments made or credited in respect thereof, and other transactions between Agent,  Lenders and Borrowers during such month.  The monthly statements shall be deemed correct and binding  upon Borrowers in the absence of manifest error and shall constitute an account stated between Lenders  and Borrowers unless Agent receives a written statement of Borrowers’ specific exceptions thereto within  thirty (30) days after such statement is received by Borrowing Agent.  The records of Agent with respect  to Borrowers’ Account shall be conclusive evidence absent manifest error of the amounts of Advances and  other charges thereto and of payments applicable thereto.  2.11 Letters of Credit.  

 

  44  147420493  158492473  (a) Subject to the terms and conditions hereof, Issuer shall issue or cause the issuance  of standby letters of credit denominated in Dollars (“Letters of Credit”) for the account of any Borrower;  provided, however, that Agent will not be required to issue or cause to be issued any Letters of Credit to  the extent that the issuance thereof would then cause Availability to be less than zero.  The Maximum  Undrawn Amount of all outstanding Letters of Credit shall not exceed in the aggregate at any time the  Letter of Credit Sublimit.  All disbursements or payments related to Letters of Credit shall be deemed to be  Domestic Rate Loans consisting of Revolving Advances and shall bear interest at the Revolving Interest  Rate for Domestic Rate Loans.  Letters of Credit that have not been drawn upon shall not bear interest (but  fees shall accrue in respect of outstanding Letters of Credit as provided in Section 3.2 hereof).  (b) Notwithstanding any provision of this Agreement, Issuer shall not be under any  obligation to issue any Letter of Credit if (i) any order, judgment or decree of any Governmental Body or  arbitrator shall by its terms purport to enjoin or restrain  Issuer from issuing any Letter of Credit, or any  Law applicable to Issuer or any request or directive (whether or not having the force of law) from any  Governmental Body with jurisdiction over Issuer shall prohibit, or request that Issuer refrain from, the  issuance of letters of credit generally or the Letter of Credit in particular or shall impose upon Issuer with  respect to the Letter of Credit any restriction, reserve or capital requirement (for which Issuer is not  otherwise compensated hereunder) not in effect on the date of this Agreement, or shall impose upon Issuer  any unreimbursed loss, cost or expense which was not applicable on the date of this Agreement, and which  Issuer in good faith deems material to it, or (ii) the issuance of the Letter of Credit would violate one or  more policies of Issuer applicable to letters of credit generally.  2.12 Issuance of Letters of Credit.  (a) Borrowing Agent, on behalf of any Borrower, may request Issuer to issue or cause  the issuance of a Letter of Credit by delivering to Issuer, with a copy to Agent at the Payment Office, prior  to 1:00 p.m. Eastern Standard Time, at least five (5) Business Days prior to the proposed date of issuance,  such Issuer’s form of Letter of Credit Application (the “Letter of Credit Application”) completed to the  satisfaction of Agent and Issuer; and, such other certificates, documents and other papers and information  as Agent or Issuer may reasonably request.  Issuer shall not issue any requested Letter of Credit if such  Issuer has received notice from Agent or any Lender that one or more of the applicable conditions set forth  in Section 8.2 of this Agreement have not been satisfied or the commitments of Lenders to make Revolving  Advances hereunder have been terminated for any reason. Borrowing Agent, on behalf of Borrowers, also  has the right to give instructions and make agreements with respect to any application, any applicable letter  of credit and security agreement, any applicable letter of credit reimbursement agreement and/or any other  applicable agreement, any letter of credit and the disposition of documents, disposition of any unutilized  funds, and to agree with Agent upon any amendment, extension or renewal of any Letter of Credit. As of  the Restatement Date, there are no issued and outstanding letters of credit under the Existing Credit  Agreement.  (b) Each Letter of Credit shall, among other things, (i) provide for the payment of sight  drafts or other written demands for payment and (ii) have an expiry date not later than twelve (12) months  after such Letter of Credit’s date of issuance and in no event later than the last day of the Term.  Each  standby Letter of Credit shall be subject either to the Uniform Customs and Practice for Documentary  Credits as most recently published by the International Chamber of Commerce at the time a Letter of Credit  is issued (the “UCP”) or the International Standby Practices (International Chamber of Commerce  Publication Number 590) (the “ISP98 Rules”), or any subsequent revision thereof at the time a standby  Letter of Credit is issued, as determined by Issuer.  (c) Agent shall use its reasonable efforts to notify Lenders of the request by Borrowing  Agent for a Letter of Credit hereunder.  

 

  45  147420493  158492473  2.13 Requirements For Issuance of Letters of Credit.  Borrowing Agent shall authorize and  direct any Issuer to name the applicable Borrower as the “Applicant” or “Account Party” of each Letter of  Credit.  If Agent is not the Issuer of any Letter of Credit, Borrowing Agent shall authorize and direct Issuer  to deliver to Agent all instruments, documents, and other writings and property received by Issuer pursuant  to the Letter of Credit and to accept and rely upon Agent’s instructions and agreements with respect to all  matters arising in connection with the Letter of Credit, and the application therefor.  2.14 Disbursements, Reimbursement.  (a) Immediately upon the issuance of each Letter of Credit, each Lender holding a  Revolving Commitment shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase  from Issuer a participation in each Letter of Credit and each drawing thereunder in an amount equal to such  Lender’s Revolving Commitment Percentage of the Maximum Face Amount of such Letter of Credit (as in  effect from time to time) and the amount of such drawing, respectively.  (b) In the event of any request for a drawing under a Letter of Credit by the beneficiary  or transferee thereof, Issuer will promptly notify Agent and Borrowing Agent.  Regardless of whether  Borrowing Agent shall have received such notice, Borrowers shall reimburse (such obligation to reimburse  Issuer shall sometimes be referred to as a “Reimbursement Obligation”) Issuer prior to 12:00 Noon, on each  date that an amount is paid by Issuer under any Letter of Credit (each such date, a “Drawing Date”) in an  amount equal to the amount so paid by Issuer.  In the event Borrowers fail to reimburse Issuer for the full  amount of any drawing under any Letter of Credit by 12:00 Noon, on the Drawing Date, Issuer will  promptly notify Agent and each Lender holding a Revolving Commitment thereof, and Borrowers shall be  automatically deemed to have requested that a Revolving Advance maintained as a Domestic Rate Loan be  made by Lenders to be disbursed on the Drawing Date under such Letter of Credit, and Lenders holding  the Revolving Commitments shall be unconditionally obligated to fund such Revolving Advance (all  whether or not the conditions specified in Section 8.2 are then satisfied or the commitments of Lenders to  make Revolving Advances hereunder have been terminated for any reason) as provided for in Section  2.14(c) immediately below.  Any notice given by Issuer pursuant to this Section 2.14(b) may be oral if  promptly confirmed in writing; provided that the lack of such a confirmation shall not affect the  conclusiveness or binding effect of such notice.  (c) Each Lender holding a Revolving Commitment shall upon any notice pursuant to  Section 2.14(b) make available to Issuer through Agent at the Payment Office an amount in immediately  available funds equal to its Revolving Commitment Percentage (subject to any contrary provisions of  Section 2.22) of the amount of the drawing, whereupon the participating Lenders shall (subject to Section  2.14(d)) each be deemed to have made a Revolving Advance maintained as a Domestic Rate Loan to  Borrowers in that amount.  If any Lender holding a Revolving Commitment so notified fails to make  available to Agent, for the benefit of Issuer, the amount of such Lender’s Revolving Commitment  Percentage of such amount by 2:00 p.m. Eastern Standard Time on the Drawing Date, then interest shall  accrue on such Lender’s obligation to make such payment, from the Drawing Date to the date on which  such Lender makes such payment (i) at a rate per annum equal to the Effective Federal Funds Rate during  the first three (3) days following the Drawing Date and (ii) at a rate per annum equal to the rate applicable  to Revolving Advances maintained as a Domestic Rate Loan on and after the fourth day following the  Drawing Date.  Agent and Issuer will promptly give notice of the occurrence of the Drawing Date, but  failure of Agent or Issuer to give any such notice on the Drawing Date or in sufficient time to enable any  Lender holding a Revolving Commitment to effect such payment on such date shall not relieve such Lender  from its obligations under this Section 2.14(c), provided that such Lender shall not be obligated to pay  interest as provided in Section 2.14(c)(i) and (ii) until and commencing from the date of receipt of notice  from Agent or Issuer of a drawing.  

 

  46  147420493  158492473  (d) With respect to any unreimbursed drawing that is not converted into a Revolving  Advance maintained as a Domestic Rate Loan to Borrowers in whole or in part as contemplated by Section  2.14(b), because of Borrowers’ failure to satisfy the conditions set forth in Section 8.2 hereof (other than  any notice requirements) or for any other reason, Borrowers shall be deemed to have incurred from Agent  a borrowing (each a “Letter of Credit Borrowing”) in the amount of such drawing.  Such Letter of Credit  Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the rate  per annum applicable to a Revolving Advance maintained as a Domestic Rate Loan.  Each applicable  Lender’s payment to Agent pursuant to Section 2.14(c) shall be deemed to be a payment in respect of its  participation in such Letter of Credit Borrowing and shall constitute a “Participation Advance” from such  Lender in satisfaction of its Participation Commitment in respect of the applicable Letter of Credit under  this Section 2.14.  (e) Each applicable Lender’s Participation Commitment in respect of the Letters of  Credit shall continue until the last to occur of any of the following events: (x) Issuer ceases to be obligated  to issue or cause to be issued Letters of Credit hereunder; (y) no Letter of Credit issued or created hereunder  remains outstanding and uncancelled; and (z) all Persons (other than Borrowers) have been fully reimbursed  for all payments made under or relating to Letters of Credit.  2.15 Repayment of Participation Advances.  (a) Upon (and only upon) receipt by Agent for the account of Issuer of immediately  available funds from Borrowers (i) in reimbursement of any payment made by Issuer or Agent under the  Letter of Credit with respect to which any Lender has made a Participation Advance to Agent, or (ii) in  payment of interest on such a payment made by Issuer or Agent under such a Letter of Credit, Agent will  pay to each Lender holding a Revolving Commitment, in the same funds as those received by Agent, the  amount of such Lender’s Revolving Commitment Percentage of such funds, except Agent shall retain the  amount of the Revolving Commitment Percentage of such funds of any Lender holding a Revolving  Commitment that did not make a Participation Advance in respect of such payment by Agent (and, to the  extent that any of the other Lender(s) holding the Revolving Commitment have funded any portion such  Defaulting Lender’s Participation Advance in accordance with the provisions of Section 2.22, Agent will  pay over to such Non-Defaulting Lenders a pro rata portion of the funds so withheld from such Defaulting  Lender).  (b) If Issuer or Agent is required at any time to return to any Borrower, or to a trustee,  receiver, liquidator, custodian, or any official in any insolvency proceeding, any portion of the payments  made by Borrowers to Issuer or Agent pursuant to Section 2.15(a) in reimbursement of a payment made  under the Letter of Credit or interest or fee thereon, each applicable Lender shall, on demand of Agent,  forthwith return to Issuer or Agent the amount of its Revolving Commitment Percentage of any amounts so  returned by Issuer or Agent plus interest at the Effective Federal Funds Rate.  2.16 Documentation  .  Each Borrower agrees to be bound by the terms of the Letter of Credit Application and by Issuer’s  interpretations of any Letter of Credit issued on behalf of such Borrower and by Issuer’s written regulations  and customary practices relating to letters of credit, though Issuer’s interpretations may be different from  such Borrower’s own.  In the event of a conflict between the Letter of Credit Application and this  Agreement, this Agreement shall govern.  It is understood and agreed that, except in the case of gross  negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non- appealable judgment), Issuer shall not be liable for any error, negligence and/or mistakes, whether of  omission or commission, in following Borrowing Agent’s or any Borrower’s instructions or those contained  in the Letters of Credit or any modifications, amendments or supplements thereto.  

 

  47  147420493  158492473  2.17 Determination to Honor Drawing Request  .  In determining whether to honor any request for drawing under any Letter of Credit by the beneficiary  thereof, Issuer shall be responsible only to determine that the documents and certificates required to be  delivered under such Letter of Credit have been delivered and that they comply on their face with the  requirements of such Letter of Credit and that any other drawing condition appearing on the face of such  Letter of Credit has been satisfied in the manner so set forth.  2.18 Nature of Participation and Reimbursement Obligations  .  The obligation of each Lender holding a Revolving Commitment in accordance with this Agreement to  make the Revolving Advances or Participation Advances as a result of a drawing under a Letter of Credit,  and the obligations of Borrowers to reimburse Issuer upon a draw under a Letter of Credit, shall be absolute,  unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Section  2.18 under all circumstances, including the following circumstances:  (i) any set-off, counterclaim, recoupment, defense or other right which such  Lender or any Borrower, as the case may be, may have against Issuer, Agent, any Borrower or Lender, as  the case may be, or any other Person for any reason whatsoever;  (ii) the failure of any Borrower or any other Person to comply, in connection  with a Letter of Credit Borrowing, with the conditions set forth in this Agreement for the making of a  Revolving Advance, it being acknowledged that such conditions are not required for the making of a Letter  of Credit Borrowing and the obligation of Lenders to make Participation Advances under Section 2.14;  (iii) any lack of validity or enforceability of any Letter of Credit;  (iv) any claim of breach of warranty that might be made by any Borrower,  Agent, Issuer or any Lender against the beneficiary of a Letter of Credit, or the existence of any claim, set- off, recoupment, counterclaim, cross-claim, defense or other right which any Borrower, Agent, Issuer or  any Lender may have at any time against a beneficiary, any successor beneficiary or any transferee of any  Letter of Credit or assignee of the proceeds thereof (or any Persons for whom any such transferee or  assignee may be acting), Issuer, Agent or any Lender or any other Person, whether in connection with this  Agreement, the transactions contemplated herein or any unrelated transaction (including any underlying  transaction between any Borrower or any Subsidiaries of such Borrower and the beneficiary for which any  Letter of Credit was procured);  (v) the lack of power or authority of any signer of (or any defect in or forgery  of any signature or endorsement on) or the form of or lack of validity, sufficiency, accuracy, enforceability  or genuineness of any draft, demand, instrument, certificate or other document presented under or in  connection with any Letter of Credit, or any fraud or alleged fraud in connection with any Letter of Credit,  or the transport of any property or provision of services relating to a Letter of Credit, in each case even if  Issuer or any of Issuer’s Affiliates has been notified thereof;  (vi) payment by Issuer under any Letter of Credit against presentation of a  demand, draft or certificate or other document which is forged or does not fully comply with the terms of  such Letter of Credit (provided that the foregoing shall not excuse Issuer from any obligation under the  terms of any applicable Letter of Credit to require the presentation of documents that on their face appear  to satisfy any applicable requirements for drawing under such Letter of Credit prior to honoring or paying  any such draw);  

 

  48  147420493  158492473  (vii) the solvency of, or any acts or omissions by, any beneficiary of any Letter  of Credit, or any other Person having a role in any transaction or obligation relating to a Letter of Credit,  or the existence, nature, quality, quantity, condition, value or other characteristic of any property or services  relating to a Letter of Credit;  (viii) any failure by Issuer or any of Issuer’s Affiliates to issue any Letter of  Credit in the form requested by Borrowing Agent, unless Agent and Issuer have each received written notice  from Borrowing Agent of such failure within three (3) Business Days after Issuer shall have furnished  Agent and Borrowing Agent a copy of such Letter of Credit and such error is material and no drawing has  been made thereon prior to receipt of such notice;  (ix) the occurrence of any Material Adverse Effect;  (x) any breach of this Agreement or any Other Document by any party thereto;  (xi) the occurrence or continuance of an insolvency proceeding with respect to  any Borrower or any Guarantor;  (xii) the fact that a Default or an Event of Default shall have occurred and be  continuing;  (xiii) the fact that the Term shall have expired or this Agreement or the  obligations of Lenders to make Advances have been terminated; and  (xiv) any other circumstance or happening whatsoever, whether or not similar  to any of the foregoing.  2.19 Liability for Acts and Omissions.  (a) As between Borrowers and Issuer, Swing Loan Lender, Agent and Lenders, each  Borrower assumes all risks of the acts and omissions of, or misuse of the Letters of Credit by, the respective  beneficiaries of such Letters of Credit.  In furtherance and not in limitation of the foregoing, Issuer shall  not be responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any  document submitted by any party in connection with the application for an issuance of any such Letter of  Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent  or forged (even if Issuer or any of its Affiliates shall have been notified thereof); (ii) the validity or  sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter  of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to  be invalid or ineffective for any reason; (iii) the failure of the beneficiary of any such Letter of Credit, or  any other party to which such Letter of Credit may be transferred, to comply fully with any conditions  required in order to draw upon such Letter of Credit or any other claim of any Borrower against any  beneficiary of such Letter of Credit, or any such transferee, or any dispute between or among any Borrower  and any beneficiary of any Letter of Credit or any such transferee; (iv) errors, omissions, interruptions or  delays in transmission or delivery of any messages, by mail, cable, facsimile, telex or otherwise, whether  or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the  transmission or otherwise of any document required in order to make a drawing under any such Letter of  Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of  the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from causes  beyond the control of Issuer, including any Governmental Acts, and none of the above shall affect or impair,  or prevent the vesting of, any of Issuer’s rights or powers hereunder.  Nothing in the preceding sentence  shall relieve Issuer from liability for Issuer’s gross negligence or willful misconduct (as determined by a  

 

  49  147420493  158492473  court of competent jurisdiction in a final non-appealable judgment) in connection with actions or omissions  described in such clauses (i) through (viii) of such sentence.  In no event shall Issuer or Issuer’s Affiliates  be liable to any Borrower for any indirect, consequential, incidental, punitive, exemplary or special  damages or expenses (including without limitation attorneys’ fees), or for any damages resulting from any  change in the value of any property relating to a Letter of Credit.  (b) Without limiting the generality of the foregoing, Issuer and each of its Affiliates:   (i) may rely on any oral or other communication reasonably believed by Issuer or such Affiliate to have  been authorized or given by or on behalf of the applicant for a Letter of Credit; (ii) may honor any  presentation if the documents presented appear on their face substantially to comply with the terms and  conditions of the relevant Letter of Credit; (iii) may honor a previously dishonored presentation under a  Letter of Credit, whether such dishonor was pursuant to a court order, to settle or compromise any claim of  wrongful dishonor, or otherwise, and shall be entitled to reimbursement to the same extent as if such  presentation had initially been honored, together with any interest paid by Issuer or its Affiliates; (iv) may  honor any drawing that is payable upon presentation of a statement advising negotiation or payment, upon  receipt of such statement (even if such statement indicates that a draft or other document is being delivered  separately), and shall not be liable for any failure of any such draft or other document to arrive, or to  conform in any way with the relevant Letter of Credit; (v) may pay any paying or negotiating bank claiming  that it rightfully honored under the laws or practices of the place where such bank is located; and (vi) may  settle or adjust any claim or demand made on Issuer or its Affiliate in any way related to any order issued  at the applicant’s request to an air carrier, a letter of guarantee or of indemnity issued to a steamship agent  or carrier or any document or instrument of like import (each an “Order”) and honor any drawing in  connection with any Letter of Credit that is the subject of such Order, notwithstanding that any drafts or  other documents presented in connection with such Letter of Credit fail to conform in any way with such  Letter of Credit.  (c) In furtherance and extension and not in limitation of the specific provisions set  forth above, any action taken or omitted by Issuer under or in connection with the Letters of Credit issued  by it or any documents and certificates delivered thereunder, if taken or omitted in good faith and without  gross negligence (as determined by a court of competent jurisdiction in a final non-appealable judgment),  shall not put Issuer under any resulting liability to any Borrower, Agent or any Lender.  2.20 Mandatory Prepayments.  (a) Subject to Section 7.1 hereof, when any Borrower sells or otherwise disposes of  any Collateral other than Inventory in the Ordinary Course of Business, Borrowers shall repay the Advances  in an amount equal to the net proceeds of such sale (i.e., gross proceeds less the reasonable direct costs of  such sales or other dispositions), such repayments to be made promptly but in no event more than one (1)  Business Day following receipt of such net proceeds, and until the date of payment, such proceeds shall be  held in trust for Agent.  The foregoing shall not be deemed to be implied consent to any such sale otherwise  prohibited by the terms and conditions hereof.  Such repayments shall be applied in such order as Agent  may determine, subject to Borrowers’ ability to reborrow Revolving Advances in accordance with the terms  hereof.  (b) When any Borrower or Guarantor receives any Extraordinary Receipts, Borrowers  shall repay the Advances in an amount equal to such Extraordinary Receipts, such repayments to be made  promptly but in no event more than one (1) Business Day following receipt thereof, and until the date of  repayment, all such amounts shall be held in trust for Agent.  Such repayments will be applied to the  Advances in such order as Agent may determine, subject to Borrowers’ ability to reborrow Revolving  Advances in accordance with the terms hereof.  

 

  50  147420493  158492473  2.21 Use of Proceeds.  (a) Borrowers shall apply the proceeds of Advances to (i) pay fees and expenses  relating to this transaction, and (ii) provide for its working capital and other general corporate needs and  reimburse drawings under Letters of Credit.  (b) Without limiting the generality of Section 2.21(a) above, neither the Borrowers,  the Guarantors nor any other Person which may in the future become party to this Agreement or the Other  Documents as a Borrower or Guarantor, intends to use nor shall they use any portion of the proceeds of the  Advances, directly or indirectly, for any purpose in violation of Applicable Law.  2.22 Defaulting Lender.  (a) Notwithstanding anything to the contrary contained herein, in the event any Lender  is a Defaulting Lender, all rights and obligations hereunder of such Defaulting Lender and of the other  parties hereto shall be modified to the extent of the express provisions of this Section 2.22 so long as such  Lender is a Defaulting Lender.  (b) (i) Except as otherwise expressly provided for in this Section 2.22, (x) Revolving  Advances shall be made pro rata from Lenders holding Revolving Commitments which are not Defaulting  Lenders based on their respective Revolving Commitment Percentages, and no Revolving Commitment  Percentage of any Lender or any pro rata share of any Revolving Advances required to be advanced by any  Lender shall be increased as a result of any Lender being a Defaulting Lender and (y) Equipment Loans  shall be made pro rata from Lenders holding Equipment Loan Commitments which are not Defaulting  Lenders based on their respective Equipment Loan Commitment Percentages, and no Equipment Loan  Commitment Percentage of any Lender or any pro rata share of any Equipment Loans required to be  advanced by any Lender shall be increased as a result of any Lender being a Defaulting Lender.  Amounts  received in respect of principal of any type of Revolving Advances or Equipment Loans, as applicable shall  be applied to reduce such type of Revolving Advances or Equipment Loans, as applicable of each Lender  (other than any Defaulting Lender) holding a Revolving Commitment or an Equipment Loan Commitment,  as applicable in accordance with their Revolving Commitment Percentages or Equipment Loan  Commitment Percentages, as applicable; provided, that, Agent shall not be obligated to transfer to a  Defaulting Lender any payments received by Agent for Defaulting Lender’s benefit, nor shall a Defaulting  Lender be entitled to the sharing of any payments hereunder (including any principal, interest or fees).   Amounts payable to a Defaulting Lender shall instead be paid to or retained by Agent.  Agent may hold  and, in its discretion, re-lend to a Borrower the amount of such payments received or retained by it for the  account of such Defaulting Lender.  (ii) Certain fees contained in the Fee Letter shall cease to accrue in favor of  such Defaulting Lender.  (iii) If any Swing Loans are outstanding or any Letters of Credit (or drawings  under any Letter of Credit for which Issuer has not been reimbursed) are outstanding or exist at the time  any such Lender holding a Revolving Commitment becomes a Defaulting Lender, then:  (A) Defaulting Lender’s Participation Commitment in the outstanding  Swing Loans and of the Maximum Undrawn Amount of all outstanding Letters of Credit shall be reallocated  among Non-Defaulting Lenders holding Revolving Commitments in proportion to the respective Revolving  Commitment Percentages of such Non-Defaulting Lenders to the extent (but only to the extent) that (x)  such reallocation does not cause the aggregate sum of outstanding Revolving Advances made by any such  Non-Defaulting Lender holding a Revolving Commitment plus such Lender’s reallocated Participation  

 

  51  147420493  158492473  Commitment in the outstanding Swing Loans plus such Lender’s reallocated Participation Commitment in  the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit to exceed the Revolving  Commitment Amount of any such Non-Defaulting Lender, and (y) no Default or Event of Default has  occurred and is continuing at such time;  (B) if the reallocation described in clause (A) above cannot, or can  only partially, be effected, Borrowers shall within one Business Day following notice by Agent (x) first,  prepay any outstanding Swing Loans that cannot be reallocated, and (y) second, cash collateralize for the  benefit of Issuer, Borrowers’ obligations corresponding to such Defaulting Lender’s Participation  Commitment in the Maximum Undrawn Amount of all Letters of Credit (after giving effect to any partial  reallocation pursuant to clause (A) above) in accordance with Section 3.2(b) for so long as such Obligations  are outstanding;  (C) if Borrowers cash collateralize any portion of such Defaulting  Lender’s Participation Commitment in the Maximum Undrawn Amount of all Letters of Credit pursuant to  clause (B) above, Borrowers shall not be required to pay any fees to such Defaulting Lender pursuant to  Section 3.2(a) with respect to such Defaulting Lender’s Revolving Commitment Percentage of Maximum  Undrawn Amount of all Letters of Credit during the period such Defaulting Lender’s Participation  Commitment in the Maximum Undrawn Amount of all Letters of Credit are cash collateralized;  (D) if Defaulting Lender’s Participation Commitment in the  Maximum Undrawn Amount of all Letters of Credit is reallocated pursuant to clause (A) above, then the  fees payable to Lenders holding Revolving Commitments pursuant to Section 3.2(a) shall be adjusted and  reallocated to Non-Defaulting Lenders holding Revolving Commitments in accordance with such  reallocation; and  (E) if all or any portion of such Defaulting Lender’s Participation  Commitment in the Maximum Undrawn Amount of all Letters of Credit is neither reallocated nor cash  collateralized pursuant to clauses (A) or (B) above, then, without prejudice to any rights or remedies of  Issuer or any other Lender hereunder, all Letter of Credit Fees payable under Section 3.2(a) with respect to  such Defaulting Lender’s Revolving Commitment Percentage of the Maximum Undrawn Amount of all  Letters of Credit shall be payable to the Issuer (and not to such Defaulting Lender) until (and then only to  the extent that) such Participation Commitment in the Maximum Undrawn Amount of all Letters of Credit  is reallocated and/or cash collateralized; and  (iv) so long as any Lender holding a Revolving Commitment is a Defaulting  Lender, Swing Loan Lender shall not be required to fund any Swing Loans and Issuer shall not be required  to issue, amend or increase any Letter of Credit, unless such Swing Loan Lender or Issuer, as applicable, is  satisfied that the related exposure and Defaulting Lender’s Participation Commitment in the Maximum  Undrawn Amount of all Letters of Credit and all Swing Loans (after giving effect to any such issuance,  amendment, increase or funding) will be fully allocated to Non-Defaulting Lenders holding Revolving  Commitments and/or cash collateral for such Letters of Credit will be provided by Borrowers in accordance  with clause (A) and (B) above, and participating interests in any newly made Swing Loan or any newly  issued or increased Letter of Credit shall be allocated among Non-Defaulting Lenders in a manner  consistent with Section 2.22(b)(iii)(A) above (and such Defaulting Lender shall not participate therein).  (c) A Defaulting Lender shall not be entitled to give instructions to Agent or to  approve, disapprove, consent to or vote on any matters relating to this Agreement and the Other Documents,  and all amendments, waivers and other modifications of this Agreement and the Other Documents may be  made without regard to a Defaulting Lender and, for purposes of the definition of “Required Lenders”, a  

 

  52  147420493  158492473  Defaulting Lender shall not be deemed to be a Lender, to have any outstanding Advances or a Revolving  Commitment Percentage or Equipment Loan Commitment Percentage.  (d) Other than as expressly set forth in this Section 2.22, the rights and obligations of  a Defaulting Lender (including the obligation to indemnify Agent) and the other parties hereto shall remain  unchanged.  Nothing in this Section 2.22 shall be deemed to release any Defaulting Lender from its  obligations under this Agreement and the Other Documents, shall alter such obligations, shall operate as a  waiver of any default by such Defaulting Lender hereunder, or shall prejudice any rights which any  Borrower, Agent or any Lender may have against any Defaulting Lender as a result of any default by such  Defaulting Lender hereunder.  (e) In the event that Agent, Borrowers, Swing Loan Lender and Issuer agree in writing  that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting  Lender, then Agent will so notify the parties hereto, and, if such cured Defaulting Lender is a Lender  holding a Revolving Commitment, then Participation Commitments of Lenders holding Revolving  Commitments (including such cured Defaulting Lender) of the Swing Loans and Maximum Undrawn  Amount of all outstanding Letters of Credit shall be reallocated to reflect the inclusion of such Lender’s  Revolving Commitment, and on such date such Lender shall purchase at par such of the Revolving  Advances of the other Lenders as Agent shall determine may be necessary in order for such Lender to hold  such Revolving Advances in accordance with its Revolving Commitment Percentage.  (f) If Swing Loan Lender or Issuer has a good faith belief that any Lender holding a  Revolving Commitment has defaulted in fulfilling its obligations under one or more other agreements in  which such Lender commits to extend credit, Swing Loan Lender shall not be required to fund any Swing  Loans and Issuer shall not be required to issue, amend or increase any Letter of Credit, unless Swing Loan  Lender or Issuer, as the case may be, shall have entered into arrangements with Borrowers or such Lender,  satisfactory to Swing Loan Lender or Issuer, as the case may be, to defease any risk to it in respect of such  Lender hereunder.  2.23 Payment of Obligations  .  Agent may charge to Borrowers’ Account as a Revolving Advance or, at the discretion of Swing Loan  Lender, as a Swing Loan (i) all payments with respect to any of the Obligations required hereunder or under  any Other Document (including without limitation principal payments, payments of interest, payments of  Letter of Credit Fees and all other fees provided for hereunder and payments under Sections 16.5 and 16.9)  as and when each such payment shall become due and payable (whether as regularly scheduled, upon or  after acceleration, upon maturity or otherwise), (ii) without limiting the generality of the foregoing clause  (i), (a) all amounts expended by Agent or any Lender pursuant to Sections 4.2 or 4.3 hereof and (b) all  expenses which Agent incurs in connection with the forwarding of Advance proceeds and the establishment  and maintenance of any Blocked Accounts or Depository Accounts as provided for in Section 4.8(h), and  (iii) any sums expended by Agent or any Lender due to any Borrower’s failure to perform or comply with  its obligations under this Agreement or any Other Document including any Borrower’s obligations under  Sections 3.4, 4.4, 4.7, 6.4, 6.6, 6.7 and 6.8 hereof, and all amounts so charged shall be added to the  Obligations and shall be secured by the Collateral.  To the extent Revolving Advances are not actually  funded by the other Lenders in respect of any such amounts so charged, all such amounts so charged shall  be deemed to be Revolving Advances / Swing Loans made by and owing to Agent and Agent shall be  entitled to all rights (including accrual of interest) and remedies of a Lender under this Agreement and the  Other Documents with respect to such Revolving Advances.  

 

  53  147420493  158492473  III. INTEREST AND FEES.  3.1 Interest  .  Interest on Advances shall be payable in arrears on the first day of each month with respect to Domestic  Rate Loans and, with respect to LIBORBSBY Rate Loans, at (a) the end of each Interest Period, and (b)  for LIBORBSBY Rate Loans with an Interest Period in excess of three months, at the end of each three  month period during such Interest Period, provided further that all accrued and unpaid interest shall be due  and payable at the end of the Term.  Interest charges shall be computed on the actual principal amount of  Advances outstanding during the month at a rate per annum equal to (i) with respect to Revolving Advances,  the applicable Revolving Interest Rate and (ii) with respect to Swing Loans, the Revolving Interest Rate for  Domestic Rate Loans and (iii) with respect to the Equipment Loans, the applicable Equipment Loan Rate  (as applicable, the “Contract Rate”).  Except as expressly provided otherwise in this Agreement, any  Obligations other than the Advances that are not paid when due shall accrue interest at the Revolving  Interest Rate for Domestic Rate Loans, subject to the provision of the final sentence of this Section 3.1  regarding the Default Rate.  Whenever, subsequent to the date of this Agreement, the Alternate Base Rate  is increased or decreased, the applicable Contract Rate shall be similarly changed without notice or demand  of any kind by an amount equal to the amount of such change in the Alternate Base Rate during the time  such change or changes remain in effect.  The LIBORBSBY Rate shall be adjusted with respect to  LIBORBSBY Rate Loans without notice or demand of any kind on the effective date of any change in the  Reserve Percentage as of such effective date.  Upon and after the occurrence of an Event of Default, and  during the continuation thereof, at the option of Agent or at the direction of Required Lenders, upon notice  to the Borrowing Agent (or, in the case of any Event of Default under Section 10.6, immediately and  automatically upon the occurrence of any such Event of Default without the requirement of any notice or  other affirmative action by any party), (i) the Obligations shall bear interest at the rate applicable thereto  (provided that if the Applicable Margin at such time is not at the highest (i.e., most expensive) Level, the  Applicable Margin shall be increased to the highest Level) plus two percent (2%) per annum, or if no rate  is otherwise applicable thereto, at the Revolving Interest Rate (at the highest (i.e., most expensive) Level)  for Domestic Loans plus two percent (2%) per annum (as applicable, the “Default Rate”).  3.2 Letter of Credit Fees.  (a) Borrowers shall pay (x) to Agent, for the ratable benefit of Lenders holding  Revolving Commitments, fees for each Letter of Credit for the period from and excluding the date of  issuance of same to and including the date of expiration or termination, equal to the daily face amount of  each outstanding Letter of Credit multiplied by a per annum rate equal to the Applicable Margin for  Revolving Advances consisting of LIBORBSBY Rate Loans, such fees to be calculated on the basis of a  360-day year for the actual number of days elapsed and to be payable quarterly in arrears on the first day  of each calendar quarter and on the last day of the Term (it being understood and agreed that in no event  shall the fee under this subsection (x) in respect of any Letter of Credit be less than the Agent’s minimum  fee in effect from time to time), and (y) to Issuer, a fronting fee of one quarter of one percent (0.25%) per  annum times the daily face amount of each outstanding Letter of Credit for the period from and excluding  the date of issuance of same to and including the date of expiration or termination, to be payable quarterly  in arrears on the first day of each calendar quarter and on the last day of the Term. (all of the foregoing fees,  the “Letter of Credit Fees”).  In addition, Borrowers shall pay to Agent, for the benefit of Issuer, any and  all administrative, issuance, amendment, payment and negotiation charges with respect to Letters of Credit  and all fees and expenses as agreed upon by Issuer and the Borrowing Agent in connection with any Letter  of Credit, including in connection with the opening, amendment or renewal of any such Letter of Credit  and any acceptances created thereunder, all such charges, fees and expenses, if any, to be payable on  demand.  All such charges shall be deemed earned in full on the date when the same are due and payable  hereunder and shall not be subject to rebate or pro-ration upon the termination of this Agreement for any  

 

  54  147420493  158492473  reason.  Any such charge in effect at the time of a particular transaction shall be the charge for that  transaction, notwithstanding any subsequent change in Issuer’s prevailing charges for that type of  transaction.  Upon and after the occurrence of an Event of Default, and during the continuation thereof, at  the option of Agent or at the direction of Required Lenders, upon notice to the Borrowing Agent (or, in the  case of any Event of Default under Section 10.6, immediately and automatically upon the occurrence of  any such Event of Default without the requirement of any notice or other affirmative action by any party),  the Letter of Credit Fees described in clause (x) of this Section 3.2(a) shall be increased by an additional  two percent (2.0%) per annum; provided that if the Applicable Margin used to calculate Letter of Credit  Fees at such time is not at the highest (i.e., most expensive) Level, the Applicable Margin shall be increased  to the highest Level) in addition to such additional 2.0%.  (b) Upon the occurrence and during the continuance of an Event of Default, at the  option of Agent or at the direction of Required Lenders (or, in the case of any Event of Default under  Section 10.6, immediately and automatically upon the occurrence of such Event of Default, without the  requirement of any affirmative action by any party), or upon the expiration of the Term or any other  termination of this Agreement (and also, if applicable, in connection with any mandatory prepayment under  Section 2.20), Borrowers will cause cash to be deposited and maintained in an account with Agent, as cash  collateral, in an amount equal to one hundred and five percent (105%) of the Maximum Undrawn Amount  of all outstanding Letters of Credit, and each Borrower hereby irrevocably authorizes Agent, in its  discretion, on such Borrower’s behalf and in such Borrower’s name, to open such an account and to make  and maintain deposits therein, or in an account opened by such Borrower, in the amounts required to be  made by such Borrower, out of the proceeds of Receivables or other Collateral or out of any other funds of  such Borrower coming into any Lender’s possession at any time.  Agent may, in its discretion, invest such  cash collateral (less applicable reserves) in such short-term money-market items as to which Agent and  such Borrower mutually agree (or, in the absence of such agreement, as Agent may reasonably select) and  the net return on such investments shall be credited to such account and constitute additional cash collateral,  or Agent may (notwithstanding the foregoing) establish the account provided for under this Section 3.2(b)  as a non-interest bearing account and in such case Agent shall have no obligation (and Borrowers hereby  waive any claim) under Article 9 of the Uniform Commercial Code or under any other Applicable Law to  pay interest on such cash collateral being held by Agent.  No Borrower may withdraw amounts credited to  any such account without written consent of Agent, to be given or withheld in its sole discretion, except  upon the occurrence of all of the following: (x) payment and performance in full of all Obligations; (y)  expiration of all Letters of Credit; and (z) termination of this Agreement.  Borrowers hereby assign, pledge  and grant to Agent, for its benefit and the ratable benefit of Issuer, Lenders and each other Secured Party,  a continuing security interest in and to and Lien on any such cash collateral and any right, title and interest  of Borrowers in any deposit account, securities account or investment account into which such cash  collateral may be deposited from time to time to secure the Obligations, specifically including all  Obligations with respect to any Letters of Credit.  Borrowers agree that upon the coming due of any  Reimbursement Obligations (or any other Obligations, including Obligations for Letter of Credit Fees) with  respect to the Letters of Credit, Agent may use such cash collateral to pay and satisfy such Obligations.  3.3 [Reserved].  3.4 Fee Letter; Appraisals.  (a) Borrowers shall pay the amounts required to be paid in the Fee Letter in the manner  and at the times required by the Fee Letter.  (b) All of the fees and out-of-pocket costs and expenses of any appraisals conducted  pursuant to Section 4.7 hereof shall be paid for when due, in full and without deduction, off-set or  counterclaim by Borrowers.  

 

  55  147420493  158492473  3.5 Computation of Interest and Fees  .  Subject to Section 3.6 hereof, interest and fees hereunder shall be computed on the basis of a year of 360  days and for the actual number of days elapsed.  If any payment to be made hereunder becomes due and  payable on a day other than a Business Day, the due date thereof shall be extended to the next succeeding  Business Day and interest thereon shall be payable at the applicable Contract Rate during such extension.  All fees payable under this Agreement and the Other Documents will be deemed earned in full on the date  when same is due and payable and will not be subject to rebate or proration upon termination of this  Agreement for any reason.  3.6 Maximum Charges  .  In no event whatsoever shall interest and other charges charged hereunder exceed the highest rate  permissible under Applicable Law.  In the event interest and other charges as computed hereunder would  otherwise exceed the highest rate permitted under Applicable Law: (i) the interest rates hereunder will be  reduced to the maximum rate permitted under Applicable Law; (ii) such excess amount shall be first applied  to any unpaid principal balance owed by Borrowers; and (iii) if the then remaining excess amount is greater  than the previously unpaid principal balance, Lenders shall promptly refund such excess amount to  Borrowers and the provisions hereof shall be deemed amended to provide for such permissible rate.  3.7 Increased Costs  .  In the event that any Applicable Law or any Change in Law or compliance by any Lender (for purposes  of this Section 3.7, the term “Lender” shall include Agent, Swing Loan Lender, any Issuer or Lender and  any corporation or bank controlling Agent, Swing Loan Lender, any Lender or Issuer and the office or  branch where Agent, Swing Loan Lender, any Lender or Issuer (as so defined) makes or maintains any  LIBORBSBY Rate Loans) with any request or directive (whether or not having the force of law) from any  central bank or other financial, monetary or other authority, shall:  (a) subject Agent, Swing Loan Lender, any Lender or Issuer to any tax of any kind  whatsoever with respect to this Agreement, any Letter of Credit, any participation in a Letter of Credit or  any LIBORBSBY Rate Loan, or change the basis of taxation of payments to Agent, Swing Loan Lender,  such Lender or Issuer in respect thereof (except for Indemnified Taxes or Other Taxes covered by Section  3.10 and the imposition of, or any change in the rate of, any Excluded Tax payable by Agent, Swing Loan  Lender, such Lender or the Issuer);  (b) impose, modify or deem applicable any reserve, special deposit, assessment,  compulsory loan, insurance charge or similar requirement against assets held by, or deposits in or for the  account of, advances or loans by, or other credit extended by, any office of Agent, Swing Loan Lender,  Issuer or any Lender, including pursuant to Regulation D of the Board of Governors of the Federal Reserve  System; or  (c) impose on Agent, Swing Loan Lender, any Lender or Issuer or the London  interbank LIBORrelevant market any other condition, loss or expense (other than Taxes) affecting this  Agreement or any Other Document or any Advance made by any Lender, or any Letter of Credit or  participation therein;  and the result of any of the foregoing is to increase the cost to Agent, Swing Loan Lender, any  Lender or Issuer of making, converting to, continuing, renewing or maintaining its Advances hereunder by  an amount that Agent, Swing Loan Lender, such Lender or Issuer deems to be material or to reduce the  amount of any payment (whether of principal, interest or otherwise) in respect of any of the Advances by  

 

  56  147420493  158492473  an amount that Agent, Swing Loan Lender or such Lender or Issuer deems to be material, then, in any case  Borrowers shall promptly pay Agent, Swing Loan Lender, such Lender or Issuer, upon its demand, such  additional amount as will compensate Agent, Swing Loan Lender or such Lender or Issuer for such  additional cost or such reduction, as the case may be, provided that the foregoing shall not apply to increased  costs which are reflected in the LIBORBSBY Rate, as the case may be.  Agent, Swing Loan Lender, such  Lender or Issuer shall certify the amount of such additional cost or reduced amount to Borrowing Agent,  and such certification shall be conclusive absent manifest error.  3.8 Alternate Rate of Interest.   3.8.1. Interest Rate Inadequate or Unfair.  In the event that Agent or any Lender shall have  determined that:  (a) reasonable means do not exist for ascertaining the LIBORBSBY Rate applicable  pursuant to Section 2.2 hereof for any Interest Period; or  (b) Dollar deposits in the relevant amount and for the relevant maturity are not  available in the London interbank LIBOR market, with respect to an outstanding LIBORBSBY Rate Loan,  a proposed LIBORBSBY Rate Loan, or a proposed conversion of a Domestic Rate Loan into a  LIBORBSBY Rate Loan; or  (c) the making, maintenance or funding of any LIBORBSBY Rate Loan has been  made impracticable or unlawful by compliance by Agent or such Lender in good faith with any Applicable  Law or any interpretation or application thereof by any Governmental Body or with any request or directive  of any such Governmental Body (whether or not having the force of law),; or  (d) the LIBORBSBY Rate will not adequately and fairly reflect the cost to such Lender  of the establishment or maintenance of any LIBORBSBY Rate Loan, and Lenders have provided notice of  such determination to Agent,  then Agent shall give Borrowing Agent prompt written or telephonic notice of such determination.   If such notice is given prior to a Benchmark Replacement Date (as defined below), (i) any such requested  LIBORBSBY Rate Loan shall be made as a Domestic Rate Loan, unless Borrowing Agent shall notify  Agent no later than 1:00 p.m. Eastern Standard Time two (2) Business Days prior to the date of such  proposed borrowing, that its request for such borrowing shall be cancelled or made as an unaffected type  of LIBORBSBY Rate Loan, (ii) any Domestic Rate Loan or LIBORBSBY Rate Loan which was to have  been converted to an affected type of LIBORBSBY Rate Loan shall be continued as or converted into a  Domestic Rate Loan, or, if Borrowing Agent shall notify Agent, no later than 1:00 p.m. Eastern Standard  Time two (2) Business Days prior to the proposed conversion, shall be maintained as an unaffected type of  LIBORBSBY Rate Loan, and (iii) any outstanding affected LIBORBSBY Rate Loans shall be converted  into a Domestic Rate Loan, or, if Borrowing Agent shall notify Agent, no later than 1:00 p.m. Eastern  Standard Time two (2) Business Days prior to the last Business Day of the then current Interest Period  applicable to such affected LIBORBSBY Rate Loan, shall be converted into an unaffected type of  LIBORBSBY Rate Loan, on the last Business Day of the then current Interest Period for such affected  LIBORBSBY Rate Loans (or sooner, if any Lender cannot continue to lawfully maintain such affected  LIBORBSBY Rate Loan).  Until such notice has been withdrawn, Lenders shall have no obligation to make  an affected type of LIBORBSBY Rate Loan or maintain outstanding affected LIBORBSBY Rate Loans  and no Borrower shall have the right to convert a Domestic Rate Loan or an unaffected type of  LIBORBSBY Rate Loan into an affected type of LIBORBSBY Rate Loan.  3.8.2. Benchmark Replacement Setting.  

 

  57  147420493  158492473  (a) Announcements Related to LIBOR.  On March 5, 2021, the ICE Benchmark  Administration, the administrator of LIBOR (the “IBA”) and the U.K. Financial Conduct Authority, the  regulatory supervisor for the IBA, announced in a public statement the future cessation or loss of  representativeness of overnight/Spot Next, 1-week, 1-month, 2-month, 3-month, 6-month and 12-month  USD LIBOR tenor settings (collectively, the “Cessation Announcements”).  The parties hereto  acknowledge that, as a result of the Cessation Announcements, a Benchmark Transition Event occurred on  March 5, 2021 with respect to USD LIBOR under clauses (1) and (2) of the definition of Benchmark  Transition Event below; provided however, no related Benchmark Replacement Date occurred as of such  date.  (a) (b) Benchmark Replacement.  Notwithstanding anything to the contrary herein or  in the Other Documents (and any agreement executed in connection with an Interest Rate Hedge shall be  deemed not to be an “Other Document” for purposes of this Section titled “Benchmark Replacement  Setting”), if a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related  Benchmark Replacement Date havehas occurred prior to the Reference Time in respect of any setting of  the then current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause  (1) or (2) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such  Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Other  Document in respect of such Benchmark setting and subsequent Benchmark settings without any  amendment to, or further action or consent (subject to clause (y) below) of any other party to, this  Agreement or any Other Document and (y) if a Benchmark Replacement is determined in accordance with  clause (3) of the definition of “Benchmark Replacement” or clause (2) of the definition of “Benchmark  Replacement Adjustment” for such Benchmark Replacement Date, such Benchmark Replacement will  replace such Benchmark for all purposes hereunder and under any Other Document in respect of any  Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date  notice of such Benchmark Replacement is provided to the Lenders without any amendment to, or further  action or consent of any other party to, this Agreement or any Other Document 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.  (b) (c) Benchmark Replacement Conforming Changes.  In connection with the use,  administration, adoption, or implementation of athe Benchmark Replacement, the Agent will have the right  to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything  to the contrary herein or in the Other Documents, any amendments implementing such Benchmark  Replacement Conforming Changes will become effective without any further action or consent of any other  party to this Agreement or any Other Document.  (c) (d) Notices; Standards for Decisions and Determinations.  The Agent will  promptly notify the BorrowerBorrowers and the Lenders of (i) any occurrence of a Benchmark Transition  Event, a Term SOFR Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark  Replacement Date, (iiA) the implementation of any Benchmark Replacement, and (iiiB) the effectiveness  of any Benchmark Replacement Conforming Changes, in connection with the use, administration, adoption  or implementation of a Benchmark Replacement.  The Agent will notify the Borrowers of (ivx) the removal  or reinstatement of any tenor of a Benchmark pursuant to paragraph (eiv) below and (vy) the  commencement or conclusion of any Benchmark Unavailability Period.  Any determination, decision or  election that may be made by the Agent or, if applicable, any Lender (or group of Lenders) pursuant to this  Section titled “Benchmark Replacement Setting,”   including any determination with respect to a tenor, rate  or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to  take or refrain from taking any action or any selection, 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 to this Agreement  

 

  58  147420493  158492473  or any Other Document, except, in each case, as expressly required pursuant to this Section titled  “Benchmark Replacement Setting.”  (d) (e) Unavailability of Tenor of Benchmark.  Notwithstanding anything to the  contrary herein or in any of the Other DocumentsDocument, at any time (including in connection with the  implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including  Term SOFR or USD LIBOR) and either (A) any tenor for such Benchmark is not displayed on a screen or  other information service that publishes such rate from time to time as selected by the Agent in its  reasonable discretion or, (B) the regulatory supervisor foradministrator of such Benchmark or an Official  Body having jurisdiction over such administrator with respect to its publication of such Benchmark or an  Official Body having jurisdiction over the Agent, in each case acting in such capacity, has provided a public  statement or publication of information identifying a specific date after which any tenor shall or will no  longer be made available, or permitted to be used for determining the interest rate of U.S. dollar  denominated syndicated loans, or (C) the administrator of such Benchmark has provided a public statement  or publication of information (including a “Technical Note” published on the BSBY Website) announcing  that a BSBY Final Step Event has occurred with respect to any tenor offor such Benchmark is or will be no  longer representative, then the Agent may modify the definition of “Interest Period” (or any similar or  analogous definition) for any Benchmark settings at or after such time to remove such unavailable or non- representativeimpacted tenor, and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is  subsequently displayed on a screen or information service for a Benchmark (including a Benchmark  Replacement) or (B) is not, (or is no longer,) subject to an announcement that it is or will no longer be  representative for a Benchmark (including a Benchmark Replacement)described in clause (i)(B) or clause  (i)(C) above, then the Agent may modify the definition of “Interest Period” (or any similar or analogous  definition) for all Benchmark settings at or after such time to reinstate such previously removed tenor.  (e) (f) Benchmark Unavailability Period.  Upon the BorrowerBorrowers’s receipt of  notice of the commencement of a Benchmark Unavailability Period, the BorrowerBorrowers may revoke  any pending request for a Loan bearing interest based on USD LIBOR, conversion to or continuation of  BSBY Rate Loans bearing interest based on USD LIBOR to be made, converted or continued during any  Benchmark Unavailability Period and, failing that, the BorrowerBorrowers will be deemed to have  converted any such request into a request for a Domestic Rate Loan.  During anya Benchmark  Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor,  the component of the Alternate Base Rate based upon thesuch then-current Benchmark or suchthe tenor for  such Benchmark, as applicable, will not be used in any determination of the Alternate Base Rate.  (g) Term SOFR Transition Event.  Notwithstanding anything to the contrary herein or  in any Other Document and subject to the proviso below in this paragraph, if a Term SOFR Transition  Event and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect  of any setting of the then-current Benchmark, then (i) the applicable Benchmark Replacement will replace  the then-current Benchmark for all purposes hereunder or under any Other Document in respect of such  Benchmark setting (the “Secondary Term SOFR Conversion Date”) and subsequent Benchmark settings,  without any amendment to, or further action or consent of any other party to, this Agreement or any Other  Document; and (ii) Loans outstanding on the Secondary Term SOFR Conversion Date bearing interest  based on the then-current Benchmark shall be deemed to have been converted to Loans bearing interest at  the Benchmark Replacement with a tenor approximately the same length as the interest payment period of  the then-current Benchmark; provided that, this paragraph (g) shall not be effective unless the Agent has  delivered to the Lenders and the Borrower a Term SOFR Notice.  For the avoidance of doubt, the Agent  shall not be required to deliver a Term SOFR Notice after a Term SOFR Transition Event and may do so  in its sole discretion.  

 

  59  147420493  158492473  (f) (h) Certain Defined TermsDefinitions.  As used in this Section titled “Benchmark  Replacement Setting”:  “Available Tenor” means, as of any date of determination and with respect to the  then-current Benchmark, as applicable, (x) if the then currentsuch Benchmark is a term rate or is based on  a term rate, any tenor for such Benchmark (or component thereof) that is or may be used for determining  the length of an Interest Periodinterest period pursuant to this Agreement or (y) otherwise, any payment  period for interest calculated with reference to such Benchmark (or component thereof) that is or may be  used for determining any frequency of making payments of interest calculated with reference to such  Benchmark pursuant to this Agreement, in each case, as of such date and not including, for the avoidance  of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period”  pursuant to paragraphclause (eiv) of this Section titled “Benchmark Replacement Setting”, or (y) if the then  current Benchmark is not a term rate nor based on a term rate, any payment period for interest calculated  with reference to such Benchmark pursuant to this Agreement as of such date.  “Benchmark” means, initially, USD LIBORthe BSBY Screen Rate; provided that  if a Benchmark Transition Event, a Term SOFR Transition Event or an Early Opt-in Election, as applicable,  and its related Benchmark Replacement Date have has occurred with respect to USD LIBORthe BSBY  Screen Rate or the then-current Benchmark, then “Benchmark” means the applicable Benchmark  Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate  pursuant to paragraph (b) of this Section titled. Any reference to “Benchmark Replacement Setting.” shall  include, as applicable, the published component used in the calculation thereof.  “Benchmark Replacement” means, for any Available Tenor, the first alternative  set forth in the order below that can be determined by the Agent for the applicable Benchmark Replacement  Date:  (1) the sum of: (aA) Term SOFR and (bB) the related Benchmark Replacement  Adjustment;  (2) the sum of: (aA) Daily Simple SOFR and (bB) the related Benchmark  Replacement Adjustment; and  (3) the sum of: (aA) the alternate benchmark rate and (B) an adjustment (which  may be a positive or negative value or zero), in each case, that has been  selected by the Agent and the BorrowerBorrowers as the replacement for the  then-currentsuch Available Tenor of such Benchmark for the applicable  Corresponding Tenor 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 benchmark rate and an  adjustment as a replacement for the then-current Benchmark, including any  applicable recommendations made by a Relevant Governmental Body, for  U.S. dollar-denominated syndicated credit facilities at such time and  (b) the  Benchmark Replacement Adjustment;    provided that, in the case of clause (1), any such Unadjusted Benchmark Replacement is displayed on a  screen or other information service that publishes such rate from time to timeshall be administratively  feasible as selecteddetermined by the Agent in its reasonablesole discretion; provided, further, that, with  respect to a Term SOFR Transition Event, on the applicable Benchmark Replacement Date, the  “Benchmark Replacement” shall revert to and shall be determined as set forth in clause (1) of this definition.   If the Benchmark Replacement as determined pursuant to clause (1), (2) or (3) above would be less than  

 

  60  147420493  158492473  the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement  and the Other Documents.  “Benchmark Replacement Adjustment” means, for purposes of clauses (1) and  (2) of the definition of “Benchmark Replacement,” with respect to any replacement of the then-current  Benchmark with an Unadjusted Benchmark Replacement for any applicable Available Tenor for any setting  of such Unadjusted Benchmark Replacement:  (1) for purposes of clauses (1) and (2) of the definition of “Benchmark  Replacement,” the applicable amount(s)first alternative set forth in the order below that can be determined  by the Agent:    Available Tenor Benchmark Replacement Adjustment*    One-Week 0.03839%   (3.839 basis points)  One-Month 0.11448%   (11.448 basis points)  Two-Months 0.18456%   (18.456 basis points)  Three-Months 0.26161%   (26.161 basis points)  Six-Months 0.42826%   (42.826 basis points)    * These values represent the ARRC/ISDA recommended spread adjustment values  available here: https://assets.bbhub.io/professional/sites/10/IBOR-Fallbacks- LIBOR-Cessation_Announcement_20210305.pdf      (1) an adjustment (which may be a positive or negative value or zero) equal to the  BSBY Long-Term Spread Adjustment for such Corresponding Tenor as of the  Reference Time such Benchmark Replacement is first set and is displayed on  a screen or other information service that publishes such adjustment from time  to time as selected by the Agent in its reasonable discretion; and    (2) for purposes of clause (3) of the definition of “Benchmark Replacement,”  the  spread adjustment, or method for calculating or determining such spreadan  adjustment, (which may be a positive or negative value or zero) that has been  selected by the Agent and the Borrower as the replacement for the applicable  Correspondingsuch Available Tenor  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 such  Benchmark with  the applicable Unadjusted Benchmark Replacement  by the  Relevant Governmental Body on the applicable Benchmark Replacement Date  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 such Available Tenor of such Benchmark  with the applicable Unadjusted Benchmark Replacement, including any  applicable recommendations made by a Relevant Governmental Body, for  U.S. dollar-denominated syndicated credit facilities at such time;    

 

  61  147420493  158492473  provided that, if the then-current Benchmark is a term rate, more than one tenor of such Benchmark is  available as of the applicable Benchmark Replacement Date and the applicable Unadjusted Benchmark  Replacement that will replace such Benchmark in accordance with this Section will not be a term rate, the  Available Tenor of such Benchmark for purposes of this definition of “Benchmark Replacement  Adjustment” shall be deemed to be the Available Tenor that has approximately the same length  (disregarding business day adjustments) as the payment period for interest calculated with reference to such  Unadjusted Benchmark Replacement.  “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 “Business Day,” the definition of “Interest Period,” timing and  frequency of determining rates and making payments of interest, timing of borrowing requests or  prepayment, conversion or continuation notices, length of lockbox periods, the applicability of breakage  provisions, and other technical,  administrative or operational matters) that the Agent decides 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 is reasonably necessary in connection with the  administration of this Agreement and the Other Documents).  “Benchmark Replacement Date” means the earliera date and time determined by  the Agent, which date shall be no later than the earliest to occur of the following events with respect to the  then-current Benchmark:  (1)   (1) in the case of clause (1) or (2) of the definition of “Benchmark Transition  Event,” the later of (aA) the date of the public statement or publication of  information referenced therein and (bB) the date on which the administrator of  the Benchmark (or the published component used in the calculation thereof)   permanently or indefinitely ceases to provide all Available Tenor of such  Benchmark (or such component thereof)all Available Tenors of such  Benchmark (or such component thereof) are no longer available, permitted to  be used for determining the interest rate of U.S. dollar denominated syndicated  loans, or shall cease; or  (2) in the case of clause (32) of the definition of “Benchmark Transition Event,”  thea date and time determined by the Agent, which date shall promptly follow  as administratively feasible in its reasonable discretion and no later than 90  days following the date of the public statement or publication of information  referenced therein;.  (3) in the case of a Term SOFR Transition Event, the date that is set forth in the  Term SOFR Notice provided to the Lenders and the Borrower pursuant to this  Section titled “Benchmark Replacement Setting”, which date shall be at least  30 days from the date of the Term SOFR Notice; or  (4) in the case of an Early Opt-in Election, the sixth (6th) Business Day after the  date notice of such Early Opt-in Election is provided to the Lenders, so long  as the Agent has not received, by 5:00 p.m. (New York City time) on the fifth  (5th) Business Day after the date notice of such Early Opt-in Election is  provided to the Lenders, written notice of objection to such Early Opt-in  Election from Lenders comprising the Required Lenders.  

 

  62  147420493  158492473    For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the  same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark  Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and  (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clauseclauses (1)  orand (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth  therein with respect to all then-current Available Tenors of such Benchmark available hereunder (or the  published component used in the calculation thereof).  “Benchmark Transition Event” means the occurrence of one or more of the  following events with respect to the then-current Benchmark:  (1) a public statement or publication of information by or on behalf of (A) the  administrator of such Benchmark (or the published component used in the  calculation thereof) announcing that, (B) an Official Body having jurisdiction  over such administrator has ceased or will cease to provide all Available  Tenors of such Benchmark (or such component thereof), permanently or  indefinitely, provided that, at the time of such statement or publication, there  is no successor administrator that will continue to provide any Available  Tenorwith respect to its publication of such Benchmark (or such component  thereof);  (2) a public statement or publication of information by a Governmental, or (C) an  Official Body having jurisdiction over the Agent, the regulatory supervisor for  the administrator of such Benchmark (or the published component used in the  calculation thereof), the Federal Reserve Board, the Federal Reserve Bank of  New York, an insolvency official with jurisdiction over the administrator for  the LIBOR Rate, a resolution authority with jurisdiction over the administrator  for such Benchmark (or such component), a resolution authority with  jurisdiction over the administrator for such Benchmark (or such component)  or a court or an entity with similar insolvency or resolution authority over the  administrator for such Benchmark (or such component), which states that the  administrator of such Benchmark (or such component) has ceasedin each case  acting in such capacity, identifying a specific date after which all Available  Tenors of such Benchmark, (or such component thereof) (i) shall or will no  longer be made available or permitted to be used for determining the interest  rate of U.S. dollar denominated syndicated loans, or (ii) shall or will otherwise  cease to provide all Available Tenors of such Benchmark (or such component  thereof) permanently or indefinitely, provided that, at the time of any such  statement or publication to the extent related solely to unavailability or  cessation of such Benchmark, there is no successor administrator that will  continue to provide any Available Tenor of such Benchmark (or such  component thereof); or  (2) (3) a public statement or publication of information by the regulatory  supervisor for the administrator of such Benchmark (or theincluding a  “Technical Note” published component used inon the calculation thereof) or a  Governmental Body having jurisdiction over the Agent announcingBSBY  Website) that a BSBY Final Step Event has occurred for all Available Tenors  of such Benchmark (or such component thereof) are no longer representative.    For avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to  any Benchmark if a public statement or publication of information set forth above has occurred with respect  

 

  63  147420493  158492473  to each then-current Available Tenor of such Benchmark (or the published component used in the  calculation thereof).  “Benchmark Unavailability Period” means, so long as a Benchmark Transition  Event has occurred, the period (if any) (x) beginning at the time that a Benchmark Replacement Date  pursuant to clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement  has replaced the then-current Benchmark for all purposes hereunder and under any Other Document in  accordance with this Section titled “Benchmark Replacement Setting” and (y) ending at the time that a  Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under  any Other Document in accordance with this Section titled “Benchmark Replacement Setting.”  “BSBY Final Step Event” means, for any Available Tenor, either (i) the twentieth  (20th) consecutive U.S. Government Securities Business Day or (ii) the thirtieth (30th) U.S. Government  Securities Business Day within a rolling ninety (90)-day period, on which the BSBY Screen Rate is  calculated in accordance with “Level 6” (or any successor final step) of the “Alternative Calculation  Waterfall” defined or set forth in the BSBY Screen Rate’s index methodology and rulebook, as published  on the BSBY Website.  “BSBY Long-Term Spread Adjustment” means the most recently dated “BSBY  SOFR 5Y Spread Adjustment” published on the BSBY Website.  “BSBY Website” means the “Bloomberg Short-Term Bank Yield Index” website  at https://www.bloomberg.com/professional/product/ indices/bsby/ (or any successor website).  “Corresponding Tenor” with respect to any Available Tenor means, as applicable,  either a tenor (including overnight) or an interest payment period having approximately the same length  (disregarding business day adjustment) as such Available Tenor, provided that, (i) if any Available Tenor  does not correspond to a tenor applicable to the Unadjusted Benchmark Replacement, the closest  corresponding tenor of the Unadjusted Benchmark Replacement shall be applied, and (ii) if applicable, if a  tenor of the Unadjusted Benchmark Replacement corresponds equally to two tenors of the then-current  Benchmark, the corresponding tenor of the shorter duration shall be applied.  “Daily Simple SOFR” means, for any day, SOFR, with the conventions for this  rate (which will include a lookback) being established by the Agent in accordance with the conventions for  this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple  SOFR” for syndicated business loans; provided, that if the Agent decides that any such convention is not  administratively feasible for the Agent, then the Agent may establish another convention in its reasonable  discretion.  “Early Opt-in Election” means, if the then-current Benchmark is USD LIBOR,  the occurrence of:  (1) a notification by the Agent to (or the request by the Borrower to the Agent to  notify) each of the other parties hereto that at least five currently outstanding  U.S. dollar-denominated syndicated credit facilities at such time contain (as a  result of amendment or as originally executed) a SOFR-based rate (including  SOFR, a term SOFR, or any other rate based upon SOFR) as a benchmark rate  (and such syndicated credit facilities are identified in such notice and are  publicly available for review), and  

 

  64  147420493  158492473  (2) the joint election by the Agent and the Borrower to trigger a fallback from  USD LIBOR and the provision by the Agent of written notice of such election  to the Lenders.  “Floor” means the benchmark rate floor, if any, provided in this Agreement  initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement  or otherwise) with respect to USD LIBORthe BSBY Rate or, if no floor is specified, zero.  “ISDA Definitions” means the 2006 ISDA Definitions published by the  International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or  supplemented from time to time, or any successor definitional booklet for interest rate derivatives published  from time to time by the International Swaps and Derivatives Association, Inc. or such successor thereto.  “Reference Time” means, with respect to any setting of the then-current  Benchmark means (1) if such Benchmark is USD LIBOR, 11 a.m. (London time) on the day that is two  London banking days preceding the date of such setting, and (2) if such Benchmark is not USD LIBOR,  the time determined by the Agent in its reasonable discretion.  “Relevant Governmental Body” means the Board of Governors of the Federal  Reserve BoardSystem of the United States and/or the Federal Reserve Bank of New York, or a committee  officially endorsed or convened by the Board of Governors of the Federal Reserve BoardSystem of the  United States and/or the Federal Reserve Bank of New York, or any successor thereto.  “SOFR” means, with respect to any Business Day, a rate per annum equal to the  secured overnight financing rate for such Business Dayas published by the SOFR Administrator on the  SOFR Administrator’s Website on the immediately succeeding Business Day.  “SOFR Administrator” means the Federal Reserve Bank of New York (or a  successor administrator of the secured overnight financing rate).  “SOFR Administrator’s Website” means on the website of the Federal Reserve  Bank of New York, currently at http://www.newyorkfed.org,http://www.newyorkfed.org (or any successor  source for the secured overnight financing rate identified as such by the SOFR Administratoradministrator  of the secured overnight financing rate from time to time).  “Term SOFR” means, for the applicable Corresponding Tenor as of the applicable  Reference Time, the forward-looking term rate based on SOFR that has beenadministered by CME Group  Benchmark Administration Limited (or a successor administrator selected or recommended by the Relevant  Governmental BodyAdministrative Agent in its reasonable discretion).  “Term SOFR Notice” means a notification by the Agent to the Lenders and the  Borrower of the occurrence of a Term SOFR Transition Event.  “Term SOFR Transition Event” means the determination by the Agent that (a)  Term SOFR has been recommended for use by the Relevant Governmental Body, and is determinable for  each Available Tenor, (b) the administration of Term SOFR is administratively feasible for the Agent and  (c) a Benchmark Transition Event or an Early Opt-in Election, as applicable, has previously occurred  resulting in a Benchmark Replacement in accordance with Section titled “Benchmark Replacement Setting”  that is not Term SOFR.  “Unadjusted Benchmark Replacement” means the applicable Benchmark  Replacement excluding the related Benchmark Replacement Adjustment.  

 

  65  147420493  158492473  “USD LIBOR” means the London interbank offered rate for U.S. dollars.  3.9 Capital Adequacy.  (a) In the event that Agent, Swing Loan Lender or any Lender shall have determined  that any Applicable Law or guideline regarding capital adequacy, or any Change in Law or any change in  the interpretation or administration thereof by any Governmental Body, central bank or comparable agency  charged with the interpretation or administration thereof, or compliance by Agent, Swing Loan Lender,  Issuer or any Lender (for purposes of this Section 3.9, the term “Lender” shall include Agent, Swing Loan  Lender, Issuer or any Lender and any corporation or bank controlling Agent, Swing Loan Lender or any  Lender and the office or branch where Agent, Swing Loan Lender or any Lender (as so defined) makes or  maintains any LIBORBSBY Rate Loans) with any request or directive regarding capital adequacy (whether  or not having the force of law) of any such authority, central bank or comparable agency, has or would have  the effect of reducing the rate of return on Agent, Swing Loan Lender or any Lender’s capital as a  consequence of its obligations hereunder (including the making of any Swing Loans) to a level below that  which Agent, Swing Loan Lender or such Lender could have achieved but for such adoption, change or  compliance (taking into consideration Agent’s, Swing Loan Lender’s and each Lender’s policies with  respect to capital adequacy) by an amount deemed by Agent, Swing Loan Lender or any Lender to be  material, then, from time to time, Borrowers shall pay upon demand to Agent, Swing Loan Lender or such  Lender (on an after-tax basis) such additional amount or amounts as will compensate Agent, Swing Loan  Lender or such Lender for such reduction.  In determining such amount or amounts, Agent, Swing Loan  Lender or such Lender may use any reasonable averaging or attribution methods.  The protection of this  Section 3.9 shall be available to Agent, Swing Loan Lender and each Lender regardless of any possible  contention of invalidity or inapplicability with respect to the Applicable Law, rule, regulation, guideline or  condition.  (b) A certificate of Agent, Swing Loan Lender or such Lender setting forth such  amount or amounts as shall be necessary to compensate Agent, Swing Loan Lender or such Lender with  respect to Section 3.9(a) hereof when delivered to Borrowing Agent shall be conclusive absent manifest  error.  3.10 Taxes.  (a) Any and all payments by or on account of any Obligations hereunder or under any  Other Document shall be made free and clear of and without reduction or withholding for any Indemnified  Taxes or Other Taxes; provided that if Borrowers shall be required by Applicable Law to deduct any  Indemnified Taxes (including any Other Taxes) from such payments, then (i) the sum payable shall be  increased as necessary so that after making all required deductions (including deductions applicable to  additional sums payable under this Section) Agent, Swing Loan Lender, Lender, Issuer or Participant, as  the case may be, receives an amount equal to the sum it would have received had no such deductions been  made, (ii) Borrowers shall make such deductions, and (iii) Borrowers shall timely pay the full amount  deducted to the relevant Governmental Body in accordance with Applicable Law. Notwithstanding the  foregoing, no Borrower shall be obligated to make any portion of the Indemnified Taxes that is attributable  to any withholding or deductions that would not have been paid or claimed had the applicable payee or  payees properly claimed a complete exemption with respect thereto pursuant to Section 3.10(e).  (b) Without limiting the provisions of Section 3.10(a) above, Borrowers shall timely  pay any Other Taxes to the relevant Governmental Body in accordance with Applicable Law.  (c) Each Borrower shall indemnify Agent, Swing Loan Lender, each Lender, Issuer  and any Participant, within ten (10) days after demand therefor, for the full amount of any Indemnified  

 

  66  147420493  158492473  Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable  to amounts payable under this Section) paid by Agent, Swing Loan Lender, such Lender, Issuer, or such  Participant, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or  with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally  imposed or asserted by the relevant Governmental Body.  A certificate as to the amount of such payment  or liability delivered to Borrowers by any Lender, Swing Loan Lender, Participant, or Issuer (with a copy  to Agent), or by Agent on its own behalf or on behalf of Swing Loan Lender, a Lender or Issuer, shall be  conclusive absent manifest error.  (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by  any Borrower to a Governmental Body, Borrowers shall deliver to Agent the original or a certified copy of  a receipt issued by such Governmental Body evidencing such payment, a copy of the return reporting such  payment or other evidence of such payment reasonably satisfactory to Agent.  (e) Any Foreign Lender that is entitled to an exemption from or reduction of  withholding tax under the law of the jurisdiction in which any Borrower is resident for tax purposes, or  under any treaty to which such jurisdiction is a party, with respect to payments hereunder or under any  Other Document shall deliver to Borrowers (with a copy to Agent), at the time or times prescribed by  Applicable Law or reasonably requested by Borrowers or Agent, such properly completed and executed  documentation prescribed by Applicable Law as will permit such payments to be made without withholding  or at a reduced rate of withholding.  Notwithstanding the submission of such documentation claiming a  reduced rate of or exemption from U.S. withholding tax, Agent shall be entitled to withhold United States  federal income taxes at the full 30% withholding rate if in its reasonable judgment it is required to do so  under the due diligence requirements imposed upon a withholding agent under § 1.1441-7(b) of the United  States Income Tax Regulations or other Applicable Law.  Further, Agent is indemnified under § 1.1461- 1(e) of the United States Income Tax Regulations against any claims and demands of any Lender, Issuer or  assignee or participant of a Lender or Issuer for the amount of any tax it deducts and withholds in  accordance with regulations under § 1441 of the Code.  In addition, any Lender, if requested by Borrowers  or Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by  the Borrowers or Agent as will enable Borrowers or 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 of America,  any Foreign Lender (or other Lender) shall deliver to Borrowers and Agent (in such number of copies as  shall be requested by the recipient) on or prior to the date on which such Foreign Lender (or other Lender)  becomes a Lender under this Agreement (and from time to time thereafter upon the request of Borrowers  or Agent, but only if such Foreign Lender (or other Lender) is legally entitled to do so), whichever of the  following is applicable: two (2) duly completed valid originals of IRS Form W-8BEN claiming eligibility  for benefits of an income tax treaty to which the United States of America is a party,  (i) two (2) duly completed valid originals of IRS Form W-8ECI,  (ii) 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 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 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) two duly completed valid originals of  IRS Form W-8BEN,  (iii) 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  

 

  67  147420493  158492473  supplementary documentation as may be prescribed by Applicable Law to permit the Borrowers to  determine the withholding or deduction required to be made, or  (iv) To the extent that any Lender is not a Foreign Lender, such Lender shall  submit to Agent two (2) originals of an IRS Form W-9 or any other form prescribed by Applicable Law  demonstrating that such Lender is not a Foreign Lender.  (f) If a payment made to a Lender, Swing Loan Lender, Participant, Issuer, or Agent  under this Agreement or any Other Document would be subject to U.S. Federal withholding Tax imposed  by FATCA if such Person fails 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, Swing Loan Lender,  Participant, Issuer, or Agent shall deliver to the Agent (in the case of Swing Loan Lender, a Lender,  Participant or Issuer) and Borrowers (A) a certification signed by the chief financial officer, principal  accounting officer, treasurer or controller of such Person, and (B) other documentation reasonably requested  by Agent or any Borrower sufficient for Agent and Borrowers to comply with their obligations under  FATCA and to determine that Swing Loan Lender, such Lender, Participant, Issuer, or Agent has complied  with such applicable reporting requirements.  (g) If Agent, Swing Loan Lender, a Lender, a Participant or Issuer determines, in its  sole discretion, that it has received a refund of any Indemnified Taxes or Other Taxes as to which it has  been indemnified by Borrowers or with respect to which Borrowers have paid additional amounts pursuant  to this Section, it shall pay to Borrowers an amount equal to such refund (but only to the extent of indemnity  payments made, or additional amounts paid, by Borrowers under this Section with respect to the  Indemnified Taxes or Other Taxes giving rise to such refund); net of all out-of-pocket expenses of the  Agent, Swing Loan Lender, such Lender, Participant, or the Issuer, as the case may be, and without interest  (other than any interest paid by the relevant Governmental Body with respect to such refund), provided that  Borrowers, upon the request of Agent, Swing Loan Lender, such Lender, Participant, or Issuer, agrees to  repay the amount paid over to Borrowers (plus any penalties, interest or other charges imposed by the  relevant Governmental Body) to Agent, Swing Loan Lender, such Lender, Participant or the Issuer in the  event Agent, Swing Loan Lender, such Lender, Participant or the Issuer is required to repay such refund to  such Governmental Body.  This Section shall not be construed to require Agent, Swing Loan Lender, any  Lender, Participant, or Issuer to make available its tax returns (or any other information relating to its taxes  that it deems confidential) to Borrowers or any other Person.  3.11 Replacement of Lenders  .  If any Lender (an “Affected Lender”) (a) makes demand upon Borrowers for (or if Borrowers are  otherwise required to pay) amounts pursuant to Section 3.7 or 3.9 hereof, (b) is unable to make or maintain  LIBORBSBY Rate Loans as a result of a condition described in Section 2.2(h) hereof, (c) is a Defaulting  Lender, or (d) denies any consent requested by the Agent pursuant to Section 16.2(b) hereof, Borrowers  may, within ninety (90) days of receipt of such demand, notice (or the occurrence of such other event  causing Borrowers to be required to pay such compensation or causing Section 2.2(h) hereof to be  applicable), or such Lender becoming a Defaulting Lender or denial of a request by Agent pursuant to  Section 16.2(b) hereof, as the case may be, by notice in writing to the Agent and such Affected Lender (i)  request the Affected Lender to cooperate with Borrowers in obtaining a replacement Lender satisfactory to  Agent and Borrowers (the “Replacement Lender”); (ii) request the non-Affected Lenders to acquire and  assume all of the Affected Lender’s Advances and its Revolving Commitment Percentage and/or  Equipment Loan Commitment Percentage, as applicable, as provided herein, but none of such Lenders shall  be under any obligation to do so; or (iii) propose a Replacement Lender subject to approval by Agent in its  good faith business judgment.  If any satisfactory Replacement Lender shall be obtained, and/or if any one  or more of the non-Affected Lenders shall agree to acquire and assume all of the Affected Lender’s  

 

  68  147420493  158492473  Advances and its Revolving Commitment Percentage and/or Equipment Loan Commitment Percentage, as  applicable, then such Affected Lender shall assign, in accordance with Section 16.3 hereof, all of its  Advances and its Revolving Commitment Percentage and/or Equipment Loan Commitment Percentage, as  applicable, and other rights and obligations under this Loan Agreement and the Other Documents to such  Replacement Lender or non-Affected Lenders, as the case may be, in exchange for payment of the principal  amount so assigned and all interest and fees accrued on the amount so assigned, plus all other Obligations  then due and payable to the Affected Lender.  IV. COLLATERAL:  GENERAL TERMS  4.1 Security Interest in the Collateral  .  Each Borrower hereto reaffirms the security interest granted pursuant to the Existing Credit Agreement,  as applicable. Without limiting the foregoing, to secure the prompt payment and performance to Agent,  Issuer and each Lender (and each other holder of any Obligations) of the Obligations, each Borrower hereby  assigns, pledges and grants to Agent for its benefit and for the ratable benefit of each Lender, Issuer and  each other Secured Party, a continuing security interest in and to and Lien on all of its Collateral, whether  now owned or existing or hereafter created, acquired or arising and wheresoever located.  Each Borrower  shall mark its books and records as may be necessary or appropriate to evidence, protect and perfect Agent’s  security interest and shall cause its financial statements to reflect such security interest.  Each Borrower  shall provide Agent with written notice of all commercial tort claims promptly upon the occurrence of any  events giving rise to any such claim(s) (regardless of whether legal proceedings have yet been commenced),  such notice to contain a brief description of the claim(s), the events out of which such claim(s) arose and  the parties against which such claims may be asserted and, if applicable in any case where legal proceedings  regarding such claim(s) have been commenced, the case title together with the applicable court and docket  number.  Upon delivery of each such notice, such Borrower shall be deemed to thereby grant to Agent a  security interest and lien in and to such commercial tort claims described therein and all proceeds thereof.   Each Borrower shall provide Agent with written notice promptly upon becoming the beneficiary under any  letter of credit or otherwise obtaining any right, title or interest in any letter of credit rights, and at Agent’s  request shall take such actions as Agent may reasonably request for the perfection of Agent’s security  interest therein.  4.2 Perfection of Security Interest  .  Each Borrower shall take all action that may be necessary or desirable, or that Agent may reasonably  request, so as at all times to maintain the validity, perfection, enforceability and priority of Agent’s security  interest in and Lien on the Collateral or to enable Agent to protect, exercise or enforce its rights hereunder  and in the Collateral, including, but not limited to, (i) promptly discharging all Liens other than Permitted  Encumbrances, (ii) using commercially reasonable efforts to obtain Lien Waiver Agreements, (iii)  delivering to Agent, endorsed or accompanied by such instruments of assignment as Agent may specify,  and stamping or marking, in such manner as Agent may specify, any and all chattel paper, instruments,  letters of credits and advices thereof and documents evidencing or forming a part of the Collateral, except,  so long as no Default or Event of Default has occurred and is continuing, for such chattel paper, instruments,  letters of credit and related documents having an aggregate value for all such items of less than $250,000,  (iv) entering into warehousing, lockbox, customs and freight agreements and other custodial arrangements  pursuant to this Agreement in form and substance reasonably satisfactory to Agent, and (v) executing and  delivering financing statements, control agreements (to the extent required hereunder), instruments of  pledge, mortgages, notices and assignments, in each case in form and substance reasonably satisfactory to  Agent, relating to the creation, validity, perfection, maintenance or continuation of Agent’s security interest  and Lien under the Uniform Commercial Code or other Applicable Law.  By its signature hereto, each  Borrower hereby authorizes Agent to file against such Borrower, one or more financing, continuation or  

 

  69  147420493  158492473  amendment statements pursuant to the Uniform Commercial Code in form and substance satisfactory to  Agent (which statements may have a description of collateral which is broader than that set forth herein,  including without limitation a description of Collateral as “all assets” and/or “all personal property” of any  Borrower).  All reasonable and documented out of pocket charges, expenses and fees Agent may incur in  doing any of the foregoing, and any local taxes relating thereto, shall be charged to Borrowers’ Account as  a Revolving Advance of a Domestic Rate Loan and added to the Obligations, or, at Agent’s option, shall  be paid by Borrowers to Agent for its benefit and for the ratable benefit of Lenders immediately upon  demand.  4.3 Preservation of Collateral  .  Following the occurrence and during the continuance of a Default or Event of Default, in addition to the  rights and remedies set forth in Section 11.1 hereof, Agent: (a) may at any time take such steps as Agent  deems necessary to protect Agent’s interest in and to preserve the Collateral, including the hiring of security  guards or the placing of other security protection measures as Agent may deem appropriate; (b) may employ  and maintain at any of any Borrower’s premises a custodian who shall have full authority to do all acts  necessary to protect Agent’s interests in the Collateral; (c) may lease warehouse facilities to which Agent  may move all or part of the Collateral; (d) may use any Borrower’s owned or leased lifts, hoists, trucks and  other facilities or equipment for handling or removing the Collateral; and (e) shall have, and is hereby  granted, a right of ingress and egress to the places where the Collateral is located, and may proceed over  and through any of Borrowers’ owned or leased property.  Each Borrower shall cooperate fully with all of  Agent’s efforts to preserve the Collateral and will take such actions to preserve the Collateral as Agent may  direct.  All of Agent’s reasonable and documented out-of-pocket expenses of preserving the Collateral,  including any expenses relating to the bonding of a custodian, shall be charged to Borrowers’ Account as a  Revolving Advance maintained as a Domestic Rate Loan and added to the Obligations.  4.4 Ownership and Location of Collateral.  (a) With respect to the Collateral, at the time the Collateral becomes subject to Agent’s  security interest:  (i) each Borrower shall be the sole owner of and fully authorized and able to sell, transfer,  pledge and/or grant a first priority security interest in each and every item of its respective Collateral to  Agent; and, except for Permitted Encumbrances the Collateral shall be free and clear of all Liens  whatsoever; (ii) each document and agreement executed by each Borrower or delivered to Agent or any  Lender in connection with this Agreement shall be true and correct in all material respects; (iii) all  signatures and endorsements of each Borrower that appear on such documents and agreements shall be  genuine and each Borrower shall have full capacity to execute same; and (iv) each Borrower’s equipment  (other than vehicles and equipment out for repair) and Inventory (other than sample Inventory and other  immaterial items of Collateral held by employees of Borrowers for marketing and sales purposes) shall be  located as set forth on Schedule 4.4 or in transit to or between such locations or in transit to customers in  the Ordinary Course of Business; provided that the Borrowing Agent may amend Schedule 4.4 by delivery  of such amended schedule to Agent at the time of acquisition of any new location in the United States.  (b) (i) There is no location at which any Borrower has any (x) Inventory (except for  Inventory in transit and sample Inventory and other immaterial items of Collateral held by employees of  Borrowers for marketing and sales purposes) or (y) Equipment (except for Equipment in transit to or  between those locations listed on Schedule 4.4(b)(i)) other than those locations listed on Schedule 4.4(b)(i);  (ii) Schedule 4.4(b)(ii) hereto contains a correct and complete list, as of the Restatement Date, of the legal  names and addresses of each warehouse at which Inventory of any Borrower is stored; none of the receipts  received by any Borrower from any warehouse states that the goods covered thereby are to be delivered to  bearer or to the order of a named Person or to a named Person and such named Person’s assigns; (iii)  Schedule 4.4(b)(iii) hereto sets forth a correct and complete list as of the Restatement Date of (A) each  

 

  70  147420493  158492473  place of business of each Borrower and (B) the chief executive office of each Borrower; and (iv) Schedule  4.4(b)(iv) hereto sets forth a correct and complete list as of the Restatement Date of the location, by state  and street address, of all Real Property owned or leased by each Borrower, identifying which properties are  owned and which are leased, together with the names and addresses of any landlords.  4.5 Defense of Agent’s and Lenders’ Interests  .  Until (a) payment and performance in full of all of the Obligations (other than Inchoate Obligations) and  (b) termination of this Agreement, Agent’s interests in the Collateral shall continue in full force and effect.   During such period no Borrower shall, without Agent’s prior written consent, pledge, sell (except for sales  or other dispositions otherwise permitted in Section 7.1(b) hereof), assign, transfer, create or suffer to exist  a Lien upon or encumber or allow or suffer to be encumbered in any way except for Permitted  Encumbrances, any part of the Collateral.  Each Borrower shall defend Agent’s interests in the Collateral  against any and all Persons whatsoever.  At any time following demand by Agent for payment of all  Obligations in accordance with this Agreement, Agent shall have the right to take possession of the indicia  of the Collateral and the Collateral in whatever physical form contained, including:  labels, stationery,  documents, instruments and advertising materials.  If Agent exercises this right to take possession of the  Collateral, Borrowers shall, upon demand, assemble it in the best manner possible and make it available to  Agent at a place reasonably convenient to Agent.  In addition, with respect to all Collateral, Agent and  Lenders shall be entitled to all of the rights and remedies set forth herein and further provided by the  Uniform Commercial Code or other Applicable Law.  Each Borrower shall, and, after the occurrence and  during the continuance of a Default or Event of Default,  Agent may, at its option, instruct all suppliers,  carriers, forwarders, warehousers or others receiving or holding cash, checks, Inventory, documents or  instruments in which Agent holds a security interest to deliver same to Agent and/or subject to Agent’s  order and if they shall come into any Borrower’s possession, they, and each of them, shall be held by such  Borrower in trust as Agent’s trustee, and such Borrower will immediately deliver them to Agent in their  original form together with any necessary endorsement.  4.6 Inspection of Premises  .  At all reasonable times and from time to time as often as Agent shall elect in its sole discretion, Agent  and each Lender shall have full access to and the right to audit, check, inspect and, subject to applicable  confidentiality restrictions, make abstracts and copies from each Borrower’s books, records, audits,  correspondence and all other papers relating to the Collateral and the operation of each Borrower’s business  (each, a “Field Exam”).  Agent, any Lender and their agents may enter upon any premises of any Borrower  at any time during business hours and at any other reasonable time, and from time to time as often as Agent  shall elect in its sole discretion, for the purpose of inspecting the Collateral and any and all records  pertaining thereto and the operation of such Borrower’s business.  4.7 Appraisals  .  Agent may, in its sole discretion, exercised in a commercially reasonable manner, at any time after the  Restatement Date and from time to time, engage the services of an independent appraisal firm or firms of  reputable standing, satisfactory to Agent, for the purpose of appraising the then current values of Borrowers’  assets.  Absent the occurrence and continuance of an Event of Default at such time, Agent shall consult  with Borrowers as to the identity of any such firm.  In the event the value of Borrowers’ Inventory, as so  determined pursuant to such appraisal, is less than anticipated by Agent or Lenders, such that the Revolving  Advances are in excess of such Advances permitted hereunder, then, promptly upon Agent’s demand for  same, Borrowers shall make mandatory prepayments of the then outstanding Revolving Advances so as to  eliminate the excess Advances.  

 

  71  147420493  158492473  4.8 Receivables; Deposit Accounts and Securities Accounts.  (a) Each of the Receivables (without representing that any such Receivable is an  Eligible Receivable except to the extent otherwise expressly so represented pursuant to this Agreement of  any Other Documents) shall be a bona fide and valid account representing a bona fide indebtedness incurred  by the Customer therein named, for a fixed sum as set forth in the invoice relating thereto (provided  immaterial or unintentional invoice errors shall not be deemed to be a breach hereof) with respect to an  absolute sale or lease and delivery of goods upon stated terms of a Borrower, or work, labor or services  theretofore rendered by a Borrower as of the date each Receivable is created.  Same shall be due and owing  in accordance with the applicable Borrower’s standard terms of sale without known dispute, setoff or  counterclaim except as may be stated on the accounts receivable schedules delivered by Borrowers to  Agent.  (b) Each Customer, to the best of each Borrower’s knowledge based on such  Borrower’s use and review of customary credit checks and other similar inspections with respect to such  Customer, as of the date each Receivable is created, is and will be solvent and able to pay all Receivables  on which the Customer is obligated in full when due.  With respect to such Customers of any Borrower  who are not solvent, such Borrower has set up on its books and in its financial records bad debt reserves  adequate to cover such Receivables.  (c) Each Borrower’s chief executive office as of the Restatement Effective Date is  located at 2027 Harpers Way, Torrance, California.  Until written notice is given to Agent by Borrowing  Agent of a new chief executive office (which notice shall be provided no less than 10 Business Days prior  to any transfer thereof) any other office at which any Borrower keeps its records pertaining to Receivables,  all such records shall be kept at such executive office; provided that duplicate copies thereof may be kept  at other locations of the Borrowers and their Subsidiaries.  (d) Until any Borrower’s authority to do so is terminated by Agent (which notice  Agent may give at any time following the occurrence and during the continuance of a Default or Event of  Default ), each Borrower will, at such Borrower’s sole cost and expense, but on Agent’s behalf and for  Agent’s account, collect as Agent’s property and in trust for Agent all amounts received on Receivables,  and shall not commingle such collections with any Borrower’s funds or use the same except to pay  Obligations, and shall as soon as possible and in any event no later than one (1) Business Day after the  receipt thereof (i) in the case of remittances paid by check, deposit all such remittances in their original  form (after supplying any necessary endorsements) and (ii) in the case of remittances paid by wire transfer  of funds, transfer all such remittances, in each case, into such Blocked Accounts(s) and/or Depository  Account(s).  Each Borrower shall deposit in the Blocked Account and/or Depository or, upon request by  Agent, deliver to Agent, in original form and on the date of receipt thereof, all checks, drafts, notes, money  orders, acceptances, cash and other evidences of Indebtedness.  (e) After the occurrence and during the continuance of a Default or Event of Default,  Agent shall have the right to send notice of the assignment of, and Agent’s security interest in and Lien on,  the Receivables to any and all Customers or any third party holding or otherwise concerned with any of the  Collateral.  Thereafter, Agent shall have the sole right, if it has made such election, to collect the  Receivables, take possession of the Collateral, or both.  Agent’s actual collection expenses, including  stationery and postage, telephone and telegraph, secretarial and clerical expenses and the salaries of any  collection personnel used for collection, may be charged to Borrowers’ Account and added to the  Obligations.  (f) Agent shall have the right to receive, endorse, assign and/or deliver in the name of  Agent or any Borrower any and all checks, drafts and other instruments for the payment of money relating  

 

  72  147420493  158492473  to the Receivables, and each Borrower hereby waives notice of presentment, protest and non-payment of  any instrument so endorsed.  Each Borrower hereby constitutes Agent or Agent’s designee as such  Borrower’s attorney with power (i) to endorse such Borrower’s name upon any notes, acceptances, checks,  drafts, money orders or other evidences of payment or Collateral; (ii) to sign such Borrower’s name on any  invoice or bill of lading relating to any of the Receivables, drafts against Customers, assignments and  verifications of Receivables; (iii) to send verifications of Receivables to any Customer; (iv) to sign such  Borrower’s name on all financing statements or any other documents or instruments deemed necessary or  appropriate by Agent to preserve, protect, or perfect Agent’s interest in the Collateral and to file same; (v)  to demand payment of the Receivables; (vi) to enforce payment of the Receivables by legal proceedings or  otherwise; (vii) to exercise all of such Borrower’s rights and remedies with respect to the collection of the  Receivables and any other Collateral; (viii) to settle, adjust, compromise, extend or renew the Receivables;  (ix) to settle, adjust or compromise any legal proceedings brought to collect Receivables; (x) to prepare,  file and sign such Borrower’s name on a proof of claim in bankruptcy or similar document against any  Customer; (xi) to prepare, file and sign Borrower’s name on any notice of Lien, assignment or satisfaction  of Lien or similar document in connection with the Receivables; and (xii) to do all other acts and things  necessary to carry out this Agreement; provided, however, that Agent shall only exercise the rights  described in clauses (vi) through (ix), inclusive upon the occurrence and during the continuance of a Default  or Event of Default.  All acts of said attorney or designee are hereby ratified and approved, and said attorney  or designee shall not be liable for any acts of omission or commission nor for any error of judgment or  mistake of fact or of law, unless done maliciously or with gross (not mere) negligence (as determined by a  court of competent jurisdiction in a final non-appealable judgment); this power being coupled with an  interest is irrevocable while any of the Obligations (other than Inchoate Obligations) remain unpaid.  Agent  shall have the right at any time following the occurrence and during the continuance of an Event of Default  or Default, to change the address for delivery of mail addressed to any Borrower to such address as Agent  may designate and to receive, open and dispose of all mail addressed to any Borrower.  (g) Neither Agent nor any Lender shall, under any circumstances or in any event  whatsoever, have any liability for any error or omission or delay of any kind occurring in the settlement,  collection or payment of any of the Receivables or any instrument received in payment thereof, or for any  damage resulting therefrom.  (h) All proceeds of Collateral and all Extraordinary Receipts shall be deposited by  Borrowers into either (i) a lockbox account, dominion account or such other “blocked account” (“Blocked  Accounts”) established at a bank or banks (each such bank, a “Blocked Account Bank”) pursuant to an  arrangement with such Blocked Account Bank as may be selected by Borrowing Agent and be acceptable  to Agent or (ii) depository accounts (“Depository Accounts”) established at Agent for the deposit of such  proceeds.  Each applicable Borrower, Agent and each Blocked Account Bank shall enter into a deposit  account control agreement in form and substance satisfactory to Agent that is sufficient to give Agent  “control” (for purposes of Articles 8 and 9 of the Uniform Commercial Code) over such account and which  directs such Blocked Account Bank to transfer such funds so deposited on a daily basis or at other times  acceptable to Agent to Agent, either to any account maintained by Agent at said Blocked Account Bank or  by wire transfer to appropriate account(s) at Agent.  All funds deposited in such Blocked Accounts or  Depository Accounts shall immediately become subject to the security interest of Agent for its own benefit  and the ratable benefit of Issuer, Lenders and all other holders of the Obligations, and Borrowing Agent  shall obtain the agreement by such Blocked Account Bank to waive any offset rights against the funds so  deposited.  Neither Agent nor any Lender assumes any responsibility for such blocked account arrangement,  including any claim of accord and satisfaction or release with respect to deposits accepted by any Blocked  Account Bank thereunder.  Agent shall apply all funds received by it from the Blocked Accounts and/or  Depository Accounts to the satisfaction of the Obligations (including the cash collateralization of the Letters  of Credit) in such order as Agent shall determine in its sole discretion, provided that, in the absence of any  

 

  73  147420493  158492473  Event of Default, Agent shall apply all such funds representing collection of Receivables first to the  prepayment of the principal amount of the Swing Loans, if any, and then to the Revolving Advances.  (i) No Borrower will, without Agent’s consent, compromise or adjust any Receivables  (or extend the time for payment thereof) or accept any returns of merchandise or grant any additional  discounts, allowances or credits thereon except for those compromises, adjustments, returns, discounts,  credits and allowances as have been heretofore customary in the Ordinary Course of Business of such  Borrower.  (j) All deposit accounts (including all Blocked Accounts and Depository Accounts),  securities accounts and investment accounts of each Borrower and its Subsidiaries as of the Restatement  Date are set forth on Schedule 4.8(j).  The Borrowing Agent shall promptly (and in any event within ten  (10) days of the occurrence thereof) notify Agent in writing upon any Borrower or Guarantor acquiring or  otherwise obtaining any deposit account, securities account or investment account (other than an account  of the type described in clause (a) of Section 4.13) and, if such account is to be maintained with a bank,  depository institution or securities intermediary that is not Agent, the applicable Borrower or Guarantor  shall promptly (and in any event within twenty (20) days of the date on which such Borrower or Guarantor  acquired or obtained such account) deliver to Agent an account control agreement in form and substance  reasonably satisfactory to Agent sufficient to give Agent “control” (for purposes of Articles 8 and 9 of the  Uniform Commercial Code) over such account.  4.9 Inventory  .  To the extent Inventory held for sale or lease has been produced by any Borrower, it has been and will be  produced by such Borrower in accordance with the Federal Fair Labor Standards Act of 1938, as amended,  and all rules, regulations and orders thereunder.  4.10 Maintenance of Equipment  .  The equipment shall be maintained in good operating condition and repair (reasonable wear and tear  excepted) and all necessary replacements of and repairs thereto shall be made so that the value and operating  efficiency of the equipment shall be maintained and preserved.  The Borrowers shall use or operate their  equipment in compliance in all material respects with Applicable Law.  Each Borrower shall have the right  to sell equipment to the extent expressly set forth in Section 7.1.  4.11 Exculpation of Liability  .  Nothing herein contained shall be construed to constitute Agent or any Lender as any Borrower’s agent  for any purpose whatsoever, nor shall Agent or any Lender be responsible or liable for any shortage,  discrepancy, damage, loss or destruction of any part of the Collateral wherever the same may be located  and regardless of the cause thereof.  Neither Agent nor any Lender, whether by anything herein or in any  assignment or otherwise, assume any of any Borrower’s obligations under any contract or agreement  assigned to Agent or such Lender, and neither Agent nor any Lender shall be responsible in any way for  the performance by any Borrower of any of the terms and conditions thereof.  4.12 Financing Statements  .  Except as respects the financing statements filed by Agent, financing statements described on Schedule  1.2, and financing statements filed in connection with Permitted Encumbrances, no financing statement  covering any of the Collateral or any proceeds thereof is or will be on file in any public office.  

 

  74  147420493  158492473  4.13 Deposit Accounts.  Borrowers agree not to maintain any deposit or investment accounts  other than accounts held at or through Agent, except that Borrowers may maintain the accounts set forth on  Schedule 4.15(j) (as so updated from time to time) that are (a) deposit accounts exclusively used for payroll,  payroll taxes and other employee wage and benefit payments to or for the benefit of Borrowers’ employees  (including any “rabbi trust” account used in connection with such purposes) and identified to Agent by  Borrowers as such, or (b) subject to a control agreement in favor of Agent from the holder of such account,  giving Agent a first-priority security interest in such account, in form and substance satisfactory to Agent.   4.14 New and Newly Registered Intellectual Property.  If any Borrower (a) obtains ownership  of any patent registered with the United States Patent and Trademark Office, trademark registered with the  United States Patent and Trademark Office, or copyright registered with the United States Copyright Office,  or (b) submits a registered application for any patent or  any trademark, then such Borrower shall, as further  provided in Section 9.17, concurrently with the delivery of the Compliance Certificate for the relevant  period, provide written notice thereof to Agent and shall execute such Intellectual Property Security  Agreements and other documents and take such other actions (including recording or allowing Agent to  record such intellectual property security agreements with the United States Copyright Office or the United  States Patent and Trademark Office, as applicable) as Agent shall request in its Permitted Discretion to  perfect and maintain a first priority perfected security interest in favor of Agent.  No Borrower shall register  any copyrights or mask works in the United States Copyright Office, unless such Borrower shall: (i) not  less than five (5) Business Days prior to making the relevant filings, provide Agent written notice of such  Borrower’s filing of an application to register such copyrights or mask works together with a copy of the  application to be filed with the United States Copyright Office (excluding exhibits thereto); (ii) execute an  Intellectual Property Security Agreement and such other documents and take such other actions as Agent  may request in its Permitted Discretion to perfect and maintain a first priority perfected security interest in  favor of Agent in the copyrights or mask works intended to be registered with the United States Copyright  Office; and (iii) record or allow Agent to record such Intellectual Property Security Agreement with the  United States Copyright Office.  Each Borrower shall promptly provide to Agent evidence of the recording  of the Intellectual Property Security Agreement necessary for Agent to perfect and maintain a first priority  perfected security interest in such property.  V. REPRESENTATIONS AND WARRANTIES.  Each Borrower represents and warrants as follows:  5.1 Authority  .  Each Borrower has full power, authority and legal right to enter into this Agreement and the Other  Documents to which it is a party and to perform all its respective Obligations hereunder and thereunder.   This Agreement and the Other Documents to which it is a party have been duly executed and delivered by  each Borrower, and this Agreement and the Other Documents to which it is a party constitute the legal,  valid and binding obligation of such Borrower enforceable in accordance with their terms, except as such  enforceability may be limited by any applicable bankruptcy, insolvency, moratorium or similar laws  affecting creditors’ rights generally.  The execution, delivery and performance of this Agreement and of  the Other Documents to which it is a party (a) are within such Borrower’s corporate or company powers,  as applicable, have been duly authorized by all necessary corporate or company action, as applicable, are  not in contravention of law or the terms of such Borrower’s Organizational Documents or to the conduct of  such Borrower’s business or of any Material Contract or undertaking to which such Borrower is a party or  by which such Borrower is bound, (b) will not conflict with or violate any law or regulation, or any  judgment, order or decree of any Governmental Body, (c) will not require the Consent of any Governmental  Body, any party to a Material Contract or any other Person, except those Consents set forth on Schedule  5.1 hereto, all of which will have been duly obtained, made or compiled prior to the Restatement Date and  

 

  75  147420493  158492473  which are in full force and effect and (d) will not conflict with, nor result in any breach in any of the  provisions of or constitute a default under any material agreement, charter document, instrument, by-law,  operating agreement or other material instrument to which such Borrower is a party or by which it or its  property is a party or by which it may be bound or result in the creation of any Lien except Permitted  Encumbrances upon any asset of such Borrower under the provisions of any agreement, instrument, or other  document to which such Borrower is a party or by which it or its property is a party or by which it may be  bound.  5.2 Formation and Qualification.  (a) Each Borrower is duly incorporated or formed, as applicable, and in good standing  under the laws of the state listed on Schedule 5.2(a) and is qualified to do business and is in good standing  in the states listed on Schedule 5.2(a) which constitute all states in which qualification and good standing  are necessary for such Borrower to conduct its business and own its property and where the failure to so  qualify could reasonably be expected to have a Material Adverse Effect on such Borrower.  Each Borrower  has delivered to Agent true and complete copies of its Organizational Documents and will promptly notify  Agent of any amendment or changes thereto not less than 30 days prior to each such amendment.  (b) The only Subsidiaries of each Borrower are listed on Schedule 5.2(b).  5.3 Survival of Representations and Warranties  .  All representations and warranties of such Borrower contained in this Agreement and the Other  Documents to which it is a party shall be true, correct, and complete, in all material respects (except that  any such representation or warranty already qualified or modified by materiality in the text thereof shall be  true, correct and complete in all respects) at the time of such Borrower’s execution of this Agreement and  the Other Documents to which it is a party, and shall survive the execution, delivery and acceptance thereof  by the parties thereto and the closing of the transactions described therein or related thereto.  5.4 Tax Returns  .  Each Borrower’s federal tax identification number is set forth on Schedule 5.4.  Each Borrower has filed  all material federal, state and local tax returns and other reports each is required by law to file and has paid  all taxes, assessments, fees and other governmental charges that are due and payable.  The provision for  taxes on the books of each Borrower is adequate for all years not closed by applicable statutes, and for its  current fiscal year, and no Borrower has any knowledge of any deficiency or additional assessment in  connection therewith not provided for on its books.  5.5 [Reserved].  5.6 Entity Names  .  No Borrower has been known by any other company or corporate name, as applicable, in the past five (5)  years and does not sell Inventory under any other name except as set forth on Schedule 5.6, nor has any  Borrower been the surviving corporation or company, as applicable, of a merger or consolidation or  acquired all or substantially all of the assets of any Person during the preceding five (5) years.  5.7 O.S.H.A  . Environmental Compliance; Flood Insurance.  

 

  76  147420493  158492473  (a) Except as set forth on Schedule 5.7 hereto, each Borrower is in compliance with,  and its facilities, business, assets, property, leaseholds, Real Property and Equipment are in compliance in  all material respects with the Federal Occupational Safety and Health Act, and Environmental Laws and  there are no outstanding citations, notices or orders of non-compliance issued to any Borrower or relating  to its business, assets, property, leaseholds or Equipment under any such laws, rules or regulations which  could reasonably be expected to result in a Material Adverse Effect.  (b) Except as set forth on Schedule 5.7 hereto, each Borrower has been issued all  required federal, state and local licenses, certificates or permits (collectively, “Approvals”) relating to all  applicable Environmental Laws other than those the failure of which to obtain could not individually or in  the aggregate reasonably be expected to have a Material Adverse Effect and all such Approvals are current  and in full force and effect.  (c) Except as set forth on Schedule 5.7: (i) there have been no releases, spills,  discharges, leaks or disposal (collectively referred to as “Releases”) of Hazardous Materials to which a  material liability in excess of $250,000 for each claim or all such claims could reasonably be expected to  attach has occurred at, upon, under or migrating from or onto any Real Property owned, leased or occupied  by any Borrower, except for those Releases which are in full compliance with Environmental Laws; (ii)  there are no underground storage tanks or polychlorinated biphenyls on any Real Property owned, leased  or occupied by any Borrower, except for such underground storage tanks or polychlorinated biphenyls that  are present in compliance with Environmental Laws; (iii) the Real Property including any premises owned,  leased or occupied by any Borrower has never been used by any Borrower to dispose of Hazardous  Materials, except as authorized by Environmental Laws; and (iv) no Hazardous Materials are managed by  any Borrower on any Real Property including any premises owned, leased or occupied by any Borrower,  excepting such quantities as are managed in accordance with all applicable manufacturer’s instructions and  compliance with Environmental Laws and as are necessary for the operation of the commercial business of  any Borrower or of its tenants.  (d) All Real Property owned by Borrowers is insured pursuant to policies and other  bonds which are valid and in full force and effect and which provide adequate coverage from reputable and  financially sound insurers in amounts sufficient to insure the assets and risks of each such Borrower in  accordance with prudent business practice in the industry of such Borrower.  Each Borrower has taken all  actions required under the Flood Laws and/or requested by Agent to assist in ensuring that each Lender is  in compliance with the Flood Laws applicable to the Collateral, including, but not limited to, providing  Agent with the address and/or GPS coordinates of each structure located upon any Real Property that will  be subject to a Mortgage in favor of Agent (if any), for the benefit of Lenders, and, to the extent required,  obtaining flood insurance for such property, structures and contents prior to such property, structures and  contents becoming Collateral.  5.8 Solvency; No Litigation, Violation, Indebtedness or Default; ERISA Compliance.  (a) Borrowers, taken as a whole, are solvent, able to pay their debts as they mature,  have capital sufficient to carry on their businesses and all businesses in which they are about to engage, and  (i) as of the Restatement Date, the fair present saleable value of their assets, taken as a whole, calculated  on a going concern basis, is in excess of the amount of its liabilities and (ii) subsequent to the Restatement  Date, the fair saleable value of their assets (calculated on a going concern basis), taken as a whole, will be  in excess of the amount of its liabilities.  (b) Except as disclosed in Schedule 5.8(b)(i), no Borrower has any pending or  threatened (in writing to any Borrower) litigation, arbitration, actions or proceedings that could reasonably  

 

  77  147420493  158492473  be expected to have a Material Adverse Effect.  No Borrower has any outstanding Indebtedness other than  the Obligations and other Indebtedness permitted under Section 7.8 hereof.  (c) No Borrower is in violation of any applicable statute, law, rule, regulation or  ordinance in any respect which could reasonably be expected to have a Material Adverse Effect, nor is any  Borrower in violation of any order of any court, Governmental Body or arbitration board or tribunal,.  Each  Plan is in compliance with the applicable provisions of ERISA, the Code and other federal or state laws,  except to the extent the failure to do so could not reasonably be expected to have a Material Adverse Effect.  (d) No Borrower or any member of the Controlled Group maintains or is required to  contribute to any Plan other than as otherwise permitted by this Agreement (which Plans as of the  Restatement Date are set forth on Schedule 5.8(d) hereto).  (i) Each Borrower and each member of the  Controlled Group has met all applicable minimum funding requirements under Section 302 of ERISA and  Section 412 of the Code in respect of each Plan, and each Plan is in compliance with Sections 412, 430 and  436 of the Code and Sections 206(g), 302 and 303 of ERISA, without regard to waivers and variances; (ii)  each Plan which is intended to be a qualified plan under Section 401(a) of the Code as currently in effect  has been determined by the Internal Revenue Service to be qualified under Section 401(a) of the Code and  the trust related thereto is exempt from federal income tax under Section 501(a) of the Code or an  application for such a determination is currently being processed by the Internal Revenue Code; (iii) neither  any Borrower nor any member of the Controlled Group has incurred any liability to the PBGC other than  for the payment of premiums, and there are no premium payments which have become due which are  unpaid; (iv) no Plan has been terminated by the plan administrator thereof nor by the PBGC for which there  is any unsatisfied material liability, and there is no occurrence which would reasonably be expected to cause  the PBGC to institute proceedings under Title IV of ERISA to terminate any Plan; (v) except as would not  reasonably be expected to have a Material Adverse Effect, the current value of the assets of each Plan  exceeds the present value of the accrued benefits and other liabilities of such Plan and neither any Borrower  nor any member of the Controlled Group knows of any facts or circumstances which would materially  change the value of such assets and accrued benefits and other liabilities; (vi) except as would not  reasonably be expected to have a Material Adverse Effect, neither any Borrower nor any member of the  Controlled Group has breached any of the responsibilities, obligations or duties imposed on it by ERISA  with respect to any Plan; (vii) except as would not reasonably be expected to have a Material Adverse  Effect, neither any Borrower nor any member of a Controlled Group has incurred any liability for any excise  tax arising under Section 4971, 4972 or 4980B of the Code, and no fact exists which could give rise to any  such liability; (viii) except as would not reasonably be expected to have a Material Adverse Effect, neither  any Borrower nor any member of the Controlled Group nor any fiduciary of, nor any trustee to, any Plan,  has engaged in a “prohibited transaction” described in Section 406 of the ERISA or Section 4975 of the  Code nor taken any action which would reasonably be expected to constitute or result in a Termination  Event with respect to any such Plan which is subject to ERISA; (ix) no Termination Event has occurred or  is reasonably expected to occur; (x) there exists no event described in Section 4043 of ERISA, for which  the thirty (30) day notice period has not been waived; (xi) neither any Borrower nor any member of the  Controlled Group has engaged in a transaction that could be subject to Section 4069 or 4212(c) of ERISA;  (xii) neither any Borrower nor any member of the Controlled Group maintains or is required to contribute  to any Plan which provides health, accident or life insurance benefits to former employees, their spouses or  dependents, other than (A) as required by Applicable Law, including Section 4980B of the Code, (B)  benefits through the end of the month of termination of employment, (C) death benefits attributable to  deaths occurring at or prior to termination of employment, (D) disability benefits attributable to disabilities  occurring at or prior to termination of employment, (E) one or more “rabbi trust” accounts used in  connection with such purposes in a manner consistent with Borrowers’ and the Controlled Group’s  historical practices, and (F) conversion rights; (xiii) neither any Borrower nor any member of the Controlled  Group has withdrawn, completely or partially, within the meaning of Section 4203 or 4205 of ERISA, from  any Multiemployer Plan so as to incur unsatisfied liability under the Multiemployer Pension Plan  

 

  78  147420493  158492473  Amendments Act of 1980 and there exists no fact which would reasonably be expected to result in any such  liability; and (xiv) no Plan fiduciary (as defined in Section 3(21) of ERISA) has any liability for breach of  fiduciary duty or for any failure in connection with the administration or investment of the assets of a Plan.  5.9 Patents, Trademarks, Copyrights and Licenses  .  All registered Intellectual Property (or applications therefor) owned or utilized by any Borrower: (i) is set  forth on Schedule 5.9; (ii) is valid and has been duly registered or filed with all appropriate Governmental  Bodies; and (iii) constitutes all of the intellectual property rights which are necessary for the operation of  its business.  To the knowledge of Borrowers, there is no objection to, pending challenge to the validity of,  or proceeding by any Governmental Body to suspend, revoke, terminate or adversely modify, any such  Intellectual Property and no Borrower is aware of any grounds for any challenge or proceedings, except as  set forth in Schedule 5.9 hereto.  All Intellectual Property owned or held by any Borrower consists of  original material or property developed by such Borrower or was lawfully acquired by such Borrower from  the proper and lawful owner thereof.  Each of such items has been maintained so as to preserve in all  material respects the value thereof from the date of creation or acquisition thereof unless a Borrower has  determined that an item is no longer necessary for its business.  5.10 Licenses and Permits  .  Except as set forth in Schedule 5.10, each Borrower (a) is in compliance with and (b) has procured and is  now in possession of, all material licenses or permits required by any applicable federal, state, provincial  or local law, rule or regulation for the operation of its business in each jurisdiction wherein it is now  conducting or proposes to conduct business and where the failure to procure such licenses or permits could  reasonably be expected to have a Material Adverse Effect.  5.11 Default of Indebtedness  .  No Borrower is in default in the payment of the principal of or interest on any Indebtedness or under any  instrument or agreement under or subject to which any Indebtedness has been issued and no event has  occurred under the provisions of any such instrument or agreement which with or without the lapse of time  or the giving of notice, or both, constitutes or would constitute an event of default thereunder.  5.12 No Default  .  No Default or Event of Default has occurred.  5.13 No Burdensome Restrictions  .  No Borrower is party to any contract or agreement the performance of which could reasonably be expected  to have a Material Adverse Effect. Each Borrower has heretofore delivered to Agent true and complete  copies of all Material Contracts to which it is a party or to which it or any of its properties is subject.  No  Borrower has agreed or consented to cause or permit in the future (upon the happening of a contingency or  otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien which is  not a Permitted Encumbrance.  5.14 No Labor Disputes  .  No Borrower is involved in any material labor dispute; there are no material strikes or walkouts or union  organization of any Borrower’s employees threatened or in existence and no labor contract is scheduled to  expire during the Term other than as set forth on Schedule 5.14 hereto.  

 

  79  147420493  158492473  5.15 Margin Regulations  .  No Borrower is engaged, nor will it engage, principally or as one of its important activities, in the business  of extending credit for the purpose of “purchasing” or “carrying” any “margin stock” within the respective  meanings of each of the quoted terms under Regulation U of the Board of Governors of the Federal Reserve  System as now and from time to time hereafter in effect.  No part of the proceeds of any Advance will be  used for “purchasing” or “carrying” “margin stock” as defined in Regulation U of such Board of Governors.  5.16 Investment Company Act  .  No Borrower is an “investment company” registered or required to be registered under the Investment  Company Act of 1940, as amended, nor is it controlled by such a company.  5.17 Disclosure  .  No representation or warranty made by any Borrower in this Agreement or in any Other Document or in  any financial statement, report, certificate or any other document furnished in connection herewith or  therewith contains any untrue statement of a material fact or omits to state any material fact necessary to  make the statements herein or therein not misleading as of the time it was made or deemed made or  delivered; provided that any Borrower’s representation and warranty as to any forecast, projection or other  statement regarding future performance, future financial results or other future development is limited to  the fact that such forecast, projection or statement was prepared in good faith on the basis of information  and assumptions that such Borrower believed to be reasonable as of the date such material was prepared (it  being understood that the projections are subject to uncertainties and contingencies, many of which are  beyond such Borrower’s control, and that no assurance can be given that the projections will be realized).   There is no fact known to any Borrower or which reasonably should be known to such Borrower that such  Borrower has not disclosed to Agent in writing with respect to the transactions contemplated by this  Agreement that could reasonably be expected to have a Material Adverse Effect.  5.18 [Reserved].  5.19 [Reserved].  5.20 Swaps  .  No Borrower is a party to, nor will it be a party to, any swap agreement whereby such Borrower has  agreed or will agree to swap interest rates or currencies unless same provides that damages upon termination  following an event of default thereunder are payable on an unlimited “two-way basis” without regard to  fault on the part of either party.  5.21 Business and Property of Borrowers  .  Upon and after the Restatement Date, Borrowers do not propose to engage in any business (other than as  set forth in Section 7.9) the business of manufacturing to supplying equipment and furniture to schools and  activities necessary to conduct the foregoing.  On the Restatement Date, each Borrower will own all the  property and possess all of the rights and Consents necessary for the conduct of the business of such  Borrower.  5.22 Ineligible Securities  

 

  80  147420493  158492473  .  Borrowers do not intend to use and shall not use any portion of the proceeds of the Advances, directly or  indirectly, to purchase during the underwriting period, or for 30 days thereafter, Ineligible Securities being  underwritten by a securities Affiliate of Agent or any Lender.  5.23 [Reserved].  5.24 Equity Interests  .  The authorized and outstanding Equity Interests of each Borrower (other than VMC), and each legal and  beneficial holder thereof (other than the beneficial holders of the Equity Interests of VMC), are as set forth  on Schedule 5.24(a) hereto.  All of the Equity Interests of each Borrower have been duly and validly  authorized and issued and are fully paid and non-assessable and have been sold and delivered to the holders  hereof in compliance in all material respects with, or under valid exemption from, all federal and state laws  and the rules and regulations of each Governmental Body governing the sale and delivery of securities.   Except for the rights and obligations set forth on Schedule 5.24(b) or as otherwise disclosed on the reports  required to be filed by VMC with the SEC pursuant to the Exchange Act, there are no subscriptions,  warrants, options, calls, commitments, rights or agreement by which any Borrower or any of the  shareholders of any Borrower is bound relating to the issuance, transfer, voting or redemption of shares of  its Equity Interests or any pre-emptive rights held by any Person with respect to the Equity Interests of  Borrowers.  Except as set forth on Schedule 5.24(c) or as otherwise disclosed on the reports required to be  filed by VMC with the SEC pursuant to the Exchange Act, Borrowers have not issued any securities  convertible into or exchangeable for shares of its Equity Interests or any options, warrants or other rights  to acquire such shares or securities convertible into or exchangeable for such shares.  5.25 Commercial Tort Claims  .  No Borrower has any commercial tort claims it has asserted in excess of $250,000 except as set forth on  Schedule 5.25 hereto.  5.26 Letter of Credit Rights  .  No Borrower has any letter of credit rights except as set forth on Schedule 5.26 hereto.  5.27 Material Contracts  .  Schedule 5.27 sets forth all Material Contracts of the Borrowers as of the Restatement Date and all such  Material Contracts are in full force and effect and no material defaults currently exist thereunder.    5.28 Certificate of Beneficial Ownership  .  The Certificate of Beneficial Ownership (if any) executed and delivered to Agent and Lenders for each  Borrower on or prior to the date of this Agreement, as updated from time to time in accordance with this  Agreement, is accurate, complete and correct as of the date hereof and as of the date any such update is  delivered.  Each Borrower acknowledges and agrees that each such Certificate of Beneficial Ownership  constitutes an Other Document.  5.29 Sanctions and other Anti-Terrorism Laws  .  No (a) Covered Entity: (i) is a Sanctioned Person, nor any employees, officers, directors, affiliates,  consultants, brokers or agents acting on a Covered Entity’s behalf in connection with this Agreement is a  Sanctioned Person; (ii) directly, or indirectly through any third party, engages in any transactions or other  

 

  81  147420493  158492473  dealings with any Sanctioned Person or Sanctioned Jurisdiction, or which otherwise are prohibited by any  Laws of the United States or laws of other applicable jurisdictions relating to economic sanctions and other  Ant-Terrorism Laws; (b) Collateral is embargoed Property.  5.30 Anti-Corruption Laws  .  Each Covered Entity has (a) conducted its business in compliance with all Anti-Corruption Laws and (b)  has instituted and maintains policies and procedures designed to ensure compliance with such Laws.  VI. AFFIRMATIVE COVENANTS.  Each Borrower shall, until payment in full of the Obligations (other than Inchoate Obligations) and  termination of this Agreement:  6.1 Compliance with Laws  .  Comply in all material respects with all Applicable Laws with respect to the Collateral or any part thereof  or to the operation of such Borrower’s business the non-compliance with which could reasonably be  expected to have a Material Adverse Effect (except to the extent any separate provision of this Agreement  shall expressly require compliance with any particular Applicable Law(s) pursuant to another standard).   Each Borrower may, however, contest or dispute any Applicable Laws in any reasonable manner, provided  that any related Lien is inchoate or stayed and sufficient reserves are established to the reasonable  satisfaction of Agent to protect Agent’s Lien on or security interest in the Collateral.  6.2 Conduct of Business and Maintenance of Existence and Assets  .  (a) Conduct its business according to good business practices and maintain all of its properties useful or  necessary in its business in good working order and condition (reasonable wear and tear excepted and  except as may be disposed of or sold in accordance with the terms of this Agreement), including all  Intellectual Property and take all actions necessary to enforce and protect the validity of any intellectual  property right or other right included in the Collateral; (b) keep in full force and effect its existence and  comply in all material respects with the laws and regulations governing the conduct of its business where  the failure to do so could reasonably be expected to have a Material Adverse Effect; and (c) make all such  reports and pay all such franchise and other taxes and license fees and do all such other acts and things as  may be lawfully required to maintain its rights, licenses, leases, powers and franchises under the laws of  the United States or any political subdivision thereof where the failure to do so could reasonably be expected  to have a Material Adverse Effect.  6.3 Books and Records  .  Keep proper books of record and account in which full, true and correct entries will be made of all dealings  or transactions of or in relation to its business and affairs (including without limitation accruals for taxes,  assessments, Charges, levies and claims, allowances against doubtful Receivables and accruals for  depreciation, obsolescence or amortization of assets), all in accordance with, or as required by, GAAP  consistently applied in the opinion of such independent public accountant as shall then be regularly engaged  by Borrowers.  6.4 Payment of Taxes  .  Pay, when due, all taxes, assessments and other Charges lawfully levied or assessed upon such Borrower  or any of the Collateral, including real and personal property taxes, assessments and charges and all  

 

  82  147420493  158492473  franchise, income, employment, social security benefits, withholding, and sales taxes, except Borrowers  shall not be required to pay or cause to be paid taxes, assessments or other Charges that in the aggregate  are in an amount less than $250,000 so long as no material property of any Borrower is at impending risk  of being seized, levied upon or forfeited.  If any tax by any Governmental Body is or may be imposed on  or as a result of any transaction between any Borrower and Agent or any Lender which Agent or any Lender  may be required to withhold or pay or if any taxes, assessments, or other Charges remain unpaid after the  date fixed for their payment, or if any claim shall be made which, in Agent’s or any Lender’s opinion, may  possibly create a valid Lien on the Collateral, Agent may without notice to Borrowers pay the taxes,  assessments or other Charges and each Borrower hereby indemnifies and holds Agent and each Lender  harmless in respect thereof.  Agent will not pay any taxes, assessments or Charges to the extent that any  applicable Borrower has Properly Contested those taxes, assessments or Charges.  The amount of any  payment by Agent under this Section 6.4 shall be charged to Borrowers’ Account as a Revolving Advance  maintained as a Domestic Rate Loan and added to the Obligations and, until Borrowers shall furnish Agent  with an indemnity therefor (or supply Agent with evidence satisfactory to Agent that due provision for the  payment thereof has been made), Agent may hold without interest any balance standing to Borrowers’  credit and Agent shall retain its security interest in and Lien on any and all Collateral held by Agent.  6.5 Financial Covenants.  (a) Fixed Charge Coverage Ratio.  From and after the Amendment No. 1 Effective  Date, causeCause to be maintained a Fixed Charge Coverage Ratio of not less than (i) 1.00 to 1.00 for each  of the consecutive four fiscal quarter periods of Borrowers ending January 31, 2022 and April 30, 2022,  and (ii) 1.10 to 1.00 for each consecutive four fiscal quarter period of Borrowers, commencing with the  fiscal quarter ending thereafterOctober 31, 2022.  For purposes of clarity, Borrowers Fixed Charge  Coverage Ratio shall not be tested for the fiscal quarter periods ending April 30, 2022 and July 31, 2022.  (b) [Reserved]Minimum EBITDA.  Cause to be maintained (i) for the three (3) fiscal  month period ending April 30, 2022, year-to-date EBITDA for such period of not less than (negative)  $4,100,000, and (ii) for the six (6) fiscal month period ending July 31, 2022, year-to-date EBITDA for such  period of not less than $5,000,000.  6.6 Insurance.  (a) (i) Keep all its insurable properties and properties in which such Borrower has an  interest insured against the hazards of fire, flood, sprinkler leakage, those hazards covered by extended  coverage insurance and such other hazards, and for such amounts, as is customary in the case of companies  engaged in businesses similar to such Borrower’s including business interruption insurance; (ii) maintain a  bond in such amounts as is customary in the case of companies engaged in businesses similar to such  Borrower insuring against larceny, embezzlement or other criminal misappropriation of insured’s officers  and employees who may either singly or jointly with others at any time have access to the assets or funds  of such Borrower either directly or through authority to draw upon such funds or to direct generally the  disposition of such assets; (iii) maintain public and product liability insurance against claims for personal  injury, death or property damage suffered by others; (iv) maintain all such worker’s compensation or similar  insurance as may be required under the laws of any state or jurisdiction in which such Borrower is engaged  in business; (v) [reserved]; (vi) furnish Agent with (A) copies of all policies and evidence of the  maintenance of such policies by the renewal thereof at least thirty (30) days before any expiration date, and  (B) appropriate loss payable endorsements in form and substance satisfactory to Agent, naming Agent as  an additional insured and mortgagee and/or lender loss payee (as applicable) as its interests may appear  with respect to all insurance coverage referred to in clauses (i), and (iii) above, and providing (I) that all  proceeds thereunder shall be payable to Agent, (II) no such insurance shall be affected by any act or neglect  of the insured or owner of the property described in such policy, and (III) that such policy and loss payable  

 

  83  147420493  158492473  clauses may not be cancelled, amended or terminated unless at least thirty (30) days prior written notice is  given to Agent (or in the case of non-payment, at least ten (10) days prior written notice).  In the event of  any loss thereunder, the carriers named therein hereby are directed by Agent and the applicable Borrower  to make payment for such loss to Agent and not to such Borrower and Agent jointly.  If any insurance losses  are paid by check, draft or other instrument payable to any Borrower and Agent jointly, Agent may endorse  such Borrower’s name thereon and do such other things as Agent may deem advisable to reduce the same  to cash.  (b) Each Borrower shall take all actions required under the Flood Laws and/or  requested by Agent to assist in ensuring that each Lender is in compliance with the Flood Laws applicable  to the Collateral, including, but not limited to, providing Agent with the address and/or GPS coordinates of  each structure on any real property that will be subject to a mortgage in favor of Agent, for the benefit of  Lenders, and, to the extent required, obtaining flood insurance for such property, structures and contents  prior to such property, structures and contents becoming Collateral, and thereafter maintaining such flood  insurance in full force and effect for so long as required by the Flood Laws.  (c) Agent is hereby authorized to adjust and compromise claims under insurance  coverage referred to in Sections 6.6(a)(i) and (iii) and 6.6(b) above in each case if an Event of Default has  occurred and be continuing.  All loss recoveries received by Agent under any such insurance may be applied  to the Obligations, in such order as Agent in its sole discretion shall determine.  Any surplus shall be paid  by Agent to Borrowers or applied as may be otherwise required by law.  Any deficiency thereon shall be  paid by Borrowers to Agent, on demand.  Anything hereinabove to the contrary notwithstanding, and  subject to the fulfillment of the conditions set forth below, Agent shall remit to Borrowing Agent insurance  proceeds received by Agent during any calendar year under insurance policies procured and maintained by  Borrowers which insure Borrowers’ insurable properties to the extent such insurance proceeds do not  exceed $25,000 in the aggregate during such calendar year or $25,000 per occurrence.  In the event the  amount of insurance proceeds received by Agent for any occurrence exceeds $25,000, then Agent shall not  be obligated to remit the insurance proceeds to Borrowing Agent unless Borrowing Agent shall provide  Agent with evidence reasonably satisfactory to Agent that the insurance proceeds will be used by Borrowers  to repair, replace or restore the insured property which was the subject of the insurable loss.  In the event  Borrowing Agent has previously received (or, after giving effect to any proposed remittance by Agent to  Borrowing Agent would receive) insurance proceeds which equal or exceed $25,000 in the aggregate during  any calendar year, then Agent may, in its sole discretion, either remit the insurance proceeds to Borrowing  Agent upon Borrowing Agent providing Agent with evidence reasonably satisfactory to Agent that the  insurance proceeds will be used by Borrowers to repair, replace or restore the insured property which was  the subject of the insurable loss, or apply the proceeds to the Obligations, as aforesaid.  The agreement of  Agent to remit insurance proceeds in the manner above provided shall be subject in each instance to  satisfaction of each of the following conditions: (x) No Event of Default or Default shall then have occurred,  (y) Borrowers shall use such insurance proceeds promptly to repair, replace or restore the insurable property  which was the subject of the insurable loss and for no other purpose, and (z) such remittances shall be made  under such procedures as Agent may establish. If any Borrower fails to obtain insurance as hereinabove  provided, or to keep the same in force, Agent, if Agent so elects, may obtain such insurance and pay the  premium therefor on behalf of such Borrower, which payments shall be charged to Borrowers’ Account  and constitute part of the obligations.  6.7 Payment of Indebtedness and Leasehold Obligations  .  Pay, discharge or otherwise satisfy (i) at or before maturity (subject, where applicable, to specified grace  periods) all its Indebtedness, except when the failure to do so could not reasonably be expected to have a  Material Adverse Effect or when the amount or validity thereof is currently being Properly Contested,  subject at all times to any applicable subordination arrangement in favor of Lenders and (ii) when due its  

 

  84  147420493  158492473  rental obligations under all leases under which it is a tenant, and shall otherwise comply, in all material  respects, with all other terms of such leases and keep them in full force and effect.  6.8 Environmental Matters.  (a) Ensure that the Real Property and all operations and businesses conducted thereon  are in compliance in all material respects and remain in compliance in all material respects with all  Environmental Laws and it shall manage any and all Hazardous Materials on any Real Property in  compliance in all material respects with Environmental Laws.  (b) Establish and maintain an environmental management and compliance system to  assure and monitor continued compliance with all applicable Environmental Laws which system shall  include periodic environmental compliance audits to be conducted by knowledgeable environmental  professionals.  All potential violations and violations of Environmental Laws shall be reviewed with legal  counsel to determine any required reporting to applicable Governmental Bodies and any required corrective  actions to address such potential violations or violations.  (c) Respond promptly to any Hazardous Discharge or Environmental Complaint and  take all necessary action in order to safeguard the health of any Person and to avoid subjecting the Collateral  or Real Property to any Lien.  If any Borrower shall fail to respond promptly to any Hazardous Discharge  or Environmental Complaint or any Borrower shall fail to comply with any of the requirements of any  Environmental Laws, Agent on behalf of Lenders may, but without the obligation to do so, for the sole  purpose of protecting Agent’s interest in the Collateral:  (i) give such notices or (ii) enter onto the Real  Property (or authorize third parties to enter onto the Real Property) and take such actions as Agent (or such  third parties as directed by Agent) deem reasonably necessary or advisable, to remediate, remove, mitigate  or otherwise manage with any such Hazardous Discharge or Environmental Complaint.  All reasonable  costs and expenses incurred by Agent and Lenders (or such third parties) in the exercise of any such rights,  including any sums paid in connection with any judicial or administrative investigation or proceedings,  fines and penalties, together with interest thereon from the date expended at the Default Rate for Domestic  Rate Loans constituting Revolving Advances shall be paid upon demand by Borrowers, and until paid shall  be added to and become a part of the Obligations secured by the Liens created by the terms of this  Agreement or any other agreement between Agent, any Lender and any Borrower.  (d) Promptly upon the written request of Agent from time to time, Borrowers shall  provide Agent, at Borrowers’ expense, with an environmental site assessment or environmental compliance  audit report prepared by an environmental engineering firm acceptable in the reasonable opinion of Agent,  to assess with a reasonable degree of certainty the existence of a Hazardous Discharge and the potential  costs in connection with abatement, remediation and removal of any Hazardous Materials found on, under,  at or within the Real Property.  Any report or investigation of such Hazardous Discharge proposed and  acceptable to the responsible Governmental Body shall be acceptable to Agent.  If such estimates,  individually or in the aggregate, exceed $100,000, Agent shall have the right to require Borrowers to post  a bond, letter of credit or other security reasonably satisfactory to Agent to secure payment of these costs  and expenses.  6.9 Standards of Financial Statements  .  Cause all financial statements referred to in Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12, and 9.13 as to which  GAAP is applicable to fairly present in all material respects the financial condition and results of operations  of the Borrowers and their Subsidiaries (subject, in the case of interim financial statements, to normal year- end audit adjustments and the absence of footnotes) and to be prepared in reasonable detail and in  

 

  85  147420493  158492473  accordance with GAAP applied consistently throughout the periods reflected therein (except as disclosed  therein and agreed to by such reporting accountants or officer, as applicable).  6.10 [Reserved]  .    6.11 Execution of Supplemental Instruments  .  Execute and deliver to Agent from time to time, upon demand, such supplemental agreements, statements,  assignments and transfers, or instructions or documents relating to the Collateral, and such other  instruments as Agent may reasonably request, in order that the full intent of this Agreement may be carried  into effect.  6.12 [Reserved].  6.13 Government Receivables  .  Take all steps necessary to protect Agent’s interest in the Collateral under the Federal Assignment of  Claims Act, the Uniform Commercial Code and all other applicable state or local statutes or ordinances and  deliver to Agent appropriately endorsed, any instrument or chattel paper connected with any Receivable  arising out of any contract between any Borrower and the United States, any state or any department, agency  or instrumentality of any of them.  6.14 [Reserved]  .     6.15 Keepwell  .  If it is a Qualified ECP Loan Party, then jointly and severally, together with each other Qualified ECP  Loan Party, hereby absolutely unconditionally and irrevocably (a) guarantees the prompt payment and  performance of all Swap Obligations owing by each Non-Qualifying Party (it being understood and agreed  that this guarantee is a guaranty of payment and not of collection), and (b) undertakes to provide such funds  or other support as may be needed from time to time by any Non-Qualifying Party to honor all of such Non  Qualifying Party’s obligations under this Agreement or any Other Document in respect of Swap Obligations  (provided, however, that each Qualified ECP Loan Party shall only be liable under this Section 6.15 for the  maximum amount of such liability that can be hereby incurred without rendering its obligations under this  Section 6.15, or otherwise under this Agreement or any Other Document, voidable under applicable law,  including applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater  amount).  The obligations of each Qualified ECP Loan Party under this Section 6.15 shall remain in full  force and effect until payment in full of the Obligations and termination of this Agreement and the Other  Documents.  Each Qualified ECP Loan Party intends that this Section 6.15 constitute, and this Section 6.15  shall be deemed to constitute, a guarantee of the obligations of, and a “keepwell, support, or other  agreement” for the benefit of each other Borrower and Guarantor for all purposes of Section 1a(18(A)(v)(II)  of the CEA.  6.16 Certificate of Beneficial Ownership and Other Additional Information  .  Provide to Agent and the Lenders: (i) confirmation of the accuracy of the information set forth in the most  recent Certificate of Beneficial Ownership provided to the Agent and Lenders; (ii) a new Certificate of  

 

  86  147420493  158492473  Beneficial Ownership, in form and substance acceptable to Agent and each Lender, when the individual(s)  to be identified as a Beneficial Owner have changed; and (iii) such other information and documentation  as may reasonably be requested by Agent or any Lender from time to time for purposes of compliance by  Agent or such Lender with applicable laws (including without limitation the USA Patriot Act and other  “know your customer” and anti-money laundering rules and regulations), and any policy or procedure  implemented by Agent or such Lender to comply therewith.  6.17 Sanctions and other Anti-Terrorism Laws; Anti-Corruption Laws.  (a) The Loan Parties covenant and agree that (A) they shall immediately notify the  Agent and each of the Lenders in writing upon the occurrence of a Reportable Compliance Event; and (B)  if, at any time, any Collateral becomes Embargoed Property, in addition to all other rights and remedies  available to the Agent and each of the Lenders, upon request by the Agent or any of the Lenders, the Loan  Parties shall provide substitute Collateral acceptable to the Lenders that is not Embargoed Property.  (b) Each Covered Entity shall conduct their business in compliance with all Anti- Corruption Laws and maintain policies and procedures designed to ensure compliance with such Laws.  VII. NEGATIVE COVENANTS.  No Borrower shall, until satisfaction in full of the Obligations (other than Inchoate Obligations)  and termination of this Agreement:  7.1 Merger, Consolidation, Acquisition and Sale of Assets.  (a) Enter into any merger, consolidation or other reorganization with or into any other  Person or acquire all or a substantial portion of the assets or Equity Interests of any Person or consummate  an LLC Division or permit any other Person to consolidate with or merge with it, except (i) (A) any  Borrower may merge, consolidate or reorganize with another Borrower or acquire the assets or Equity  Interest of another Borrower (or a Subsidiary of any Borrower), and (B) any Subsidiary of a Borrower may  merge, consolidate or reorganize with a Borrower so long as such Borrower is the surviving entity of any  such merger, consolidation or reorganization, so long , in each case, such Borrower provides Agent with  ten (10) days prior written notice of such merger, consolidation or reorganization and delivers all of the  relevant documents evidencing such merger, consolidation or reorganization, and (ii) the Conway  Transaction pursuant and subject to the Conway Transaction Documents.  (b) Sell, lease, transfer or otherwise dispose of any of its properties or assets  (including, in each case, by way of an LLC Division), except (i) the sale of Inventory in the Ordinary Course  of Business and, (ii) the disposition or transfer of obsolete and worn-out equipment in the Ordinary Course  of Business during any fiscal year having an aggregate fair market value of not more than $200,000 and  only to the extent that the proceeds of which are remitted to Agent to be applied pursuant to Section 2.20  and, (iii) a disposition of the Conway Property and related assets pursuant to the Permitted Conway Property  Sale-Leaseback, and (iv) any other sales, leases, transfers or dispositions expressly permitted by this  Agreement.  7.2 Creation of Liens  .  Create or suffer to exist any Lien or transfer upon or against any of its property or assets now owned or  hereafter created or acquired, except Permitted Encumbrances provided that nothing herein constitutes an  admission by Agent  that a Permitted Encumbrance has priority over any Lien in favor of Agent or any  

 

  87  147420493  158492473  other Secured Party, and Agent and the other Secured Parties reserve their rights to assert such priority as  against any Permitted Encumbrance.  7.3 Guarantees  .  Become liable upon the obligations or liabilities of any Person by assumption, endorsement or guaranty  thereof or otherwise (other than to Secured Parties) except (a) as disclosed on Schedule 7.3, (b) guarantees  made in the Ordinary Course of Business in respect of (i) performance bonds (other than performance bonds  in respect of sales of school furniture), surety or appeal bonds, notary public bonds and bonds in support of  Borrowers’ prior self-insurance program up to an aggregate amount of $250,000 and (ii) unsecured bid  bonds and unsecured performance bonds in respect of sales of school furniture, (c) the endorsement of  checks in the Ordinary Course of Business and (d) guarantees in respect of Indebtedness otherwise  permitted hereunder.  7.4 Investments  .  Purchase or acquire obligations or Equity Interests of, or any other interest in, any Person, or make any  investments, advances, loans or extensions of credit to any Person, including any Parent, Subsidiary or  Affiliate (each, an “Investment”) except with respect to:  (a) the following cash equivalents (i) obligations issued or guaranteed by the United  States of America or any agency thereof, (ii) commercial paper with maturities of not more than 180 days  and a published rating of not less than A-1 or P-1 (or the equivalent rating), (iii) certificates of time deposit  and bankers’ acceptances having maturities of not more than 180 days and repurchase agreements backed  by United States government securities of a commercial bank if (x) such bank has a combined capital and  surplus of at least $500,000,000, or (y) its debt obligations, or those of a holding company of which it is a  Subsidiary, are rated not less than A (or the equivalent rating) by a nationally recognized investment rating  agency, (iv) bonds and other fixed income instruments (including tax-exempt bonds) rated investment grade  from companies or public entities, and mutual funds that invest substantially all of their assets in such bonds  and other fixed income instruments, either owned directly by a Borrower or Guarantor or managed on a  Borrower’s or Guarantor’s behalf by any nationally recognized investment advisor who or which has assets  under management in excess of $500,000,000, (v) repurchase agreements or similar arrangements with  banks which have capital and surplus of not less than $500,000,000, (vi) U.S. money market funds that  invest solely in obligations issued or guaranteed by the United States of America or an agency thereof and  (vii) mutual funds or money market funds that  invest substantially all of their assets in instruments  described in the subsections above;  (b) advances to officers, directors and employees of Borrowers and \ or Guarantors in  an aggregate amount not to exceed $25,000 at any time outstanding, for travel, entertainment, relocation  and other purposes in the Ordinary Course of Business and consistent with past practice;  (c) Investments of Borrowers in any Guarantor and Investments of any Subsidiary in  any Borrower or Guarantor;  (d) Investments received in satisfaction of judgments or pursuant to any plan or  reorganization or similar arrangement upon the bankruptcy or insolvency of trade creditors or account  debtors;  (e) guarantees permitted by Section 7.3;  

 

  88  147420493  158492473  (f) Investments existing as of the date hereof and set forth on Schedule 7.4 and any  replacements, renewals or extensions of any such Investments; provided that the amount of any such  Investment is not increased at the time of such replacement, renewal or extension of such Investment except  by an amount equal to a reasonable premium or other reasonable amount paid in respect of the underlying  obligations and fees and expenses reasonably incurred in connection with such replacement, renewal or  extension;  (g) Investments in respect of prepaid expenses, negotiable instruments held for  collection or lease, utility, workers’ compensation, in each case in the Ordinary Course of Business;  (h) Investments pursuant to employee wage and benefit plans for the benefit of the  employees of the Borrowers and Guarantors (including any “rabbi trust” account used in connection with  such purposes); and  (i) additional Investments not exceeding $50,000 in the aggregate outstanding at any  time.  7.5 [Reserved].  7.6 Capital Expenditures  .  Contract for, purchase or make any expenditure or commitments for Capital Expenditures in any fiscal  year, in an aggregate amount for all Borrowers in excess of $8,000,000.  7.7 Dividends  .  Declare, pay or make any dividend or distribution on any shares of the common stock or preferred stock  of any Borrower (other than dividends or distributions payable in its stock, or split-ups or reclassifications  of its stock, including, in respect of VMC’s Rights Plan) or apply any of its funds, property or assets to the  purchase, redemption or other retirement of any common or preferred stock, or of any options to purchase  or acquire any such shares of common or preferred stock of any Borrower (collectively, “Restricted  Payments”), except that (without duplication):  (a) each Subsidiary may make Restricted Payments to any Borrower that owns an  Equity Interest in such Subsidiary;  (b) each Borrower and Subsidiary may purchase, redeem or otherwise acquire Equity  Interests issued by it solely with the proceeds received from the substantially concurrent issue of new shares  of its common stock or other common Equity Interests;  (c) each Borrower and Subsidiary may purchase (i) Equity Interests in any Borrower  or options with respect to Equity Interests in any Borrower held by directors, employees or management of  any Borrower or any of its Subsidiaries (or their estates or authorized representatives) in connection with  the death, disability or termination of employment of any such directors, employees or management and  (ii) Equity Interests in any Borrower for the purpose of holding such Equity Interest for future issuance  under an employee stock plan; and  (d) except as set forth in the last sentence of this Section 7.7(d), Borrowers may make  Restricted Payments to any Person that owns an Equity Interest in any Borrower so long as (i) such  Restricted Payments shall not exceed $3,000,000 in the aggregate during any fiscal year; (ii) no Default or  Event of Default shall have occurred or be continuing, and (iii) no Default or Event of Default shall result  

 

  89  147420493  158492473  from any such Restricted Payment; provided, further that, in connection with any such Restricted Payment,  Borrowers must show pro forma compliance with the Fixed Charge Coverage Ratio of not less than  1.20:1.00 for the most recent twelve month period ending as of the fiscal quarter immediately preceding  the date of such Restricted Payment (giving pro forma effect to such Restricted Payment as if it had been  made on such date) and furnish Agent a Compliance Certificate evidencing such pro forma compliance  prior to the making of such Restricted Payment; and  (e) so long as no Default or Event of Default is then continuing, VMC may make one  or more Permitted Conway Property Special Distributions in connection with the Permitted Conway  Property Sale-Leaseback should it occur.  7.8 Indebtedness  .  Create, incur, assume or suffer to exist any Indebtedness (exclusive of trade debt) except in respect of:  (a) the Obligations;  (b) Indebtedness in respect of Capital Expenditures permitted under Section 7.6;  (c) without duplication, guarantees of any Borrower or Subsidiary in respect of  Indebtedness of the Borrowers expressly permitted hereunder;  (d) intercompany Indebtedness between the Borrowers;  (e) Indebtedness of any Borrower or Subsidiary thereof incurred in the Ordinary  Course of Business in respect of bank guarantees, letters of credit or similar instruments to support local  regulatory requirements;  (f) Indebtedness disclosed on Schedule 7.8 and any permitted Refinancing  Indebtedness in respect thereof;  (g) additional unsecured Indebtedness in an aggregate principal amount not to exceed  $500,000 at any time outstanding;  (h) Indebtedness in respect of Capitalized Lease Obligations not in excess of $150,000  in the aggregate at any time outstanding, solely to the extent arising due to changes imposed subsequent to  the Restatement Date by GAAP requiring leases characterized as operating leases as of the Restatement  Date (or any renewal or replacement thereof) to be recharacterized as a Capital Lease Obligation; in the  aggregate at any time outstanding;  (i) guarantees permitted under Section 7.3;  (j) other Indebtedness incurred in the Ordinary Course of Business or arising as result  of operations of the Borrowers in the Ordinary Course of Business, in each case not constituting Funded  Debt and not otherwise prohibited under this Agreement or any Other Document;   (k) the Conway Indebtedness so long as the Permitted Conway Property Sale- Leaseback shall not have occurred, and  

 

  90  147420493  158492473  (l) (k) in the event the Permitted Conway Property Sale-Leaseback occurs, to the  extent the obligations of Borrowers under the Permitted Sale-Leaseback Documentation are or may be  characterized as Indebtedness, such Indebtedness.  7.9 Nature of Business  .  Substantially change the nature of the business in which it is presently engaged or any business  substantially related or incidental thereto or any reasonable extension thereof, as determined in good faith  by the Borrowers.  7.10 Transactions with Affiliates  .  Directly or indirectly, purchase, acquire or lease any property from, or sell, transfer or lease any property  to, or otherwise enter into any transaction or deal with, any Affiliate, except transactions on an arm’s-length  basis on terms and conditions no less favorable than terms and conditions that would have been obtainable  from a Person other than an Affiliate, except:  (a) any contract, agreement or business arrangement between Borrowers and \ or  Guarantors; and  (b) reasonable and customary director, officer and employee compensation (including  bonuses) and other benefits (including retirement, health, stock option and other benefit plans, any issuances  of securities 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) and reasonable and customary  indemnification and reimbursement arrangements with respect to such Persons, in each case incurred in the  Ordinary Course of Business and consistent in all material respects with past practice.  7.11 [Reserved].  7.12 Subsidiaries.  (a) Form or acquire any Subsidiary unless such Subsidiary (i) is not a Foreign  Subsidiary, (ii) at Agent’s discretion, such  Subsidiary expressly joins in this Agreement as a borrower or  becomes a Guarantor of the Obligations and grants a security interest in its assets (subject to the same  exceptions and limitations as the security interest granted by Borrowers hereunder) and becomes jointly  and severally liable for the obligations of Borrowers hereunder, under the Notes, and under any other  agreement between any Borrower and Agent or Lenders, in each case pursuant to a joinder agreement  acceptable to Agent, and (iii) Agent shall have received all documents, including without limitation, legal  opinions and collateral evaluations it may reasonably require to establish compliance with each of the  foregoing conditions in connection therewith.  (b) Enter into any partnership, joint venture or similar arrangement.  7.13 Fiscal Year and Accounting Changes  .  Change, without the prior written consent of Agent to be given or withheld in its sole discretion, its fiscal  year end from January 31 or make any change (a) in accounting treatment and reporting practices except as  required by GAAP or the Securities Act or (b) in tax reporting treatment except as required by law.  7.14 Pledge of Credit  

 

  91  147420493  158492473  .  Now or hereafter pledge Agent’s or any Lender’s credit on any purchases, commitments or contracts or  for any purpose whatsoever or use any portion of any Advance in or for any business other than such  Borrower’s business operations as conducted on the Restatement Date.  7.15 Amendment of Organizational Documents; Sale-Leaseback Documents.  (a) (i) Change its legal name, (ii) change its form of legal entity (e.g., converting from  a corporation to a limited liability company or vice versa), or (iii) change its jurisdiction of organization or  become (or attempt or purport to become) organized in more than one jurisdiction, in any such case without  (x) giving at least ten (10) Business Days prior written notice of such intended change to Agent, and (y)  having received from Agent confirmation that Agent has taken all steps necessary for Agent to continue the  perfection of and protect the enforceability and priority of its Liens in the Collateral belonging to such  Borrower and in the Equity Interests of such Borrower; or  (b) otherwise amend, modify or waive any term or material provision of its  Organizational Documents (unless required by law) in a manner adverse to Agent or any other Secured  Party in any material respect (including, at any time VMC shall have issued and outstanding preferred stock,  any such amendment that changes the manner in which members of the board of directors are elected,  vacancies on such board are filled, the number of members that may constitute such board (or any provision  pursuant to which the number of members may be increased or decreased) or the manner in which any class  of shares is entitled to vote or the manner in which the weight of such vote is calculated, including, in all  such cases any amendment to Article IX of the Certificate of Incorporation of VMC, which, in each  instance, shall be deemed materially adverse to Agent and the Lenders); or   (c) amend, modify or waive any term or material provision of the Permitted Sale- Leaseback Documentation, other than as approved in advance in writing by Agent in its Permitted  Discretion.  7.16 Compliance with ERISA  .  (a) (i) Maintain, or permit any member of the Controlled Group to maintain, or (ii) become obligated to  contribute, or permit any member of the Controlled Group to become obligated to contribute, to any Plan,  other than those Plans disclosed on Schedule 5.8(d), (b) engage, or permit any member of the Controlled  Group to engage, in any non-exempt “prohibited transaction”, as that term is defined in Section 406 of  ERISA or Section 4975 of the Code that could reasonably be expected to have a Material Adverse Effect,  (c) except as could not reasonably be expected to have a Material Adverse Effect terminate, or permit any  member of the Controlled Group to terminate, any Plan where such event could result in any liability of  any Borrower or any member of the Controlled Group or the imposition of a lien on the property of any  Borrower or any member of the Controlled Group pursuant to Section 4068 of ERISA, (d) incur, or permit  any member of the Controlled Group to incur, any withdrawal liability to any Multiemployer Plan that  could reasonably be expected to have a Material Adverse Effect; (e) fail promptly to notify Agent of the  occurrence of any Termination Event could reasonably be expected to have a Material Adverse Effect, (f)  fail to comply, or permit a member of the Controlled Group to fail to comply, with the requirements of  ERISA or the Code or other Applicable Laws in respect of any Plan could reasonably be expected to have  a Material Adverse Effect, (g) fail to meet, permit any member of the Controlled Group to fail to meet, or  permit any Plan to fail to meet all minimum funding requirements under ERISA and the Code, without  regard to any waivers or variances, or postpone or delay or allow any member of the Controlled Group to  postpone or delay any funding requirement with respect of any Plan, or (h) cause, or permit any member of  the Controlled Group to cause, a representation or warranty in Section 5.8(d) to cease to be true and correct.  7.17 Prepayment of Funded Debt  

 

  92  147420493  158492473  .  At any time, directly or indirectly, prepay any Funded Debt (other than the Obligations), or repurchase,  redeem, retire or otherwise acquire any Funded Debt of any Borrower, in an amount not in excess of  $150,000 in the aggregate in any fiscal year of the Borrowers. Notwithstanding the foregoing, payments of  principal and interest may be made by VMC on the Conway Indebtedness in consecutive monthly  installments of $34,904.47, as set forth in the Conway Seller Note.  7.18 Sanctions and other Anti-Terrorism Laws  .  Each Borrower hereby covenants and agrees that until the last day of the Term, such Borrower will not,  and will not permit any of its Subsidiaries to: (a) become a Sanctioned Person or allow its employees,  officers, directors, affiliates, consultants, brokers, and agents acting on its behalf in connection with this  Agreement to become a Sanctioned Person; (b) directly, or indirectly through a third party, engage in any  transactions or other dealings with any Sanction Person or Sanctioned Jurisdiction, including any use of the  proceeds of the Loans to fund any operations in, finance any investments or activities in, or, make any  payments to, a Sanctions Person or Sanctioned Jurisdiction; (c) repay the Loans with funds derived from  any unlawful activity; (d) permit any Collateral to become Embargoed Property; (e) engage in any  transactions or other dealings with any Sanctioned Person or Sanctioned Jurisdiction prohibited by any  Laws of the United States or other applicable jurisdictions relating to economic sanctions and any Anti- Terrorism Laws; or (f) cause any Lender or Agent to violate any sanctions administered by OFAC.  7.19 Anti-Corruption Laws  .  Each Borrower hereby covenants and agrees that until the last day of the Term, such Borrower will not,  and will not permit any of its Subsidiaries to, directly or indirectly, use the Loans or any proceeds thereof  for any purpose which would breach any Anti-Corruption Laws in any jurisdiction in which any Covered  Entity conducts business.  7.20 Clean Down  .  During the fourth fiscal quarter of each fiscal year, permit the Revolving Advances and Swing Loans, in  the aggregate, to exceed $10,000,000 at any time for a period of 30 consecutive days during such period.  7.21 Leases  .  EnterOther than in connection with the Permitted Conway Property Sale-Leaseback, enter as lessee into  any lease arrangement for real or personal property (unless capitalized and permitted under Section 7.6) if  after giving effect thereto, aggregate annual rental payments for all leased property would exceed  $10,000,000 (excluding rental paid pursuant to any applicable Permitted Sale-Leaseback Documentation)  in any one fiscal year in the aggregate for all Borrowers.  7.22 Membership / Partnership Interests  .  Designate or permit any of their Subsidiaries to (a) treat their limited liability company membership  interests or partnership interests, as the case may be, as securities as contemplated by the definition of  “security” in Section 8-102(15) and by Section 8-103 of Article 8 of the Uniform Commercial Code or (b)  certificate their limited liability company membership interests or partnership interests, as applicable,  unless, in each case, such certificates are contemporaneously with such treatment delivered to Agent  together with an endorsement in blank.  

 

  93  147420493  158492473  VIII. CONDITIONS PRECEDENT.  8.1 Conditions to Restatement  .  In order for Closing to occur and for each Lender and Issuer to become obligated to make its initial  Advance hereunder, the following conditions precedent must be satisfied (or waived by Agent):  (a) Note.  If required, Agent shall have received the Notes duly executed and delivered  by an authorized officer of each Borrower;  (b) Other Documents.  Agent shall have received each of the executed Other  Documents, as applicable;  (c) Closing Certificate.  Agent shall have received a closing certificate signed by the  Senior Vice President Finance of each Borrower dated as of the date hereof, certifying as to the matters  described in Sections 8.2(a) and 8.2(b);  (d) Filings, Registrations and Recordings.  Each document (including any Uniform  Commercial Code financing statement) required by this Agreement, any related agreement or under law or  reasonably requested by Agent to be filed, registered or recorded in order to create, in favor of Agent, a  perfected security interest in or lien upon the Collateral shall have been properly filed, registered or recorded  in each jurisdiction in which the filing, registration or recordation thereof is so required or requested, and  Agent shall have received an acknowledgment copy, or other evidence satisfactory to it, of each such filing,  registration or recordation and satisfactory evidence of the payment of any necessary fee, tax or expense  relating thereto;  (e) Secretary’s Certificates, Authorizing Resolutions and Good Standings of  Borrowers.  Agent shall have received a certificate of the Secretary or Assistant Secretary (or other  equivalent officer, partner or manager) of each Borrower in form and substance satisfactory to Agent dated  as of the Restatement Date which shall certify (i) copies of resolutions in form and substance reasonably  satisfactory to Agent, of the board of directors (or other equivalent governing body, member or partner) of  such Borrower authorizing (x) the execution, delivery and performance of this Agreement, the Notes and  each Other Document to which such Borrower is a party (including authorization of the incurrence of  indebtedness, borrowing of Revolving Advances and requesting of Letters of Credit on a joint and several  basis with all Borrowers as provided for herein), and (y) the granting by such Borrower of the security  interests in and liens upon the Collateral to secure all of the joint and several Obligations of Borrowers (and  such certificate shall state that such resolutions have not been amended, modified, revoked or rescinded as  of the date of such certificate), (ii) the incumbency and signature of the officers of such Borrower authorized  to execute this Agreement and the Other Documents, (iii) copies of the Organizational Documents of such  Borrower as in effect on such date, complete with all amendments thereto, and (iv) the good standing (or  equivalent status) of such Borrower in its jurisdiction of organization dated not more than 30 days prior to  the Restatement Date, issued by the Secretary of State or other appropriate official of each such jurisdiction;  (f) No Litigation.  No litigation, investigation or proceeding before or by any  arbitrator or Governmental Body shall be continuing or threatened in writing against any Borrower or  against the officers or directors of any Borrower (A) in connection with this Agreement, the Other  Documents or any of the transactions contemplated thereby and which, in the reasonable opinion of Agent,  is deemed material or (B) which could, in the reasonable opinion of Agent, have a Material Adverse Effect;  and (ii) no injunction, writ, restraining order or other order of any nature materially adverse to any Borrower  or the conduct of its business or inconsistent with the due consummation of the Closing shall have been  issued by any Governmental Body;  

 

  94  147420493  158492473  (g) Fees and Expenses.  Agent and Lenders shall have received all fees payable to  Agent and/or Lenders, which are due on or prior to the Restatement Date hereunder or under any Other  Document (including the Fee Letter), and reimbursement of all costs and expenses incurred as of the  Restatement Date which are payable or reimbursable under this Agreement or any Other Document and for  which reimbursement has been requested;  (h) Consents.  Agent shall have received any and all Consents necessary to permit the  effectuation of the transactions contemplated by this Agreement and the Other Documents; and, Agent shall  have received such Consents and waivers of such third parties as might assert claims with respect to the  Collateral, as Agent and its counsel shall deem necessary;  (i) No Adverse Material Change.  (i) Since January 31, 2021, there shall not have  occurred any event, condition or state of facts which could reasonably be expected to have a Material  Adverse Effect and (ii) no representations made or information supplied to Agent or Lenders shall have  been proven to be inaccurate or misleading in any material respect;  (j) Compliance with Laws.  Agent shall be reasonably satisfied that each Borrower is  in compliance with all pertinent federal, state, local or territorial regulations, including those with respect  to the Federal Occupational Safety and Health Act, the Environmental Protection Act, ERISA and the Anti- Terrorism Law;  (k) Certificate of Beneficial Ownership; USA Patriot Act Diligence.  Agent and each  Lender shall have received, in form and substance acceptable to Agent and each Lender an executed  Certificate of Beneficial Ownership and such other documentation and other information requested in  connection with applicable “know your customer” and anti-money laundering rules and regulations,  including the USA Patriot Act; and  (l) Other.  All corporate and other proceedings, and all documents, instruments and  other legal matters in connection with the Closing shall be satisfactory in form and substance to Agent and  its counsel.  8.2 Conditions to Each Advance  .  The agreement of Lenders to make any Advance requested to be made on any date (including the initial  Advance), and of Issuer to issue or cause to be issued any Letter of Credit requested to be issued on any  date, is subject to the satisfaction of the following conditions precedent as of the date such Advance is  made:  (a) Representations and Warranties.  Each of the representations and warranties made  by any Borrower in or pursuant to this Agreement, the Other Documents and any related agreements to  which it is a party, and each of the representations and warranties contained in any certificate, document or  financial or other statement furnished at any time under or in connection with this Agreement, the Other  Documents or any related agreement shall be true and correct in all material respects (except that any such  representation or warranty that is already qualified or modified by materiality shall be true and correct in  all respects) on and as of such date as if made on and as of such date, except for those representations and  warranties that relate solely to an earlier date, in which case such representation or warranty shall be true  and correct in all material respects as of such date;  (b) No Default.  No Event of Default or Default shall have occurred and be continuing  on such date, or would exist after giving effect to the Advances requested to be made, on such date;  

 

  95  147420493  158492473  (c) No Material Adverse Effect. No Material Adverse Effect shall have occurred on  or prior to such date, or would result after giving effect to the Advances requested to be made on such date;  Provided, however, that, notwithstanding Sections 8.2(a), (b) and (c), Agent, in its sole discretion, may  continue to make Advances notwithstanding the existence of an Event of Default or Default and that any  Advances so made shall not be deemed a waiver of any such Event of Default or Default and shall not  obligate any Secured Party to make any future Advances; and  (d) Maximum Advances.  In the case of any type of Advance requested to be made,  after giving effect thereto, the aggregate amount of such type of Advance shall not exceed the maximum  amount of such type of Advance permitted under this Agreement.  Each request for an Advance by any Borrower hereunder shall constitute a representation and  warranty by each Borrower as of the date of such Advance that the conditions contained in this subsection  shall have been satisfied.  IX. INFORMATION AS TO BORROWERS.  Each Borrower shall, or (except with respect to Section 9.11) shall cause Borrowing Agent on its  behalf to, until satisfaction in full of the Obligations (other than Inchoate Obligations) and the termination  of this Agreement:  9.1 Disclosure of Material Matters  .  Immediately upon learning thereof, report to Agent all matters materially adversely affecting the value,  enforceability or collectability of any portion of the Collateral in excess of $100,000 in the aggregate (other  than Inventory held by employees of the Borrowers for marketing and sales purposes not in excess of  $10,000 in the aggregate), including any Borrower’s reclamation or repossession of, or the return to any  Borrower of, a material amount of goods or claims or disputes asserted by any Customer or other obligor.  9.2 Schedules  .  During the Peak Season, deliver to Agent on or before the fifteenth (15th) day of each month (or as  frequently as Agent shall require during the existence of a Default) a Borrowing Base Certificate in form  and substance satisfactory to Agent (which shall be calculated as of the last day of the prior month and  which shall not be binding upon Agent or restrictive of Agent’s rights under this Agreement) and on or  before the  Wednesday of each week (or as frequently as Agent shall require during the existence of a  Default) as and for the prior week (a) accounts receivable roll forwards and agings inclusive of  reconciliations to the general ledger, (b) accounts payable schedules inclusive of reconciliations to the  general ledger, and (c) Inventory reports.  At all times other than during the Peak Season, deliver to Agent  on or before the fifteenth (15th) day of each month (or as frequently as Agent shall require during the  existence of a Default) as and for the prior month (a) accounts receivable agings inclusive of reconciliations  to the general ledger, (b) accounts payable schedules inclusive of reconciliations to the general ledger, (c)  Inventory reports, (d) current ‘do not mail’ planscape accounts receivable detail and (e) a Borrowing Base  Certificate in form and substance satisfactory to Agent (which shall be calculated as of the last day of the  prior month and which shall not be binding upon Agent or restrictive of Agent’s rights under this  Agreement).  Borrowers shall also deliver to Agent on or before Wednesday of each week (or as frequently  as Agent shall require during the existence of a Default) as and for the prior week, a report of the sales and  collections activity for such week. In addition, each Borrower will deliver to Agent at such intervals as  Agent may require:  (i) confirmatory assignment schedules, (ii) copies of Customer’s invoices, (iii)  evidence of shipment or delivery, and (iv) such further schedules, documents and/or information regarding  

 

  96  147420493  158492473  the Collateral as Agent may require including trial balances and test verifications.  Agent shall have the  right to confirm and verify all Receivables by any manner and through any medium it considers advisable  and may do whatever it deems reasonably necessary to protect its interests hereunder.  The items to be  provided under this Section 9.2 are to be in form satisfactory to Agent and executed by Borrowing Agent  and delivered to Agent from time to time solely for Agent’s convenience in maintaining records of the  Collateral, and any Borrower’s failure to deliver any of such items to Agent shall not affect, terminate,  modify or otherwise limit Agent’s Lien with respect to the Collateral. Unless otherwise agreed to by Agent,  the items to be provided under this Section 9.2 shall be delivered to Agent by the specific method of  Approved Electronic Communication designated by Agent.  9.3 Environmental Reports.  (a) Furnish Agent, concurrently with the delivery of the financial statements referred  to in Sections 9.7 and 9.8, with a Compliance Certificate stating (to the best of his knowledge) that each  Borrower is in compliance in all material respects with all applicable Environmental Laws.  To the extent  any Borrower is not in compliance with the foregoing laws, the Compliance Certificate shall set forth with  specificity all areas of non-compliance and the proposed action such Borrower will implement in order to  achieve full compliance.  (b) In the event any Borrower obtains, gives or receives notice of any Release or threat  of Release in any case of a reportable quantity of any Hazardous Materials at the Real Property that could  reasonably be expected to result in a liability in excess of $250,000 to any Borrower (any such event being  hereinafter referred to as a “Hazardous Discharge”) or receives any notice of violation, request for  information or notification that it is potentially responsible for investigation or cleanup of environmental  conditions at the Real Property, demand letter or complaint, order, citation, or other written notice with  regard to any Hazardous Discharge or violation of Environmental Laws affecting the Real Property or any  Borrower’s interest therein or the operations or the business (any of the foregoing is referred to herein as  an “Environmental Complaint”) from any Person, including any Governmental Body, in any case that could  reasonably be expected to result in a liability in excess of $250,000 to any Borrower, then Borrowing Agent  shall, within five (5) Business Days, give written notice of same to Agent detailing facts and circumstances  of which any Borrower is aware giving rise to the Hazardous Discharge or Environmental Complaint. Such  information is to be provided to allow Agent to protect its security interest in and Lien on the Collateral and  is not intended to create nor shall it create any obligation upon Agent or any Lender with respect thereto.  (c) Borrowing Agent shall promptly forward to Agent copies of any request for  information, notification of potential liability, demand letter relating to potential responsibility with respect  to the investigation or cleanup of Hazardous Materials at any other site owned, operated or used by any  Borrower to manage of Hazardous Materials in any case that could reasonably be expected to result in a  liability in excess of $250,000 to any Borrower and shall continue to forward copies of any such  correspondence between any Borrower and the Governmental Body regarding such claims to Agent until  the claim is settled.  Borrowing Agent shall promptly forward to Agent copies of all documents and reports  concerning a Hazardous Discharge or Environmental Complaint at the Real Property, operations or business  that any Borrower is required to file under any Environmental Laws that could reasonably be expected to  result in a liability in excess of $250,000 to any Borrower.  Such information is to be provided solely to  allow Agent to protect Agent’s security interest in and Lien on the Collateral.  9.4 Litigation  .  Promptly notify Agent in writing of any claim, litigation, suit or administrative proceeding affecting any  Borrower or any Guarantor, whether or not the claim is covered by insurance, and of any litigation, suit or  

 

  97  147420493  158492473  administrative proceeding, which in any such case adversely affects the Collateral or that could reasonably  be expected to have a Material Adverse Effect.  9.5 Material Occurrences  .  Promptly notify Agent in writing upon the occurrence of: (a) any Event of Default or Default; (b) any  event, development or circumstance whereby any financial statements or other reports furnished to Agent  fail in any material respect to present fairly, in accordance with GAAP consistently applied (after giving  effect to any reconciliation required to accompany such financial statements pursuant to Section 1.1), the  financial condition or operating results of any Borrower as of the date of such statements; (c) any  accumulated retirement plan funding deficiency which, if such deficiency continued for two plan years and  was not corrected as provided in Section 4971 of the Code, could subject any Borrower to a tax imposed  by Section 4971 of the Code; (d) each and every default by any Borrower that might result in the  acceleration of the maturity of any Funded Debt, including the names and addresses of the holders of such  Funded Debt with respect to which there is a default existing or with respect to which the maturity has been  or could be accelerated, and the amount of such Funded Debt; and (e) any default under any of the Permitted  Sale-Leaseback Documentation and, if applicable, copies of any written communication (which shall  include email) from the Conway landlord (or any of its Affiliates, attorneys or other advisors) pursuant to  which any such default is asserted or described; and (f) any other development in the business or affairs of  any Borrower or any Guarantor, which could reasonably be expected to have a Material Adverse Effect; in  each case describing the nature thereof and the action Borrowers propose to take with respect thereto.  9.6 Government Receivables  .  Upon request of Agent, provide Agent with a listing of all Receivables that arise out of contracts between  any Borrower and the United States, any state, or any department, agency or instrumentality of any of them,  in such reasonable detail as Agent may require.  9.7 Annual Financial Statements  .  Furnish Agent and Lenders within ninety (90) days after the end of each fiscal year of VMC, financial  statements of Borrowers and their Subsidiaries on a consolidating (if applicable) and consolidated basis  including statements of income and stockholders’ equity and cash flow from the beginning of the current  fiscal year to the end of such fiscal year and the balance sheet as at the end of such fiscal year, all prepared  in accordance with GAAP consistently applied, and in reasonable detail and reported upon without a “going  concern” or like qualification by an independent certified public accounting firm selected by Borrowers  and satisfactory to Agent (the “Accountants”).  The report of the Accountants shall be prepared in  accordance with generally accepted accounting standards.  In addition, the reports shall be accompanied by  a Compliance Certificate.  9.8 Quarterly Financial Statements  .  Furnish Agent and Lenders within forty-five (45) days after the end of (i) each fiscal quarter (other than  the fourth fiscal quarter), an unaudited balance sheet of Borrowers and their Subsidiaries on a consolidating  (if applicable) and consolidated basis and unaudited statements of income and stockholders’ equity and  cash flow of Borrowers and their Subsidiaries on a consolidating (if applicable) and consolidated basis  reflecting results of operations from the beginning of the fiscal year to the end of such quarter and for such  quarter, prepared on a basis consistent with prior practices and fairly representing the financial condition  of the Borrowers in all material respects, subject to normal and recurring year-end adjustments and to the  absence of footnotes and (ii) the fourth fiscal quarter a summary of the last three month’s profits and losses,  and cash flow.  The reports shall be accompanied by a Compliance Certificate.  

 

  98  147420493  158492473  9.9 Monthly Financial Statements  .  Furnish Agent and Lenders within thirty (30) days after the end of each month, an unaudited balance  sheet of Borrowers and their Subsidiaries on a consolidating (if applicable) and consolidated basis and  unaudited statements of income and stockholders’ equity and cash flow of Borrowers and their Subsidiaries  on a consolidating (if applicable) and consolidated basis reflecting results of operations from the beginning  of the fiscal year to the end of such month and for such month, prepared on a basis consistent with prior  practices and fairly representing the financial condition of the Borrowers in all material respects, subject to  normal and recurring year-end adjustments and to the absence of footnotes.  The reports shall be  accompanied by a Compliance Certificate.  9.10 Other Reports  .  Furnish Agent as soon as available, but in any event within ten (10) days after the issuance thereof, (a)  with copies of such financial statements, reports and returns as each Borrower shall send to its stockholders,  (b) with copies of each annual report, proxy or financial statement or other report or communication sent  to the shareholders of Borrowers, and copies of all annual, regular, periodic and special reports and  registration statements which Borrowers may file or be required to file with the SEC under Section 13 or  15(d) of the Exchange Act, and not otherwise required to be delivered to Lenders pursuant to other  provisions of this Section, and (c) with copies of any other report or other document that was filed by  Borrower or any of its Subsidiaries with any Governmental Body.  9.11 Additional Information  .  Furnish Agent with such additional information as Agent shall reasonably request in order to enable Agent  to determine whether the terms, covenants, provisions and conditions of this Agreement and the Other  Documents  have been complied with by Borrowers including, without the necessity of any request by  Agent, (a) copies of all environmental audits and reviews, (b) at least thirty (30) days prior thereto, notice  of any Borrower’s opening of any new office or place of business or any Borrower’s closing of any existing  office or place of business (other than home offices of individual marketing and sales employees and  regional sales managers of the Borrowers), and (c) promptly upon any Borrower’s learning thereof, notice  of any labor dispute to which any Borrower may become a party, any strikes or walkouts relating to any of  its plants or other facilities, and the expiration of any labor contract to which any Borrower is a party or by  which any Borrower is bound.  9.12 Projected Operating Budget  .  Furnish Agent and Lenders, (a) no later than thirty (30) days prior to the beginning of each Borrower’s  fiscal year a draft of, and (b) no later than thirty (30) days after the beginning of each such fiscal year a  final board of directors approved, month by month projected operating budget and cash flow of Borrowers  and their Subsidiaries on a consolidating (if applicable) and consolidated basis for such fiscal year  (including an income statement for each month and a balance sheet as at the end of the last month in each  fiscal quarter), such projections, in the case of the foregoing clause (b), to be accompanied by a certificate  signed by the President or Vice President Finance of each Borrower to the effect that such projections have  been prepared on the basis of sound financial planning practice consistent with past budgets and financial  statements and that such officer has no reason to question the reasonableness of any material assumptions  on which such projections were prepared.  9.13 Variances From Operating Budget  

 

  99  147420493  158492473  .  Furnish Agent, concurrently with the delivery of the financial statements referred to in Sections 9.7 and  9.8, a written report summarizing all material variances from budgets submitted by Borrowers pursuant to  Section 9.12 and a discussion and analysis by management with respect to such variances.  9.14 Notice of Suits, Adverse Events  .  Furnish Agent with prompt written notice of (a) any lapse or other termination of any Consent issued to  any Borrower by any Governmental Body or any other Person that is material to the operation of any  Borrower’s business, (b) any refusal by any Governmental Body or any other Person to renew or extend  any such Consent; and (c) copies of any periodic or special reports filed by any Borrower or any Guarantor  with any Governmental Body or Person, if such reports indicate any material change in the business,  operations, affairs or condition of any Borrower or any Guarantor, or if copies thereof are requested by  Lender, and (d) copies of any material notices and other communications from any Governmental Body or  Person which specifically relate to any Borrower or any Guarantor.  9.15 ERISA Notices and Requests  .  Furnish Agent with prompt written notice in the event that (a) any Borrower or any member of the  Controlled Group knows or has reason to know that a Termination Event has occurred, together with a  written statement describing such Termination Event and the action, if any, which such Borrower or any  member of the Controlled Group has taken, is taking, or proposes to take with respect thereto and, when  known, any action taken or threatened by the Internal Revenue Service, Department of Labor or PBGC  with respect thereto, (b) any Borrower or any member of the Controlled Group knows or has reason to  know that a prohibited transaction (as defined in Sections 406 of ERISA and 4975 of the Code) that could  reasonably be expected to have a Material Adverse Effect has occurred together with a written statement  describing such transaction and the action which such Borrower or any member of the Controlled Group  (as applicable) has taken, is taking or proposes to take with respect thereto, (c) a funding waiver request  has been filed with respect to any Plan together with all communications received by any Borrower or any  member of the Controlled Group (as applicable) with respect to such request, (d) any increase in the benefits  of any existing Plan or the establishment of any new Plan or the commencement of contributions to any  Plan to which any Borrower or any member of the Controlled Group was not previously contributing shall  occur, (e) any Borrower or any member of the Controlled Group shall receive from the PBGC a notice of  intention to terminate a Plan or to have a trustee appointed to administer a Plan, together with copies of  each such notice, (f) any Borrower or any member of the Controlled Group shall receive any unfavorable  determination letter from the Internal Revenue Service regarding the qualification of a Plan under Section  401(a) of the Code, together with copies of each such letter; (g) any Borrower or any member of the  Controlled Group shall receive a notice regarding the imposition of withdrawal liability, together with  copies of each such notice; (h) any Borrower or any member of the Controlled Group shall fail to make a  required installment or any other required payment under the Code or ERISA on or before the due date for  such installment or payment; or (i) any Borrower or any member of the Controlled Group knows that (i) a  Multiemployer Plan has been terminated, (ii) the administrator or plan sponsor of a Multiemployer Plan  intends to terminate a Multiemployer Plan, (iii) the PBGC has instituted or will institute proceedings under  Section 4042 of ERISA to terminate a Multiemployer Plan or (d) a Multiemployer Plan is subject to Section  432 of the Code or Section 305 of ERISA.  9.16 Additional Documents  .  Execute and deliver to Agent, upon request, such documents and agreements as Agent may, from time to  time, reasonably request to carry out the purposes, terms or conditions of this Agreement.  9.17 Updates to Certain Schedules  

 

  100  147420493  158492473  ; Notices of Management Changes.   Concurrently with the delivery of the Compliance Certificate following  the occurrence thereof, deliver to Agent updates, as applicable, to Schedules 4.4 (Locations of equipment  and Inventory), 5.4 (Federal Tax Identification Number), 5.9 (Intellectual Property, Source Code Escrow  Agreements), 5.24 (Equity Interests), 5.25 (Commercial Tort Claims), and 5.26 (Letter-of-Credit Rights).   Any such updated Schedules delivered by Borrowers to Agent in accordance with this Section 9.17 shall  automatically and immediately be deemed to amend and restate the prior version of such Schedule  previously delivered to Agent and attached to and made part of this Agreement.  Promptly provide to Agent  notice of any new senior officer or manager of any loan party and such documentation with respect thereto,  including incumbency certificates, as Agent may request to conduct its applicable due diligence with respect  to such Person.  9.18 Financial Disclosure  .  Each Borrower hereby irrevocably authorizes and directs all accountants and auditors employed by such  Borrower at any time during the Term to exhibit and deliver to Agent and each Lender copies of any of  such Borrower’s financial statements, trial balances or other accounting records of any sort in the  accountant’s or auditor’s possession, and to disclose to Agent and each Lender any information such  accountants may have concerning such Borrower’s financial status and business operations.  Each Borrower  hereby authorizes all Governmental Bodies to furnish to Agent and each Lender copies of reports or  examinations relating to such Borrower, whether made by such Borrower or otherwise; however, Agent  and each Lender will attempt to obtain such information or materials directly from such Borrower prior to  obtaining such information or materials from such accountants or Governmental Bodies.  X. EVENTS OF DEFAULT.  The occurrence of any one or more of the following events shall constitute an “Event of Default”:  10.1 Nonpayment  .  Failure by any Borrower to pay any principal or interest on the Obligations (including without limitation  pursuant to Section 2.9) when due, whether due at maturity or by reason of acceleration pursuant to the  terms of this Agreement or by notice of intention to prepay, or by required prepayment or failure to pay any  other liabilities or make any other payment, fee or charge provided for herein or in any Other Document  when due.  10.2 Breach of Representation  .  Any representation or warranty made or deemed made by any Borrower or any Guarantor in this  Agreement, any Other Document or any related agreement or in any certificate, document or financial or  other statement furnished at any time in connection herewith or therewith shall prove to have been incorrect  in any material respect or when taken together with all such other information delivered under this  Agreement or the Other Documents, misleading in any material respect (except, in each case, that any such  representation or warranty that is already qualified or modified by materiality shall be true and correct in  all respects) on the date when made or deemed to have been made;  10.3 Noncompliance  .  Except as otherwise provided in Section 10.1, failure or neglect of any Borrower or Guarantor to perform,  keep or observe any term, provision, condition or covenant:  

 

  101  147420493  158492473  (a) contained in Sections 4.4, 4.5, 4.13, 6.5, 6.6, 6.7, Sections 7.1 through 7.22 or  Sections 9.7, 9.8, 9.9, 9.12 and 9.13;  (b) contained in Section 6.3  and Sections 9.1 through 9.15 (other than Sections 9.7,  9.8, 9.9, 9.12 and 9.13), which remains unremedied for a period of five (5) Business Days; or  (c) contained in any other provisions of this Agreement or any of the Other  Documents, which remains unremedied for a period of thirty (30) days after the earlier of (x) knowledge of  such failure by any Borrower, or (y) written notice of such failure to Borrowing Agent by Agent or any  Lender.    10.4 Judicial Actions and Seizures  .  (a) Issuance of a notice of Lien, levy, assessment, injunction or attachment (i) against any Borrower’s  Inventory or Receivables or (ii) against a material portion of any Borrower’s other property or (b) (i) the  seizure, garnishment or taking by a Governmental Body, or any Borrower or any Guarantor, of any material  portion of the Collateral, or (ii) the title and rights of any Borrower or any which is the owner of any material  portion of the Collateral shall have become the subject matter of claim, litigation, suit, garnishment or other  proceeding which might, in the opinion of Agent, upon final determination, result in impairment or loss of  the security provided by this Agreement or the Other Document;  10.5 Judgments  .  Any (a) judgment or judgments, writ(s), order(s) or decree(s) for the payment of money are rendered  against any Borrower or any Guarantor for an aggregate amount in excess of $250,000 or against all  Borrowers or Guarantors for an aggregate amount in excess of $250,000 and (b) (i) enforcement action  shall be legally taken by any judgment creditor to levy upon assets or properties of any Borrower or any  Guarantor to enforce any such judgment, (ii) such judgment shall remain undischarged for a period of thirty  (30) consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal  or otherwise, shall not be in effect, or (iii) any Liens arising by virtue of the rendition, entry or issuance of  such judgment upon assets or properties of any Borrower or any Guarantor shall be senior to any Liens in  favor of Agent on such assets or properties;  10.6 Bankruptcy  .  Any Borrower or any Guarantor shall (a) apply for, consent to or suffer the appointment of, or the taking  of possession by, a receiver, custodian, trustee, liquidator or similar fiduciary of itself or of all or a  substantial part of its property, (b) admit in writing its inability, or be generally unable, to pay its debts as  they become due or cease operations of its present business, (c) make a general assignment for the benefit  of creditors, (d) commence a voluntary case under any state or federal bankruptcy or receivership laws (as  now or hereafter in effect), (e) be adjudicated a bankrupt or insolvent (including by entry of any order for  relief in any involuntary bankruptcy or insolvency proceeding commenced against it), (f) file a petition  seeking to take advantage of any other law providing for the relief of debtors, (g) acquiesce to, or fail to  have dismissed, within thirty (30) days, any petition filed against it in any involuntary case under such  bankruptcy laws, or (h) take any action for the purpose of effecting any of the foregoing;  10.7 Inability to Pay  .  Any Borrower or any Guarantor shall admit in writing its inability, or be generally unable, to pay its debts  as they become due or cease operations of its present business;  

 

  102  147420493  158492473  10.8 Lien Priority  .  Any Lien created hereunder or provided for hereby or under any related agreement for any reason ceases  to be or is not a valid and perfected Lien having a first priority interest (subject only to Permitted  Encumbrances that have priority as a matter of Applicable Law to the extent such Liens only attach to  Collateral other than Receivables or Inventory);  10.9 Cross-Default  .  A default of the obligations of any Borrower or any Guarantor shall occur under (i) any agreement to  which it is a party in respect of Funded Debt in excess of $200,000 in the aggregate for all such Persons, or  (ii) the Permitted Sale-Leaseback Documentation, or (iii) any other agreement to which it is a party that  materially adversely affects its condition, affairs or prospects (financial or otherwise), in each case which  default is not cured within any applicable grace period;  10.10 Breach of Guaranty or Pledge Agreement  .  Termination or breach of any Guaranty, Guarantor Security Agreement, Pledge Agreement or similar  agreement executed and delivered to Agent in connection with the Obligations of any Borrower, or if any  Guarantor or pledgor attempts to terminate, challenges (in writing) the validity of, or its liability under, any  such Guaranty, Guarantor Security Agreement, Pledge Agreement or similar agreement;  10.11 Change of Control  .  Any Change of Control shall occur;  10.12 Invalidity  .  Any material provision of this Agreement or any Other Document shall, for any reason, cease to be valid  and binding on any Borrower or any Guarantor, or any Borrower or any Guarantor shall so claim in writing  to Agent or any Lender or any Borrower challenges the validity of or its liability under this Agreement or  any Other Document;  10.13 Licenses  .  (a) Any Governmental Body shall (i) revoke, terminate, suspend or adversely modify any license, permit,  patent trademark or trade name of any Borrower or Guarantor, or (ii) commence proceedings to suspend,  revoke, terminate or adversely modify any such license, permit, trademark, trade name or patent and such  proceedings shall not be dismissed or discharged within sixty (60) days, or (iii) schedule or conduct a  hearing on the renewal of any license, permit, trademark, trade name or patent necessary for the  continuation of any Borrower’s or Guarantor’s business and the staff of such Governmental Body issues a  report recommending the termination, revocation, suspension or material, adverse modification of such  license, permit, trademark, trade name or patent; or (b) any agreement that is necessary or material to the  operation of any Borrower’s or Guarantor’s business shall be revoked or terminated and not replaced by a  substitute acceptable to Agent within thirty (30) days after the date of such revocation or termination, and  such revocation or termination and non-replacement could, in each case of this Section 10.13, reasonably  be expected to have a Material Adverse Effect;  10.14 Operations  

 

  103  147420493  158492473  .  The operations of any Borrower’s or Guarantor’s manufacturing facility are interrupted at any time for  more than (a) five (5) consecutive days during the Peak Season or (b) fifteen (15) consecutive days at any  other time, in each case unless such Borrower or Guarantor shall (i) be entitled to receive for such period  of interruption, proceeds of business interruption insurance sufficient to assure that its per diem cash needs  during such period is at least equal to its average per diem cash needs for the consecutive six month period  immediately preceding the initial date of interruption and (ii) receive such proceeds in the amount described  in clause (a) preceding not later than thirty (30) days following the initial date of any such interruption;  provided, however, that notwithstanding the provisions of clauses (i) and (ii) of this section, an Event of  Default shall be deemed to have occurred if such Borrower or Guarantor shall be receiving the proceeds of  business interruption insurance for a period of thirty (30) consecutive days; or  10.15 Pension Plans  .  Any failure by any Borrower or Guarantor to comply with the requirements of Sections 7.16 or 9.15  hereof shall occur or exist with respect to any Plan and, as a result of such event or condition, together with  all other such events or conditions, any Borrower or any member of the Controlled Group shall incur, or in  the opinion of Agent be reasonably likely to incur, a liability to a Plan or the PBGC (or both) which would  be reasonably likely to result in a Material Adverse Effect; or the occurrence of any Termination Event, or  any Borrower’s failure to immediately report a Termination Event in accordance with Section 9.15 hereof.  10.16 Anti-Money Laundering/International Trade Law Compliance  10.17 .  Any representation, warranty or covenant contained in Sections 5.29, 5.30, 6.17, 7.18  and 7.19 is or becomes false or misleading at any time.  XI. LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT.  11.1 Rights and Remedies.  (a) Upon the occurrence of: (i) an Event of Default pursuant to Section 10.6 or 10.4,  all Obligations shall be immediately due and payable and this Agreement and the obligation of Lenders to  make Advances and the obligation of Issuer to issue or cause the issuance of any Letter of Credit shall be  deemed terminated, (ii) any of the other Events of Default and at any time thereafter (such Event of Default  not have previously been waived in writing), at the option of Agent or at the direction of Required Lenders  all Obligations shall be immediately due and payable and Agent or Required Lenders shall have the right  to terminate this Agreement and to terminate the obligation of Lenders to make Advances; and (iii) without  limiting Section 8.2 hereof, any Default under Section 10.6 hereof, the obligation of Lenders to make  Advances hereunder and the obligation of Issuer to issue or cause the issuance of any Letter of Credit shall  be suspended until such time as such involuntary petition shall be dismissed.  Upon the occurrence of any  Event of Default, Agent shall have the right to exercise any and all rights and remedies provided for herein,  under the Other Documents, under the Uniform Commercial Code and at law or equity generally, including  the right to foreclose the security interests granted herein and to realize upon any Collateral by any available  judicial procedure and/or to take possession of and sell any or all of the Collateral with or without judicial  process.  Agent may enter any of any Borrower’s premises or other premises without legal process and  without incurring liability to any Borrower therefor, and Agent may thereupon, or at any time thereafter, in  its discretion without notice or demand, take the Collateral and remove the same to such place as Agent  may deem advisable and Agent may require Borrowers to make the Collateral available to Agent at a  convenient place.  With or without having the Collateral at the time or place of sale, Agent may sell the  Collateral, or any part thereof, at public or private sale, at any time or place, in one or more sales, at such  price or prices, and upon such terms, either for cash, credit or future delivery, as Agent may elect.  Except  as to that part of the Collateral which is perishable or threatens to decline speedily in value or is of a type  

 

  104  147420493  158492473  customarily sold on a recognized market, Agent shall give Borrowers reasonable notification of such sale  or sales, it being agreed that in all events written notice mailed to Borrowing Agent at least ten (10) days  prior to such sale or sales is reasonable notification.  At any public sale Agent or any Lender may bid  (including credit bid) for and become the purchaser, and Agent, any Lender or any other purchaser at any  such sale thereafter shall hold the Collateral sold absolutely free from any claim or right of whatsoever  kind, including any equity of redemption and all such claims, rights and equities are hereby expressly  waived and released by each Borrower.  In connection with the exercise of the foregoing remedies,  including the sale of Inventory, Agent is granted a perpetual nonrevocable, royalty free, nonexclusive  license and Agent is granted permission to use all of each Borrower’s (a) Intellectual Property which is  used or useful in connection with Inventory for the purpose of marketing, advertising for sale and selling  or otherwise disposing of such Inventory and (b) equipment for the purpose of completing the manufacture  of unfinished goods.  The cash proceeds realized from the sale of any Collateral shall be applied to the  Obligations in the order set forth in Section 11.5 hereof.  Noncash proceeds will only be applied to the  Obligations as they are converted into cash.  If any deficiency shall arise, Borrowers shall remain liable to  Agent and Lenders therefor.  (b) To the extent that Applicable Law imposes duties on Agent to exercise remedies  in a commercially reasonable manner, each Borrower acknowledges and agrees that it is not commercially  unreasonable for Agent: (i) to fail to incur expenses reasonably deemed significant by Agent to prepare  Collateral for disposition or otherwise to complete raw material or work in process into finished goods or  other finished products for disposition; (ii) to fail to obtain third party consents for access to Collateral to  be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party  consents for the collection or disposition of Collateral to be collected or disposed of; (iii) to fail to exercise  collection remedies against Customers or other Persons obligated on Collateral or to remove Liens on or  any adverse claims against Collateral; (iv) to exercise collection remedies against Customers and other  Persons obligated on Collateral directly or through the use of collection agencies and other collection  specialists; (v) to advertise dispositions of Collateral through publications or media of general circulation,  whether or not the Collateral is of a specialized nature; (vi) to contact other Persons, whether or not in the  same business as any Borrower, for expressions of interest in acquiring all or any portion of such Collateral;  (vii) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not  the Collateral is of a specialized nature; (viii) to dispose of Collateral by utilizing internet sites that provide  for the auction of assets of the types included in the Collateral or that have the reasonable capacity of doing  so, or that match buyers and sellers of assets; (ix) to dispose of assets in wholesale rather than retail markets;  (x) to disclaim disposition warranties, such as title, possession or quiet enjoyment, (xi) to purchase  insurance or credit enhancements to insure Agent against risks of loss, collection or disposition of Collateral  or to provide to Agent a guaranteed return from the collection or disposition of Collateral; or (xii) to the  extent deemed appropriate by the Agent, to obtain the services of other brokers, investment bankers,  consultants and other professionals to assist Agent in the collection or disposition of any of the Collateral.   Each Borrower acknowledges that the purpose of this Section 11.1(b) is to provide non-exhaustive  indications of what actions or omissions by Agent would not be commercially unreasonable in Agent’s  exercise of remedies against the Collateral and that other actions or omissions by Agent shall not be deemed  commercially unreasonable solely on account of not being indicated in this Section 11.1(b).  Without  limitation upon the foregoing, nothing contained in this Section 11.1(b) shall be construed to grant any  rights to any Borrower or to impose any duties on Agent that would not have been granted or imposed by  this Agreement or by Applicable Law in the absence of this Section 11.1(b).  11.2 Agent’s Discretion  .  Agent shall have the right in its sole discretion to determine which rights, Liens, security interests or  remedies Agent may at any time pursue, relinquish, subordinate, or modify, which procedures, timing and  methodologies to employ, and what any other action to take with respect to any or all of the Collateral and  

 

  105  147420493  158492473  in what order, thereto and such determination will not in any way modify or affect any of Agent’s or  Lenders’ rights hereunder as against Borrowers or each other.  11.3 Setoff  .  Subject to Section 14.13, in addition to any other rights which Agent or any Lender may have under  Applicable Law, upon the occurrence of an Event of Default hereunder, Agent and such Lender shall have  a right, immediately and without notice of any kind, to apply any Borrower’s property held by Agent and  such Lender or any of their Affiliates to reduce the Obligations and to exercise any and all rights of setoff  which may be available to Agent and such Lender with respect to any deposits held by Agent or such  Lender.  Every such right of setoff shall be deemed to have been exercised immediately upon the occurrence  of an Event of Default hereunder without any action of the Agent, although the Agent may enter such setoff  on its books and records at a later time.  11.4 Rights and Remedies not Exclusive  .  The enumeration of the foregoing rights and remedies is not intended to be exhaustive and the exercise  of any rights or remedy shall not preclude the exercise of any other right or remedies provided for herein  or otherwise provided by law, all of which shall be cumulative and not alternative.  11.5 Allocation of Payments After Event of Default  .  Notwithstanding any other provisions of this Agreement to the contrary, after the occurrence and during  the continuance of an Event of Default, all amounts collected or received by Agent on account of the  Obligations (including without limitation any amounts on account of any of Cash Management Liabilities  or Hedge Liabilities), or in respect of the Collateral may, at Agent’s discretion, be paid over or delivered as  follows:  FIRST, to the payment of all reasonable out-of-pocket costs and expenses (including reasonable  attorneys’ fees) of Agent in connection with enforcing its rights and the rights of Lenders under this  Agreement and the Other Documents, and any Out-of-Formula Loans and Protective Advances funded by  Agent with respect to the Collateral under or pursuant to the terms of this Agreement;  SECOND, to payment of any fees owed to Agent;  THIRD, to the payment of all reasonable out-of-pocket costs and expenses (including reasonable  attorneys’ fees) of each of the Lenders to the extent owing to such Lender pursuant to the terms of this  Agreement;  FOURTH, to the payment of all of the Obligations consisting of accrued interest on account of the  Swing Loans;  FIFTH, to the payment of the outstanding principal amount of the Obligations consisting of Swing  Loans;  SIXTH, to the payment of all Obligations arising under this Agreement and the Other Documents  consisting of accrued fees and interest (other than interest in respect of Swing Loans paid pursuant to clause  FOURTH above);  SEVENTH, to the payment of the outstanding principal amount of the Obligations (other than  principal in respect of Swing Loans paid pursuant to clause FIFTH above) arising under this Agreement  

 

  106  147420493  158492473  (including Cash Management Liabilities and Hedge Liabilities and the payment or cash collateralization of  any outstanding Letters of Credit in accordance with Section 3.2(b) hereof).  EIGHTH, to all other Obligations arising under this Agreement which shall have become due and  payable (hereunder, under the Other Documents or otherwise) and not repaid pursuant to clauses “FIRST”  through “SEVENTH” above;  NINTH, to all other Obligations which shall have become due and payable and not repaid pursuant  to clauses “FIRST” through “EIGHTH”; and  TENTH, to the payment of the surplus, if any, to whoever may be lawfully entitled to receive such  surplus.  In carrying out the foregoing, (i) amounts received shall be applied in the numerical order provided  until exhausted prior to application to the next succeeding category; (ii) each of the Lenders shall receive  (so long as it is not a Defaulting Lender) an amount equal to its pro rata share (based on the proportion that  the then outstanding Advances, Cash Management Liabilities and Hedge Liabilities held by such Lender  bears to the aggregate then outstanding Advances, Cash Management Liabilities and Hedge Liabilities) of  amounts available to be applied pursuant to clauses “SIXTH”, “SEVENTH”, “EIGHTH” and “TENTH”  above; and (iii) notwithstanding anything to the contrary in this Section 11.5, no Swap Obligations of any  Non-Qualifying Party shall be paid with amounts received from such Non-Qualifying Party under its  Guaranty (including sums received as a result of the exercise of remedies with respect to such Guaranty) or  from the proceeds of such Non-Qualifying Party’s Collateral if such Swap Obligations would constitute  Excluded Hedge Liabilities, provided, however, that to the extent possible appropriate adjustments shall be  made with respect to payments and/or the proceeds of Collateral from other Borrowers and/or Guarantors  that are Eligible Contract Participants with respect to such Swap Obligations to preserve the allocation to  Obligations otherwise set forth above in this Section 11.5; and (iv) to the extent that any amounts available  for distribution pursuant to clause “SEVENTH” above are attributable to the issued but undrawn amount  of outstanding Letters of Credit, such amounts shall be held by Agent as cash collateral for the Letters of  Credit pursuant to Section 3.2(b) hereof and applied (A) first, to reimburse Issuer from time to time for any  drawings under such Letters of Credit and (B) then, following the expiration of all Letters of Credit, to all  other obligations of the types described in clauses “SEVENTH,” “EIGHTH”, and “TENTH” above in the  manner provided in this Section 11.5.  XII. WAIVERS AND JUDICIAL PROCEEDINGS.  12.1 Waiver of Notice  .  Each Borrower hereby waives notice of non-payment of any of the Receivables, demand, notice of  acceleration, notice of intent to accelerate, presentment, protest and notice thereof with respect to any and  all instruments, notice of acceptance hereof, notice of loans or advances made, credit extended, Collateral  received or delivered, or any other action taken in reliance hereon, and all other demands and notices of  any description, except such as are expressly provided for herein.  12.2 Delay  .  No delay or omission on Agent’s or any Lender’s part in exercising any right, remedy or option shall  operate as a waiver of such or any other right, remedy or option or of any Default or Event of Default.  12.3 Jury Waiver; California Judicial Reference.  

 

  107  147420493  158492473  (a) EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES TO  THE MAXIMUM EXTENT NOT PROHIBITED BY APPLICABLE LAW, ANY RIGHT TO TRIAL BY  JURY OF ANY CLAIM, COUNTERCLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A)  ARISING UNDER THIS AGREEMENT, THE OTHER DOCUMENTS, OR ANY OTHER  INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION  HEREWITH OR THEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR  INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR THERETO OR ANY OF THEM  WITH RESPECT TO THIS AGREEMENT, THE OTHER DOCUMENTS OR ANY OTHER  INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION  HEREWITH OR THEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO IN  EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER  SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS  THAT ANY SUCH CLAIM, COUNTERCLAIM, DEMAND, ACTION OR CAUSE OF ACTION  SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS  AGREEMENT OR SUCH OTHER DOCUMENT MAY FILE AN ORIGINAL COUNTERPART OR A  COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF  THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.  (b) IN THE EVENT THAT ANY SUCH ACTION IS COMMENCED OR  MAINTAINED IN ANY COURT IN THE STATE OF CALIFORNIA, AND THE WAIVER OF JURY  TRIAL SET FORTH IN SECTION ABOVE IS NOT ENFORCEABLE, AND EACH PARTY TO SUCH  ACTION DOES NOT SUBSEQUENTLY WAIVE IN AN EFFECTIVE MANNER UNDER  CALIFORNIA LAW ITS RIGHT TO A TRIAL BY JURY, THE PARTIES HERETO HEREBY ELECT  TO PROCEED AS FOLLOWS:  (i) WITH THE EXCEPTION OF THE ITEMS SPECIFIED IN CLAUSE (II)  BELOW, ANY CONTROVERSY, DISPUTE OR CLAIM (EACH, A “CONTROVERSY”) BETWEEN  THE PARTIES ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER  DOCUMENT WILL BE RESOLVED BY A REFERENCE PROCEEDING IN ACCORDANCE WITH  THE PROVISIONS OF SECTIONS 638, ET SEQ. OF THE CALIFORNIA CODE OF CIVIL  PROCEDURE (“CCP”), OR THEIR SUCCESSOR SECTIONS, WHICH SHALL CONSTITUTE THE  EXCLUSIVE REMEDY FOR THE RESOLUTION OF ANY CONTROVERSY, INCLUDING  WHETHER THE CONTROVERSY IS SUBJECT TO THE REFERENCE PROCEEDING.  EXCEPT AS  OTHERWISE PROVIDED ABOVE, VENUE FOR THE REFERENCE PROCEEDING WILL BE IN  ANY COURT IN WHICH VENUE IS APPROPRIATE UNDER APPLICABLE LAW (THE “COURT”).  (ii) THE MATTERS THAT SHALL NOT BE SUBJECT TO A  REFERENCE ARE THE FOLLOWING: (A) NON-JUDICIAL FORECLOSURE OF ANY SECURITY  INTERESTS IN REAL OR PERSONAL PROPERTY; (B) EXERCISE OF SELF HELP REMEDIES  (INCLUDING SET-OFF); (C) APPOINTMENT OF A RECEIVER; AND (D) TEMPORARY,  PROVISIONAL OR ANCILLARY REMEDIES (INCLUDING WRITS OF ATTACHMENT, WRITS OF  POSSESSION, TEMPORARY RESTRAINING ORDERS OR PRELIMINARY INJUNCTIONS).  THIS  AGREEMENT DOES NOT LIMIT THE RIGHT OF ANY PARTY TO EXERCISE OR OPPOSE ANY  OF THE RIGHTS AND REMEDIES DESCRIBED IN CLAUSES (A) AND (B) OR TO SEEK OR  OPPOSE FROM A COURT OF COMPETENT JURISDICTION ANY OF THE ITEMS DESCRIBED IN  CLAUSES (C) AND (D).  THE EXERCISE OF, OR OPPOSITION TO, ANY OF THOSE ITEMS DOES  NOT WAIVE THE RIGHT OF ANY PARTY TO A REFERENCE PURSUANT TO THIS  AGREEMENT.  (iii) THE REFEREE SHALL BE A RETIRED JUDGE OR JUSTICE  SELECTED BY MUTUAL WRITTEN AGREEMENT OF THE PARTIES.  IF THE PARTIES DO NOT  

 

  108  147420493  158492473  AGREE WITHIN TEN (10) DAYS OF A WRITTEN REQUEST TO DO SO BY ANY PARTY, THEN,  UPON REQUEST OF ANY PARTY, THE REFEREE SHALL BE SELECTED BY THE PRESIDING  JUDGE OF THE COURT (OR HIS OR HER REPRESENTATIVE).  A REQUEST FOR APPOINTMENT  OF A REFEREE MAY BE HEARD ON AN EX PARTE OR EXPEDITED BASIS, AND THE PARTIES  AGREE THAT IRREPARABLE HARM WOULD RESULT IF EX PARTE RELIEF IS NOT GRANTED.  (iv) EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE  REFEREE SHALL DETERMINE THE MANNER IN WHICH THE REFERENCE PROCEEDING IS  CONDUCTED INCLUDING THE TIME AND PLACE OF HEARINGS, THE ORDER OF  PRESENTATION OF EVIDENCE, AND ALL OTHER QUESTIONS THAT ARISE WITH RESPECT  TO THE COURSE OF THE REFERENCE PROCEEDING.  ALL PROCEEDINGS AND HEARINGS  CONDUCTED BEFORE THE REFEREE, EXCEPT FOR TRIAL, SHALL BE CONDUCTED  WITHOUT A COURT REPORTER, EXCEPT THAT WHEN ANY PARTY SO REQUESTS, A COURT  REPORTER WILL BE USED AT ANY HEARING CONDUCTED BEFORE THE REFEREE, AND THE  REFEREE WILL BE PROVIDED A COURTESY COPY OF THE TRANSCRIPT.  THE PARTY  MAKING SUCH A REQUEST SHALL HAVE THE OBLIGATION TO ARRANGE FOR THE COURT  REPORTER.  SUBJECT TO THE REFEREE’S POWER TO AWARD COSTS TO THE PREVAILING  PARTY, THE BORROWERS WILL PAY THE COST OF THE REFEREE AND ALL COURT  REPORTERS.  (v) THE REFEREE SHALL BE REQUIRED TO DETERMINE ALL  ISSUES IN ACCORDANCE WITH EXISTING APPLICABLE CASE LAW AND STATUTORY LAW.   THE RULES OF EVIDENCE APPLICABLE TO PROCEEDINGS AT LAW IN THE COURT WILL BE  APPLICABLE TO THE REFERENCE PROCEEDING.  THE REFEREE SHALL BE EMPOWERED TO  ENTER EQUITABLE AS WELL AS LEGAL RELIEF, ENTER EQUITABLE ORDERS THAT WILL  BE BINDING ON THE PARTIES AND RULE ON ANY MOTION THAT WOULD BE AUTHORIZED  IN A COURT PROCEEDING.  THE REFEREE SHALL ISSUE A DECISION AT THE CLOSE OF THE  REFERENCE PROCEEDING WHICH DISPOSES OF ALL CLAIMS OF THE PARTIES THAT ARE  THE SUBJECT OF THE REFERENCE.PURSUANT TO CCP SECTION 644, SUCH DECISION SHALL  BE ENTERED BY THE COURT AS A JUDGMENT OR AN ORDER IN THE SAME MANNER AS IF  THE ACTION HAD BEEN TRIED BY THE COURT AND ANY SUCH DECISION WILL BE FINAL,  BINDING AND CONCLUSIVE.  THE PARTIES RESERVE THE RIGHT TO APPEAL FROM THE  FINAL JUDGMENT OR ORDER OR FROM ANY APPEALABLE DECISION OR ORDER ENTERED  BY THE REFEREE.  THE PARTIES RESERVE THE RIGHT TO FINDINGS OF FACT,  CONCLUSIONS OF LAWS, A WRITTEN STATEMENT OF DECISION, AND THE RIGHT TO MOVE  FOR A NEW TRIAL OR A DIFFERENT JUDGMENT, WHICH NEW TRIAL, IF GRANTED, IS ALSO  TO BE A REFERENCE PROCEEDING UNDER THIS PROVISION.  (vi) NEITHER THE INCLUSION OF THIS SECTION 12.3, NOR ANY  REFERENCE TO CALIFORNIA LAW CONTAINED HEREIN SHALL BE DEEMED TO AFFECT OR  LIMIT IN ANY WAY THE PARTIES’ CHOICE OF NEW YORK LAW.  XIII. EFFECTIVE DATE AND TERMINATION.  13.1 Term; Prepayment  .  This Agreement, which shall inure to the benefit of and shall be binding upon the respective successors  and permitted assigns of each Borrower, Agent and each Secured Party, shall become effective on the  Restatement Date and shall continue in full force and effect until March 19April 15, 20232027 (the “Term”)  unless sooner terminated as herein provided.  Borrowers may terminate this Agreement at any time upon  not less than sixty (60) days’ nor more than ninety (90) days’ prior written notice upon payment in full of  

 

  109  147420493  158492473  the Obligations (other than Inchoate Obligations). In the event the Equipment Loans are prepaid in full or  in partthis Agreement is terminated prior to the last day of the Term (the date of such prepayment hereinafter  referred to as the “Early Termination Date”), Borrowers shall pay to Agent for the benefit of Lenders an  early termination fee as set forth in the Fee Letter.  13.2 Termination  .  The termination of the Agreement shall not affect any Borrower’s, Agent’s or any other Lender’s rights,  or any of the Obligations having their inception prior to the effective date of such termination, and the  provisions hereof shall continue to be fully operative until all transactions entered into, rights or interests  created or Obligations (other than Inchoate Obligations) have been fully and indefeasibly paid, disposed of,  concluded or liquidated.  The security interests, Liens and rights granted to Agent and Lenders hereunder  and the financing statements filed hereunder shall continue in full force and effect, notwithstanding the  termination of this Agreement or the fact that Borrowers’ Account may from time to time be temporarily  in a zero or credit position, until all of the Obligations (other than Inchoate Obligations) of each Borrower  have been indefeasibly paid and performed in full after the termination of this Agreement or each Borrower  has furnished Agent and Lenders with an indemnification satisfactory to Agent and Lenders with respect  thereto.  Accordingly, each Borrower waives any rights that it may have under the Uniform Commercial  Code to demand the filing of termination statements with respect to the Collateral, and Agent shall not be  required to send such termination statements to each Borrower, or to file them with any filing office, unless  and until this Agreement has been terminated in accordance with its terms and all Obligations (other than  Inchoate Obligations) have been indefeasibly paid in full in immediately available funds.  All  representations, warranties, covenants, waivers and agreements contained herein shall survive termination  hereof until all Obligations (other than Inchoate Obligations) are indefeasibly paid and performed in full.  In the event of the payoff or refinancing of all outstanding Obligations contemporaneously with the  termination of all Commitments hereunder, Agent shall confirm the payoff of the Obligations on the date  so paid and the termination of the Commitments on the date so terminated in a customary payoff letter  satisfactory to Agent in its reasonable discretion.  XIV. REGARDING AGENT.  14.1 Appointment  .  Each Lender hereby designates PNC to act as Agent for such Lender under this Agreement and the Other  Documents.  Each Lender hereby irrevocably authorizes Agent to take such action on its behalf under the  provisions of this Agreement and the Other Documents and to exercise such powers and to perform such  duties hereunder and thereunder as are specifically delegated to or required of Agent by the terms hereof  and thereof and such other powers as are reasonably incidental thereto and Agent shall hold all Collateral,  payments of principal and interest, fees (except the fees set forth in Sections 2.8(b) and the Fee Letter),  charges and collections received pursuant to this Agreement, for the ratable benefit of Lenders.  Agent may  perform any of its duties hereunder by or through its agents or employees.  As to any matters not expressly  provided for by this Agreement (including collection of the Notes) Agent shall not be required to exercise  any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully  protected in so acting or refraining from acting) upon the instructions of Required Lenders, and such  instructions shall be binding; provided, however, that Agent shall not be required to take any action which,  in Agent’s discretion, exposes Agent to liability or which is contrary to this Agreement or the Other  Documents or Applicable Law unless Agent is furnished with an indemnification reasonably satisfactory  to Agent with respect thereto.  14.2 Nature of Duties  

 

  110  147420493  158492473  .  Agent shall have no duties or responsibilities except those expressly set forth in this Agreement and the  Other Documents.  Neither Agent nor any of its officers, directors, employees or agents shall be (i) liable  for any action taken or omitted by them as such hereunder or in connection herewith, unless caused by their  gross (not mere) negligence or willful misconduct (as determined by a court of competent jurisdiction in a  final non-appealable judgment), or (ii) responsible in any manner for any recitals, statements,  representations or warranties made by any Borrower or any officer thereof contained in this Agreement, or  in any of the Other Documents or in any certificate, report, statement or other document referred to or  provided for in, or received by Agent under or in connection with, this Agreement or any of the Other  Documents or for the value, validity, effectiveness, genuineness, due execution, enforceability or  sufficiency of this Agreement, or any of the Other Documents or for any failure of any Borrower to perform  its obligations hereunder.  Agent shall not be under any obligation to any Lender to ascertain or to inquire  as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement  or any of the Other Documents, or to inspect the properties, books or records of any Borrower.  The duties  of Agent as respects the Advances to Borrowers shall be mechanical and administrative in nature; Agent  shall not have by reason of this Agreement a fiduciary relationship in respect of any Lender; and nothing  in this Agreement, expressed or implied, is intended to or shall be so construed as to impose upon Agent  any obligations in respect of this Agreement or the transactions described herein except as expressly set  forth herein.  14.3 Lack of Reliance on Agent  .  Independently and without reliance upon Agent or any other Lender, each Lender has made and shall  continue to make (i) its own independent investigation of the financial condition and affairs of each  Borrower and each Guarantor in connection with the making and the continuance of the Advances  hereunder and the taking or not taking of any action in connection herewith, and (ii) its own appraisal of  the creditworthiness of each Borrower and each Guarantor.  Agent shall have no duty or responsibility,  either initially or on a continuing basis, to provide any Lender with any credit or other information with  respect thereto, whether coming into its possession before making of the Advances or at any time or times  thereafter except as shall be provided by any Borrower pursuant to the terms hereof.  Agent shall not be  responsible to any Lender for any recitals, statements, information, representations or warranties herein or  in any agreement, document, certificate or a statement delivered in connection with or for the execution,  effectiveness, genuineness, validity, enforceability, collectability or sufficiency of this Agreement or any  Other Document, or of the financial condition of any Borrower or any Guarantor, or be required to make  any inquiry concerning either the performance or observance of any of the terms, provisions or conditions  of this Agreement, the Notes, the Other Documents or the financial condition or prospects of any Borrower,  or the existence of any Event of Default or any Default.  14.4 Resignation of Agent; Successor Agent  .  Agent may resign on thirty (30) days written notice to each Lender and Borrowing Agent and upon such  resignation, Required Lenders will promptly designate a successor Agent reasonably satisfactory to  Borrowing Agent (provided that no notice to or approval of Borrowing Agent  shall be required (i) in any  case where the successor Agent is one of the Lenders or (ii) after the occurrence and during the continuance  of any Event of Default).  Any such successor Agent shall succeed to the rights, powers and duties of Agent,  and shall in particular succeed to all of Agent’s right, title and interest in and to all of the Liens in the  Collateral securing the Obligations created hereunder or any Other Document (including all account control  agreements, Pledge Agreements and /or Mortgages), and the term “Agent” shall mean such successor agent  effective upon its appointment, and the former Agent’s rights, powers and duties as Agent shall be  terminated, without any other or further act or deed on the part of such former Agent.  However,  notwithstanding the foregoing, if at the time of the effectiveness of the new Agent’s appointment, any  further actions need to be taken in order to provide for the legally binding and valid transfer of any Liens  

 

  111  147420493  158492473  in the Collateral from former Agent to new Agent and/or for the perfection of any Liens in the Collateral  as held by new Agent or it is otherwise not then possible for new Agent to become the holder of a fully  valid, enforceable and perfected Lien as to any of the Collateral, former Agent shall continue to hold such  Liens solely as agent for perfection of such Liens on behalf of new Agent until such time as new Agent can  obtain a fully valid, enforceable and perfected Lien on all Collateral, provided that Agent shall not be  required to or have any liability or responsibility to take any further actions after such date as such agent  for perfection to continue the perfection of any such Liens (other than to forego from taking any affirmative  action to release any such Liens).  After any Agent’s resignation as Agent, the provisions of this Article  XIV, and any indemnification rights under this Agreement, including without limitation, rights arising  under Section 16.5 hereof, shall inure to its benefit as to any actions taken or omitted to be taken by it while  it was Agent under this Agreement (and in the event resigning Agent continues to hold any Liens pursuant  to the provisions of the immediately preceding sentence, the provisions of this Article XIV and any  indemnification rights under this Agreement, including without limitation, rights arising under Section 16.5  hereof, shall inure to its benefit as to any actions taken or omitted to be taken by it in connection with such  Liens).  14.5 Certain Rights of Agent  .  If Agent shall request instructions from Lenders with respect to any act or action (including failure to act)  in connection with this Agreement or any Other Document, Agent shall be entitled to refrain from such act  or taking such action unless and until Agent shall have received instructions from Required Lenders; and  Agent shall not incur liability to any Person by reason of so refraining.  Without limiting the foregoing,  Lenders shall not have any right of action whatsoever against Agent as a result of its acting or refraining  from acting hereunder in accordance with the instructions of Required Lenders.  14.6 Reliance  .  Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution,  notice, statement, certificate, email, facsimile, telex, teletype or telecopier message, cablegram, order or  other document or telephone message believed by it to be genuine and correct and to have been signed, sent  or made by the proper person or entity, and, with respect to all legal matters pertaining to this Agreement  and the Other Documents and its duties hereunder, upon advice of counsel selected by it.  Agent may  employ agents and attorneys-in-fact and shall not be liable for the default or misconduct of any such agents  or attorneys-in-fact selected by Agent with reasonable care.  14.7 Notice of Default  .  Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of  Default hereunder or under the Other Documents, unless Agent has received notice from a Lender or  Borrowing Agent referring to this Agreement or the Other Documents, describing such Default or Event of  Default and stating that such notice is a “notice of default”.  In the event that Agent receives such a notice,  Agent shall give notice thereof to Lenders.  Agent shall take such action with respect to such Default or  Event of Default as shall be reasonably directed by Required Lenders; provided, that, unless and until Agent  shall have received such directions, Agent may (but shall not be obligated to) take such action, or refrain  from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the  best interests of Lenders.  14.8 Indemnification  .  To the extent Agent is not reimbursed and indemnified by Borrowers, each Lender will reimburse and  indemnify Agent in proportion to its respective portion of the outstanding Advances and its respective  

 

  112  147420493  158492473  Participation Commitments in the outstanding Letters of Credit and outstanding Swing Loans (or, if no  Advances are outstanding, pro rata according to the percentage that its Revolving Commitment Amount  and Equipment Loan Commitment Amount, as applicable, constitute of the total aggregate Revolving  Commitment Amounts and Equipment Loan Commitment Amounts), from and against any and all  liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or  disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against  Agent in performing its duties hereunder, or in any way relating to or arising out of this Agreement or any  Other Document; provided that Lenders shall not be liable for any portion of such liabilities, obligations,  losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from  Agent’s gross (not mere) negligence or willful misconduct (as determined by a court of competent  jurisdiction in a final non-appealable judgment).  All amounts due under this Section 14.8 shall be payable  not later than ten (10) days after demand therefor.  14.9 Agent in its Individual Capacity  .  With respect to the obligation of Agent to lend under this Agreement, the Advances made by it shall have  the same rights and powers hereunder as any other Lender and as if it were not performing the duties as  Agent specified herein; and the term “Lender” or any similar term shall, unless the context clearly otherwise  indicates, include Agent in its individual capacity as a Lender.  Agent may engage in business with any  Borrower as if it were not performing the duties specified herein, and may accept fees and other  consideration from any Borrower for services in connection with this Agreement or otherwise without  having to account for the same to Lenders.  14.10 Delivery of Documents  .  To the extent Agent receives financial statements required under Sections 9.7, 9.8, 9.9, 9.12 and 9.13 or  Borrowing Base Certificates from any Borrower pursuant to the terms of this Agreement which any  Borrower is not obligated to deliver to each Lender, Agent will promptly furnish such documents and  information to Lenders.  14.11 Borrowers’ Undertaking to Agent  .  Without prejudice to their respective obligations to Lenders under the other provisions of this Agreement,  each Borrower hereby undertakes with Agent to pay to Agent from time to time on demand all amounts  from time to time due and payable by it for the account of Agent or Lenders or any of them pursuant to this  Agreement to the extent not already paid.  Any payment made pursuant to any such demand shall pro tanto  satisfy the relevant Borrower’s obligations to make payments for the account of Lenders or the relevant one  or more of them pursuant to this Agreement.  14.12 No Reliance on Agent’s Customer Identification Program  .  To the extent the Advances or this Agreement is, or becomes, syndicated in cooperation with other  Lenders, each Lender acknowledges and agrees that neither such Lender, nor any of its Affiliates,  participants or assignees, may rely on Agent to carry out such Lender’s, Affiliate’s, participant’s or  assignee’s customer identification program, or other obligations required or imposed under or pursuant to  the USA PATRIOT Act or the regulations thereunder, including the regulations contained in 31 CFR  103.121 (as hereafter amended or replaced, the “CIP Regulations”), or any other Anti Terrorism Law,  including any programs involving any of the following items relating to or in connection with any of  Borrowers, their Affiliates or their agents, the Other Documents or the transactions hereunder or  contemplated hereby: (i) any identity verification procedures, (ii) any recordkeeping, (iii) comparisons with  

 

  113  147420493  158492473  government lists, (iv) customer notices or (v) other procedures required under the CIP Regulations or such  Anti-Terrorism Law.  14.13 Other Agreements  .  Each of the Lenders agrees that it shall not, without the express consent of Agent, and that it shall, to the  extent it is lawfully entitled to do so, upon the request of Agent, set off against the Obligations, any amounts  owing by such Lender to any Borrower or any deposit accounts of any Borrower now or hereafter  maintained with such Lender.  Anything in this Agreement to the contrary notwithstanding, each of the  Lenders further agrees that it shall not, unless specifically requested to do so by Agent, take any action to  protect or enforce its rights arising out of this Agreement or the Other Documents, it being the intent of  Lenders that any such action to protect or enforce rights under this Agreement and the Other Documents  shall be taken in concert and at the direction or with the consent of Agent or Required Lenders.  14.14 Erroneous Payments.  (a) If the Agent notifies a Lender, Issuer or Secured Party, or any Person who has  received funds on behalf of a Lender, Issuer or Secured Party (any such Lender, Issuer, Secured Party or  other recipient, a “Payment Recipient”) that the Agent has determined in its sole discretion (whether or not  after receipt of any notice under immediately succeeding clause (b)) that any funds received by such  Payment Recipient from the Agent or any of its Affiliates were erroneously transmitted to, or otherwise  erroneously or mistakenly received by, such Payment Recipient (whether or not known to such Lender,  Issuer, Secured Party or other Payment Recipient on its behalf) (any such funds, whether received as a  payment, prepayment or repayment of principal, interest, fees, distribution or otherwise, individually and  collectively, an “Erroneous Payment”) and demands the return of such Erroneous Payment (or a portion  thereof), such Erroneous Payment shall at all times remain the property of the Agent and shall be segregated  by the Payment Recipient and held in trust for the benefit of the Agent, and such Lender, Issuer or Secured  Party shall (or, with respect to any Payment Recipient who received such funds on its behalf, shall cause  such Payment Recipient to) promptly, but in no event later than two Business Days thereafter, return to the  Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was  made, in same day funds (in the currency so received), together with interest thereon in respect of each day  from and including the date such Erroneous Payment (or portion thereof) was received by such Payment  Recipient to the date such amount is repaid to the Agent in same day funds at the greater of the Effective  Federal Funds Rate and a rate determined by the Agent in accordance with banking industry rules on  interbank compensation from time to time in effect. A notice from the Agent to any Payment Recipient  under this clause (a) shall be conclusive, absent manifest error.  (b) Without limiting immediately preceding clause (a), each Lender, Issuer or Secured  Party, or any Person who has received funds on behalf of a Lender, Issuer or Secured Party hereby further  agrees that if it receives a payment, prepayment or repayment (whether received as a payment, prepayment  or repayment of principal, interest, fees, distribution or otherwise) from the Agent (or any of its Affiliates)   (x) that is in an amount different than, or on a different date from, that specified in a notice of payment,  prepayment or repayment sent by the Agent (or any of its Affiliates) with respect to such, prepayment or  repayment (y) that was not preceded or accompanied by a notice of payment, prepayment or repayment  sent by the Agent (or any of its Affiliates), or (z) that such Lender, Issuer or Secured Party, or other such  recipient, otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part)  in each case:  (i) (A) In the case of immediately preceding clauses (x) or (y), an error shall  be presumed to have been made (absent written confirmation from the Agent to the contrary) or (B) an error  

 

  114  147420493  158492473  has been made (in the case of immediately preceding clause (z)), in each case, with respect to such payment,  prepayment or repayment; and  (ii) such Lender, Issuer or Secured Party shall (and shall cause any other  recipient that receives funds on its respective behalf to) promptly (and, in all events, within one Business  Day of its knowledge of such error) notify the Agent of its receipt of such payment, prepayment or  repayment, the details thereof (in reasonable detail) and that it is so notifying the Agent pursuant to this  Section 14.14(b).  (c) Each Lender, Issuer or Secured Party hereby authorizes the Agent to set off, net  and apply any and all amounts at any time owing to such Lender, Issuer or Secured Party under any Other  Document, or otherwise payable or distributable by the Agent to such Lender, Issuer or Secured Party from  any source, against any amount due to the Agent under immediately preceding clause (a) or under the  indemnification provisions of this Agreement.  (d) In the event that an Erroneous Payment (or portion thereof) is not recovered by the  Agent for any reason, after demand therefor by the Agent in accordance with immediately preceding clause  (a), from any Lender or Issuer that has received such Erroneous Payment (or portion thereof) (and/or from  any Payment Recipient who received such Erroneous Payment (or portion thereof) on its respective behalf  (such unrecovered amount, an “Erroneous Payment Return Deficiency”), upon the Agent’s notice to such  Lender or Issuer at any time, (i) such Lender or Issuer shall be deemed to have assigned its loans (but not  its commitments) of the relevant class with respect to which such Erroneous Payment was made (the  “Erroneous Payment Impacted Class”) in an amount equal to the Erroneous Payment Return Deficiency (or  such lesser amount as the Agent may specify) (such assignment of the loans (but not commitments) of the  Erroneous Payment Impacted Class, the “Erroneous Payment Deficiency Assignment”) at par plus any  accrued and unpaid interest (with the assignment fee to be waived by the Agent in such instance), and is  hereby (together with the Borrower) deemed to execute and deliver an assignment and assumption with  respect to such Erroneous Payment Deficiency Assignment, and such Lender or Issuer shall deliver any  Notes evidencing such loans to the Borrower or the Agent, (ii) the Agent as the assignee Lender shall be  deemed to acquire the Erroneous Payment Deficiency Assignment, (iii) upon such deemed acquisition, the  Agent as the assignee Lender shall become a Lender or Issuer, as applicable, hereunder with respect to such  Erroneous Payment Deficiency Assignment and the assigning Lender or assigning Issuer shall cease to be  a Lender or Issuer, as applicable, hereunder with respect to such Erroneous Payment Deficiency  Assignment, excluding for the avoidance of doubt, its obligations under the indemnification provisions of  this Agreement and its applicable commitments which shall survive as to such assigning Lender or  assigning Issuer and (iv) the Agent may reflect in the Register its ownership interest in the loans subject to  the Erroneous Payment Deficiency Assignment.  The Agent may, in its discretion, sell any loans acquired  pursuant to an Erroneous Payment Deficiency Assignment and upon receipt of the proceeds of such sale,  the Erroneous Payment Return Deficiency owing by the applicable Lender or Issuer shall be reduced by the  net proceeds of the sale of such loan (or portion thereof), and the Agent shall retain all other rights, remedies  and claims against such Lender or Issuer (and/or against any recipient that receives funds on its respective  behalf).  For the avoidance of doubt, no Erroneous Payment Deficiency Assignment will reduce the  commitments of any Lender or Issuer and such commitments shall remain available in accordance with the  terms of this Agreement.  In addition, each party hereto agrees that, except to the extent that the Agent has  sold a loan (or portion thereof) acquired pursuant to an Erroneous Payment Deficiency Assignment, and  irrespective of whether the Agent may be equitably subrogated, the Agent shall be contractually subrogated  to all the rights and interests of the applicable Lender, Issuer or Secured Party under the Other Documents  with respect to such Erroneous Payment Return Deficiency (the “Erroneous Payment Subrogation Rights”).  (e) The parties hereto agree that an Erroneous Payment shall not pay, prepay, repay,  discharge or otherwise satisfy any Obligations owed by the Borrower or any other loan party, except, in  

 

  115  147420493  158492473  each case, to the extent such Erroneous Payment is, and solely with respect to the amount of such Erroneous  Payment that is, comprised of funds received by the Agent from the Borrower or any other loan party for  the purpose of making such Erroneous Payment.  (f) To the extent permitted by applicable law, no Payment Recipient shall assert any  right or claim to an Erroneous Payment, and hereby waives, and is deemed to waive, any claim,  counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim  by the Agent for the return of any Erroneous Payment received, including without limitation, waiver of any  defense based on “discharge for value” or any similar doctrine.  (g) Each party’s obligations under this Section 14.14 shall survive the resignation or  replacement of the Agent, the termination of all of the commitments and/or repayment, satisfaction or  discharge of all Obligations (or any portion thereof) under any Other Document.  XV. BORROWING AGENCY.  15.1 Borrowing Agency Provisions.  (a) Each Borrower hereby irrevocably designates Borrowing Agent to be its attorney  and agent and in such capacity, whether verbally, in writing or through electronic methods (including,  without limitation, an Approved Electronic Communication) to (i) borrow, (ii) request advances, (iii)  request the issuance of Letters of Credit, (iv) sign and endorse notes, (v) execute and deliver all instruments,  documents, applications, security agreements, reimbursement agreements and letter of credit agreements  for Letters of Credit and all other certificates, notice, writings and further assurances now or hereafter  required hereunder, (vi) make elections regarding interest rates, (vii) give instructions regarding Letters of  Credit and agree with Issuer upon any amendment, extension or renewal of any Letter of Credit and (viii)  otherwise take action under and in connection with this Agreement and the Other Documents, all on behalf  of and in the name such Borrower or Borrowers, and hereby authorizes Agent to pay over or credit all loan  proceeds hereunder in accordance with the request of Borrowing Agent.  (b) The handling of this credit facility as a co-borrowing facility with a borrowing  agent in the manner set forth in this Agreement is solely as an accommodation to Borrowers and at their  request.  Neither Agent nor any Lender shall incur liability to Borrowers as a result thereof.  To induce  Agent and Lenders to do so and in consideration thereof, each Borrower hereby indemnifies Agent and  each Lender and holds Agent and each Lender harmless from and against any and all liabilities, expenses,  losses, damages and claims of damage or injury asserted against Agent or any Lender by any Person arising  from or incurred by reason of the handling of the financing arrangements of Borrowers as provided herein,  reliance by Agent or any Lender on any request or instruction from Borrowing Agent or any other action  taken by Agent or any Lender with respect to this Section 15.1 except due to willful misconduct or gross  (not mere) negligence by the indemnified party (as determined by a court of competent jurisdiction in a  final and non-appealable judgment).  (c) All Obligations shall be joint and several, and each Borrower shall make payment  upon the maturity of the Obligations by acceleration or otherwise, and such obligation and liability on the  part of each Borrower shall in no way be affected by any extensions, renewals and forbearance granted by  Agent or any Lender to any Borrower, failure of Agent or any Lender to give any Borrower notice of  borrowing or any other notice, any failure of Agent or any Lender to pursue or preserve its rights against  any Borrower, the release by Agent or any Lender of any Collateral now or thereafter acquired from any  Borrower, and such agreement by each Borrower to pay upon any notice issued pursuant thereto is  unconditional and unaffected by prior recourse by Agent or any Lender to the other Borrowers or any  

 

  116  147420493  158492473  Collateral for such Borrower’s Obligations or the lack thereof.  Each Borrower waives all suretyship  defenses.  15.2 Joint and Several Liability of Borrowers. Each Borrower hereby agrees as follows:  (a) Each Borrower is accepting joint and several liability hereunder and under the  Other Documents in consideration of the financial accommodations to be provided by Agent and the  Lenders under this Agreement, for the mutual benefit, directly and indirectly, of each Borrower and in  consideration of the undertakings of the other Borrowers to accept joint and several liability for the  Obligations.  (b) Each Borrower, jointly and severally, hereby irrevocably and unconditionally  accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Borrowers,  with respect to the payment and performance of all of the Obligations (including any Obligations arising  under this Section 15.2), it being the intention of each Borrower and the parties hereto that all the  Obligations shall be the joint and several obligations of each Borrower without preferences or distinction  among them.  (c) If and to the extent that any Borrower shall fail to make any payment with respect  to any of the Obligations as and when due or to perform any of the Obligations in accordance with the terms  thereof, then in each such event the other Borrowers will make such payment with respect to, or perform,  such Obligation.  (d) The Obligations of each Borrower under the provisions of this Section 15.2  constitute the absolute and unconditional, full recourse Obligations of each Borrower enforceable against  each Borrower to the full extent of its properties and assets, irrespective of the validity, regularity or  enforceability of this Agreement or any other circumstances whatsoever.  15.3 Waiver of Subrogation  .  Each Borrower expressly waives any and all rights of subrogation, reimbursement, indemnity,  exoneration, contribution of any other claim which such Borrower may now or hereafter have against the  other Borrowers or any other Person directly or contingently liable for the Obligations hereunder, or against  or with respect to any other Borrowers’ property (including, without limitation, any property which is  Collateral for the Obligations), arising from the existence or performance of this Agreement, until  termination of this Agreement and repayment in full of the Obligations.  15.4 Common Enterprise  .  The successful operation and condition of each of the Borrowers is dependent on the continued successful  performance of the functions of the group of Borrowers as a whole and the successful operation of each  Borrower is dependent on the successful performance and operation of each other Borrower.  Each of the  Borrowers expects to derive benefit (and its board of directors or other governing body has determined that  it may reasonably be expected to derive benefit), directly or indirectly, from successful operations of each  of the other Borrowers.  Each Borrower expects to derive benefit (and the board of directors or other  governing body of each such Borrower have determined that it may reasonably be expected to derive  benefit), directly and indirectly, from the credit extended by the Lenders to the Borrowers hereunder, both  in their separate capacities and as members of the group of companies.  Each Borrower has determined that  execution, delivery, and performance of this Agreement and any Other Documents to be executed by such  Borrower is within its corporate purpose, will be of direct and indirect benefit to such Borrower, and is in  its best interest.  

 

  117  147420493  158492473  XVI. MISCELLANEOUS.  16.1 Governing Law  .  This Agreement and each Other Document (unless and except to the extent expressly provided otherwise  in any such Other Document), and all matters relating hereto or thereto or arising herefrom or therefrom  (whether arising under contract law, tort law or otherwise) shall, in accordance with Section 5-1401 of the  General Obligations Law of the State of New York, be governed by and construed in accordance with the  laws of the State of New York.  Any judicial proceeding brought by or against any Borrower with respect  to any of the Obligations, this Agreement, the Other Documents or any related agreement may be brought  in any court of competent jurisdiction in the State of New York, United States of America, and, by execution  and delivery of this Agreement, each Borrower accepts for itself and in connection with its properties,  generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts, and irrevocably agrees  to be bound by any judgment rendered thereby in connection with this Agreement.  Each Borrower hereby  waives personal service of any and all process upon it and consents that all such service of process may be  made by certified or registered mail (return receipt requested) directed to Borrowing Agent at its address  set forth in Section 16.6 and service so made shall be deemed completed five (5) days after the same shall  have been so deposited in the mails of the United States of America, or, at Agent’s option, by service upon  Borrowing Agent which each Borrower irrevocably appoints as such Borrower’s Agent for the purpose of  accepting service within the State of New York.  Nothing herein shall affect the right to serve process in  any manner permitted by law or shall limit the right of Agent or any Lender to bring proceedings against  any Borrower in the courts of any other jurisdiction.  Each Borrower waives any objection to jurisdiction  and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction  or venue or based upon forum non conveniens.  Each Borrower waives the right to remove any judicial  proceeding brought against such Borrower in any state court to any federal court.  Any judicial proceeding  by any Borrower against Agent or any Lender involving, directly or indirectly, any matter or claim in any  way arising out of, related to or connected with this Agreement or any related agreement, shall be brought  only in a federal or state court located in the County of New York, State of New York; provided, that the  Borrowers may bring counterclaims in any other court in which the original claim was brought by Agent  or any Lender.  16.2 Entire Understanding.  (a) This Agreement and the documents executed concurrently herewith contain the  entire understanding between each Borrower, Agent and each Lender and supersedes all prior agreements  and understandings, if any, relating to the subject matter hereof.  Any promises, representations, warranties  or guarantees not herein contained and hereinafter made shall have no force and effect unless in writing,  signed by each Borrower’s, Agent’s and each Lender’s respective officers.  Neither this Agreement nor any  portion or provisions hereof may be changed, modified, amended, waived, supplemented, discharged,  cancelled or terminated orally or by any course of dealing, or in any manner other than by an agreement in  writing, signed by the party to be charged.  Notwithstanding the foregoing, Agent may modify this  Agreement or any of the Other Documents for the purposes of completing missing content or correcting  erroneous content of an administrative nature, without the need for a written amendment, provided that the  Agent shall send a copy of any such modification to the Borrowers and each Lender (which copy may be  provided by electronic mail).Each Borrower acknowledges that it has been advised by counsel in connection  with the execution of this Agreement and Other Documents and is not relying upon oral representations or  statements inconsistent with the terms and provisions of this Agreement.  (b) Required Lenders, Agent with the consent in writing of Required Lenders, and  Borrowers may, subject to the provisions of this Section 16.2(b), from time to time enter into written  supplemental agreements to this Agreement or the Other Documents executed by Borrowers, for the  

 

  118  147420493  158492473  purpose of adding or deleting any provisions or otherwise changing, varying or waiving in any manner the  rights of Lenders, Agent or Borrowers thereunder or the conditions, provisions or terms thereof or waiving  any Event of Default thereunder, but only to the extent specified in such written agreements; provided,  however, that no such supplemental agreement shall:  (i) increase the Revolving Commitment Percentage, the Equipment Loan  Commitment Percentage, the maximum dollar commitment of any Lender or the Maximum Revolving  Advance Amount or the Maximum Equipment Loan Amount (or any component thereof) without the  consent of each Lender directly affected thereby;  (ii) whether or not any Advances are outstanding, extend the Term or the time  for payment of principal or interest of any Advance (excluding the due date of any mandatory prepayment  of an Advance), or any fee payable to any Lender, or reduce the principal amount of or the rate of interest  borne by any Advances or reduce any fee payable to any Lender, without the consent of each Lender directly  affected thereby (except that Required Lenders may elect to waive or rescind any imposition of the Default  Rate under Section 3.1 or of default rates of Letter of Credit fees under Section 3.2 (unless imposed by  Agent));  (iii) increase the Maximum Revolving Advance Amount without the consent  of all Lenders holding a Revolving Commitment;  (iv) alter the definition of the term Required Lenders or alter, amend or modify  this Section 16.2(b) without the consent of all Lenders;  (v) alter, amend or modify the provisions of Section 11.5 without the consent  of all Lenders;  (vi) release any Collateral during any calendar year (other than in accordance  with the provisions of this Agreement) having an aggregate value in excess of $250,000 without the consent  of all Lenders;  (vii) change the rights and duties of Agent without the consent of all Lenders;  (viii) subject to clause (e) below, permit any Revolving Advance to be made if  after giving effect thereto the total of Revolving Advances outstanding hereunder would exceed the  Formula Amount for more than thirty (30) consecutive Business Days or exceed one hundred and ten  percent (110%) of the Formula Amount without the consent of all Lenders holding a Revolving  Commitment;  (ix) increase the Advance Rates above the Advance Rates in effect on the  Restatement Date without the consent of all Lenders holding a Revolving Commitment; or  (x) release any Guarantor or Borrower without the consent of all Lenders.  (c) Any such supplemental agreement shall apply equally to each Lender and shall be  binding upon Borrowers, Lenders and Agent and all future holders of the Obligations.  In the case of any  waiver, Borrowers, Agent and Lenders shall be restored to their former positions and rights, and any Event  of Default waived shall be deemed to be cured and not continuing, but no waiver of a specific Event of  Default shall extend to any subsequent Event of Default (whether or not the subsequent Event of Default is  the same as the Event of Default which was waived), or impair any right consequent thereon.  

 

  119  147420493  158492473  (d) In the event that Agent requests the consent of a Lender pursuant to this Section  16.2 and such consent is denied, then Agent may, at its option, require such Lender to assign its interest in  the Advances to Agent or to another Lender or to any other Person designated by Agent (the “Designated  Lender”), for a price equal to (i) the then outstanding principal amount thereof plus (ii) accrued and unpaid  interest and fees due such Lender, which interest and fees shall be paid when collected from Borrowers.  In  the event Agent elects to require any Lender to assign its interest to Agent or to the Designated Lender,  Agent will so notify such Lender in writing within forty five (45) days following such Lender’s denial, and  such Lender will assign its interest to Agent or the Designated Lender no later than five (5) days following  receipt of such notice pursuant to a Commitment Transfer Supplement executed by such Lender, Agent or  the Designated Lender, as appropriate, and Agent.  (e) Notwithstanding (i) the existence of a Default or an Event of Default, (ii) that any  of the other applicable conditions precedent set forth in Section 8.2 hereof have not been satisfied or the  commitments of Lenders to make Revolving Advances hereunder have been terminated for any reason, or  (iii) any other contrary provision of this Agreement, Agent may at its discretion and without the consent of  any Lender, voluntarily permit the outstanding Revolving Advances and the Maximum Undrawn Amount  at such time to exceed the Formula Amount at such time (such sum, the “Overadvance Threshold Amount”)  by up to ten percent (10%) of the Formula Amount for up to sixty (60) consecutive Business Days (the  “Out-of-Formula Loans”); provided that such outstanding Advances and undrawn Letters of Credit do not  exceed the Maximum Revolving Advance Amount.  If Agent is willing in its sole and absolute discretion  to permit such Out-of-Formula Loans, Lenders holding the Revolving Commitments shall be obligated to  fund such Out-of-Formula Loans in accordance with their respective Revolving Commitment Percentages,  and such Out-of-Formula Loans shall be payable on demand and shall bear interest at the Default Rate for  Revolving Advances; provided that, if Agent does permit Out-of-Formula Loans, neither Agent nor Lenders  shall be deemed thereby to have changed the limits of Section 2.1(a) nor shall any Lender be obligated to  fund Revolving Advances in excess of its Revolving Commitment Amount.  For purposes of this paragraph,  the discretion granted to Agent hereunder shall not preclude involuntary overadvances that may result from  time to time due to the fact that the Formula Amount was unintentionally exceeded for any reason,  including, but not limited to, Collateral previously deemed to be either “Eligible Receivables” or “Eligible  Inventory”, as applicable, becomes ineligible, collections of Receivables applied to reduce outstanding  Revolving Advances are thereafter returned for insufficient funds or overadvances are made to protect or  preserve the Collateral.  In the event Agent involuntarily permits the outstanding Revolving Advances and  Maximum Undrawn Amount, in the aggregate, to exceed the Formula Amount by more than ten percent  (10%), Agent shall use its efforts to have Borrowers decrease such excess in as expeditious a manner as is  practicable under the circumstances and not inconsistent with the reason for such excess.  Revolving  Advances made after Agent has determined the existence of involuntary overadvances shall be deemed to  be involuntary overadvances and shall be decreased in accordance with the preceding sentence.  To the  extent any Out-of-Formula Loans are not actually funded by the other Lenders as provided for in this  Section 16.2(e), Agent may elect in its discretion to fund such Out-of-Formula Loans and any such Out-of- Formula Loans so funded by Agent shall be deemed to be Revolving Advances made by and owing to  Agent, and Agent shall be entitled to all rights (including accrual of interest) and remedies of a Lender  holding a Revolving Commitment under this Agreement and the Other Documents with respect to such  Revolving Advances.  (f) In addition to (and not in substitution of) the discretionary Revolving Advances  permitted above in this Section 16.2, Agent is hereby authorized by Borrowers and Lenders, at any time in  Agent’s sole discretion, regardless of (i) the existence of a Default or an Event of Default, (ii) whether any  of the other applicable conditions precedent set forth in Section 8.2 hereof have not been satisfied or the  commitments of Lenders to make Revolving Advances hereunder have been terminated for any reason, or  (iii) any other contrary provision of this Agreement, to make Revolving Advances (“Protective Advances”)  to Borrowers on behalf of Lenders which Agent, in its reasonable business judgment, deems necessary or  

 

  120  147420493  158492473  desirable (a) to preserve or protect the Collateral, or any portion thereof, (b) to enhance the likelihood of,  or maximize the amount of, repayment of the Advances and other Obligations, or (c) to pay any other  amount chargeable to Borrowers pursuant to the terms of this Agreement; provided, that the Protective  Advances made hereunder shall not exceed more than ten percent (10%) of the Formula Amount in the  aggregate and provided further that at any time after giving effect to any such Protective Advances, the  outstanding Revolving Advances, Swing Loans and Maximum Undrawn Amount of all outstanding Letters  of Credit do not exceed the Maximum Revolving Advance Amount.  Lenders holding the Revolving  Commitments shall be obligated to fund such Protective Advances and effect a settlement with Agent  therefor upon demand of Agent in accordance with their respective Revolving Commitment Percentages.   To the extent any Protective Advances are not actually funded by the other Lenders as provided for in this  Section 16.2(f), any such Protective Advances funded by Agent shall be deemed to be Revolving Advances  made by and owing to Agent, and Agent shall be entitled to all rights (including accrual of interest) and  remedies of a Lender holding a Revolving Commitment under this Agreement and the Other Documents  with respect to such Revolving Advances.  16.3 Successors and Assigns; Participations; New Lenders.  (a) This Agreement shall be binding upon and inure to the benefit of Borrowers,  Agent, each Lender, all future holders of the Obligations and their respective successors and assigns, except  that no Borrower may assign or transfer any of its rights or obligations under this Agreement (including, in  each case, by way of an LLC Division) without the prior written consent of Agent and each Lender.  (b) Each Borrower acknowledges that in the regular course of commercial banking  business one or more Lenders may at any time and from time to time sell participating interests in the  Advances to other Persons.  Each Participant may exercise all rights of payment (including rights of set- off) with respect to the portion of such Advances held by it or other Obligations payable hereunder as fully  as if such Participant were the direct holder thereof provided that (i) Borrowers shall not be required to pay  to any Participant more than the amount which it would have been required to pay to Lender which granted  an interest in its Advances or other Obligations payable hereunder to such Participant had such Lender  retained such interest in the Advances hereunder or other Obligations payable hereunder unless the sale of  the participation to such Participant is made with Borrower’s prior written consent, and (ii) in no event shall  Borrowers be required to pay any such amount arising from the same circumstances and with respect to the  same Advances or other Obligations payable hereunder to both such Lender and such Participant.  Each  Borrower hereby grants to any Participant a continuing security interest in any deposits, moneys or other  property actually or constructively held by such Participant as security for the Participant’s interest in the  Advances.  (c) Any Lender, with the consent of Agent (which shall not be unreasonably withheld  or delayed), may sell, assign or transfer all or any part of its rights and obligations under or relating to  Revolving Advances and/or Equipment Loans under this Agreement and the Other Documents to one or  more Eligible Assignees and one or more Eligible Assignees may commit to make Advances hereunder  (each a “Purchasing Lender”), in minimum amounts of not less than $5,000,000 (or its entire interest, if  less), pursuant to a Commitment Transfer Supplement, executed by a Purchasing Lender, the transferor  Lender, and Agent and delivered to Agent for recording, provided, however, that 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 each of the Revolving Advances and/or Equipment Loans under this  Agreement in which such Lender has an interest. Upon such execution, delivery, acceptance and recording,  from and after the transfer effective date determined pursuant to such Commitment Transfer Supplement,  (i) Purchasing Lender thereunder shall be a party hereto and, to the extent provided in such Commitment  Transfer Supplement, have the rights and obligations of a Lender thereunder with a Revolving Commitment  Percentage and/or Equipment Loan Commitment Percentage, as applicable, as set forth therein, and (ii) the  

 

  121  147420493  158492473  transferor Lender thereunder shall, to the extent provided in such Commitment Transfer Supplement, be  released from its obligations under this Agreement, the Commitment Transfer Supplement creating a  novation for that purpose.  Such Commitment Transfer Supplement shall be deemed to amend this  Agreement to the extent, and only to the extent, necessary to reflect the addition of such Purchasing Lender  and the resulting adjustment of the Revolving Commitment Percentages and/or Equipment Loan  Commitment Percentages, as applicable, arising from the purchase by such Purchasing Lender of all or a  portion of the rights and obligations of such transferor Lender under this Agreement and the Other  Documents.  Each Borrower hereby consents to the addition of such Purchasing Lender and the resulting  adjustment of the Revolving Commitment Percentages and/or Equipment Loan Commitment Percentages,  as applicable, arising from the purchase by such Purchasing Lender of all or a portion of the rights and  obligations of such transferor Lender under this Agreement and the Other Documents.  Borrowers shall  execute and deliver such further documents and do such further acts and things in order to effectuate the  foregoing.  (d) Any Lender, with the consent of Agent which shall not be unreasonably withheld  or delayed, may directly or indirectly sell, assign or transfer all or any portion of its rights and obligations  under or relating to Revolving Advances and/or Equipment Loans under this Agreement and the Other  Documents to an entity, whether a corporation, partnership, trust, limited liability company or other entity  that (i) is engaged in making, purchasing, holding or otherwise investing in bank loans and similar  extensions of credit in the ordinary course of its business and (ii) is administered, serviced or managed by  the assigning Lender or an Affiliate of such Lender (a “Purchasing CLO” and together with each Participant  and Purchasing Lender, each a “Transferee” and collectively the “Transferees”), pursuant to a Commitment  Transfer Supplement modified as appropriate to reflect the interest being assigned (“Modified Commitment  Transfer Supplement”), executed by any intermediate purchaser, the Purchasing CLO, the transferor  Lender, and Agent as appropriate and delivered to Agent for recording.  Upon such execution and delivery,  from and after the transfer effective date determined pursuant to such Modified Commitment Transfer  Supplement, (i) Purchasing CLO thereunder shall be a party hereto and, to the extent provided in such  Modified Commitment Transfer Supplement, have the rights and obligations of a Lender thereunder and  (ii) the transferor Lender thereunder shall, to the extent provided in such Modified Commitment Transfer  Supplement, be released from its obligations under this Agreement, the Modified Commitment Transfer  Supplement creating a novation for that purpose.  Such Modified Commitment Transfer Supplement shall  be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition  of such Purchasing CLO.  Each Borrower hereby consents to the addition of such Purchasing CLO.   Borrowers shall execute and deliver such further documents and do such further acts and things in order to  effectuate the foregoing.  (e) Agent shall maintain at its address a copy of each Commitment Transfer  Supplement and Modified Commitment Transfer Supplement delivered to it and a register (the “Register”)  for the recordation of the names and addresses of each Lender and the outstanding principal, accrued and  unpaid interest and other fees due hereunder.  The entries in the Register shall be conclusive, in the absence  of manifest error, and each Borrower, Agent and Lenders may treat each Person whose name is recorded in  the Register as the owner of the Advance recorded therein for the purposes of this Agreement.  The Register  shall be available for inspection by Borrowing Agent or any Lender at any reasonable time and from time  to time upon reasonable prior notice.  Agent shall receive a fee in the amount of $3,500 payable by the  applicable Purchasing Lender and/or Purchasing CLO upon the effective date of each transfer or assignment  (other than to an intermediate purchaser) to such Purchasing Lender and/or Purchasing CLO.  (f) Each Borrower authorizes each Lender to disclose to any Transferee and any  prospective Transferee any and all financial information in such Lender’s possession concerning such  Borrower which has been delivered to such Lender by or on behalf of such Borrower pursuant to this  Agreement or in connection with such Lender’s credit evaluation of such Borrower.  

 

  122  147420493  158492473  (g) Notwithstanding anything to the contrary contained in this Agreement, any Lender  may at any time and from time to time pledge or assign a security interest in all or any portion of its rights  under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure  obligations to a Federal Reserve Bank; 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.  16.4 Application of Payments  .  Agent shall have the continuing and exclusive right to apply or reverse and re-apply any payment and any  and all proceeds of Collateral to any portion of the Obligations.  To the extent that any Borrower makes a  payment or Agent or any Lender receives any payment or proceeds of the Collateral for any Borrower’s  benefit, which are subsequently invalidated, declared to be fraudulent or preferential, set aside or required  to be repaid to a trustee, debtor in possession, receiver, custodian or any other party under any bankruptcy  law, common law or equitable cause, then, to such extent, the Obligations or part thereof intended to be  satisfied shall be revived and continue as if such payment or proceeds had not been received by Agent or  such Lender.  16.5 Indemnity  .  Each Borrower shall defend, protect, indemnify, pay and save harmless Agent, Issuer, each Lender and  each of their respective officers, directors, Affiliates, attorneys, employees and agents (each an  “Indemnified Party”) for and from and against any and all claims, demands, liabilities, obligations, losses,  damages, penalties, fines, actions, judgments, suits, costs, charges, expenses and disbursements of any kind  or nature whatsoever (including fees and disbursements of counsel (including allocated costs of internal  counsel)) (collectively, “Claims”) which may be imposed on, incurred by, or asserted against any  Indemnified Party in arising out of or in any way relating to or as a consequence, direct or indirect, of: (i)  this Agreement, the Other Documents, the Advances and other Obligations and/or the transactions  contemplated hereby including the Closing, (ii) any action or failure to act or action taken only after delay  or the satisfaction of any conditions by any Indemnified Party in connection with and/or relating to the  negotiation, execution, delivery or administration of the Agreement and the Other Documents, the credit  facilities established hereunder and thereunder and/or the transactions contemplated hereby including the  Closing, (iii) any Borrower’s or any Guarantor’s failure to observe, perform or discharge any of its  covenants, obligations, agreements or duties under or breach of any of the representations or warranties  made in this Agreement and the Other Documents, (iv) the enforcement of any of the rights and remedies  of Agent, Issuer or any Lender under the Agreement and the Other Documents, (v) any threatened or actual  imposition of fines or penalties, or disgorgement of benefits, for violation of any Anti-Terrorism Law by  any Borrower, any Affiliate or Subsidiary of any Borrowers, or any Guarantor, and (vi) any claim, litigation,  proceeding or investigation instituted or conducted by any Governmental Body or instrumentality,  any  Borrower, any Affiliate or Subsidiary of any Borrowers, or any Guarantor, or any other Person with respect  to any aspect of, or any transaction contemplated by, or referred to in, or any matter related to, this  Agreement or the Other Documents, whether or not Agent or any Lender is a party thereto.  Without limiting  the generality of any of the foregoing, each Borrower shall defend, protect, indemnify, pay and save  harmless each Indemnified Party from (x) any Claims which may be imposed on, incurred by, or asserted  against any Indemnified Party arising out of or in any way relating to or as a consequence, direct or indirect,  of the issuance of any Letter of Credit hereunder and (y) any Claims which may be imposed on, incurred  by, or asserted against any Indemnified Party under any Environmental Laws with respect to or in  connection with the Real Property, any Hazardous Discharge, the presence of any Hazardous Materials  affecting the Real Property (whether or not the same originates or emerges from the Real Property or any  contiguous real estate), including any Claims consisting of or relating to the imposition or assertion of any  Lien on any of the Real Property under any Environmental Laws and any loss of value of the Real Property  

 

  123  147420493  158492473  as a result of the foregoing except to the extent such loss, liability, damage and expense is attributable to  any Hazardous Discharge resulting from actions on the part of Agent or any Lender.  Borrowers’ obligations  under this Section 16.5 shall arise upon the discovery of the presence of any Hazardous Materials at the  Real Property, whether or not any federal, state, or local environmental agency has taken or threatened any  action in connection with the presence of any Hazardous Materials, in each such case except to the extent  that any of the foregoing arises out of the gross (not mere) negligence or willful misconduct of the  Indemnified Party (as determined by a court of competent jurisdiction in a final and non-appealable  judgment).  Without limiting the generality of the foregoing, this indemnity shall extend to any liabilities,  obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any  kind or nature whatsoever (including fees and disbursements of counsel) asserted against or incurred by  any of the Indemnified Parties by any Person under any Environmental Laws or similar laws by reason of  any Borrower’s or any other Person’s failure to comply with laws applicable to solid or hazardous waste  materials, including Hazardous Materials and Hazardous Waste, or other Toxic Substances.  Additionally,  if any taxes (excluding taxes imposed upon or measured solely by the net income of Agent and Lenders,  but including any intangibles taxes, stamp tax, recording tax or franchise tax) shall be payable by Agent,  Lenders or Borrowers on account of the execution or delivery of this Agreement, or the execution, delivery,  issuance or recording of any of the Other Documents, or the creation or repayment of any of the Obligations  hereunder, by reason of any Applicable Law now or hereafter in effect, Borrowers will pay (or will promptly  reimburse Agent and Lenders for payment of) all such taxes, including interest and penalties thereon, and  will indemnify and hold the Indemnified Parties harmless from and against all liability in connection  therewith.  All amounts due under this Section 16.5 shall be payable not later than ten (10) days after  demand therefor.  16.6 Notice  .  Any notice or request hereunder may be given to Borrowing Agent or any Borrower or to Agent or any  Lender at their respective addresses set forth below or at such other address as may hereafter be specified  in a notice designated as a notice of change of address under this Section.  Any notice, request, demand,  direction or other communication (for purposes of this Section 16.6 only, a “Notice”) to be given to or made  upon any party hereto under any provision of this Agreement shall be given or made by telephone or in  writing (which includes by means of electronic transmission (i.e., “e-mail”) or facsimile transmission or by  setting forth such Notice on a website to which Borrowers are directed (an “Internet Posting”) if Notice of  such Internet Posting (including the information necessary to access such site) has previously been  delivered to the applicable parties hereto by another means set forth in this Section 16.6) in accordance with  this Section 16.6.  Any such Notice must be delivered to the applicable parties hereto at the addresses and  numbers set forth under their respective names on Section 16.6 hereof or in accordance with any subsequent  unrevoked Notice from any such party that is given in accordance with this Section 16.6.  Any Notice shall  be effective:  (a) In the case of hand-delivery, when delivered;  (b) If given by mail, four (4) days after such Notice is deposited with the United States  Postal Service, with first-class postage prepaid, return receipt requested;  (c) In the case of a telephonic Notice, when a party is contacted by telephone, if  delivery of such telephonic Notice is confirmed no later than the next Business Day by hand delivery, a  facsimile or electronic transmission, an Internet Posting or an overnight courier delivery of a confirmatory  Notice (received at or before noon on such next Business Day);  

 

  124  147420493  158492473  (d) In the case of a facsimile transmission, when sent to the applicable party’s  facsimile machine’s telephone number, if the party sending such Notice receives confirmation of the  delivery thereof from its own facsimile machine;  (e) In the case of electronic transmission, when actually received;  (f) In the case of an Internet Posting, upon delivery of a Notice of such posting  (including the information necessary to access such site) by another means set forth in this Section 16.6;  and  (g) If given by any other means (including by overnight courier), when actually  received.  Any Lender giving a Notice to Borrowing Agent or any Borrower shall concurrently send a copy  thereof to Agent, and Agent shall promptly notify the other Lenders of its receipt of such Notice.  (A) If to Agent or PNC at:  PNC Bank, National Association  350 S. Grand Avenue, Suite 3850  Los Angeles, California 90071  Attention: Christopher CaliceLisa Pinckney / Assistant Vice  President      (Virco)  Telephone: (626) 432-6130229-6223  Facsimile: (626) 432-4589  Email:  christopher.calicelisa.pinckney@pnc.com    with a copy to:    PNC Bank, National Association  PNC Agency Services  PNC Firstside Center  500 First Avenue (Mailstop: P7-PFSC-04-1)  Pittsburgh, Pennsylvania 15219  Attention: Lori Killmeyer  Telephone: (412) 807.7002  Facsimile: (412) 762-8672    with an additional copy to:    McGuireWoods LLP  355 S. Grand Avenue, Suite 4200  Los Angeles, California 90071  Attention: Mark Spitzer  Telephone: (213) 457-9847  Facsimile: (213) 457-9884    (B) If to a Lender other than Agent, as specified on its Administrative  Questionnaire  

 

  125  147420493  158492473  (C) If to Borrowing Agent or any Borrower:  Virco Mfg. Corporation  2027 Harpers Way  Torrance, California 90501  Attention: Robert E. Dose  Telephone: (310) 533-0474  Facsimile: (310) 553-1906  Email: robertdose@virco.com    16.7 Survival  .  The obligations of Borrowers under Sections 2.2(f), 2.2(g), 2.2(h), 3.7, 3.8, 3.9, 3.10, 16.5 and 16.9 and  the obligations of Lenders under Sections 2.2, 2.15(b), 2.16, 2.18, 2.19, 14.8 and 16.5, shall survive  termination of this Agreement and the Other Documents and payment in full of the Obligations.  16.8 Severability  .  If any part of this Agreement is contrary to, prohibited by, or deemed invalid under Applicable Laws,  such provision shall be inapplicable and deemed omitted to the extent so contrary, prohibited or invalid,  but the remainder hereof shall not be invalidated thereby and shall be given effect so far as possible.  16.9 Expenses  .  All reasonable and documented out-of-pocket costs and expenses, including reasonable attorneys’ fees  (including the allocated costs of in-house counsel, one primary counsel to Agent and, if necessary, one local  counsel in any relevant jurisdiction) and disbursements incurred by Agent on its behalf or on behalf of  Secured Parties, including all costs and expenses incurred (and including in or in connection with or  anticipation of an insolvency proceeding, reorganization, or any similar proceeding):  (a) in all efforts made  to enforce payment of any Obligation or effect collection of any Collateral, or (b) in connection with the  entering into, modification, amendment, administration and enforcement of this Agreement and the Other  Documents or any consents or waivers hereunder or thereunder and all related agreements, documents and  instruments, or (c) in instituting, maintaining, preserving, enforcing and foreclosing on Agent’s security  interest in or Lien on any of the Collateral, or maintaining, preserving or enforcing any of Agent’s or any  Lender’s rights hereunder and under the Other Documents and under all related agreements, documents and  instruments, whether through judicial proceedings or otherwise, or (d) in defending or prosecuting any  actions or proceedings arising out of or relating to Agent’s or any Lender’s transactions with any Borrower,  or (e) in connection with any advice given to Agent or any Lender with respect to its rights and obligations  under this Agreement and under the Other Documents and all related agreements, documents and  instruments, may be charged to Borrowers’ Account and shall be part of the Obligations, or (f) in connection  with any inspections or appraisals conducted pursuant to Section 4.7, provided that (i) absent the occurrence  and continuation of an Event of Default and so long as the trailing 90-day average Availability shall exceed  17.5% of the then applicable Maximum Revolving Advance Availability, only one Field Exam during any  12 month period shall be at the expense of Borrowers (it being understood that should the trailing 90-day  average Availability at any time be  less than 17.5% of the then applicable Maximum Revolving Advance  Availability, such additional Field Exams as Agent may conduct pursuant to Section 4.6 shall be at the  expense of Borrowers) and (ii) absent the occurrence and continuation of an Event of Default only one  machinery and equipment collateral appraisal (excluding desk top appraisals) during any successive 24  month period shall be at the expense of Borrowers.  16.10 Injunctive Relief  

 

  126  147420493  158492473  .  Each Borrower recognizes that, in the event any Borrower fails to perform, observe or discharge any of  its obligations or liabilities under this Agreement, or threatens to fail to perform, observe or discharge such  obligations or liabilities, any remedy at law may prove to be inadequate relief to Lenders; therefor, Agent,  if Agent so requests, shall be entitled to temporary and permanent injunctive relief in any such case without  the necessity of proving that actual damages are not an adequate remedy.  16.11 Consequential Damages  .  Neither Agent nor any Lender, nor any agent or attorney for any of them, shall be liable to any Borrower,  or any Guarantor (or any Affiliate of any such Person) for indirect, punitive, exemplary or consequential  damages arising from any breach of contract, tort or other wrong relating to the establishment,  administration or collection of the Obligations or as a result of any transaction contemplated under this  Agreement or any Other Document.  16.12 Captions  .  The captions at various places in this Agreement are intended for convenience only and do not constitute  and shall not be interpreted as part of this Agreement.  16.13 Counterparts; Facsimile Signatures  .  This Agreement may be executed in any number of and by different parties hereto on separate  counterparts, all of which, when so executed, shall be deemed an original, but all such counterparts shall  constitute one and the same agreement.  Any signature delivered by a party by facsimile or electronic  transmission (including email transmission of a PDF image) shall be deemed to be an original signature  hereto.  16.14 Construction  .  The parties acknowledge that each party and its counsel have reviewed this Agreement and that the normal  rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not  be employed in the interpretation of this Agreement or any amendments, schedules or exhibits thereto.  16.15 Confidentiality; Sharing Information  .  Agent, each Lender and each Transferee shall hold all non-public information obtained by Agent, such  Lender or such Transferee pursuant to the requirements of this Agreement in accordance with Agent’s, such  Lender’s and such Transferee’s customary procedures for handling confidential information of this nature;  provided, however, Agent, each Lender and each Transferee may disclose such confidential information  (a) to its Affiliates and its and their examiners, Affiliates, financing sources, directors, officers, partners,  employees, agents, outside auditors, counsel and other professional advisors, (b) to Agent, any Lender or  to any prospective Transferees, (c) in connection with, and to the extent reasonably necessary for, the  exercise of any secured creditor remedy under this Agreement or under any of the Other Documents, and  (d) as required or requested by any Governmental Body or representative thereof or pursuant to legal  process; provided, further that (i) unless specifically prohibited by Applicable Law, Agent, each Lender  and each Transferee shall use its reasonable best efforts prior to disclosure thereof, to notify the applicable  Borrower of the applicable request for disclosure of such non-public information (A) by a Governmental  Body or representative thereof (other than any such request in connection with an examination of the  financial condition of a Lender or a Transferee by such Governmental Body) or (B) pursuant to legal process  and (ii) in no event shall Agent, any Lender or any Transferee be obligated to return any materials furnished  by any Borrower other than those documents and instruments in possession of Agent or any Lender in order  

 

  127  147420493  158492473  to perfect its Lien on the Collateral once the Obligations have been paid in full and this Agreement has been  terminated.  Each Borrower acknowledges that from time to time financial advisory, investment banking  and other services may be offered or provided to such Borrower or one or more of its Affiliates (in  connection with this Agreement or otherwise) by any Lender or by one or more Subsidiaries or Affiliates  of such Lender and each Borrower hereby authorizes each Lender to share any information delivered to  such Lender by such Borrower and its Subsidiaries pursuant to this Agreement, or in connection with the  decision of such Lender to enter into this Agreement, to any such Subsidiary or Affiliate of such Lender, it  being understood that any such Subsidiary or Affiliate of any Lender receiving such information shall be  bound by the provisions of this Section 16.15 as if it were a Lender hereunder.  Such authorization shall  survive the repayment of the other Obligations and the termination of this Agreement.  Notwithstanding  any non-disclosure agreement or similar document executed by Agent in favor of any Borrower or any of  any Borrower’s affiliates, the provisions of this Agreement shall supersede such agreements.  16.16 Publicity  .  Each Borrower and each Lender hereby authorizes Agent to make appropriate announcements of the  financial arrangement entered into among Borrowers, Agent and Lenders, including announcements which  are commonly known as tombstones, in such advertising, print media and promotional materials (including,  without limitation, on any of the Agent’s websites)  and to such selected parties as Agent shall in its sole  and absolute discretion deem appropriate. No Lender may make any such announcement without the prior  written consent of Agent, such consent to be given or withheld in Agent’s sole and absolute discretion.  16.17 Certifications From Banks and Participants; USA PATRIOT Act.  (a) Each Lender or assignee or participant of a Lender that is not incorporated under  the Laws of the United States of America or a state thereof (and is not excepted from the certification  requirement contained in Section 313 of the USA PATRIOT Act and the applicable regulations because it  is both (i) an affiliate of a depository institution or foreign bank that maintains a physical presence in the  United States or foreign country, and (ii) subject to supervision by a banking authority regulating such  affiliated depository institution or foreign bank) shall deliver to the Agent the certification, or, if applicable,  recertification, certifying that such Lender is not a “shell” and certifying to other matters as required by  Section 313 of the USA PATRIOT Act and the applicable regulations at such times as are required under  the USA PATRIOT Act.  (b) The USA PATRIOT Act requires all financial institutions to obtain, verify and  record certain information that identifies individuals or business entities which open an “account” with such  financial institution. Consequently, any Lender may from time to time request, and each Borrower shall  provide to such Lender, such Borrower’s name, address, tax identification number and/or such other  identifying information as shall be necessary for such Lender to comply with the USA PATRIOT Act and  any other Anti-Terrorism Law  16.18 Amendment and Restatement  .  Upon the effectiveness of this Agreement, the Existing Credit Agreement shall be amended and restated  in its entirety by this Agreement. The Existing Obligations outstanding on the Restatement Date shall  continue in full force and effect and constitute Obligations, and the effectiveness of this Agreement shall  not constitute a novation or repayment of the Existing Obligations. Such Existing Obligations, together  with any and all additional Obligations incurred by Borrowers under this Agreement or under any of the  Other Documents, shall continue to be secured by, among other things, the Collateral, whether now existing  or hereafter acquired and wheresoever located, all as more specifically set forth in this Agreement and the  Other Documents. Each Borrower hereby reaffirms its obligations, liabilities, grants of security interests,  

 

  128  147420493  158492473  pledges and the validity of all covenants by it contained in the Existing Credit Agreement and in any and  all Other Documents, as amended, supplemented or otherwise modified by this Agreement and by the Other  Documents delivered on the Restatement Date. Any and all references in any Other Documents (including  the “Loan Documents” (as such term is defined in the Existing Credit Agreement) to the Existing Credit  Agreement shall be deemed to be amended to refer to this Agreement.  [signature pages follow]  

 

    Each of the parties has signed this Agreement effective as of the day and year first above  written.  BORROWERS:    VIRCO MFG. CORPORATION,   a Delaware corporation    By: ________________________  Name: Robert E. Dose  Title: Senior Vice President Finance, Treasurer  and    Secretary      VIRCO INC.,  a Delaware corporation    By: ________________________  Name: Robert E. Dose  Title: Senior Vice President Finance, Treasurer  and    Secretary     

 

    PNC BANK, NATIONAL ASSOCIATION,  As Lender and as Agent      By: ________________________  Name: Christopher Calice  Title: Vice President    Revolving Commitment Percentage:  100%  Revolving Commitment Amount  $65,000,00070,000,000      Equipment Loan Commitment Percentage:   100%  Equipment Loan Commitment Amount:  $333,333.20Document

Kronos Bio, Inc.
Severance and Change in Control Plan

Section 1.Introduction.
The Kronos Bio, Inc. Severance and Change in Control Plan (the “Plan”) is hereby established by the Board of Directors of Kronos Bio, Inc. (the “Company”) effective upon the Effective Date (as defined below). The purpose of the Plan is to provide for the payment of severance and/or Change in Control (as defined below) benefits to eligible employees of the Company Group (as defined below). This Plan document is also the Summary Plan Description for the Plan.
For purposes of the Plan, the following terms are defined as follows:
(a)“Affiliate” means, at the time of determination, any “parent” or “subsidiary” of the Company as such terms are defined in Rule 405 promulgated under the Securities Act. The Board of Directors of the Company may determine the time or times at which “parent” or “subsidiary” status is determined within the foregoing definition.
(b)“Base Salary” means base pay (excluding incentive pay, premium pay, commissions, overtime, bonuses and other forms of variable compensation) as in effect prior to any reduction that would give rise to an employee’s right to a resignation for Good Reason (if applicable).
(c)“Cause” means, with respect to a particular employee, the meaning ascribed to such term in any written employment agreement, offer letter or similar agreement between such employee and the Company Group defining such term, and, in the absence of such agreement, means with respect to such employee, the term “Cause” as defined in the Equity Plan. The determination whether a termination is for Cause shall be made by the Plan Administrator in its sole and exclusive judgment and discretion.
(d)“Change in Control” has the meaning ascribed to such term in the Equity Plan.
(e)“Change in Control Period” means the period commencing as of the Closing of a Change in Control and ending 12 months following the Closing of a Change in Control.
(f)“Closing” means the initial closing of the Change in Control as defined in the definitive agreement executed in connection with the Change in Control. In the case of a series of transactions constituting a Change in Control, “Closing” means the first closing that satisfies the threshold of the definition for a Change in Control.
(g)“Code” means the U.S. Internal Revenue Code of 1986, as amended, including any applicable regulations and guidance thereunder.
(h)“Committee” means the Board of Directors or the Compensation Committee of the Board of Directors of the Company.
(i)“Company” means Kronos Bio, Inc. or, following a Change in Control, the surviving entity resulting from such event.
(j)“Company Group” means the Company and its Affiliates.
(k)“Confidentiality Agreement” means the Company Group’s standard form of Proprietary Information and Invention Assignment Agreement or any similar or successor document.
(l)“Covered Termination” means, with respect to an employee, a termination of employment that is due to (1) a termination by the Company Group without Cause (other than as a result of the employee’s death or Disability) or (2) a resignation for Good Reason and in either case of (1) or (2), results in such employee’s Separation from Service.
    

(m)“Disability” means any physical or mental condition which renders an employee incapable of performing the work for which he or she was employed by the Company or similar work offered by the Company Group. The Disability of an employee shall be established if (i) the employee satisfies the requirements for benefits under the Company Group’s long-term disability plan or (ii) if no long-term disability plan, the employee satisfies the requirements for Social Security disability benefits.
(n)“Effective Date” means April 20, 2022.
(o)“Eligible Employee” means an employee of the Company Group that meets the requirements to be eligible to receive Plan benefits as set forth in Section 2.
(p)“Equity Plan” means the Kronos Bio, Inc. 2020 Equity Incentive Plan, as amended from time to time, or any successor plan thereto.
(q)“Good Reason” for an employee’s resignation has such meaning, with respect to a particular employee, as is ascribed to such term in any written employment agreement, offer letter or similar agreement between such employee and the Company Group defining such term, and, in the absence of such agreement, means the undertaking of any of the following by the Company Group without the employee’s written consent: 
(1)a material reduction in a such employee’s base salary (unless pursuant to a salary reduction program affecting substantially all of the similarly situated employees of the Company Group and that does not adversely affect the employee to a greater extent than other similarly situated employees);
(2)a material diminution of such employee’s authority, duties or responsibilities;
(3)a relocation of such employee’s principal place of employment with the Company Group (or successor to the Company, if applicable) to a place that increases such employee’s one-way commute by more than 50 miles as compared to such employee’s then-current principal place of employment immediately prior to such relocation (excluding regular travel in the ordinary course of business); provided that (i) if such employee’s principal place of employment is his or her personal residence, this clause (3) shall not apply and (ii) if the employee works remotely during any period in which such employee’s regular principal office location is a Company Group office that is closed, then neither the employee’s relocation to remote work or back to the office from remote work will be considered a relocation of such employee’s principal office location for purposes of this definition; or
(4)a material breach by the Company Group of any provision of this Plan or any other material agreement between such employee and the Company Group concerning the terms and conditions of such employee’s employment with the Company Group.
Notwithstanding the foregoing, in order for the employee’s resignation to be deemed to have been for Good Reason, the employee must (a) provide written notice to the Company Group of such employee’s intent to resign for Good Reason within 30 days after the first occurrence of the event giving rise to Good Reason, which notice shall describe the event(s) the employee believes give rise to Good Reason; (b) allow the Company Group at least 30 days from receipt of the written notice to cure the event (such period, the “Cure Period”), and (c) if the event is not reasonably cured within the Cure Period, the employee’s resignation from all positions held with the Company Group is effective not later than 30 days after the expiration of the Cure Period.
(r)“Participation Agreement” means an agreement between an employee and the Company in substantially the form of Appendix A attached hereto, and which may include such other terms as the Committee deems necessary or advisable in the administration of the Plan.
(s)“Plan Administrator” means the Committee prior to the Closing and the Representative upon and following the Closing, as applicable.
    2.
 

(t)“Representative” means one or more members of the Committee or other persons or entities designated by the Committee prior to or in connection with a Change in Control that will have authority to administer and interpret the Plan upon and following the Closing as provided in Section 9(a).
(u)“Section 409A” means Section 409A of the Code and the treasury regulations and other guidance thereunder and any state law of similar effect.
(v)“Separation from Service” means a “separation from service” within the meaning of Treasury Regulations Section 1.409A-1(h), without regard to any alternative definition thereunder.
(w)“Target Bonus” means the cash bonus payable to an Eligible Employee pursuant to an annual performance bonus or annual variable compensation plan following completion of the applicable plan year and based on achievement of specified performance goals for the year in which such Covered Termination occurs, as if all the applicable performance goals for such year were attained at a level of 100%. If at the time of the Covered Termination, an Eligible Employee is eligible for a Target Bonus, but no target percentage or target dollar amount is specified for the year in which such Covered Termination occurs, the Target Bonus amount will be the target bonus percentage established for such eligible employee in the preceding year (but adjusted if necessary for your position for the year in which the Covered Termination occurs). The Target Bonus shall not include any bonus paid in installments during the applicable plan year.
Section 2.Eligibility for Benefits.
(a)Eligible Employee. An employee of the Company Group is eligible to participate in the Plan if (i) the Plan Administrator has designated such employee as eligible to participate in the Plan by providing such employee a Participation Agreement; (ii) such employee has signed and returned such Participation Agreement to the Company Group within the time period required therein; and (iii) such employee meets the other Plan eligibility requirements set forth in this Section 2. The determination of whether an employee is an Eligible Employee shall be made by the Plan Administrator, in its sole discretion, and such determination shall be binding and conclusive on all persons.
(b)Release Requirement. Except as otherwise provided in an individual Participation Agreement, in order to be eligible to receive benefits under the Plan, the employee also must execute a general waiver and release, in such a form as provided by the Company (the “Release”), within the applicable time period set forth therein, and such Release must become effective in accordance with its terms, which must occur in no event more than 60 days following the date of the applicable Covered Termination.
(c)Plan Benefits Provided In Lieu of Any Previous Benefits. Except as otherwise provided in an individual Participation Agreement, this Plan shall supersede any change in control or severance benefit plan, policy or practice previously maintained by the Company Group with respect to an Eligible Employee and any change in control or severance benefits in any individually negotiated employment contract or other agreement between the Company Group and an Eligible Employee. Notwithstanding the foregoing, the Eligible Employee’s outstanding equity awards shall remain subject to the terms of the Equity Plan or other applicable equity plan under which such awards were granted (including the award documentation governing such awards) that may apply upon a Change in Control and/or termination of such employee’s service and no provision of this Plan shall be construed as to limit the actions that may be taken, or to violate the terms, thereunder.
(d)Exceptions to Severance Benefit Entitlement. An employee who otherwise is an Eligible Employee will not receive benefits under the Plan in the following circumstances, as determined by the Plan Administrator in its sole discretion:
(1)The employee is terminated by the Company Group for any reason or voluntarily terminates employment with the Company Group in any manner, and in either case, such termination does not constitute a Covered Termination. Voluntary terminations include, but are not limited to, resignation, retirement or failure to return from a leave of absence on the scheduled date.
    3.
 

(2)The employee voluntarily terminates employment with the Company Group in order to accept employment with another entity that is wholly or partly owned (directly or indirectly) by the Company Group.
(3)The employee is offered an identical or substantially equivalent or comparable position with the Company Group. For purposes of the foregoing, a “substantially equivalent or comparable position” is one that provides the employee substantially the same level of responsibility and compensation and would not give rise to the employee’s right to a resignation for Good Reason.
(4)The employee is offered immediate reemployment by a successor to the Company or an Affiliate or by a purchaser of the Company’s assets, as the case may be, following a Change in Control and the terms of such reemployment would not give rise to the employee’s right to a resignation for Good Reason. For purposes of the foregoing, “immediate reemployment” means that the employee’s employment with the successor to the Company or an Affiliate or the purchaser of its assets, as the case may be, results in uninterrupted employment such that the employee does not incur a lapse in pay or benefits as a result of the change in ownership of the Company or the sale of its assets. An employee who becomes immediately reemployed as described in this Section 2(d)(4) by a successor to the Company or an Affiliate or by a purchaser of the Company’s assets, as the case may be, following a Change in Control shall continue to be an Eligible Employee following the date of such reemployment.
(5)The employee is rehired by the Company Group and recommences employment prior to the date severance benefits under the Plan are scheduled to commence.
(e)Termination of Severance Benefits. An Eligible Employee’s right to receive severance benefits under this Plan shall terminate immediately if, at any time prior to or during the period for which the Eligible Employee is receiving severance benefits under the Plan, the Eligible Employee
(1)willfully breaches any material statutory, common law, or contractual obligation to the Company Group (including, without limitation, the contractual obligations set forth in the Confidentiality Agreement and any other confidentiality, non-disclosure and developments agreement, non-competition, non-solicitation, or similar type agreement between the Eligible Employee and the Company Group, as applicable); 
(2)fails to enter into the terms of the Confidentiality Agreement; or
(3)without the prior written approval of the Plan Administrator, engages in a Prohibited Action (as defined below). In addition, if benefits under the Plan have already been paid to the Eligible Employee and the Eligible Employee subsequently engages in a Prohibited Action during the Prohibited Period (or it is determined that the Eligible Employee engaged in a Prohibited Action prior to receipt of such benefits), any benefits previously paid to the Eligible Employee shall be subject to recoupment by the Company Group on such terms and conditions as shall be determined by the Plan Administrator, in its sole discretion. The “Prohibited Period” shall commence on the date of the Eligible Employee’s Covered Termination and continue for the number of months corresponding to the Severance Period set forth in such Eligible Employee’s Participation Agreement. A “Prohibited Action” shall occur if the Eligible Employee: (i) breaches a material provision of the Confidentiality Agreement and/or any obligations of confidentiality, non-solicitation, non-disparagement, no conflicts or non-competition set forth in the Eligible Employee’s employment agreement, offer letter, any other written agreement between the Eligible Employee and the Company Group, or under applicable law; (ii) encourages or solicits any of the Company Group’s then current employees to leave the Company Group’s employ for any reason or interferes in any other manner with employment relationships at the time existing between the Company Group and its then current employees; or (iii) induces any of the Company Group’s then current clients, customers, suppliers, vendors, distributors, licensors, licensees, or other third parties to terminate their existing business relationship with the Company Group or interferes in any other manner with any existing business relationship between the Company Group and any then current client, customer, supplier, vendor, distributor, licensor, licensee, or other third parties.
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Section 3.Amount of Benefits.
(a)Benefits in Participation Agreement. Benefits under the Plan shall be provided to an Eligible Employee as set forth in the Participation Agreement.
(b)Additional Benefits. Notwithstanding the foregoing, the Committee may, in its sole discretion, provide benefits to individuals who are not Eligible Employees (“Non-Eligible Employees”) chosen by the Plan Administrator, in its sole discretion, and the provision of any such benefits to a Non-Eligible Employee shall in no way obligate the Company Group to provide such benefits to any other individual, even if similarly situated. If benefits under the Plan are provided to a Non-Eligible Employee, references in the Plan to “Eligible Employee” (and similar references) shall be deemed to refer to such Non-Eligible Employee.
(c)Certain Reductions. In addition to Section 2(e) above, the Company, in its sole discretion, shall have the authority to reduce an Eligible Employee’s severance benefits, in whole or in part, by any other severance benefits, pay and benefits provided during a period following written notice of a business closing or mass layoff, pay and benefits in lieu of such notice, or other similar benefits payable to the Eligible Employee by the Company Group that become payable in connection with the Eligible Employee’s termination of employment pursuant to (i) any applicable legal requirement, including, without limitation, the Worker Adjustment and Retraining Notification Act or any other similar state law or (ii) any Company Group policy or practice providing for the Eligible Employee to remain on the payroll for a limited period of time after being given notice of the termination of the Eligible Employee’s employment, and the Plan Administrator shall so construe and implement the terms of the Plan. Any such reductions that the Company determines to make pursuant to this Section 3(c) shall be made such that any severance benefit under the Plan shall be reduced solely by any similar type of benefit under such legal requirement, agreement, policy or practice (i.e., any cash severance benefits under the Plan shall be reduced solely by any cash payments or severance benefits under such legal requirement, agreement, policy or practice). The Company’s decision to apply such reductions to the severance benefits of one Eligible Employee and the amount of such reductions shall in no way obligate the Company to apply the same reductions in the same amounts to the severance benefits of any other Eligible Employee. In the Company’s sole discretion, such reductions may be applied on a retroactive basis, with severance benefits previously paid being re-characterized as payments pursuant to the Company’s statutory obligation.
(d)Parachute Payments. Except as otherwise provided in an individual Participation Agreement, if any payment or benefit an Eligible Employee will or may receive from the Company Group or otherwise (a “Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then any such Payment shall be equal to the Reduced Amount. The “Reduced Amount” shall be either (x) the largest portion of the Payment that would result in no portion of the Payment (after reduction) being subject to the Excise Tax or (y) the largest portion, up to and including the total, of the Payment, whichever amount (i.e., the amount determined by clause (x) or by clause (y)), after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in the Eligible Employee’s receipt, on an after-tax basis, of the greater economic benefit notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in a Payment is required pursuant to the preceding sentence and the Reduced Amount is determined pursuant to clause (x) of the preceding sentence, the reduction shall occur in the manner (the “Reduction Method”) that results in the greatest economic benefit for the Eligible Employee. If more than one method of reduction will result in the same economic benefit, the items so reduced will be reduced pro rata (the “Pro Rata Reduction Method”).
Notwithstanding any provisions in this Section above to the contrary, if the Reduction Method or the Pro Rata Reduction Method would result in any portion of the Payment being subject to taxes pursuant to Section 409A that would not otherwise be subject to taxes pursuant to Section 409A, then the Reduction Method and/or the Pro Rata Reduction Method, as the case may be, shall be modified so as to avoid the imposition of taxes pursuant to Section 409A as follows: (A) as a first priority, the modification shall preserve to the greatest extent possible, the greatest economic benefit for the Eligible Employee as determined on an after-tax basis; (B) as a second priority, Payments that are contingent on future events 
    5.
 

(e.g., being terminated without Cause), shall be reduced (or eliminated) before Payments that are not contingent on future events; and (C) as a third priority, Payments that are “deferred compensation” within the meaning of Section 409A shall be reduced (or eliminated) before Payments that are not deferred compensation within the meaning of Section 409A.
The Company shall appoint a nationally recognized accounting or law firm to make the determinations required by this Section. The Company shall bear all expenses with respect to the determinations by such accounting or law firm required to be made hereunder. If the Eligible Employee receives a Payment for which the Reduced Amount was determined pursuant to clause (x) above and the Internal Revenue Service determines thereafter that some portion of the Payment is subject to the Excise Tax, Eligible Employee agrees to promptly return to the Company a sufficient amount of the Payment (after reduction pursuant to clause (x) above) so that no portion of the remaining Payment is subject to the Excise Tax. If the Reduced Amount was determined pursuant to clause (y) above, the Eligible Employee shall have no obligation to return any portion of the Payment pursuant to the preceding sentence.
Section 4.Return of Company Property.
An Eligible Employee will not be entitled to any severance benefit under the Plan unless and until the Eligible Employee returns all Company Property. For this purpose, “Company Property” means all paper and electronic Company Group documents (and all copies thereof) and other Company Group property which the Eligible Employee had in his or her possession or control at any time, including, but not limited to, Company Group files, notes, drawings, records, plans, forecasts, reports, studies, analyses, proposals, agreements, financial information, research and development information, sales and marketing information, operational and personnel information, specifications, code, software, databases, computer-recorded information, tangible property and equipment (including, but not limited to, computers, facsimile machines, mobile telephones, servers), credit cards, entry cards, identification badges and keys; and any materials of any kind which contain or embody any proprietary or confidential information of the Company Group (and all reproductions thereof in whole or in part). As a condition to receiving benefits under the Plan, an Eligible Employee must not make or retain copies, reproductions or summaries of any such Company Group documents, materials or property. However, an Eligible Employee is not required to return his or her personal copies of documents evidencing the Eligible Employee’s hire, termination, compensation, benefits and stock options and any other documentation received as a stockholder of the Company.
Section 5.Time of Payment and Form of Benefits.
The Company reserves the right in the Participation Agreement to specify whether payments under the Plan will be paid in a single sum, in installments, or in any other form and to determine the timing of such payments. All such payments under the Plan will be subject to applicable withholding for federal, state, foreign, provincial and local taxes. All benefits provided under the Plan are intended to satisfy the requirements for an exemption from application of Section 409A to the maximum extent that an exemption is available and any ambiguities herein shall be interpreted accordingly; provided, however, that to the extent such an exemption is not available, the benefits provided under the Plan are intended to comply with the requirements of Section 409A to the extent necessary to avoid adverse personal tax consequences and any ambiguities herein shall be interpreted accordingly.
It is intended that (i) each installment of any benefits payable under the Plan to an Eligible Employee be regarded as a separate “payment” for purposes of Treasury Regulations Section 1.409A-2(b)(2)(i), (ii) all payments of any such benefits under the Plan satisfy, to the greatest extent possible, the exemptions from the application of Section 409A provided under Treasury Regulations Sections 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9)(iii), and (iii) any such benefits consisting of premium payments for group health insurance continuation coverage also satisfy, to the greatest extent possible, the exemption from the application of Section 409A provided under Treasury Regulations Section 1.409A-1(b)(9)(v). However, if the Company determines that any severance benefits payable under the Plan constitute “deferred compensation” under Section 409A and the Eligible Employee is a “specified employee” of the Company, as such term is defined in Section 409A(a)(2)(B)(i), then, solely to the extent necessary to avoid the imposition of the adverse personal tax consequences under Section 409A, (A) the timing of such severance benefit payments shall be delayed until the earlier of (1) the date 
    6.
 

that is six months and one day after the Eligible Employee’s Separation from Service and (2) the date of the Eligible Employee’s death (such applicable date, the “Delayed Initial Payment Date”), and (B) the Company shall (1) pay the Eligible Employee a lump sum amount equal to the sum of the severance benefit payments that the Eligible Employee would otherwise have received through the Delayed Initial Payment Date if the commencement of the payment of the severance benefits had not been delayed pursuant to this paragraph and (2) commence paying the balance, if any, of the severance benefits in accordance with the applicable payment schedule.

In no event shall payment of any severance benefits under the Plan be made prior to an Eligible Employee’s Separation from Service or prior to the effective date of the Release. If the Company determines that any severance payments or benefits provided under the Plan constitute “deferred compensation” under Section 409A, and the Eligible Employee’s Separation from Service occurs at a time during the calendar year when the Release could become effective in the calendar year following the calendar year in which the Eligible Employee’s Separation from Service occurs, then regardless of when the Release is returned to the Company and becomes effective, the Release will not be deemed effective, solely for purposes of the timing of payment of severance benefits under this Plan, any earlier than the latest permitted effective date (the “Release Deadline”). If the Company determines that any severance payments or benefits provided under the Plan constitute “deferred compensation” under Section 409A, then except to the extent that severance payments may be delayed until the Delayed Initial Payment Date pursuant to the preceding paragraph, on the first regular payroll date following the effective date of an Eligible Employee’s Release, the Company shall (1) pay the Eligible Employee a lump sum amount equal to the sum of the severance benefit payments that the Eligible Employee would otherwise have received through such payroll date but for the delay in payment related to the effectiveness of the Release and (2) commence paying the balance, if any, of the severance benefits in accordance with the applicable payment schedule.

Section 6.Transfer and Assignment.
The rights and obligations of an Eligible Employee under this Plan may not be transferred or assigned without the prior written consent of the Company. This Plan shall be binding upon any entity or person who is a successor by merger, acquisition, consolidation or otherwise to the business formerly carried on by the Company Group without regard to whether or not such entity or person actively assumes the obligations hereunder and without regard to whether or not a Change in Control occurs.
Section 7.Mitigation.
Except as otherwise specifically provided in the Plan, an Eligible Employee will not be required to mitigate damages or the amount of any payment provided under the Plan by seeking other employment or otherwise, nor will the amount of any payment provided for under the Plan be reduced by any compensation earned by an Eligible Employee as a result of employment by another employer or any retirement benefits received by such Eligible Employee after the date of the Eligible Employee’s termination of employment with the Company Group.
Section 8.Clawback; Recovery.
All payments and severance benefits provided under the Plan will be subject to recoupment in accordance with any clawback policy that the Company is required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law. In addition, the Plan Administrator may impose such other clawback, recovery or recoupment provisions as the Plan Administrator determines necessary or appropriate, including but not limited to a reacquisition right in respect of previously acquired shares of common stock of the Company or other cash or property upon the occurrence of a termination of employment for Cause. No recovery of compensation under such a clawback policy will be an event giving rise to a right to resign for Good 
    7.
 

Reason, constructive termination, or any similar term under any plan of or agreement with the Company Group.
Section 9.Right to Interpret and Administer Plan; Amendment and Termination.
(a)Interpretation and Administration. Prior to the Closing, the Committee shall be the Plan Administrator and shall have the exclusive discretion and authority to establish rules, forms, and procedures for the administration of the Plan and to construe and interpret the Plan and to decide any and all questions of fact, interpretation, definition, computation or administration arising in connection with the operation of the Plan, including, but not limited to, the eligibility to participate in the Plan and amount of benefits paid under the Plan. The rules, interpretations, computations and other actions of the Committee shall be binding and conclusive on all persons. Upon and after the Closing, the Plan will be interpreted and administered in good faith by the Representative who shall be the Plan Administrator during such period. All actions taken by the Representative in interpreting the terms of the Plan and administering the Plan upon and after the Closing will be final and binding on all Eligible Employees. Any references in this Plan to the “Committee” or “Plan Administrator” with respect to periods following the Closing shall mean the Representative.
(b)Amendment. The Plan Administrator reserves the right to amend this Plan at any time; provided, however, that any amendment of the Plan will not be effective as to a particular employee who is or may be adversely impacted by such amendment or termination and has an effective Participation Agreement without the written consent of such employee.
(c)Termination. The Plan will remain in effect until terminated by the Plan Administrator. Any outstanding obligations under the Plan (if any) will remain outstanding following termination of the Plan until satisfied by the Company (or successor to the Company, if applicable).
Section 10.No Implied Employment Contract.
The Plan shall not be deemed (i) to give any employee or other person any right to be retained in the employ of the Company Group or (ii) to interfere with the right of the Company Group to discharge any employee or other person at any time, with or without cause, which right is hereby reserved. This Plan does not modify the at-will employment status of any Eligible Employee.
Section 11.Legal Construction.
This Plan is intended to be governed by and shall be construed in accordance with the Employee Retirement Income Security Act of 1974 (“ERISA”) and, to the extent not preempted by ERISA, the laws of the State of California.
Section 12.Claims, Inquiries and Appeals.
(a)Applications for Benefits and Inquiries. Any application for benefits, inquiries about the Plan or inquiries about present or future rights under the Plan must be submitted to the Plan Administrator in writing by an applicant (or his or her authorized representative). The Plan Administrator is:
Kronos Bio, Inc.
Compensation Committee of the Board of Directors or Representative
Attention to: Corporate Secretary
1300 So. El Camino Real, Suite 400
San Mateo, California 94402

(b)Denial of Claims. In the event that any application for benefits is denied in whole or in part, the Plan Administrator must provide the applicant with written or electronic notice of the denial of the application, and of the applicant’s right to review the denial. Any electronic notice will comply with the regulations of the U.S. Department of Labor. The notice of denial will be set forth in a manner designed to be understood by the applicant and will include the following:
    8.
 

(1)the specific reason or reasons for the denial;
(2)references to the specific Plan provisions upon which the denial is based;
(3)a description of any additional information or material that the Plan Administrator needs to complete the review and an explanation of why such information or material is necessary; and
(4)an explanation of the Plan’s review procedures and the time limits applicable to such procedures, including a statement of the applicant’s right to bring a civil action under Section 502(a) of ERISA following a denial on review of the claim, as described in Section 12(d) below.
This notice of denial will be given to the applicant within 90 days after the Plan Administrator receives the application, unless special circumstances require an extension of time, in which case, the Plan Administrator has up to an additional 90 days for processing the application. If an extension of time for processing is required, written notice of the extension will be furnished to the applicant before the end of the initial 90 day period.
This notice of extension will describe the special circumstances necessitating the additional time and the date by which the Plan Administrator is to render its decision on the application.
(c)Request for a Review. Any person (or that person’s authorized representative) for whom an application for benefits is denied, in whole or in part, may appeal the denial by submitting a request for a review to the Plan Administrator within 60 days after the application is denied. A request for a review shall be in writing and shall be addressed to:
Kronos Bio, Inc.
Compensation Committee of the Board of Directors or Representative
Attention to: Corporate Secretary
1300 So. El Camino Real, Suite 400
San Mateo, California 94402

A request for review must set forth all of the grounds on which it is based, all facts in support of the request and any other matters that the applicant feels are pertinent. The applicant (or his or her representative) shall have the opportunity to submit (or the Plan Administrator may require the applicant to submit) written comments, documents, records, and other information relating to his or her claim. The applicant (or his or her representative) shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to his or her claim. The review shall take into account all comments, documents, records and other information submitted by the applicant (or his or her representative) relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.
(d)Decision on Review. The Plan Administrator will act on each request for review within 60 days after receipt of the request, unless special circumstances require an extension of time (not to exceed an additional 60 days), for processing the request for a review. If an extension for review is required, written notice of the extension will be furnished to the applicant within the initial 60 day period. This notice of extension will describe the special circumstances necessitating the additional time and the date by which the Plan Administrator is to render its decision on the review. The Plan Administrator will give prompt, written or electronic notice of its decision to the applicant. Any electronic notice will comply with the regulations of the U.S. Department of Labor. In the event that the Plan Administrator confirms the denial of the application for benefits in whole or in part, the notice will set forth, in a manner calculated to be understood by the applicant, the following:
(1)the specific reason or reasons for the denial;
(2)references to the specific Plan provisions upon which the denial is based;
    9.
 

(3)a statement that the applicant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to his or her claim; and
(4)a statement of the applicant’s right to bring a civil action under Section 502(a) of ERISA.
(e)Rules and Procedures. The Plan Administrator will establish rules and procedures, consistent with the Plan and with ERISA, as necessary and appropriate in carrying out its responsibilities in reviewing benefit claims. The Plan Administrator may require an applicant who wishes to submit additional information in connection with an appeal from the denial of benefits to do so at the applicant’s own expense.
(f)Exhaustion of Remedies. No legal action for benefits under the Plan may be brought until the applicant (i) has submitted a written application for benefits in accordance with the procedures described by Section 12(a) above, (ii) has been notified by the Plan Administrator that the application is denied, (iii) has filed a written request for a review of the application in accordance with the appeal procedure described in Section 12(c) above, and (iv) has been notified that the Plan Administrator has denied the appeal. Notwithstanding the foregoing, if the Plan Administrator does not respond to an Eligible Employee’s claim or appeal within the relevant time limits specified in this Section 12, the Eligible Employee may bring legal action for benefits under the Plan pursuant to Section 502(a) of ERISA.
Section 13.Basis of Payments to and from Plan.
The Plan shall be unfunded, and all cash payments under the Plan shall be paid only from the general assets of the Company.
Section 14.Other Plan Information.
(a)Employer and Plan Identification Numbers. The Employer Identification Number assigned to the Company (which is the “Plan Sponsor” as that term is used in ERISA) by the Internal Revenue Service is 82-1895605. The Plan Number assigned to the Plan by the Plan Sponsor pursuant to the instructions of the Internal Revenue Service is 601.
(b)Ending Date for Plan’s Fiscal Year. The date of the end of the fiscal year for the purpose of maintaining the Plan’s records is December 31.
(c)Agent for the Service of Legal Process. The agent for the service of legal process with respect to the Plan is:
Kronos Bio, Inc.
Attention to: Corporate Secretary
1300 So. El Camino Real, Suite 400
San Mateo, California 94402

In addition, service of legal process may be made upon the Plan Administrator. 
    10.
 

(d)Plan Sponsor. The “Plan Sponsor” is:
Kronos Bio, Inc.
1300 So. El Camino Real, Suite 400
San Mateo, California 94402
(650) 781-5200
(e)Plan Administrator. The Plan Administrator is the Committee prior to the Closing and the Representative upon and following the Closing. The Plan Administrator’s contact information is:
Kronos Bio, Inc.
Compensation Committee of the Board of Directors or Representative
1300 So. El Camino Real, Suite 400
San Mateo, California 94402

The Plan Administrator is the named fiduciary charged with the responsibility for administering the Plan.
Section 15.Statement of ERISA Rights.
Participants in this Plan (which is a welfare benefit plan sponsored by Kronos Bio, Inc.) are entitled to certain rights and protections under ERISA. If you are an Eligible Employee, you are considered a participant in the Plan and, under ERISA, you are entitled to:
(a)Receive Information About Your Plan and Benefits
(1)Examine, without charge, at the Plan Administrator’s office and at other specified locations, such as worksites, all documents governing the Plan and a copy of the latest annual report (Form 5500 Series), if applicable, filed by the Plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration;
(2)Obtain, upon written request to the Plan Administrator, copies of documents governing the operation of the Plan and copies of the latest annual report (Form 5500 Series), if applicable, and an updated (as necessary) Summary Plan Description. The Administrator may make a reasonable charge for the copies; and
(3)Receive a summary of the Plan’s annual financial report, if applicable. The Plan Administrator is required by law to furnish each Eligible Employee with a copy of this summary annual report.
(b)Prudent Actions by Plan Fiduciaries. In addition to creating rights for Plan Eligible Employees, ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan. The people who operate the Plan, called “fiduciaries” of the Plan, have a duty to do so prudently and in the interest of you and other Eligible Employees and beneficiaries. No one, including your employer, your union or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a Plan benefit or exercising your rights under ERISA.
(c)Enforce Your Rights. If your claim for a Plan benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules.
Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request a copy of Plan documents or the latest annual report from the Plan, if applicable, and do not receive them within 30 days, you may file suit in a Federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator.
    11.
 

If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or Federal court.
If you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a Federal court. The court will decide who should pay court costs and legal fees. If you are successful, the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.
(d)Assistance with Your Questions. If you have any questions about the Plan, you should contact the Plan Administrator. If you have any questions about this statement or about your rights under ERISA, or if you need assistance in obtaining documents from the Plan Administrator, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210. You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.
    12.
 

Appendix A
Participation Agreement
Name:     __________________________________
Section 1.Eligibility.
You have been designated as eligible to participate in the Kronos Bio, Inc. Severance and Change in Control Plan (the “Plan”), a copy of which is attached to this Participation Agreement (the “Participation Agreement”). Capitalized terms not explicitly defined in this Participation Agreement but defined in the Plan shall have the same definitions as in the Plan. You will receive the benefits set forth below if you meet all the eligibility requirements set forth in the Plan, including, without limitation, executing the required Release within the applicable time period set forth therein and allowing such Release to become effective in accordance with its terms. Notwithstanding the schedule for provision of benefits as set forth below, the schedule and timing of payment of any benefits under this Participant Agreement is subject to any delay in payment that may be required under Section 5 of the Plan.
Section 2.Change in Control Severance Benefits.
If you are terminated in a Covered Termination that occurs during the Change in Control Period, you will receive the severance benefits set forth in this Section 2. All severance benefits described herein are subject to standard deductions and withholdings.
(a)Base Salary. You shall receive a cash payment in an amount equal to [     ]1 months (the “Severance Period”) of payment of your Base Salary. The Base Salary payment will be paid to you in a lump sum cash payment no later than the second regular payroll date following the later of (i) the effective date of the Release or (ii) the Closing, but in any event not later than March 15 of the year following the year in which your Separation from Service occurs.
(b)Annual Target Bonus Payment.  You will be entitled to [     ]2 of your Target Bonus for the year in which your Covered Termination occurs.  The amount of the Target Bonus to which you are entitled under this Section 2(b) will be calculated (1) assuming all articulated performance goals for such bonus (including, but not limited to, corporate and individual performance, if applicable), for the year of the Covered Termination were achieved at target levels; (2) as if you had provided services for the entire year for which the bonus relates; and (3) ignoring any reduction in your Base Salary that would give rise to your right to resignation for Good Reason (such bonus to which you are entitled under this Section 2(b), the “Annual Target Bonus Payment”).  The Annual Target Bonus Payment shall be paid in a lump sum cash payment no later than the second regular payroll date following the later of (i) the effective date of the Release or (ii) the Closing, but in any event not later than March 15 of the year following the year in which your Separation from Service occurs.  
(c)Payment of Continued Group Health Plan Benefits. If you timely elect continued group health plan continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) following your Covered Termination date, the Company Group shall pay directly to the carrier the full amount of your COBRA premiums on behalf of you for your continued coverage under the Company Group’s health plans, including coverage for your eligible dependents, until the earliest of (i) the end of the Severance Period following the date of your Covered Termination, (ii) the expiration of your eligibility for the continuation coverage under COBRA, or (iii) the date when you become eligible for substantially equivalent health insurance coverage in connection with new employment (such period from your termination date through the earliest of (i) through (iii), the “COBRA Payment Period”). Upon the conclusion of such period of insurance premium payments made by the Company Group, you will be responsible for the entire payment of premiums (or payment for the 

1 For CEO, 18 months. For other C-level employees, 12 months. For SVP-level employees, 9 months. For VP-level employees, 6 months.
2 For CEO, 150%. For other C-level employees, 100%. For SVP-level employees, 75% months. For VP-level employees, 50%.

cost of coverage) required under COBRA for the duration of your eligible COBRA coverage period, if any. For purposes of this Section, (1) references to COBRA shall be deemed to refer also to analogous provisions of state law and (2) any applicable insurance premiums that are paid by the Company Group shall not include any amounts payable by you under an Internal Revenue Code Section 125 health care reimbursement plan, which amounts, if any, are your sole responsibility. You agree to promptly notify the Company Group as soon as you become eligible for health insurance coverage in connection with new employment or self-employment. Notwithstanding the foregoing, if at any time the Company Group determines, in its sole discretion, that it cannot provide the COBRA premium benefits without potentially incurring financial costs or penalties under applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then in lieu of paying COBRA premiums directly to the carrier on your behalf, the Company Group will instead pay you on the last day of each remaining month of the COBRA Payment Period a fully taxable cash payment equal to the value of your monthly COBRA premium for the first month of COBRA coverage, subject to applicable tax withholding (such amount, the “Special Severance Payment”), such Special Severance Payment to be made without regard to your election of COBRA coverage or payment of COBRA premiums and without regard to your continued eligibility for COBRA coverage during the COBRA Payment Period. Such Special Severance Payment shall end upon expiration of the COBRA Payment Period.
(d)Equity Acceleration. The vesting and exercisability of each outstanding unvested stock option and other stock award, as applicable, that you hold covering the Company Group’s equity securities (including any equity securities assumed, substituted or continued by the Company’s successor in connection with the Change in Control) as of the date of your Covered Termination (each, an “Equity Award”) and that vests based solely upon your continued service shall be accelerated in full and any reacquisition or repurchase rights held by the Company Group (or its successor) in respect of the equity securities issued pursuant to any Equity Award granted to you shall lapse in full. Each Equity Award that is subject to performance-based vesting conditions shall vest in accordance with the terms and conditions set forth the applicable agreement(s) governing such Equity Award.
Section 3.Non-Change in Control Severance Benefits.
    If you are terminated in a Covered Termination that occurs at a time that is not during the Change in Control Period, you will receive:
(a)the base salary cash payment described in Section 2(a) above, but in an amount equal to [     ]3 months and the payment shall be made in accordance with the Company Group’s regular payroll practices over the length of the Severance Period rather than in a single lump sum;
(b)the COBRA benefits described in Section 2(c) above, but the Severance Period for purposes of calculating such benefits shall be [     ]4 months; and
(c)[the Equity Award acceleration benefits described in Section 2(d).]5
In no event shall you be entitled to benefits under both Section 2 and this Section 3. If you are eligible for severance benefits under both Section 2 and this Section 3, you shall receive the benefits set forth in Section 2 and such benefits shall be reduced by any benefits previously provided to you under Section 3.
Section 4.Acknowledgements; Interaction with Prior Benefits.
As a condition to participation in the Plan, you hereby acknowledge each of the following:

3 For CEO, 12 months. For other C-level employees, 9 months. For SVP-level employees, 6 months. For VP-level employees, 3 months.
4 For CEO, 12 months. For other C-level employees, 9 months. For SVP-level employees, 6 months. For VP-level employees, 3 months.
5 For CEO, include the bracketed text. For other C-, SVP- and VP-level employees, delete subsection (c) and replace “; and” with “.” in the preceding subsection (b).

(a)The benefits that may be provided to you under this Participation Agreement are subject to certain reductions and termination under Section 2 and Section 3 of the Plan.
(b)Your eligibility for and receipt of any severance benefits to which you may become entitled as described in Section 2 or Section 3 above is expressly contingent upon your execution of and compliance with the terms and conditions of the Plan, the Release and the Confidentiality Agreement. Severance benefits under this Participation Agreement shall immediately cease in the event of your violation of the provisions of Confidentiality Agreement or any other written agreement with the Company Group.
(c)As further described in Section 2(c) of the Plan, this Participation Agreement and the Plan supersede and replace any change in control or severance benefits previously provided to you, and by executing below you expressly agree to such treatment.
To accept the terms of this Participation Agreement and participate in the Plan, please sign and date this Participation Agreement in the space provided below and return it to _____________________ no later than _________, ____.

Kronos Bio, Inc.

By:     

_____________________
_____________________

Eligible Employee

        
    

Date:

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