Document:

PNCMoog-5thAmendmenttotheReceivablesPurchaseAgreementRPA708456516_7

EXECUTION COPY
 

FIFTH AMENDMENT TO THE 
RECEIVABLES PURCHASE AGREEMENT

This FIFTH AMENDMENT TO THE RECEIVABLES PURCHASE AGREEMENT (this “Amendment”), dated as of February 14, 2014, is entered into by and among the following parties:
		
	(i)
	MOOG RECEIVABLES LLC, a Delaware limited liability company, as Seller;

		
	(i)
	MOOG INC., an New York corporation, as Servicer;

		
	(ii)
	PNC BANK, NATIONAL ASSOCIATION, as Administrator; and

		
	(iii)
	PNC BANK, NATIONAL ASSOCIATION, as the Issuer.

Capitalized terms used but not otherwise defined herein (including such terms used above) have the respective meanings assigned thereto in the Receivables Purchase Agreement described below.
BACKGROUND
The parties hereto have entered into a Receivables Purchase Agreement, dated as of March 5, 2012 (as amended, restated, supplemented or otherwise modified through the date hereof, the “Receivables Purchase Agreement”) and desire to amend the Receivables Purchase Agreement as set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1.    Amendments to the Receivables Purchase Agreement.  The Receivables Purchase Agreement is hereby amended as follows:
(a)    The definition of “Concentration Percentage” set forth in Exhibit I to the Receivables Purchase Agreement is amended by replacing the percentage “25%” where it appears therein with the percentage “30%”.
(b)    The definition of “Excess Concentration” set forth in Exhibit I to the Receivables Purchase Agreement is replaced in its entirety with the following:
“Excess Concentration” means, without duplication, the sum of the following amounts:
(i)    the sum of the amounts by which the Outstanding Balance of Eligible Receivables of each Obligor then in the Receivables Pool exceeds an amount equal to: (a) the applicable Concentration Percentage for such Obligor, multiplied by (b) the Adjusted Aggregate Eligible Outstanding Balance;
(ii)    the amount by which the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool, the Obligors of which are the 

	
			
	 
	 
	 

708456516 11208934

United States federal government or a United States federal governmental subdivision, affiliate or agency, exceeds 20.0% (or, if the long-term senior unsecured and uncredit-enhanced debt rating of Moog is then less than “B” by Standard & Poor’s or “B2” by Moody’s, 15.0%) of the Adjusted Aggregate Eligible Outstanding Balance;
(iii)    the amount by which the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool, the stated maturity of which is more than ninety days after the original invoice date thereof, exceeds 2.5% of the Adjusted Aggregate Eligible Outstanding Balance;
(iv)    the amount by which the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool, the Obligors of which are residents of countries other than the United States of America, exceeds 40.0% (or, if the long-term senior unsecured and uncredit-enhanced debt rating of Moog is then less than “B” by Standard & Poor’s or “B2” by Moody’s, 30.0%) of the Adjusted Aggregate Eligible Outstanding Balance;
(v)    the amount by which the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool, the Obligors of which are Eligible A-Rated Foreign Obligors, exceeds 20.0% (or, if the long-term senior unsecured and uncredit-enhanced debt rating of Moog is then less than “B” by Standard & Poor’s or “B2” by Moody’s, 10.0%) of the Adjusted Aggregate Eligible Outstanding Balance;
(vi)    the amount by which the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool, the Obligors of which are Eligible BBB--Rated Foreign Obligors, exceeds 5.0% (or, if the long-term senior unsecured and uncredit-enhanced debt rating of Moog is then less than “B” by Standard & Poor’s or “B2” by Moody’s, 0.0%) of the Adjusted Aggregate Eligible Outstanding Balance;
(vii)    the aggregate of the amounts calculated for each country (other than the United States of America) in which Obligors of Pool Receivables are residents equal to the amount by which the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool related to Obligors that reside in any country set forth in the table below exceeds an amount equal to the applicable percentage for such country set forth in the table below, multiplied by the Adjusted Aggregate Eligible Outstanding Balance;

	
			
	 
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708456516 11208934

	
			
	

Country
	Permitted Concentration Percentage

	If the long-term senior unsecured and uncredit-enhanced debt rating of Moog is then “B” or better by Standard & Poor’s or “B2” or better by Moody’s
	If the long-term senior unsecured and uncredit-enhanced debt rating of Moog is then less than “B” by Standard & Poor’s or less than “B2” by Moody’s

	Canada
	20.0%
	15.0%

	France
	10.0%
	5.0%

	Germany
	10.0%
	5.0%

	Any country other than the foregoing
	5.0%
	5.0%

provided, however, that the Administrator shall have the right, upon 10 days’ prior notice to the Seller and Servicer, to reduce (including to zero), in its sole discretion, the percentages used to determine the excess concentrations in clauses (ii) through (vii) above.
(c)    The definition of “Facility Termination Date” set forth in Exhibit I to the Receivables Purchase Agreement is amended by replacing the date “March 3, 2014” where it appears therein with the date “February 13, 2015”.  
(d)    The following defined term “Eligible BBB--Rated Foreign Obligor” and definition thereof are added to Exhibit I to the Receivables Purchase Agreement in appropriate alphabetical order:
“Eligible BBB--Rated Foreign Obligor” means an Obligor that is a resident of a country (other than the United States or Canada), which country has a sovereign debt rating of less than “A” by Standard & Poor’s or “A2” by Moody’s but at least “BBB-“ by Standard & Poor’s and “Baa3” by Moody’s.
(e)    Section 1 of Exhibit IV to the Receivables Purchase Agreement is amended by inserting the following new clause (v) thereto immediately following the existing clause (u) thereof:
(v)    Minimum Capital Requirement.  The Seller will at all times prior to the Facility Termination Date maintain a minimum level of Capital in an amount equal to the lesser of: (i) 80% of the Purchase Limit at such time and (ii) 100% of (a) the Net Receivables Pool Balance at such time minus (b) the Total Reserves at such time.
SECTION 2.    Representations and Warranties of the Seller and Servicer.  Each of the Seller and the Servicer hereby represents and warrants, as to itself, to the Administrator and to the Issuer, as follows:
(a)    Representations and Warranties.  Immediately after giving effect to this Amendment, the representations and warranties made by such Person in the Transaction Documents to which it is a party are true and correct as of the date hereof (unless stated to relate solely to an earlier date, in which case such representations or warranties were true and correct as of such earlier date).

	
			
	 
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708456516 11208934

(b)    Enforceability.  This Amendment and each other Transaction Document to which it is a party, as amended hereby, constitute the legal, valid and binding obligation of such Person enforceable against such Person in accordance with its respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity, regardless of whether enforceability is considered in a proceeding in equity or at law.
(c)    No Termination Event.  No event has occurred and is continuing, or would result from the transactions contemplated hereby, that constitutes a Termination Event or an Unmatured Termination Event.
SECTION 3.    Effect of Amendment.  All provisions of the Receivables Purchase Agreement and the other Transaction Documents, as expressly amended and modified by this Amendment, shall remain in full force and effect. After this Amendment becomes effective, all references in the Receivables Purchase Agreement (or in any other Transaction Document) to “this Receivables Purchase Agreement”, “this Agreement”, “hereof”, “herein” or words of similar effect referring to the Receivables Purchase Agreement shall be deemed to be references to the Receivables Purchase Agreement as amended by this Amendment. This Amendment shall not be deemed, either expressly or impliedly, to waive, amend or supplement any provision of the Receivables Purchase Agreement other than as set forth herein.
SECTION 4.    Effectiveness.  This Amendment shall become effective as of the date hereof upon the Administrator’s receipt of this Amendment (whether by facsimile or otherwise), executed by each of the parties hereto.
SECTION 5.    Severability.  If any one or more of the agreements, provisions or terms of this Amendment shall for any reason whatsoever be held invalid or unenforceable, then such agreements, provisions or terms shall be deemed severable from the remaining agreements, provisions and terms of this Amendment and shall in no way affect the validity or enforceability of the provisions of this Amendment or the Receivables Purchase Agreement.
SECTION 6.    Transaction Document.  This Amendment shall be a Transaction Document for purposes of the Receivables Purchase Agreement.
SECTION 7.    Counterparts.  This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute but one and the same instrument.  Delivery of an executed counterpart of a signature page to this Amendment by facsimile or e-mail transmission shall be effective as delivery of a manually executed counterpart hereof.
SECTION 8.    GOVERNING LAW.  THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5‐1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).

	
			
	 
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708456516 11208934

SECTION 9.    Section Headings.  The various headings of this Amendment are included for convenience only and shall not affect the meaning or interpretation of this Amendment, the Receivables Purchase Agreement or any provision hereof or thereof.
SECTION 10.    Reaffirmation of Performance Guaranty.  After giving effect to this Amendment and the transactions contemplated hereby, all of the provisions of the Performance Guaranty shall remain in full force and effect and Moog hereby ratifies and affirms the Performance Guaranty and acknowledges that the Performance Guaranty has continued and shall continue in full force and effect in accordance with its terms.
[SIGNATURE PAGES FOLLOW]

	
			
	 
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708456516 11208934

IN WITNESS WHEREOF, the parties hereto have executed this Amendment by their duly authorized officers as of the date first above written.
	
			
	 
	MOOG RECEIVABLES LLC,

	 
	as Seller

	 
	 
	 

	 
	By:
	/s/ John P. McGrath

	 
	Name:
	John P. McGrath

	 
	Title:
	Treasurer and Asst. Secretary & Director

	 
	 
	 

	 
	MOOG INC., 

	 
	individually and as Servicer

	 
	 
	 

	 
	By:
	/s/ John P. McGrath

	 
	Name:
	John P. McGrath

	 
	Title:
	Assistant Treasurer

	 
	 
	 

708456516 11208934    S-1    Fifth Amendment to the
 Receivables Purchase Agreement
(Moog Receivables LLC)

	
			
	 
	PNC BANK, NATIONAL ASSOCIATION, 

	 
	as Administrator

	 
	 
	 

	 
	By:
	/s/ Mark Falcione

	 
	Name:
	Mark Falcione 

	 
	Title:
	Executive Vice President

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

708456516 11208934    S-2    Fifth Amendment to the
 Receivables Purchase Agreement
(Moog Receivables LLC)

	
			
	 
	PNC BANK, NATIONAL ASSOCIATION,

	 
	as the Issuer 

	 
	 
	 

	 
	By:
	/s/ Mark Falcione

	 
	Name:
	Mark Falcione

	 
	Title:
	Executive Vice President

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

708456516 11208934    S-3    Fifth Amendment to the
 Receivables Purchase Agreement
(Moog Receivables LLC)ThirdAmendment

EXECUTION VERSION
CONSENT AND THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS CONSENT AND THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is entered into as of this 14th day of February, 2014 by and among THE PRIVATEBANK AND TRUST COMPANY (“Lender”), LAWSON PRODUCTS, INC., a Delaware corporation (“Lawson Products Delaware”), LAWSON PRODUCTS, INC., an Illinois corporation (“Lawson Products Illinois”), DRUMMOND AMERICAN LLC, an Illinois limited liability company (“Drummond American”), CRONATRON WELDING SYSTEMS LLC, a North Carolina limited liability company (“Cronatron Welding”), SHIRE DIVESTITURE COMPANY, a Nevada corporation (“Shire Divestiture”), BARON DIVESTITURE COMPANY, an Illinois corporation (“Baron Divestiture”), and AUTOMATIC SCREW MACHINE PRODUCTS COMPANY, INC., an Alabama corporation (“Automatic Screw Machine”; Lawson Products Delaware, Lawson Products Illinois, Drummond American, Cronatron Welding, Shire Divestiture, Baron Divestiture and Automatic Screw Machine are individually referred to herein each as a “Borrower” and collectively as “Borrowers”).
W I T N E S S E T H:
WHEREAS, Lender and Borrowers are party to that certain Loan and Security Agreement dated as of August 8, 2012 (as amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”);
WHEREAS, Automatic Screw Machine has informed Lender that it desires to sell to Nelson Stud Welding, Inc., a Delaware corporation (“Buyer”), and Buyer desires to purchase from Automatic Screw Machine, pursuant to the terms and conditions of that certain Asset Purchase Agreement by and between Buyer, Automatic Screw Machine, Baron Divestiture and Lawson Products Delaware dated as of October 11, 2013 (the “Purchase Agreement”), the Purchased Assets (as such term is defined in the Purchase Agreement) (such disposition by Automatic Screw Machine, the “Asset Disposition”), and Lawson Products Delaware desires to provide an unsecured guaranty of the obligations of Automatic Screw Machine and Baron Divestiture under the Purchase Agreement and the other Ancillary Documents (as such term is defined in the Purchase Agreement) to which each is a party pursuant to Section 11.17 of the Purchase Agreement (the “Lawson APA Guaranty”);
WHEREAS, pursuant to the terms of the Purchase Agreement and concurrently with the consummation of the Asset Disposition, Baron Divestiture and Buyer shall enter into the Real Property Lease (as such term is defined in the Purchase Agreement) pursuant to which, on the terms and subject to the conditions set forth therein, (i) Baron Divestiture shall lease to Buyer the Owned Real Property (as such term is defined in the Purchase Agreement) (the “Real Property Lease Transaction”) and (ii) (A) Buyer shall have the option to purchase the Owned Real Property from Baron Divestiture and (B) Baron Divestiture shall have the option to require Buyer to purchase the Owned Real Property from Baron Divestiture (collectively, the “Real Property Conveyance Transaction”; and together with the Real Property Lease Transaction, the “Real Property Transactions”);
WHEREAS, Borrowers have requested that Lender provide certain consents and agree to amend the Loan Agreement in certain other respects as set forth herein, including, without limitation, to amend the Minimum EBITDA covenant set forth in Section 14.1.1 of the Loan Agreement to reflect the sale of the Purchased Assets; and

WHEREAS, Lender is willing to provide such consents and make such amendments, in each case, subject to the terms, conditions and other provisions hereof.
NOW, THEREFORE, for and in consideration of the premises and mutual agreements herein contained and for the purposes of setting forth the terms and conditions of this Amendment, the parties, intending to be bound, hereby agree as follows:
Section 1    Incorporation of the Loan Agreement.  All capitalized terms which are not defined hereunder shall have the same meanings as set forth in the Loan Agreement, and the Loan Agreement, to the extent not inconsistent with this Amendment, is incorporated herein by this reference as though the same were set forth in its entirety.  To the extent any terms and provisions of the Loan Agreement are inconsistent with the amendments set forth in Section 4 below, such terms and provisions shall be deemed superseded hereby.  Except as specifically set forth herein, the Loan Agreement and the other Loan Documents shall remain in full force and effect and the provisions thereof shall be binding on the parties hereto.

Section 2    Consent to Asset Disposition, Lawson APA Guaranty and Real Property Transactions.  Effective solely upon satisfaction of each of the conditions precedent set forth in Section 2(a) or 2(b), as applicable, and in Section 5 below, in reliance upon the representations and warranties of the Loan Parties set forth in this Amendment, and subject to the other terms and conditions of this Amendment:

(a)    Notwithstanding Sections 13.4 and 13.14, as applicable, of the Loan Agreement, Lender hereby consents to each of the Asset Disposition, the Lawson APA Guaranty and the Real Property Lease Transaction, each as set forth in the Purchase Agreement as in effect on October 11, 2013 or the Ancillary Documents as in effect on the date hereof, provided that the effectiveness of each such consent is subject to the following conditions:

(i)    the Purchase Agreement and the Ancillary Documents shall be in form and substance reasonably acceptable to Lender;

(ii)    Lender shall have received a confirmation in writing on behalf of the Borrowers from an authorized officer of the Representative (or an agent of the Borrowers) to the effect that the conditions for closing set forth in the Purchase Agreement have been satisfied or waived by the appropriate party (or parties), the closing deliveries set forth in the Purchase Agreement have been delivered and that the Asset Disposition and Real Property Lease Transaction have been consummated (except for receipt of the funds to pay the cash portion of the purchase price for the Purchased Assets);

(iii)    upon receipt, the Borrowers shall immediately deliver no less than $11,000,000.00 of the net proceeds received in connection with the Purchase Agreement to Lender to be applied to prepay the outstanding Revolving Loans without a reduction in the Revolving Loan Commitment; and

(iv)    the Lawson APA Guaranty is unsecured as of the Closing Date (as such term is defined in the Purchase Agreement).

(b)    Notwithstanding Sections 13.4 and 13.14, as applicable, of the Loan Agreement, Lender hereby consents to the Real Property Conveyance Transaction, as set forth in the Real Property Lease as in effect on the date hereof, provided that the effectiveness of such consent is subject to the following conditions:

(i)    each of the conditions precedent set forth in Section 2(a) of this Amendment shall have been satisfied; and

(ii)    upon receipt, the Borrowers shall immediately deliver the proceeds received in connection with the Real Property Conveyance Transaction to Lender for application to the Obligations as required under Section 2.6.5(a) of the Loan Agreement.

(c)    The foregoing consent is expressly limited to the specific transactions described above in this Section 2, and shall not be deemed or otherwise construed to constitute a consent to any other transaction, whether or not similar to the transaction described above in this Section 2.  Lender has granted the consent set forth in this Section 2 in this particular instance and in light of the facts and circumstances that presently exist, and the grant of such consent shall not constitute a course of dealing or impair Lender's right to withhold any similar consent or waiver in the future.

Section 3    Automatic Release of Security Interest in Purchased Assets and Owned Real Property; Delivery of Release.

(a)    Effective solely upon satisfaction of the conditions precedent set forth in Section 2(a) and Section 5 of this Amendment, Lender agrees (i) that all security interests and liens granted to Lender in the Purchased Assets (for the avoidance of doubt, excluding the Excluded Assets (as such term is defined in the Purchase Agreement)), but not the proceeds thereof, pursuant to the Loan Agreement shall be deemed to have automatically been released and terminated, (ii) that Borrowers and/or Borrowers’ agent are authorized to file the UCC amendment statement in the form attached hereto as Exhibit A, (iii) to promptly execute and deliver to Borrowers that certain Release of Security Interest in Trademarks in the form attached hereto as Exhibit B, which Borrowers and/or Borrowers’ agent are then authorized to file, and (iv) to promptly execute and deliver to Borrowers and/or Borrowers’ agent, and to authorize each of the Borrowers and Borrower’s agent to file such other releases of liens, discharges, terminations and other documents as any of the Borrowers may reasonably request from time to time in order to effect and evidence the release and termination of all liens and security interests granted to Lender in the Purchased Assets.

(b)    Effective solely upon satisfaction of the conditions precedent set forth in Section 2(b) and Section 5 of this Amendment, Lender agrees upon consummation of the Real Property Conveyance (i) that all security interests and liens granted to Lender in the fixtures located in or on the Owned Real Property, but not the proceeds thereof, pursuant to the Loan Agreement shall be deemed to have automatically been released and terminated, and (ii) to promptly execute and deliver to Borrowers and/or Borrowers’ agent, and to authorize each of the Borrowers and Borrower’s agent to file such other releases of liens, discharges, terminations and other documents as any of the Borrowers may reasonably request from time to time in order to effect and evidence the release and termination of all 

liens and security interests granted to Lender in the Owned Real Property and the fixtures located in or on the Owned Real Property.

Section 4    Amendment of the Loan Agreement.  Upon satisfaction of the conditions precedent set forth in Sections 2(a) and 5 of this Amendment and in reliance on the representations and warranties made by the Loan Parties set forth herein, the Loan Agreement is hereby amended as follows:

(a)    The Loan Agreement is amended by adding the following new Section 12.2.10 to the Loan Agreement immediately following Section 12.2.9 thereof to read as follows:

12.2.10  Purchase Agreement Notices.  Promptly and in any event within fifteen (15) Business Days of receipt thereof, with respect to the Purchase Agreement (as defined below) and each of the other Ancillary Documents (as such term is defined in the Purchase Agreement), deliver copies of any notices received by any Loan Party or any Subsidiary of (x) any purchase price or other monetary adjustments exceeding $250,000 in the aggregate, (y) any breaches or violations or claims of any kind exceeding $250,000 in the aggregate, including, without limitation, with respect to representations and warranties, covenants, indemnification, guaranties or otherwise, or (z) any proposed material amendment(s) or other material modification(s) with respect to any such documents, together with a fully executed copy or copies of any such amendment(s) or other modification(s) when the same becomes available solely with respect to this clause (z).
(b)    The Loan Agreement is amended by inserting the following clause (g) into Section 13.14 immediately following clause (f) thereof (but before the period at the end thereof) to read as follows:

; and (g) an unsecured guaranty by Lawson Products Delaware of the obligations of Automatic Screw Machine and Baron Divestiture under the Purchase Agreement pursuant to Section 11.17 thereof as in effect on the date hereof
Section 5    Conditions Precedent.  The effectiveness of this Amendment is subject to satisfaction of the following conditions:

(a)    Lender shall have received a fully executed copy of this Amendment; and

(b)    The representations and warranties set forth in Section 7 below shall be true and correct.

Section 6    Post-Closing Obligations.  The Loan Parties agree to deliver to Lender, in form and substance reasonably satisfactory to Lender, the following items, on or before the dates specified with respect to such items, or such later dates as may be agreed to by Lender, in its sole discretion, and the failure of the Loan Parties to make any delivery described below, within the 

specified time period indicated below with respect thereto (or such later date as may have been agreed to by Lender in its sole discretion), shall constitute an Event of Default under the Loan Agreement:  (a) within thirty (30) days following the consummation of the Asset Disposition, the Loan Parties shall deliver to Lender fully executed copies of the Purchase Agreement, the Ancillary Documents and all other documents related to the Purchase Agreement, including, without limitation, all schedules, exhibits, and other attachments related thereto.  Until all Obligations are paid in full (other than contingent indemnification obligations for which no claims have been asserted), all Letters of Credit are returned to the L/C Issuer for cancellation (or are Cash Collateralized) and the Loan Documents terminate, the Loan Parties hereby covenant and agree that the Lawson APA Guaranty shall be unsecured at all times after the Closing Date.

Section 7    Representations and Warranties.  Each Loan Party hereby represents and warrants, in each case after giving effect to this Amendment, to Lender as follows:

(a)    The representations and warranties of each Loan Party in the Loan Agreement and each of the other Loan Documents to which it is a party shall be true and correct in all material respects (provided that if any representation or warranty is by its terms qualified by concepts of materiality, such representation or warranty shall be true and correct in all respects) on the date hereof, except for representations and warranties that expressly relate to an earlier date which  must be true and correct as of such earlier date;

(b)    No Default or Event of Default exists;

(c)    Each Loan Party has the power and authority to execute, deliver and perform its obligations under this Amendment and each other document, agreement and instrument executed by such Loan Party in connection with each of the foregoing;

(d)    The execution, delivery and performance by each Loan Party of this Amendment and each other document, agreement and instrument executed by such Loan Party in connection with each of the foregoing have been duly authorized by all necessary action; and

(e)    This Amendment and each other document, agreement and instrument executed by each Loan Party in connection with each of the foregoing constitutes the legal, valid and binding obligation of such Loan Party, enforceable against such Loan Party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditor’s rights generally or by equitable principles relating to enforceability.

Section 8    Fees and Expenses.  Borrowers agree to pay on demand all reasonable out-of-pocket costs and expenses of or incurred by Lender, including, but not limited to, legal expenses and reasonable attorneys’ fees, in connection with the evaluation, negotiation, preparation, execution and delivery of this Amendment.

Section 9    Entire Agreement.  This Amendment constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and supersedes all other understandings, oral or written, with respect to the subject matter hereof.

Section 10    No Modification; No Waiver.  Except as expressly set forth herein, nothing contained herein shall be deemed to constitute a waiver of compliance with any term of condition contained in the Loan Agreement or any other Loan Document or constitute a course of conduct or dealing among the parties.  Except as expressly stated herein, Lender reserves all rights, privileges and remedies under the Loan Documents.  All references in the Loan Documents to the Loan Agreement shall be deemed to be references to the Loan Agreement, as amended hereby.  The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Lender under the Loan Agreement or any of the Loan Documents.

Section 11    Severability.  The illegality or unenforceability of any provision of this Amendment or any instrument or agreement required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Amendment or any instrument or agreement required hereunder.

Section 12    Counterparts.  This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.  Delivery by facsimile or electronic transmission of a portable document file (also known as a .pdf file) of an executed counterpart signature page shall be effective as a manually executed counterpart signature hereof.

Section 13    Governing Law; Other Waivers.  This Amendment shall be governed and construed in accordance with the internal laws of the State of Illinois.  Section 18.11 of the Loan Agreement is incorporated herein by reference, mutatis mutandis.

Section 14    Release.  In consideration of Lender’s agreements contained in this Amendment, each Loan Party hereby irrevocably releases and forever discharges Lender and its affiliates, subsidiaries, successors, assigns, directors, officers, employees, agents, consultants and attorneys (each, a “Released Person”) of and from any and all claims, suits, actions, investigations, proceedings or demands, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law of any kind or character, known or unknown, which such Loan Party ever had or now has against Lender or any other Released Person which relates, directly or indirectly, to any acts of omissions of Lender or any other Released Person relating to the Loan Agreement or any other Loan Document on or prior to the date hereof.

[SIGNATURE PAGE FOLLOWS]

(Signature Page to Consent and Third Amendment to Loan and Security Agreement)
IN WITNESS WHEREOF, the parties hereto have duly executed this Consent and Third Amendment to Loan and Security Agreement as of the date first above written.
BORROWERS:
LAWSON PRODUCTS, INC., a Delaware corporation
    
By: /s/ Ronald J. Knutson                                               
Name: Ronald J. Knutson                                               
Title: Executive Vice President, Chief Financial Officer
    

LAWSON PRODUCTS, INC., an Illinois corporation
    
By: /s/ Ronald J. Knutson                                               
Name: Ronald J. Knutson                                               
Title: Executive Vice President, Chief Financial Officer
    

DRUMMOND AMERICAN LLC, an  Illinois limited liability company
    
By: /s/ Ronald J. Knutson                                               
Name: Ronald J. Knutson                                               
Title: Vice President                                                        
    

CRONATRON WELDING SYSTEMS LLC, a North Carolina limited liability company
    
By: /s/ Ronald J. Knutson                                               
Name: Ronald J. Knutson                                               
Title: Vice President                                                        
    

AUTOMATIC SCREW MACHINE PRODUCTS COMPANY, INC., an Alabama corporation
    
By: /s/ Ronald J. Knutson                                               
Name: Ronald J. Knutson                                               
Title: Vise President                                                        
    

(Signature Page to Consent and Third Amendment to Loan and Security Agreement)
BORROWERS (con't):
SHIRE DIVESTITURE COMPANY, a Nevada corporation
    
By: /s/ Ronald J. Knutson                                            
Name: Ronald J. Knutson                                            
Title: Vice President                                                     
    

BARON DIVESTITURE COMPANY, an Illinois corporation
    
By: /s/ Ronald J. Knutson                                             
Name: Ronald J. Knutson                                             
Title: Vice President                                                      
    

(Signature Page to Consent and Third Amendment to Loan and Security Agreement)

LENDER:
THE PRIVATEBANK AND TRUST COMPANY
    
By: /s/ Joseph G. Fudacz                                           
       Joseph G. Fudacz                               
       Managing Director

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