Document:

atec-ex1026_210.htm

 

Exhibit 10.26

Execution Version

 

 

 

 

 

 

 

 

CREDIT, SECURITY AND GUARANTY AGREEMENT,

dated as of November 6, 2018,

by and among

 

 

 

ALPHATEC HOLDINGS, INC.,

ALPHATEC SPINE, INC., and

SAFEOP SURGICAL, INC.

each as a Borrower, and collectively as Borrowers,

the other Credit Parties party hereto,

and

SQUADRON MEDICAL FINANCE SOLUTIONS LLC

as Lender

 

 

 

 

Execution Version

	
 

	
TABLE OF CONTENTS

	
 
	
Page

	
 
	
 

	
ARTICLE 1 – DEFINITIONS
	
2

	
 
	
 

	
    Section 1.1 Certain Defined Terms
	
2

	
 
	
 

	
    Section 1.2 Accounting Terms and Determinations
	
14

	
 
	
 

	
    Section 1.3 Other Definitional and Interpretive Provisions
	
14

	
 
	
 

	
    Section 1.4 Time is of the Essence
	
14

	
 
	
 

	
    Section 1.5 Intercreditor Agreement
	
15

	
 
	
 

	
ARTICLE 2 – LOAN
	
15

	
 
	
 

	
    Section 2.1 Term Loan
	
15

	
 
	
 

	
    Section 2.2 Interest, Interest Calculations and Certain Fees.
	
16

	
 
	
 

	
    Section 2.3 Term Note
	
17

	
 
	
 

	
    Section 2.4 General Provisions Regarding Payment; Loan Account.
	
17

	
 
	
 

	
    Section 2.5 Maximum Interest
	
18

	
 
	
 

	
    Section 2.6 Appointment of Borrower Representative
	
18

	
 
	
 

	
    Section 2.7 Joint and Several Liability; Rights of Contribution; Subordination and
	
 

	
    Subrogation
	
18

	
 
	
 

	
    Section 2.8 Termination; Restriction on Termination
	
20

	
 
	
 

	
    Section 2.9 Closing Fee.
	
20

	
 
	
 

	
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
	
21

	
 
	
 

	
    Section 3.1 Existence and Power
	
21

	
 
	
 

	
    Section 3.2 Organization and Governmental Authorization; No Contravention
	
21

	
 
	
 

	
    Section 3.3 Binding Effect
	
21

	
 
	
 

	
    Section 3.4 Capitalization
	
21

	
 
	
 

	
    Section 3.5 Financial Information
	
21

	
 
	
 

	
    Section 3.6 Litigation
	
21

	
 
	
 

	
    Section 3.7 Ownership of Property
	
22

	
 
	
 

	
    Section 3.8 No Default
	
22

	
 
	
 

	
    Section 3.9 Labor Matters
	
22

	
 
	
 

	
    Section 3.10 Regulated Entities
	
22

	
 
	
 

	
    Section 3.11 Margin Regulations
	
22

	
 
	
 

	
    Section 3.12 Compliance With Laws; Anti-Terrorism Laws
	
22

	
 
	
 

	
    Section 3.13 Taxes
	
22

	
 
	
 

	
    Section 3.14 Compliance with ERISA
	
23

	
 
	
 

	
    Section 3.15 Consummation of Operative Documents; Brokers
	
23

i

 

	
 
	
 

	
    Section 3.16 Related Transactions
	
23

	
 
	
 

	
    Section 3.17 Material Contracts
	
23

	
 
	
 

	
    Section 3.18 Compliance with Environmental Requirements; No Hazardous Materials
	
24

	
 
	
 

	
    Section 3.19 Intellectual Property
	
24

	
 
	
 

	
    Section 3.20 Solvency
	
24

	
 
	
 

	
    Section 3.21 Full Disclosure
	
24

	
 
	
 

	
    Section 3.22 Interest Rate
	
25

	
 
	
 

	
    Section 3.23 Subsidiaries
	
25

	
 
	
 

	
    Section 3.24 Limited Offering of the Warrants
	
25

	
 
	
 

	
    Section 3.25 Registration Right; Issuance Taxes.
	
25

	
 
	
 

	
ARTICLE 4 - AFFIRMATIVE COVENANTS
	
25

	
 
	
 

	
    Section 4.1 Financial Statements and Other Reports
	
25

	
 
	
 

	
    Section 4.2 Payment and Performance of Obligations
	
25

	
 
	
 

	
    Section 4.3 Maintenance of Existence
	
26

	
 
	
 

	
    Section 4.4 Maintenance of Property; Insurance.
	
26

	
 
	
 

	
    Section 4.5 Compliance with Laws and Material Contracts
	
26

	
 
	
 

	
    Section 4.6 Inspection of Property; Books and Records
	
27

	
 
	
 

	
    Section 4.7 Use of Proceeds
	
27

	
 
	
 

	
    Section 4.8 Estoppel Certificates
	
27

	
 
	
 

	
    Section 4.9 Notices of Litigation and Defaults
	
27

	
 
	
 

	
    Section 4.10 Hazardous Materials; Remediation.
	
27

	
 
	
 

	
    Section 4.11 Further Assurances
	
28

	
 
	
 

	
    Section 4.12 Power of Attorney
	
29

	
 
	
 

	
ARTICLE 5 - NEGATIVE COVENANTS
	
29

	
 
	
 

	
    Section 5.1 Debt; Contingent Obligations
	
29

	
 
	
 

	
    Section 5.2 Liens
	
29

	
 
	
 

	
    Section 5.3 Restricted Distributions
	
29

	
 
	
 

	
    Section 5.4 Restrictive Agreements
	
29

	
 
	
 

	
    Section 5.5 Payments and Modifications of Subordinated Debt
	
29

	
 
	
 

	
    Section 5.6 Consolidations, Mergers and Sales of Assets; Change in Control
	
30

	
 
	
 

	
    Section 5.7 Purchase of Assets, Investments
	
30

	
 
	
 

	
    Section 5.8 Transactions with Affiliates
	
30

	
 
	
 

	
    Section 5.9 Modification of Organizational Documents
	
30

	
 
	
 

	
    Section 5.10 Modification of Certain Agreements
	
30

	
 
	
 

	
    Section 5.11 Conduct of Business
	
30

ii

 

	
 
	
 

	
    Section 5.12 Lease Payments
	
30

	
 
	
 

	
    Section 5.13 Limitation on Sale and Leaseback Transactions
	
30

	
 
	
 

	
    Section 5.14 Compliance with Anti-Terrorism Laws
	
30

	
 
	
 

	
    Section 5.15 Orthotec Litigation
	
31

	
 
	
 

	
ARTICLE 6 - FINANCIAL COVENANT
	
31

	
 
	
 

	
    Section 6.1 Additional Defined Terms
	
31

	
 
	
 

	
    Section 6.2 Liquidity
	
31

	
 
	
 

	
    Section 6.3 Fixed Charge Coverage Ratio
	
32

	
 
	
 

	
    Section 6.4 Evidence of Compliance
	
32

	
 
	
 

	
ARTICLE 7 - CONDITIONS
	
32

	
 
	
 

	
    Section 7.1 Conditions to Closing
	
32

	
 
	
 

	
    Section 7.2 Searches
	
32

	
 
	
 

	
    Section 7.3 Post-Closing Requirements
	
32

	
 
	
 

	
ARTICLE 8 - REGULATORY MATTERS
	
32

	
 
	
 

	
    Section 8.1 Healthcare Permits.
	
32

	
 
	
 

	
    Section 8.2 FDA Regulatory Matters
	
33

	
 
	
 

	
ARTICLE 9 - SECURITY AGREEMENT
	
34

	
 
	
 

	
    Section 9.1 Generally.
	
34

	
 
	
 

	
    Section 9.2 Representations and Warranties and Covenants Relating to Collateral.
	
35

	
 
	
 

	
ARTICLE 10 - EVENTS OF DEFAULT
	
36

	
 
	
 

	
    Section 10.1 Events of Default
	
36

	
 
	
 

	
    Section 10.2 Acceleration of Term Loan
	
38

	
 
	
 

	
    Section 10.3 UCC Remedies
	
38

	
 
	
 

	
    Section 10.4 Default Rate of Interest
	
39

	
 
	
 

	
    Section 10.5 Application of Proceeds.
	
39

	
 
	
 

	
    Section 10.6 Waivers.
	
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    Section 10.7 Injunctive Relief
	
41

	
 
	
 

	
    Section 10.8 Marshalling; Payments Set Aside
	
41

	
 
	
 

	
ARTICLE 11 - MISCELLANEOUS
	
41

	
 
	
 

	
    Section 11.1 Survival
	
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    Section 11.2 No Waivers
	
42

	
 
	
 

	
    Section 11.3 Notices.
	
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    Section 11.4 Severability
	
42

	
 
	
 

	
    Section 11.5 Headings
	
42

	
 
	
 

	
    Section 11.6 Confidentiality
	
42

iii

 

	
 
	
 

	
    Section 11.7 Waiver of Consequential and Other Damages
	
43

	
 
	
 

	
    Section 11.8 GOVERNING LAW; SUBMISSION TO JURISDICTION.
	
43

	
 
	
 

	
    Section 11.9 WAIVER OF JURY TRIAL
	
43

	
 
	
 

	
    Section 11.10 Publication; Advertisement.
	
44

	
 
	
 

	
    Section 11.11 Counterparts; Integration
	
44

	
 
	
 

	
    Section 11.12 No Strict Construction
	
44

	
 
	
 

	
    Section 11.13 Lender Approvals
	
44

	
 
	
 

	
    Section 11.14 Expenses; Indemnity
	
44

	
 
	
 

	
    Section 11.15 Payments
	
45

	
 
	
 

	
    Section 11.16 Reinstatement
	
46

	
 
	
 

	
     Section 11.17 Successors and Assigns
	
46

	
 
	
 

	
    Section 11.18 USA PATRIOT Act Notification
	
46

	
 
	
 

	
    Section 11.19 Right to Perform, Preserve and Protect
	
46

	
 
	
 

	
ARTICLE 12 - GUARANTY
	
46

	
 
	
 

	
    Section 12.1 Guaranty
	
46

	
 
	
 

	
    Section 12.2 Payment of Amounts Owed
	
47

	
 
	
 

	
    Section 12.3 Certain Waivers by Guarantor
	
47

	
 
	
 

	
    Section 12.4 Guarantor’s Obligations Not Affected by Modifications of Financing Documents
	
48

	
 
	
 

	
    Section 12.5 Reinstatement; Deficiency
	
49

	
 
	
 

	
    Section 12.6 Subordination of Borrowers’ Obligations to Guarantors; Claims in Bankruptcy.
	
49

	
 
	
 

	
    Section 12.7 Maximum Liability
	
49

	
 
	
 

	
    Section 12.8 Guarantor’s Investigation
	
50

	
 
	
 

	
    Section 12.9 Termination
	
50

	
 
	
 

	
    Section 12.10 Representative
	
50

	
 
	
 

 

 

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CREDIT, SECURITY AND GUARANTY AGREEMENT

THIS CREDIT, SECURITY AND GUARANTY AGREEMENT (as the same may be amended, supplemented, restated or otherwise modified from time to time, the “Agreement”) is dated as of November 6, 2018, by and among ALPHATEC HOLDINGS, INC., a Delaware corporation, ALPHATEC SPINE, INC., a California corporation, SAFEOP SURGICAL, INC., a Delaware corporation, and each additional borrower that may hereafter be added to this Agreement (each individually as a “Borrower”, and collectively as “Borrowers”), the other Credit Parties listed on the signature pages hereof, and SQUADRON MEDICAL FINANCE SOLUTIONS LLC, a Delaware limited liability company as lender (“Lender”).

RECITALS

WHEREAS, in connection with the refinancing of the continued working capital and other needs of Borrowers and the other Credit Parties, Borrowers and the other Credit Parties have requested, among other things, that Lender make available to Borrowers a new term loan facility in the original principal amount of Thirty Five Million Dollars ($35,000,000); and

WHEREAS, Lender has agreed to the request of Borrowers and the other Credit Parties on the terms and conditions set forth herein and in the other Financing Documents.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

ARTICLE 1 - DEFINITIONS

Section 1.1 Certain Defined Terms. The following terms have the following meanings:

“Acceleration Event” means the occurrence of an Event of Default (a) in respect of which Lender has declared all or any portion of the Obligations to be immediately due and payable pursuant to Section 10.2 and/or (b) pursuant to either Section 10.1(e) and/or Section 10.1(f).

“Affiliate” means, with respect to any Person, (a) any Person that directly or indirectly controls such Person, (b) any Person which is controlled by or is under common control with such controlling Person, and (c) each of such Person’s (other than, with respect to Lender, Lender’s) officers or directors (or Persons functioning in substantially similar roles) and the spouses, parents, descendants and siblings of such officers, directors or other Persons. As used in this definition, the term “control” of a Person means the possession, directly or indirectly, of the power to vote five percent (5%) or more of any class of voting securities of such Person or to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“Affiliated Financing Documents” means any credit, loan, letter of credit or related documents which are, by their terms and by the terms of this Agreement, cross-defaulted with the Financing Documents, and for which a Credit Party hereunder is liable or contingently liable for payment or as security for which a Credit Party hereunder has pledged, assigned or subjected any assets to Lender.

“Anti-Terrorism Laws” means any Laws relating to terrorism or money laundering, including, without limitation, Executive Order No. 13224 (effective September 24, 2001), the USA PATRIOT Act, the Laws comprising or implementing the Bank Secrecy Act, and the Laws administered by OFAC.

“Applicable Margin” means eight percent (8.00%).

“Asset Disposition” means any sale, lease, license, transfer, assignment or other consensual disposition by any Credit Party of any asset.

“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy”, as the same may be amended, modified or supplemented from time to time, and any successor statute thereto.

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“Base Rate” means the per annum rate of interest announced, from time to time, within Wells Fargo at its principal office in San Francisco as its “prime rate,” with the understanding that the “prime rate” is one of Wells Fargo’s base rates (not necessarily the lowest of such rates) and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto and is evidenced by the recording thereof after its announcement in such internal publications as Wells Fargo may designate; provided, however, that Lender may, upon prior written notice to Borrower Representative, choose a reasonably comparable index or source to use as the basis for the Base Rate.

“Blocked Person” means any Person: (a) listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224, (b) owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No.13224, (c) with which Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law, (d) that commits, threatens or conspires to commit or supports “terrorism” as defined in Executive Order No. 13224, or (e) that is named a “specially designated national” or “blocked person” on the most current list published by OFAC or other similar list or is named as a “listed person” or “listed entity” on other lists made under any Anti-Terrorism Law.

“Borrower” and “Borrowers” mean the entities described in the first paragraph of this Agreement and each of their successors and permitted assigns.

“Borrower Representative” means Holdings, in its capacity as Borrower Representative pursuant to the provisions of Section 2.6.

“Business Day” means any day except a Saturday, Sunday or other day on which either the New York Stock Exchange is closed, or on which commercial banks in New York City are authorized by law to close.

“CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.A. § 9601 et seq., as the same may be amended from time to time.

“Change in Control” means any of the following events: (a) any Person or two or more Persons acting in concert shall have acquired beneficial ownership, directly or indirectly, of, or shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation, will result in its or their acquisition of or control over, voting stock of any Borrower (or other securities convertible into such voting stock) representing 40% or more of the combined voting power of all voting stock of any Borrower; or (b) Holdings ceases to own, directly or indirectly, 100% of the capital stock of any of its Subsidiaries; or (c) any “Change of Control”, “Change in Control”, or terms of similar import under any document or instrument governing or relating to Debt of or equity in such Person. As used herein, “beneficial ownership” shall have the meaning provided in Rule 13d-3 of the Securities and Exchange  Commission under the Securities Exchange Act of 1934.

“Claim” has the meaning set forth in Section 12.3.

“Closing Date” means the date of this Agreement.

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

“Collateral” means all property, now existing or hereafter acquired, mortgaged or pledged to, or purported to be subjected to a Lien in favor of, Lender pursuant to this Agreement and the Security Documents, including, without limitation, all of the property described in Schedule 9.1 hereto.

“Compliance Certificate” means a certificate, duly executed by a Responsible Officer of Borrowers, appropriately completed and substantially in the form of Exhibit C hereto.

“Consolidated Subsidiary” means, at any date, any Subsidiary the accounts of which would be consolidated with those of Holdings (or any other Person, as the context may require hereunder) in its consolidated financial statements if such statements were prepared as of such date.

“Contingent Obligation” means, with respect to any Person, any direct or indirect liability of such Person: (a) with respect to any Debt of another Person (a “Third Party Obligation”) if the purpose or intent of such Person incurring such liability, or the effect thereof, is to provide assurance to the obligee of such Third Party Obligation 

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that such Third Party Obligation will be paid or discharged, or that any agreement relating thereto will be complied with, or that any holder of such Third Party Obligation will be protected, in whole or in part, against loss with respect thereto; (b) with respect to any undrawn portion of any letter of credit issued for the account of such Person or as to which such Person is otherwise liable for the reimbursement of any drawing; (c) to make take-or-pay or similar payments if required regardless of nonperformance by any other party or parties to an agreement; or (d) for any obligations of another Person pursuant to any Guarantee or pursuant to any agreement to purchase, repurchase or otherwise acquire any obligation or any property constituting security therefor, to provide funds for the payment or discharge of such obligation or to preserve the solvency, financial condition or level of income of another Person. The amount of any Contingent Obligation shall be equal to the amount of the obligation so Guaranteed or otherwise supported or, if not a fixed and determinable amount, the maximum amount so Guaranteed or otherwise supported.

“Controlled Group” means all members of any group of corporations and all members of a group of trades or businesses (whether or not incorporated) under common control which, together with any Borrower, are treated as a single employer under Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of ERISA.

“Copyright Security Agreement” means any Copyright Security Agreement executed and delivered by any Credit Party to Lender, in form and substance satisfactory to Lender, as amended and in effect from time to time.

“Credit Exposure” means, at any time, any portion of the Term Loan Borrowing that remains outstanding; provided, however, that no Credit Exposure shall be deemed to exist solely due to the existence of contingent indemnification liability, absent the assertion of a claim, or the known existence of a claim reasonably likely to be asserted, with respect thereto.

“Credit Party” means any Guarantor hereunder or under any other Guarantee of the Obligations or any part thereof, any Borrower and any other Person (other than Lender), whether now existing or hereafter acquired or formed, that becomes obligated as a borrower, guarantor, surety, indemnitor, pledgor, assignor or other obligor under any Financing Document and “Credit Parties” means all such Persons, collectively; provided that no Subsidiary of Holdings as of the Closing Date incorporated or organized under the laws of any jurisdiction other than the United States or any other political subdivision thereof shall be required to become a Credit Party.

“Debt” of a Person means at any date, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable arising and paid on a timely basis and in the Ordinary Course of Business, (d) all capital leases of such Person, (e) all non-contingent obligations of such Person to reimburse any bank or other Person in respect of amounts paid under a letter of credit, banker’s acceptance or similar instrument, (f) all equity securities of such Person subject to repurchase or redemption other than at the sole option of such Person, (g) all obligations secured by a Lien on any asset of such Person, whether or not such obligation is otherwise an obligation of such Person, (h) “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, (i) all Debt of others Guaranteed by such Person, (j) off-balance sheet liabilities and/or Pension Plan or Multiemployer Plan liabilities of such Person, (k) obligations arising under non-compete agreements, and (l) obligations arising under bonus, deferred compensation, incentive compensation or similar arrangements, other than those arising in the Ordinary Course of Business. Without duplication of any of the foregoing, Debt of Borrowers shall include the Term Loan.

“Default” means any condition or event which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default.

“Deficiency Amount” has the meaning set forth in Section 2.7(e).

“Deposit Account” means a “deposit account” (as defined in Article 9 of the UCC), an investment account, or other account in which funds are held or invested for credit to or for the benefit of any Borrower.

“Dollars” or “$” means the lawful currency of the United States.

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“Environmental Laws” means any present and future federal, state and local laws, statutes, ordinances, rules, regulations, standards, policies and other governmental directives or requirements, as well as common law, pertaining to the environment, natural resources, pollution, health (including any environmental clean-up statutes and all regulations adopted by any local, state, federal or other Governmental Authority, and any statute, ordinance, code, order, decree, law rule or regulation all of which pertain to or impose liability or standards of conduct concerning medical waste or medical products, equipment or supplies), safety or clean-up that apply to any Borrower and relate to Hazardous Materials, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. § 9601 et seq.), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. § 6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C. § 1251 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. § 5101 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. § 136 et seq.), the Emergency Planning and Community Right-to-Know Act (42 U.S.C. § 11001 et seq.), the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.), the Residential Lead-Based Paint Hazard Reduction Act (42 U.S.C. § 4851 et seq.), any analogous state or local laws, any amendments thereto, and the regulations promulgated pursuant to said laws, together with all amendments from time to time to any of the foregoing and judicial interpretations thereof.

“ERISA” means the Employee Retirement Income Security Act of 1974, as the same may be amended, modified or supplemented from time to time, and any successor statute thereto, and any and all rules or regulations promulgated from time to time thereunder.

“ERISA Plan” means any “employee benefit plan”, as such term is defined in Section 3(3) of ERISA (other than a Multiemployer Plan), which any Borrower maintains, sponsors or contributes to, or, in the case of an employee benefit plan which is subject to Section 412 of the Code or Title IV of ERISA, to which any Borrower or any member of the Controlled Group may have any liability, including any liability by reason of having been a substantial employer within the meaning of Section 4063 of ERISA at any time during the preceding five (5) years, or by reason of being deemed to be a contributing sponsor under Section 4069 of ERISA.

“Event of Default” has the meaning set forth in Section 10.1.

“FDA” means the U.S. Food and Drug Administration.

“Financing Documents” means this Agreement, the Term Note, the Security Documents, any subordination or intercreditor agreement pursuant to which any Debt and/or any Liens securing such Debt is subordinated to all or any portion of the Obligations and all other certificates, documents, instruments and agreements related to the Obligations and heretofore executed, executed concurrently herewith or executed at any time and from time to time hereafter, as any or all of the same may be amended, supplemented, restated or otherwise modified from time to time.

“Fiscal Quarter” means each three fiscal month period ending on March 31, June 30, September 30 or December 31.

“Forbearance Agreement” has the meaning set forth in Section 5.15.

“Fraudulent Conveyance” has the meaning set forth In Section 2.7(b).

“GAAP” means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board, which are applicable to the circumstances as of the date of determination.

“General Intangible” means any “general intangible” as defined in Article 9 of the UCC, and any personal property, including things in action, other than accounts, chattel paper, commercial tort claims, deposit accounts, documents, goods, instruments, investment property, letter-of-credit rights, letters of credit, money, and oil, gas or other minerals before extraction, but including payment intangibles and software.

“Governmental Authority” means any nation or government, any state or other political subdivision thereof, and any agency, department or Person exercising executive, legislative, judicial, regulatory or 

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administrative functions of or pertaining to government and any corporation or other Person owned or controlled (through stock or capital ownership or otherwise) by any of the foregoing, whether domestic or foreign.

“Guarantee” by any Person means any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Debt or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation (whether arising by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise), or (b) entered into for the purpose of assuring in any other manner the obligee of such Debt or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part), provided, however, that the term Guarantee shall not include endorsements for collection or deposit in the Ordinary Course of Business. The term “Guarantee” used as a verb has a corresponding meaning.

“Guarantor” means any Credit Party that has executed or delivered, or shall in the future execute or deliver, this Agreement as a Guarantor or any Guarantee of any portion of the Obligations; provided that no Subsidiary of Holdings as of the Closing Date incorporated or organized under the laws of any jurisdiction other than the United States or any other political subdivision thereof shall be required to become a Guarantor. As of the Closing Date, no Credit Party is a Guarantor.

“Hazardous Materials” means petroleum and petroleum products and compounds containing them, including gasoline, diesel fuel and oil; explosives, flammable materials; radioactive materials; polychlorinated biphenyls and compounds containing them; lead and lead-based paint; asbestos or asbestos-containing materials; underground or above-ground storage tanks, whether empty or containing any substance; any substance the presence of which is prohibited by any Environmental Laws; toxic mold, any substance that requires special handling; and any other material or substance now or in the future defined as a “hazardous substance,” “hazardous material,” “hazardous waste,” “toxic substance,” “toxic pollutant,” “contaminant,” “pollutant” or other words of similar import within the meaning of any Environmental Law, including: (a) any “hazardous substance” defined as such in (or for purposes of) CERCLA, or any so-called “superfund” or “superlien” Law, including the judicial interpretation thereof; (b) any “pollutant or contaminant” as defined in 42 U.S.C.A. § 9601(33); (c) any material now defined as “hazardous waste” pursuant to 40 C.F.R. Part 260; (d) any petroleum or petroleum by-products, including crude oil or any fraction thereof; (e) natural gas, natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel; (f) any “hazardous chemical” as defined pursuant to 29 C.F.R. Part 1910; (g) any toxic or harmful substances, wastes, materials, pollutants or contaminants (including, without limitation, asbestos, polychlorinated biphenyls (“PCBs”), flammable explosives, radioactive materials, infectious substances, materials containing lead-based paint or raw materials which include hazardous constituents); and (h) any other toxic substance or contaminant that is subject to any Environmental Laws or other past or present requirement of any Governmental Authority.

“Hazardous Materials Contamination” means contamination (whether now existing or hereafter occurring) of the improvements, buildings, facilities, personalty, soil, groundwater, air or other elements on or of the relevant property by Hazardous Materials, or any derivatives thereof, or on or of any other property as a result of Hazardous Materials, or any derivatives thereof, generated on, emanating from or disposed of in connection with the relevant property.

“Healthcare Laws” means all applicable Laws relating to the possession, control, warehousing, marketing, sale, distribution procurement, development, manufacture, production, analysis, dispensing, importation, exportation, use, handling, quality, or promotion of any drug, medical device, food, dietary supplement, or other product (including, without limitation, any ingredient or component of the foregoing products) subject to regulation under the Federal Food, Drug, and Cosmetic Act and similar state and foreign laws, controlled substances laws, pharmacy laws, or consumer product safety laws, and all Laws pertaining to patient healthcare, patient healthcare information, rate setting, equipment, personnel, operating policies, fee splitting, or the like, as such Laws may be amended from time to time including all other applicable Laws, statutes, ordinances, rules and regulations.

“Healthcare Permit” has the meaning set forth in Section 8.2.

“Healthpoint” has the meaning set forth in Section 5.15.

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“Holdings” means Alphatec Holdings, Inc., a Delaware corporation.

“Instrument” means “instrument”, as defined in Article 9 of the UCC.

“Intellectual Property” means, with respect to any Person, all patents, patent applications and like protections, including improvements divisions, continuation, renewals, reissues, extensions and continuations in part of the same, trademarks, trade names, trade styles, trade dress, service marks, logos and other business identifiers and, to the extent permitted under applicable law, any applications therefore, whether registered or not, and the goodwill of the business of such Person connected with and symbolized thereby, copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative works, whether published or unpublished, technology, know- how and processes, operating manuals, trade secrets, computer hardware and software, rights to unpatented inventions and all applications and licenses therefor, used in or necessary for the conduct of business by such Person and all claims for damages by way of any past, present or future infringement of any of the foregoing.

“Inventory” means “inventory” as defined in Article 9 of the UCC.

“Inventory Financing Agreement” means that certain Inventory Financing Agreement dated as of the date hereof between Spine and Structure Medical and all amendments, supplements, restatements or modifications.

“Investment” means any investment in any Person, whether by means of acquiring (whether for cash, property, services, securities or otherwise), making or holding Debt, securities, capital contributions, loans, time deposits, advances, Guarantees or otherwise. The amount of any Investment shall be the original cost of such Investment plus the cost of all additions thereto, without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect thereto.

“Laws” means any and all federal, state, provincial, territorial, local and foreign statutes, laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, codes, injunctions, permits, governmental agreements and governmental restrictions, whether now or hereafter in effect, which are applicable to any Credit Party in any particular circumstance. “Laws” includes, without limitation, Healthcare Laws and Environmental Laws.

“Lender” means the entity described in the first paragraph of this Agreement and its successors and permitted assigns.

“LIBOR Rate” means one month LIBOR as reported in The Wall Street Journal as of any date of determination. The LIBOR Rate shall be determined as of the first Business Day of each month during the term of this Agreement and shall be the rate which is in effect for such month; provided, however that the LIBOR Rate for the period commencing on the Closing Date and ending on the last day of the month in which the Closing Date occurs, shall be the LIBOR Rate as of the Closing Date.

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind, in respect of such asset. For the purposes of this Agreement and the other Financing Documents, any Borrower or any Subsidiary shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset.

“Litigation” means any action, suit or proceeding before any court, mediator, arbitrator or Governmental Authority.

“Loan Account” has the meaning set forth in Section 2.4(b).

“Material Adverse Effect” means with respect to any event, act, condition or occurrence of whatever nature (including any adverse determination in any litigation, arbitration, or governmental investigation or proceeding), whether singly or in conjunction with any other event or events, act or acts, condition or conditions, occurrence or occurrences, whether or not related, a material adverse change in, or a material adverse effect upon, any of (i) the condition (financial or otherwise), operations, business, properties or prospects of any of the Credit Parties, (ii) the 

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rights and remedies of Lender under any Financing Document, or the ability of any Credit Party to perform any of its obligations under any Financing Document to which it is a party, (iii) the legality, validity or enforceability of any Financing Document, (iv) the existence, perfection or priority of any security interest granted in any Financing Document, (v) the value of any material Collateral, or (vi) the use or scope of any Healthcare Permits.

“Material Contracts” has the meaning set forth in Section 3.17.

“Maximum Lawful Rate” has the meaning set forth in Section 2.5.

“Maximum Liability” has the meaning set forth in Section 12.7.

“MidCap” means, collectively, MidCap Financial, LLC, MidCap Funding IV, LLC, and their permitted successors and assigns as “Lenders” or as “Agent” under the MidCap Facility Agreement.

“MidCap Debt” means Debt incurred pursuant to and in accordance with the terms of the MidCap Facility Agreement or any partial or complete refinancing or replacement thereof in a principal amount not to exceed $22,500,000.

“MidCap Facility Agreement” means: (a) that certain Amended and Restated Credit, Security and Guaranty Agreement, dated as of August 30, 2013, as amended prior to and as of the date hereof, among Holdings, MidCap and the other parties party thereto and without giving effect to any further amendment, supplement, restatement or other modification thereto other than those made in accordance with the terms of this Agreement and (b) the ancillary agreements and documents, other than any warrants issued in connection therewith, entered into by Holdings, the other parties party thereto and MidCap in connection therewith, in each case, true and complete copies of which have been provided to Lender.

“MidCap Intercreditor Agreement” means that certain Intercreditor Agreement between Lender and any agent or lender with respect to the MidCap Debt, as the same may be amended, supplemented, restated or otherwise modified from time to time in accordance with the terms thereof.

“Multiemployer Plan” means a multiemployer plan within the meaning of Section 4001(a)(3) of ERISA to which any Borrower or any other member of the Controlled Group (or any Person who in the last five years was a member of the Controlled Group) is making or accruing an obligation to make contributions or has within the preceding five plan years (as determined on the applicable date of determination) made contributions.

“Obligations” means all obligations, liabilities and indebtedness (monetary (including post- petition interest, whether or not allowed) or otherwise) of each Credit Party under this Agreement or any other Financing Document, in each case howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due.

“OFAC” means the U.S. Department of Treasury Office of Foreign Assets Control.

“OFAC Lists” means, collectively, the Specially Designated Nationals and Blocked Persons List maintained by OFAC pursuant to Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept. 25, 2001) and/or any other list of terrorists or other restricted Persons maintained pursuant to any of the rules and regulations of OFAC or pursuant to any other applicable Executive Orders.

“Operative Documents” means the Financing Documents, the Warrants, the Registration Rights Agreement, MidCap Facility Agreement, Subordinated Debt Documents, Safari Acquisition Agreement and all documents effecting the acquisition of SafeOp and any documents effecting any purchase or sale or other transaction that is closing contemporaneously with the closing of the financing under this Agreement on the Closing Date.

“Ordinary Course of Business” means, in respect of any transaction involving any Credit Party, the ordinary course of business of such Credit Party, as conducted by such Credit Party in accordance with past practices.

“Organizational Documents” means, with respect to any Person other than a natural person, the documents by which such Person was organized (such as a certificate of incorporation, certificate of limited partnership or 

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articles of organization, and including, without limitation, any certificates of designation for preferred stock or other forms of preferred equity) and which relate to the internal governance of such Person (such as by-laws, a partnership agreement or an operating, limited liability company or members agreement).

“Orthotec Litigation” means litigation matters in connection with, arising from, or related to Orthotec, LLC for which the Borrowers or their Subsidiaries face potential exposure (monetary or otherwise).

“Orthotec Forbearance Agreement” has the meaning set forth in Section 5.15.

“Orthotec Settlement Agreement” has the meaning set forth in Section 5.15.

“Orthotec Settlement Payments” means, collectively, all amounts paid or transferred (including cash, cash equivalents, assets and/or services) on or after the date hereof by or on behalf of the Credit Parties and/or their respective Subsidiaries in connection with any Orthotec, LLC matter (including the Orthotec Litigation).

“Patent Security Agreement” means any Patent Security Agreement executed and delivered by any Credit Party to Lender, in form and substance satisfactory to Lender, as amended and in effect from time to time.

“Payment Acceleration Event” has the meaning set forth in Section 10.5.

“Payment Account” means the account specified on the signature pages hereof into which all payments by or on behalf of each Borrower to Lender under the Financing Documents shall be made, or such other account as Lender shall from time to time specify by notice to Borrower Representative.

“Payment Notification” means a written notification substantially in the form of Exhibit D hereto.

“PBGC” means the Pension Benefit Guaranty Corporation and any Person succeeding to any or all of its functions under ERISA.

“Pension Plan” means any ERISA Plan that is subject to Section 412 of the Code or Title IV of ERISA.

“Permits” means all governmental licenses, authorizations, provider numbers, supplier numbers, registrations, permits, drug or device authorizations and approvals, certificates, franchises, qualifications, accreditations, consents and approvals of a Credit Party required under all applicable Laws and required for such Credit Party in order to carry on its business as now conducted, including, without limitation, Healthcare Permits.

“Permitted Asset Dispositions” means the following Asset Dispositions, provided, however, that at the time of such Asset Disposition, no Default or Event of Default exists or would result from such Asset Disposition: (a) dispositions of Inventory in the Ordinary Course of Business and not pursuant to any bulk sale, (b) dispositions of furniture, fixtures and equipment in the Ordinary Course of Business that the applicable Borrower or Subsidiary determines in good faith is no longer used or useful in the business of such Borrower and its Subsidiaries, and (c) the non-exclusive license of patent rights granted to third parties in the Ordinary Course of Business for fair value consideration that does not result in a legal transfer of title to the licensed property.

“Permitted Contest” means, with respect to any Tax obligation or other obligation allegedly or potentially owing from any Borrower or its Subsidiary to any Governmental Authority or other third party, a contest maintained in good faith by appropriate proceedings promptly instituted and diligently conducted and with respect to which such reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made on the books and records and financial statements of the applicable Credit Party(ies); provided, however, that (a) compliance with the obligation that is the subject of such contest is effectively stayed during such challenge; (b) Borrowers’ and its Subsidiaries’ title to, and its right to use, the Collateral is not adversely affected thereby and Lender’s Lien and priority on the Collateral are not adversely affected, altered or impaired thereby; (c) Borrowers have given prior written notice to Lender of a Borrower’s or its Subsidiary’s intent to so contest the obligation; (d) the Collateral or any part thereof or any interest therein shall not be in any danger of being sold, forfeited or lost by reason of such contest by Borrowers or its Subsidiaries; and (e) upon a final determination of such contest, Borrowers and its Subsidiaries shall promptly comply with the requirements thereof.

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“Permitted Contingent Obligations” means (a) Contingent Obligations arising in respect of the Debt under the Financing Documents; (b) Contingent Obligations resulting from endorsements for collection or deposit in the Ordinary Course of Business; (c) Contingent Obligations outstanding on the date of this Agreement and set forth on Schedule 5.1 (but not including any refinancings, extensions, increases or amendments to the indebtedness underlying such Contingent Obligations other than extensions of the maturity thereof without any other change in terms); (d) Contingent Obligations incurred in the Ordinary Course of Business with respect to surety and appeal bonds, performance bonds and other similar obligations not to exceed $250,000 in the aggregate at any time outstanding; (e) Contingent Obligations arising under indemnity agreements with title insurers to cause such title insurers to issue to Lender mortgagee title insurance policies; (f) Contingent Obligations arising with respect to customary indemnification obligations in favor of purchasers in connection with dispositions of personal property assets permitted under Section 5.6; and (g) other Contingent Obligations not permitted by clauses (a) through (f) above, not to exceed $250,000 in the aggregate at any time outstanding.

“Permitted Debt” means: (a) Borrowers’ and their Subsidiaries’ Debt to Lender under this Agreement and the other Financing Documents; (b) Debt incurred as a result of endorsing negotiable instruments received in the Ordinary Course of Business; (c) purchase money Debt (other than purchase money Debt existing on the date of this Agreement and described on Schedule 5.1) not to exceed $2,000,000 at any time (whether in the form of a loan or a lease) used solely to acquire equipment used in the Ordinary Course of Business and secured only by such equipment; (d) Debt existing on the date of this Agreement and described on Schedule 5.1 (but not including any refinancings, extensions, increases or amendments to such Debt other than extensions of the maturity thereof without any other change in terms); (e) the MidCap Debt; (f) Debt in the form of insurance premiums financed through the applicable insurance company; (g) trade accounts payable arising and paid on a timely basis and in the Ordinary Course of Business; (h) Structure Medical Debt; (i) Subordinated Debt and (j) Permitted Intercompany Advances.

“Permitted Distributions” means: (a) dividends or other distributions by any Subsidiary of any Borrower to such parent Borrower; and (b) any repayments of or debt service on any Permitted Intercompany Advances described in clause (a), (b) or (d) of the definition thereof.

“Permitted Intercompany Advances” means loans, guarantees or other Investments made by (a) a Credit Party to another Credit Party, (b) a Subsidiary of Holdings that is not a Credit Party to another Subsidiary of Holdings that is not a Credit Party, (c) a Subsidiary of Holdings that is not a Credit Party to a Credit Party so long as such loan, guaranty or other Investment is subordinated in right of payment to the Obligations on terms and conditions acceptable to Lender, and (d) a Credit Party to a Subsidiary of Holdings that is not a Credit Party so long as the aggregate amount of all such loans, guarantees and Investments outstanding under this clause (d) does not exceed $200,000 (or such greater amount as Agent may agree in its reasonable discretion) per individual transaction, or $3,000,000 in the aggregate.

“Permitted Investments” means: (a) Investments shown on Schedule 5.7 and existing on the Closing Date; (b) cash and cash equivalents; (c) Investments consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions in the Ordinary Course of Business; (d) Investments consisting of travel advances and employee relocation loans and other employee loans and advances in the Ordinary Course of Business, but the aggregate of all such loans outstanding may not exceed $250,000 at any time; (e) Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the Ordinary Course of Business; (f) Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not Affiliates, in the Ordinary Course of Business, provided, however, that this subpart (f) shall not apply to Investments of Borrowers in any Subsidiary; (g) Investments consisting of deposit accounts; (h) Investments by any Borrower in any other Borrower made in compliance with Section 4.11(c); (i) Investments constituting Permitted Intercompany Advances; (j) Investments consisting of accounts receivables from Affiliates resulting from the sale of inventory to such Affiliates in the Ordinary Course of Business, so long as such sales are otherwise permitted pursuant to clause (y) of Section 5.8; (k) other Investments in an amount not exceeding $500,000 in the aggregate and (l) “Permitted Investments” as defined in the MidCap Facility Agreement.

“Permitted Liens” means: (a) deposits or pledges of cash to secure obligations under workmen’s compensation, social security or similar laws, or under unemployment insurance (but excluding Liens arising under 

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ERISA) pertaining to a Borrower’s or its Subsidiary’s employees, if any; (b) deposits or pledges of cash to secure bids, tenders, contracts (other than contracts for the payment of money or the deferred purchase price of property or services), leases, statutory obligations, surety and appeal bonds and other obligations of like nature arising in the Ordinary Course of Business; (c) carrier’s, warehousemen’s, mechanic’s, workmen’s, materialmen’s or other like Liens on Collateral arising in the Ordinary Course of Business with respect to obligations which are not due, or which are being contested pursuant to a Permitted Contest; (d) Liens on Collateral for Taxes or other governmental charges not at the time delinquent or thereafter payable without penalty or the subject of a Permitted Contest; (e) attachments, appeal bonds, judgments and other similar Liens on Collateral, for sums not exceeding $100,000 in the aggregate arising in connection with court proceedings; provided, however, that the execution or other enforcement of such Liens is effectively stayed and the claims secured thereby are the subject of a Permitted Contest; (f) Liens and encumbrances in favor of Lender under the Financing Documents; (g) Liens on Collateral existing on the date hereof and set forth on Schedule 5.2; (h) any Lien on any equipment securing Debt permitted under subpart (c) of the definition of Permitted Debt, provided, however, that such Lien attaches concurrently with or within twenty (20) days after the acquisition thereof; (i) Liens and encumbrances securing Structure Medical Debt, (j) Liens and encumbrances in favor of the holders of the Affiliated Financing Documents and (k) Liens and encumbrances securing the MidCap Debt.

“Permitted Modifications” means (a) such amendments or other modifications to a Borrower’s or Subsidiary’s Organizational Documents as are required under this Agreement or by applicable Law and fully disclosed to Lender within thirty (30) days after such amendments or modifications have become effective, and (b) such amendments or modifications to a Borrower’s or Subsidiary’s Organizational Documents (other than those involving a change in the name of a Borrower or Subsidiary or involving a reorganization of a Borrower or Subsidiary under the laws of a different jurisdiction) that would not adversely affect the rights and interests of Lender and fully disclosed to Lender within thirty (30) days after such amendments or modifications have become effective.

“Permitted Transfers” means, with respect to Holdings only, the collective reference to one or more transfers, via a sale and not by pledge or hypothecation, which, in the aggregate during the term of this Agreement, result in a transfer of legal or beneficial ownership or control of up to 20% of the direct or indirect ownership or voting interests in the Borrowers or any Guarantor to a Person, (a) that is purchasing such ownership interest in a public offering registered with the SEC, or (b) other than a Blocked Person, that is (i) a venture capital investor so long as Borrowers have given Lender at least fifteen (15) days prior written notice of the identity of the assignees, together with such information as Lender shall deem necessary to confirm that such assignee is not a Blocked Person or (ii) at the time of such transfer, already a holder of direct or indirect ownership or voting interests in the Borrowers.

“Person” means any natural person, corporation, limited liability company, professional association, limited partnership, general partnership, joint stock company, joint venture, association, company, trust, bank, trust company, land trust, business trust or other organization, whether or not a legal entity, and any Governmental Authority.

“Pledge Agreement” means that certain Pledge Agreement, dated as of the Closing Date, by Holdings in favor of Lender, as amended, restated, modified or otherwise supplemented from time to time.

“Promissory Note” means any promissory note (as such term is defined in the UCC) which evidences any loan, guarantee or other Investment described in clause (d) of the definition of Permitted Intercompany Advances.

“Recovery Amount” has the meaning set forth in Section 2.7(e).

“Registration Rights Agreement” means the Registration Rights Agreement dated as of the date hereof among Holdings and the holders of the Warrants.

“Responsible Officer” means any of the Chief Executive Officer, Chief Financial Officer or any other officer of the applicable Borrower acceptable to Lender.

“Restricted Distribution” means as to any Person (a) any dividend or other distribution (whether in cash, securities or other property) on any equity interest in such Person (except those payable solely in its equity interests 

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of the same class), (b) any payment by such Person on account of (i) the purchase, redemption, retirement, defeasance, surrender, cancellation, termination or acquisition of any equity interests in such Person or any claim respecting the purchase or sale of any equity interest in such Person, or (ii) any option, warrant or other right to acquire any equity interests in such Person, (c) any management fees, salaries or other fees or compensation to any Person holding an equity interest in a Borrower or a Subsidiary of a Borrower (other than (i) payments of salaries and other employee benefits to individuals, (ii) directors fees, (iii) advances and reimbursements to employees or directors, all in the Ordinary Course of Business and (iv) the issuance of stock options or restricted stock to employees and board members so long as such Borrower or Subsidiary, as applicable, is not required to redeem any such stock before the Termination Date), an Affiliate of a Borrower or an Affiliate of any Subsidiary of a Borrower, (d) any lease or rental payments to an Affiliate or Subsidiary of a Borrower or (e) repayments of or debt service on loans or other indebtedness held by any Person holding an equity interest in a Borrower or a Subsidiary of a Borrower, an Affiliate of a Borrower or an Affiliate of any Subsidiary of a Borrower unless permitted under and made pursuant to a Subordination Agreement applicable to such loans or other Debt.

“Revolving Loan Availability” has the meaning set forth in the MidCap Facility Agreement (or in any replacement revolving loan facility entered into by Borrowers).

“Safari Acquisition Agreement” means that certain Agreement and Plan of Merger, dated as of March 6, 2018, by and among Holdings, Safari Merger Sub, Inc., a Delaware corporation, SafeOp, the Key Stockholders (as defined therein), and Safari Holding Company, LLC.

“Safari Seller Notes” means those certain (a) Convertible Promissory Notes issued pursuant to the Safari Acquisition Agreement, each dated as of March 8, 2018, made by Alphatec Holdings and payable to each of Tullis-Dickerson Capital Focus III, L.P., Tullis Growth Fund, L.P., James L.L. Tullis, Lighthouse Holdings Corporation, Eugene Cattarina, Mark D’Addato, Robert Snow, Richard O’Brien and Christopher Brown, as in effect on March 8, 2018, and (b) Convertible Promissory Notes (if any) issued pursuant to the Safari Acquisition Agreement, made by Holdings and payable to certain other sellers of SafeOp, in each case, in form and substance identical to the Convertible Promissory Notes issued on March 8, 2018; provided that each seller receiving a Safari Seller Note described in clause (b) above shall have become a party to the Safari Subordination Agreement; provided further that the aggregate principal amount of all Safari Seller Notes shall not exceed $3,000,000.

“Safari Seller Subordination Agreement” means that certain Subordination Agreement, dated as of the date hereof, among the subordinated creditors signatory thereto and Lender, as such document may be amended, restated, supplemented or otherwise modified from time to time after the date hereof.

SafeOp” means SafeOp Surgical, Inc., a Delaware corporation.

“SEC” means the United States Securities and Exchange Commission.

“Securities Account” means a “securities account” (as defined in Article 9 of the UCC), an investment account, or other account in which investment property or securities are held or invested for credit to or for the benefit of any Borrower.

“Securities Account Control Agreement” means an agreement, in form and substance satisfactory to Lender, among Lender, any applicable Borrower and each securities intermediary in which such Borrower maintains a Securities Account pursuant to which Lender shall obtain “control” (as defined in Article 9 of the UCC) over such Securities Account.

“Securitization” has the meaning set forth in Section 11.6.

“Security Document” means this Agreement, any Securities Account Control Agreement, any Patent Security Agreement, any Trademark Security Agreement, any Copyright Security Agreement, the Pledge Agreement and any other agreement, certificate, document or instrument executed concurrently herewith or at any time hereafter pursuant to which one or more Credit Parties or any other Person either (a) Guarantees payment or performance of all or any portion of the Obligations, and/or (b) provides, as security for all or any portion of the Obligations, a Lien on any of its assets in favor of Lender for its own benefit, as any or all of the same may be amended, supplemented, restated or otherwise modified from time to time.

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“Solvent” means, with respect to any Person, that such Person (a) owns and will own assets the fair saleable value of which are (i) greater than the total amount of its liabilities (including Contingent Obligations), and (ii) greater than the amount that will be required to pay the probable liabilities of its then existing debts as they become absolute and matured considering all financing alternatives and potential asset sales reasonably available to it; (b) has capital that is not unreasonably small in relation to its business as presently conducted or after giving effect to any contemplated transaction; and (c) does not intend to incur and does not believe that it will incur debts beyond its ability to pay such debts as they become due.

“Spine” means Alphatec Spine, Inc., a California corporation.

“Stated Rate” has the meaning set forth in Section 2.5.

“Structure Medical” means Structure Medical, LLC, a Florida limited liability company.

“Structure Medical Debt” means the Debt payable under the terms of the Inventory Financing Agreement.

“Subordinated Debt” means any Debt of Borrowers incurred pursuant to the terms of the Subordinated Debt Documents and with the prior written consent of Lender, all of which documents must be in form and substance acceptable to Lender in its sole discretion.

“Subordinated Debt Documents” means (a) the Safari Seller Notes and (b) any other documents evidencing and/or securing Debt governed by a Subordination Agreement, all of which documents must be in form and substance acceptable to Lender in its sole discretion. As of the Closing Date, there are no Subordinated Debt Documents, other than the Safari Seller Notes.

“Subordination Agreement” means (a) the Safari Seller Subordination Agreement and (b) each other agreement between Lender and another creditor of Borrowers, as the same may be amended, supplemented, restated or otherwise modified from time to time in accordance with the terms thereof, pursuant to which the Debt owing from any Borrower(s) and/or the Liens securing such Debt granted by any Borrower(s) to such creditor are subordinated in any way to the Obligations and the Liens created under the Security Documents, the terms and provisions of such Subordination Agreements to have been agreed to by and be acceptable to Lender in the exercise of its sole discretion.

“Subsidiary” means, with respect to any Person, (a) any corporation of which an aggregate of more than fifty percent (50%) of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, capital stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, owned legally or beneficially by such Person or one or more Subsidiaries of such Person, or with respect to which any such Person has the right to vote or designate the vote of more than fifty percent (50%) of such capital stock whether by proxy, agreement, operation of law or otherwise, and (b) any partnership or limited liability company in which such Person and/or one or more Subsidiaries of such Person shall have an interest (whether in the form of voting or participation in profits or capital contribution) of more than fifty percent (50%) or of which any such Person is a general partner or may exercise the powers of a general partner.

“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto and all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Financing Document.

“Term Loan” has the meaning set forth in Section 2.1(a).

“Term Loan Borrowing” means a borrowing of a Term Loan.

“Term Note” has the meaning set forth in Section 2.3.

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“Termination Date” means the earlier to occur of (a) November 6, 2023, (b) any date on which Lender accelerates the maturity of the Term Loan pursuant to Section 10.2, or (c) the termination date stated in any notice of termination of this Agreement provided by Borrowers in accordance with Section 2.8.

“Trademark Security Agreement” means any Trademark Security Agreement executed and delivered by any Credit Party to Lender, in form and substance satisfactory to the Lender, as amended and in effect from time to time.

“UCC” means the Uniform Commercial Code of the State of New York or of any other state the laws of which are required to be applied in connection with the perfection of security interests in any Collateral.

“United States” means the United States of America.

“Warrants” means the warrants granted to Lender (including any designee of Lender) to purchase 845,000 shares of common stock of Holdings at $3.15 per share, which warrant shall be substantially in the form of Exhibit B.

Section 1.2 Accounting Terms and Determinations. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder (including, without limitation, determinations made pursuant to the exhibits hereto) shall be made, and all financial statements required to be delivered hereunder shall be prepared on a consolidated basis in accordance with GAAP applied on a basis consistent with the most recent audited consolidated financial statements of each Borrower and its Consolidated Subsidiaries delivered to Lender on or prior to the Closing Date. If at any time any change in GAAP would affect the computation of any financial ratio or financial requirement set forth in any Financing Document, and either Borrowers or Lender shall so request, Lender and Borrowers shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of Lender); provided, however, that until so amended, (a) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein, and (b) Borrowers shall provide to Lender financial statements and other documents required under this Agreement which include a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, without giving effect to any election under Statement of Financial Accounting Standards 159 (or any other Financial Accounting Standard having a similar result or effect) to value any Debt or other liabilities of any Credit Party or any Subsidiary of any Credit Party at “fair value”, as defined therein.

Section 1.3 Other Definitional and Interpretive Provisions. References in this Agreement to “Articles”, “Sections”, “Annexes”, “Exhibits”, or “Schedules” shall be to Articles, Sections, Annexes, Exhibits or Schedules of or to this Agreement unless otherwise specifically provided. Any term defined herein may be used in the singular or plural. “Include”, “includes” and “including” shall be deemed to be followed by “without limitation”. Except as otherwise specified or limited herein, references to any Person include the successors and assigns of such Person. References “from” or “through” any date mean, unless otherwise specified, “from and including” or “through and including”, respectively. Unless otherwise specified herein, the settlement of all payments and fundings hereunder between or among the parties hereto shall be made in lawful money of the United States and in immediately available funds. References to any statute or act shall include all related current regulations and all amendments and any successor statutes, acts and regulations. All amounts used for purposes of financial calculations required to be made herein shall be without duplication. References to any statute or act, without additional reference, shall be deemed to refer to federal statutes and acts of the United States. References to any agreement, instrument or document shall include all schedules, exhibits, annexes and other attachments thereto. As used in this Agreement, the meaning of the term “material” or the phrase “in all material respects” is intended to refer to an act, omission, violation or condition which reflects or could reasonably be expected to result in a Material Adverse Effect. References to capitalized terms that are not defined herein, but are defined in the UCC, shall have the meanings given them in the UCC. All references herein to times of day shall be references to daylight or standard time, as applicable.

Section 1.4 Time is of the Essence. Time is of the essence in each Borrower’s and each other Credit Party’s performance under this Agreement and all other Financing Documents.

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Section 1.5 Intercreditor Agreement. Notwithstanding anything herein to the contrary, the terms of this Agreement and the exercise of any right or remedy by Lender hereunder or under any Financing Document with respect to the liens and security interest granted Lender pursuant to this Agreement, is subject to the provisions of the MidCap Intercreditor Agreement. In the event of any conflict between the terms of the MidCap Intercreditor Agreement and this Agreement with respect to the exercise of rights and remedies or the priority of the security interests granted to the Agent herein, the terms of the MidCap Intercreditor Agreement shall govern and control.

ARTICLE 2 - LOAN

Section 2.1 Term Loan.

(a) Term Loan Amount. On the terms and subject to the conditions set forth herein, Lender hereby agrees to make to Borrowers a term loan in an aggregate original principal amount equal to the Thirty Five Million Dollars ($35,000,000) on the Closing Date (“Term Loan”).

(b) Scheduled Repayments; Mandatory Prepayments; Optional Prepayments.

(i) There shall become due and payable, and Borrowers shall repay the Term Loan through, scheduled payments beginning on June 30, 2021 and continuing on the last Business Day of each month thereafter, in monthly principal payments of $344,827. Notwithstanding the foregoing, the outstanding principal amount of the Term Loan shall become immediately due and payable in full on the Termination Date.

(ii) Subject to the provisions of the MidCap Intercreditor Agreement, there shall become due and payable and Borrowers shall prepay the Term Loan in the following amounts and at the following times:

(A) Unless Lender shall otherwise consent in writing, on the date on which any Credit Party (or Lender as loss payee or assignee) receives any casualty proceeds in excess of $50,000 with respect to assets upon which Lender maintained a Lien, an amount equal to one hundred percent (100%) of such proceeds (net of out-of-pocket expenses and repayment of secured debt permitted under clause (c) of the definition of Permitted Debt and encumbering the property that suffered such casualty), or such lesser portion of such proceeds as Lender shall elect to apply to the Obligations;

(B) an amount equal to any interest that is deemed to be in excess of the Maximum Lawful Rate (as defined below) and is required to be applied to the reduction of the principal balance of the Term Loan by Lender as provided for in Section 2.5;

(C) unless Lender shall otherwise consent in writing, upon receipt by any Credit Party of the proceeds of any Asset Disposition (other than Permitted Asset Dispositions), an amount equal to one hundred percent (100%) of the net cash proceeds of such Asset Disposition (net of out-of-pocket expenses and repayment of secured debt permitted under clause (c) of the definition of Permitted Debt and encumbering such asset), or such lesser portion as Lender shall elect to apply to the Obligations; and

(D) unless Lender shall otherwise consent in writing, upon receipt by any Credit Party of any extraordinary receipts or the proceeds from the incurrence of Debt (other than Permitted Debt) or issuance and sale of any Debt or equity securities, an amount equal to one hundred percent (100%) of such extraordinary receipts, or such lesser portion as Lender shall elect to apply to the Obligations.

Notwithstanding the foregoing and so long as no Event of Default or Default then exists: (1) any such casualty proceeds in excess of $50,000, but not to exceed $250,000 (other than with respect to Inventory and any real property, unless Lender shall otherwise elect) may be used by Borrowers within one hundred eighty (180) days from the receipt of such proceeds to replace or repair any assets in respect of which such proceeds were paid so long as (x) prior to the receipt of such proceeds, Borrowers have delivered to Lender a reinvestment plan detailing such replacement or repair acceptable to Lender in its reasonable discretion and (y) such proceeds are deposited into an account with Lender promptly upon receipt by such Borrower; and (2) proceeds 

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of personal property asset dispositions (other than Permitted Asset Dispositions) may be used by Borrowers within one hundred eighty (180) days from the receipt of such proceeds to purchase new or replacement assets of comparable value, provided, however, that such proceeds are deposited into an account with Lender promptly upon receipt by such Borrower. All sums held by Lender pending reinvestment as described in subsections (1) and (2) above shall be deemed additional collateral for the Obligations and such sums may be commingled with the general funds of Lender.

(iii) Borrowers may from time to time, with at least two (2) Business Days prior delivery to Lender of an appropriately completed Payment Notification, prepay the Term Loan in whole or in part; provided, however, that each such prepayment shall be in an amount equal to $100,000 or a higher integral multiple of $25,000 and shall be accompanied by any prepayment fees required hereunder.

(c) All Prepayments. Except as this Agreement may specifically provide otherwise, all prepayments of the Term Loan shall be applied by Lender to the Obligations in inverse order of maturity. The monthly payments required under Schedule 2.1 shall continue in the same amount (for so long as the Term Loan and/or (if applicable) any advance thereunder shall remain outstanding) notwithstanding any partial prepayment, whether mandatory or optional, of the Term Loan.

(d) LIBOR Rate.

(i) Except as provided in subsection (ii) below, the Term Loan shall accrue interest at the LIBOR Rate plus the Applicable Margin; provided, however, that in no event shall interest accrue at a rate lower than 10% per annum or greater than 13% per annum.

(ii) In the event that any change in market conditions or any law, regulation, treaty, or directive, or any change therein or in the interpretation of application thereof, shall at any time after the date hereof, in the reasonable opinion of Lender, make it unlawful or impractical for Lender to maintain the Term Loan bearing interest based upon the LIBOR Rate or to continue such maintaining, or to determine or charge interest rates at the LIBOR Rate, Lender shall give notice of such changed circumstances to Borrowers, interest shall accrue interest at the Base Rate plus the Applicable Margin.

(iii) Anything to the contrary contained herein notwithstanding, Lender is not required actually to acquire eurodollar deposits to fund or otherwise match fund any Obligation as to which interest accrues based on the LIBOR Rate.

(e) Warrants. The Borrowers and the Lender hereby acknowledge and agree that, for United States income tax purposes, for an aggregate purchase price of $35,000,000, (i) the Lender shall make the Term Loan to the Borrowers and (ii) the Borrowers shall sell to, and the Lender (including any designee of Lender) shall purchase from the Borrowers, the Warrants. Furthermore, the Borrowers and the Lender hereby acknowledge and agree that (i) the issue price (within the meaning of Section 1273(b) of the Internal Revenue Code) of the Term Loan is determined pursuant to Section 1272-1275 of the Code and the Treasury Regulations thereunder and (ii) for United States federal income tax purposes, the issue price of the Warrants within the meaning of Section 1273(b) of the Internal Revenue Code, which issue price was determined pursuant to Section 1.1273-2(h)(1) of the Treasury Regulations, is equal to $2.00. The parties hereto agree to report all income tax matters with respect to the Warrants consistent with the provisions of this Section 2.1(e) unless otherwise required due to a change in applicable Law.

Section 2.2 Interest, Interest Calculations and Certain Fees.

(a) Interest. From and following the Closing Date, except as expressly set forth in this Agreement, the Term Loan and the other Obligations shall bear interest at the sum of the LIBOR Rate plus the Applicable Margin. Interest on the Term Loan shall be paid in arrears on the last Business Day of each month and on the maturity of such Term Loan, whether by acceleration or otherwise. Interest on all other Obligations shall be payable upon demand. For purposes of calculating interest, all funds transferred to the Payment Account for application to any Term Loan shall be subject to a six (6) Business Day clearance period and all interest accruing on such funds during such clearance period shall accrue for the benefit of Lender.

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(b) Audit Fees. Borrowers shall pay to Lender all reasonable fees and expenses in connection with audits and inspections of Borrowers’ books and records, audits, valuations or appraisals of the Collateral, audits of Borrowers’ compliance with applicable Laws and such other matters as Lender shall deem appropriate, which shall be due and payable on the last Business Day of the month following the date of issuance by Lender of a written request for payment thereof to Borrowers.

(c) Wire Fees. Borrowers shall pay to Lender on written demand, fees incurred for incoming and outgoing wires made for the account of Borrowers, which such fees will be in an amount equal to the expenses incurred by Lender in making any such wire.

(d) Late Charges. If payments of principal (other than a final installment of principal upon the Termination Date), interest due on the Obligations, or any other amounts due hereunder or under the other Financing Documents are not timely made and remain overdue for a period of five (5) days, Borrowers, without notice or demand by Lender, promptly shall pay to Lender as additional compensation to Lender in administering the Obligations, an amount equal to five percent (5.0%) of each delinquent payment.

(e) Computation of Interest and Related Fees. All interest and fees under each Financing Document shall be calculated on the basis of a 360-day year for the actual number of days elapsed. The date of funding of a Term Loan shall be included in the calculation of interest. The date of payment of a Loan shall be excluded from the calculation of interest. If a Loan is repaid on the same day that it is made, one (1) day’s interest shall be charged.

Section 2.3 Term Note. The Term Loan made by Lender shall be evidenced by a promissory note in the form attached hereto as Exhibit A executed by Borrowers on a joint and several basis (“Term Note”) in an original principal amount equal to Thirty Five Million Dollars ($35,000,000).

Section 2.4 General Provisions Regarding Payment; Loan Account.

(a) All payments to be made by each Borrower under any Financing Document, including payments of principal and interest made hereunder and pursuant to any other Financing Document, and all fees, expenses, indemnities and reimbursements, shall be made without set-off, recoupment or counterclaim. If any payment hereunder becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension (it being understood and agreed that, solely for purposes of calculating financial covenants and computations contained herein and determining compliance therewith, if payment is made, in full, on any such extended due date, such payment shall be deemed to have been paid on the original due date without giving effect to any extension thereto). Any payments received in the Payment Account before 12:00 Noon (Eastern time) on any date shall be deemed received by Lender on such date, and any payments received in the Payment Account at or after 12:00 Noon (Eastern time) on any date shall be deemed received by Lender on the next succeeding Business Day. In the absence of receipt by Lender of a written designation by Borrower Representative, at least two (2) Business Days prior to such prepayment, that such prepayment is to be applied to a Term Loan, Borrowers hereby authorize and direct Lender, subject to the provisions of Section 10.5 hereof, to apply such prepayment against Term Loan in accordance with the provisions of Section 2.1(c); provided, however, that if Lender at any time determines that payments received by Lender were in respect of a mandatory prepayment event, Lender shall apply such payments in accordance with the provisions of Section 2.1(b) and shall be fully authorized by Borrowers and Lender to make corresponding Loan Account reversals in respect thereof.

(b) Lender shall maintain a loan account (the “Loan Account”) on its books to record the Term Loan and other extensions of credit made by Lender hereunder or under any other Financing Document, and all payments thereon made by each Borrower. All entries in the Loan Account shall be made in accordance with Lender’s customary accounting practices as in effect from time to time. The balance in the Loan Account, as recorded in Lender’s books and records at any time shall be conclusive and binding evidence of the amounts due and owing to Lender by each Borrower absent manifest error; provided, however, that any failure to so record or any error in so recording shall not limit or otherwise affect any Borrower’s duty to pay all amounts owing hereunder or under any other Financing Document. Lender shall endeavor to provide Borrowers with a monthly statement regarding the Loan Account (but Lender shall not have any liability if Lender shall fail to provide any such statement). Unless any Borrower notifies Lender of any objection to any such statement (specifically describing the basis for such objection) within ninety (90) days after the date of receipt thereof, it shall be deemed final, binding and conclusive upon Borrowers in all respects as to all matters reflected therein.

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Section 2.5 Maximum Interest. In no event shall the interest charged with respect to the Term Loan or any other Obligations of any Borrower under any Financing Document exceed the maximum amount permitted under the laws of the State of New York or of any other applicable jurisdiction. Notwithstanding anything to the contrary herein or elsewhere, if at any time the rate of interest payable hereunder or under the Term Note or other Financing Document (the “Stated Rate”) would exceed the highest rate of interest permitted under any applicable law to be charged (the “Maximum Lawful Rate”), then for so long as the Maximum Lawful Rate would be so exceeded, the rate of interest payable shall be equal to the Maximum Lawful Rate; provided, however, that if at any time thereafter the Stated Rate is less than the Maximum Lawful Rate, each Borrower shall, to the extent permitted by law, continue to pay interest at the Maximum Lawful Rate until such time as the total interest received is equal to the total interest which would have been received had the Stated Rate been (but for the operation of this provision) the interest rate payable. Thereafter, the interest rate payable shall be the Stated Rate unless and until the Stated Rate again would exceed the Maximum Lawful Rate, in which event this provision shall again apply. In no event shall the total interest received by Lender exceed the amount which it could lawfully have received had the interest been calculated for the full term hereof at the Maximum Lawful Rate. If, notwithstanding the prior sentence, Lender has received interest hereunder in excess of the Maximum Lawful Rate, such excess amount shall be applied to the reduction of the principal balance of the Term Loan or to other amounts (other than interest) payable hereunder, and if no such principal or other amounts are then outstanding, such excess or part thereof remaining shall be paid to Borrowers. In computing interest payable with reference to the Maximum Lawful Rate applicable to Lender, such interest shall be calculated at a daily rate equal to the Maximum Lawful Rate divided by the number of days in the year in which such calculation is made.

Section 2.6 Appointment of Borrower Representative. Each Borrower hereby designates Borrower Representative as its representative and agent on its behalf for the purposes of issuing Notices of Borrowing, and giving instructions with respect to the disbursement of the proceeds of the Term Loan, giving and receiving all other notices and consents hereunder or under any of the other Financing Documents and taking all other actions (including in respect of compliance with covenants) on behalf of any Borrower or Borrowers under the Financing Documents. Borrower Representative hereby accepts such appointment. Notwithstanding anything to the contrary contained in this Agreement, no Borrower other than Borrower Representative shall be entitled to take any of the foregoing actions. The proceeds of each Loan made hereunder shall be advanced to or at the direction of Borrower Representative and if not used by Borrower Representative in its business (for the purposes provided in this Agreement) shall be deemed to be immediately advanced by Borrower Representative to the appropriate other Borrower hereunder as an intercompany loan (collectively, “Intercompany Loans”). All collections of each Borrower in respect of proceeds of Collateral of such Borrower received by Lender and applied to the Obligations shall also be deemed to be repayments of the Intercompany Loans owing by such Borrower to Borrower Representative. Borrowers shall maintain accurate books and records with respect to all Intercompany Loans and all repayments thereof. Lender may regard any notice or other communication pursuant to any Financing Document from Borrower Representative as a notice or communication from all Borrowers, and may give any notice or communication required or permitted to be given to any Borrower or all Borrowers hereunder to Borrower Representative on behalf of such Borrower or all Borrowers. Each Borrower agrees that each notice, election, representation and warranty, covenant, agreement and undertaking made on its behalf by Borrower Representative shall be deemed for all purposes to have been made by such Borrower and shall be binding upon and enforceable against such Borrower to the same extent as if the same had been made directly by such Borrower.

Section 2.7 Joint and Several Liability; Rights of Contribution; Subordination and Subrogation.

(a) Borrowers are defined collectively to include all Persons named as one of the Borrowers herein; provided, however, that any references herein to “any Borrower”, “each Borrower” or similar references, shall be construed as a reference to each individual Person named as one of the Borrowers herein. Each Person so named shall be jointly and severally liable for all of the obligations of Borrowers under this Agreement. Each Borrower, individually, expressly understands, agrees and acknowledges, that the credit facilities would not be made available on the terms herein in the absence of the collective credit of all of the Persons named as the Borrowers herein, the joint and several liability of all such Persons, and the cross-collateralization of the collateral of all such Persons. Accordingly, each Borrower individually acknowledges that the benefit to each of the Persons named as one of the Borrowers as a whole constitutes reasonably equivalent value, regardless of the amount of the credit facilities actually borrowed by, advanced to, or the amount of collateral provided by, any individual Borrower. In addition, each entity named as one of the Borrowers herein hereby acknowledges and agrees that all of the representations, 

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warranties, covenants, obligations, conditions, agreements and other terms contained in this Agreement shall be applicable to and shall be binding upon and measured and enforceable individually against each Person named as one of the Borrowers herein as well as all such Persons when taken together. By way of illustration, but without limiting the generality of the foregoing, the terms of Section 10.1 of this Agreement are to be applied to each individual Person named as one of the Borrowers herein (as well as to all such Persons taken as a whole), such that the occurrence of any of the events described in Section 10.1 of this Agreement as to any Person named as one of the Borrowers herein shall constitute an Event of Default even if such event has not occurred as to any other Persons named as the Borrowers or as to all such Persons taken as a whole.

(b) Notwithstanding any provisions of this Agreement to the contrary, it is intended that the joint and several nature of the liability of each Borrower for the Obligations and the Liens granted by Borrowers to secure the Obligations, not constitute a Fraudulent Conveyance (as defined below). Consequently, Lender and each Borrower agree that if the liability of a Borrower for the Obligations, or any Liens granted by such Borrower securing the Obligations would, but for the application of this sentence, constitute a Fraudulent Conveyance, the liability of such Borrower and the Liens securing such liability shall be valid and enforceable only to the maximum extent that would not cause such liability or such Lien to constitute a Fraudulent Conveyance, and the liability of such Borrower and this Agreement shall automatically be deemed to have been amended accordingly. For purposes hereof, the term “Fraudulent Conveyance” means a fraudulent conveyance under Section 548 of Chapter 11 of Title II of the Bankruptcy Code or a fraudulent conveyance or fraudulent transfer under the applicable provisions of any fraudulent conveyance or fraudulent transfer law or similar law of any state, nation or other governmental unit, as in effect from time to time.

(c) Lender is hereby authorized, without notice or demand (except as otherwise specifically required under this Agreement and subject in all respects to the MidCap Intercreditor Agreement) and without affecting the liability of any Borrower hereunder, at any time and from time to time, to (i) renew, extend or otherwise increase the time for payment of the Obligations; (ii) with the written agreement of any Borrower, change the terms relating to the Obligations or otherwise modify, amend or change the terms of the Term Note or other agreement, document or instrument now or hereafter executed by either Borrower and delivered to Lender for Lender; (iii) accept partial payments of the Obligations; (iv) take and hold any Collateral for the payment of the Obligations or for the payment of any guaranties of the Obligations and exchange, enforce, waive and release any such Collateral; (v) apply any such Collateral and direct the order or manner of sale thereof as Lender, in its sole discretion, may determine; and (vi) settle, release, compromise, collect or otherwise liquidate the Obligations and any Collateral therefor in any manner, all surety defenses being hereby waived by each Borrower. Without limitations of the foregoing, with respect to the Obligations, each Borrower hereby makes and adopts each of the agreements and waivers set forth in each Guarantee, the same being incorporated hereby by reference. Except as specifically provided in this Agreement or any of the other Financing Documents, Lender shall have the exclusive right to determine the time and manner of application of any payments or credits, whether received from any Borrower or any other source, and such determination shall be binding on all Borrowers. All such payments and credits may be applied, reversed and reapplied, in whole or in part, to any of the Obligations that Lender shall determine, in its sole discretion, without affecting the validity or enforceability of the Obligations of the other Borrower.

(d) Each Borrower hereby agrees that, except as hereinafter provided, its obligations hereunder shall be unconditional, irrespective of (i) the absence of any attempt to collect the Obligations from any obligor or other action to enforce the same; (ii) the waiver or consent by Lender with respect to any provision of any instrument evidencing the Obligations, or any part thereof, or any other agreement heretofore, now or hereafter executed by a Borrower and delivered to Lender; (iii) failure by Lender to take any steps to perfect and maintain its security interest in, or to preserve its rights to, any security or collateral for the Obligations; (iv) the institution of any proceeding under the Bankruptcy Code, or any similar proceeding, by or against a Borrower or Lender’s election in any such proceeding of the application of Section 1111(b)(2) of the Bankruptcy Code; (v) any borrowing or grant of a security interest by a Borrower as debtor-in-possession, under Section 364 of the Bankruptcy Code; (vi) the disallowance, under Section 502 of the Bankruptcy Code, of all or any portion of Lender’s claim(s) for repayment of any of the Obligations; or (vii) any other circumstance other than payment in full of the Obligations which might otherwise constitute a legal or equitable discharge or defense of a guarantor or surety.

(e) The Borrowers hereby agree, as between themselves, that to the extent that Lender shall have received from any Borrower any Recovery Amount (as defined below), then the paying Borrower shall have a right of contribution against each other Borrower in an amount equal to such other Borrower’s contributive share of such 

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Recovery Amount; provided, however, that in the event any Borrower suffers a Deficiency Amount (as defined below), then the Borrower suffering the Deficiency Amount shall be entitled to seek and receive contribution from and against the other Borrowers in an amount equal to the Deficiency Amount; and provided, further, that in no event shall the aggregate amounts so reimbursed by reason of the contribution of any Borrower equal or exceed an amount that would, if paid, constitute or result in Fraudulent Conveyance. Until all Obligations have been paid and satisfied in full, no payment made by or for the account of a Borrower including, without limitation, (i) a payment made by such Borrower on behalf of the liabilities of any other Borrower, or (ii) a payment made by any other Guarantor under any Guarantee, shall entitle such Borrower, by subrogation or otherwise, to any payment from such other Borrower or from or out of such other Borrower’s property. The right of each Borrower to receive any contribution under this Section 2.7(e) or by subrogation or otherwise from any other Borrower shall be subordinate in right of payment to the Obligations and such Borrower shall not exercise any right or remedy against such other Borrower or any property of such other Borrower by reason of any performance of such Borrower of its joint and several obligations hereunder, until the Obligations have been indefeasibly paid and satisfied in full, and no Borrower shall exercise any right or remedy with respect to this Section 2.7(e) until the Obligations have been indefeasibly paid and satisfied in full. As used in this Section 2.7(e), the term “Recovery Amount” means the amount of proceeds received by or credited to Lender from the exercise of any remedy of Lender under this Agreement or the other Financing Documents, including, without limitation, the sale of any Collateral. As used in this Section 2.7(e), the term “Deficiency Amount” means any amount that is less than the entire amount a Borrower is entitled to receive by way of contribution or subrogation from, but that has not been paid by, the other Borrowers in respect of any Recovery Amount attributable to the Borrower entitled to contribution, until the Deficiency Amount has been reduced to zero through contributions and reimbursements made under the terms of this Section 2.7(e) or otherwise.

Section 2.8 Termination; Restriction on Termination.

(a) Termination by Lenders. In addition to the rights set forth in Section 10.2, Lender may terminate this Agreement without notice upon or after the occurrence and during the continuance of an Event of Default.

(b) Termination by Borrowers. Upon at least thirty (30) days’ prior written notice to Lender, Borrowers may, at their option, terminate this Agreement. Any notice of termination given by Borrowers shall be irrevocable unless Lender otherwise agrees in writing and Lender shall not have any obligation to make the Term Loan on or after the termination date stated in such notice. Borrowers may elect to terminate this Agreement in its entirety only. No section of this Agreement or type of Loan available hereunder may be terminated singly.

(c) Effectiveness of Termination. All of the Obligations shall be immediately due and payable upon the Termination Date. All undertakings, agreements, covenants, warranties and representations of Borrowers contained in the Financing Documents shall survive any such termination and Lender shall retain its Liens in the Collateral and Lender shall retain all of its rights and remedies under the Financing Documents notwithstanding such termination until all Obligations have been discharged or paid, in full, in immediately available funds. Notwithstanding the foregoing or the payment in full of the Obligations, Lender shall not be required to terminate its Liens in the Collateral unless, with respect to any loss or damage Lender may incur as a result of dishonored checks or other items of payment received by Lender from Borrower and applied to the Obligations, Lender shall, at its option, (i) have received a written agreement satisfactory to Lender, executed by Borrowers and by any Person whose loans or other advances to Borrowers are used in whole or in part to satisfy the Obligations, indemnifying Lender from any such loss or damage or (ii) have retained cash Collateral or other Collateral for such period of time as Lender, in its discretion, may deem necessary to protect Lender from any such loss or damage.

Section 2.9 Closing Fee. The Borrowers shall pay to the Lender for its own account (and not on behalf of any loan participant) a closing fee in the amount of $380,000 which fee shall be fully earned when paid and shall not be refundable for any reason whatsoever.

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ARTICLE 3 - REPRESENTATIONS AND WARRANTIES

To induce Lender to enter into this Agreement and to make the Term Loan and other credit accommodations contemplated hereby, each Credit Party hereby represents and warrants to Lender that:

Section 3.1 Existence and Power. Each Credit Party is an entity as specified on Schedule 3.1, is duly organized, validly existing and in good standing (or the local equivalent) under the laws of the jurisdiction specified on Schedule 3.1 and no other jurisdiction, has the same legal name as it appears in such Credit Party’s Organizational Documents and an organizational identification number (if any), in each case as specified on Schedule 3.1, and has all powers and all Permits necessary or desirable in the operation of its business as presently conducted or as proposed to be conducted, except where the failure to have such Permits could not reasonably be expected to have a Material Adverse Effect. Each Credit Party is qualified to do business as a foreign entity in each jurisdiction in which it is required to be so qualified, which jurisdictions as of the Closing Date are specified on Schedule 3.1, except where the failure to be so qualified could not reasonably be expected to have a Material Adverse Effect. Except as set forth on Schedule 3.1, no Credit Party (a) has had, over the five (5) year period preceding the Closing Date, any name other than its current name, or (b) was incorporated or organized under the laws of any jurisdiction other than its current jurisdiction of incorporation or organization.

Section 3.2 Organization and Governmental Authorization; No Contravention. The execution, delivery and performance by each Credit Party of the Operative Documents to which it is a party are within its powers, have been duly authorized by all necessary action pursuant to its Organizational Documents, require no further action by or in respect of, or filing with, any Governmental Authority and do not violate, conflict with or cause a breach or a default under (a) any Law applicable to any Credit Party or any of the Organizational Documents of any Credit Party, or (b) any agreement or instrument binding upon it, except for such violations, conflicts, breaches or defaults as could not, with respect to this clause (b), reasonably be expected to have a Material Adverse Effect.

Section 3.3 Binding Effect. Each of the Operative Documents to which any Credit Party is a party constitutes a valid and binding agreement or instrument of such Credit Party, enforceable against such Credit Party in accordance with its respective terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or other similar laws relating to the enforcement of creditors’ rights generally and by general equitable principles.

Section 3.4 Capitalization. The authorized equity securities of each of the Credit Parties as of the Closing Date is as set forth on Schedule 3.4. All issued and outstanding equity securities of each of the Credit Parties are duly authorized and validly issued, fully paid, nonassessable, free and clear of all Liens other than (a) those in favor of Lender for its benefit and (b) Liens permitted pursuant to clauses (l) and (m) of the definition of Permitted Liens, and such equity securities were issued in compliance with all applicable Laws. The identity of the holders of the equity securities of each of the Credit Parties (other than Holdings) and the percentage of their fully-diluted ownership of the equity securities of each of the Credit Parties (other than Holdings) as of the Closing Date is set forth on Schedule 3.4. No shares of the capital stock or other equity securities of any Credit Party, other than those described above, are issued and outstanding as of the Closing Date.

Section 3.5 Financial Information. All information delivered to Lender and pertaining to the financial condition of any Credit Party fairly presents the financial position of such Credit Party as of such date in conformity with GAAP (and as to unaudited financial statements, subject to normal year-end adjustments and the absence of footnote disclosures). Since the Closing Date, there has been no material adverse change in the business, operations, properties, prospects or condition (financial or otherwise) of any Credit Party.

Section 3.6 Litigation. Except as set forth on Schedule 3.6 as of the Closing Date, and except as hereafter disclosed to Lender in writing (including disclosures pursuant to Section 4.9 or otherwise, it being understood that any such disclosures shall not act as a consent or waiver of any Default or Event of Default arising under Section 4.9, Section 10.1(h) or any other provision of this Agreement), there is no Litigation pending against, or to such Credit Party’s knowledge threatened against or affecting, any Credit Party or, to such Credit Party’s knowledge, any party to any Operative Document other than a Credit Party. Other than as disclosed on Schedule 3.6, 

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there is no Litigation pending in which an adverse decision could reasonably be expected to have a Material Adverse Effect or which in any manner draws into question the validity of any of the Operative Documents.

Section 3.7 Ownership of Property. Each Borrower and each of its Subsidiaries is the lawful owner of, has good and marketable title to and is in lawful possession of, or has valid leasehold interests in, all properties and other assets (real or personal, tangible, intangible or mixed) purported or reported to be owned or leased (as the case may be) by such Person.

Section 3.8 No Default. No Event of Default, or to such Credit Party’s knowledge, Default, has occurred and is continuing. No Credit Party is in breach or default under or with respect to any contract, agreement, lease or other instrument to which it is a party or by which its property is bound or affected, which breach or default could reasonably be expected to have a Material Adverse Effect.

Section 3.9 Labor Matters. As of the Closing Date, there are no strikes or other labor disputes pending or, to any Credit Party’s knowledge, threatened against any Credit Party. Hours worked and payments made to the employees of the Credit Parties have not been in violation of the Fair Labor Standards Act or any other applicable Law dealing with such matters. All payments due from the Credit Parties, or for which any claim may be made against any of them, on account of wages and employee and retiree health and welfare insurance and other benefits have been paid or accrued as a liability on their books, as the case may be. The consummation of the transactions contemplated by the Financing Documents will not give rise to a right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which it is a party or by which it is bound.

Section 3.10 Regulated Entities. No Credit Party is an “investment company” or a company “controlled” by an “investment company” or a “subsidiary” of an “investment company,” all within the meaning of the Investment Company Act of 1940.

Section 3.11 Margin Regulations. None of the proceeds from the Term Loan has been or will be used, directly or indirectly, for the purpose of purchasing or carrying any “margin stock” (as defined in Regulation U of the Federal Reserve Board), for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry any “margin stock” or for any other purpose which might cause the Term Loan to be considered a “purpose credit” within the meaning of Regulation T, U or X of the Federal Reserve Board.

Section 3.12 Compliance With Laws; Anti-Terrorism Laws.

(a) Each Credit Party is in compliance with the requirements of all applicable Laws, except for such Laws the noncompliance with which could not reasonably be expected to have a Material Adverse Effect.

(b) None of the Credit Parties and, to the knowledge of the Credit Parties, none of their Affiliates (i) is in violation of any Anti-Terrorism Law, (ii) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law, (iii) is a Blocked Person, or is controlled by a Blocked Person, (iv) is acting or will act for or on behalf of a Blocked Person, (v) is associated with, or will become associated with, a Blocked Person or (vi) is providing, or will provide, material, financial or technical support or other services to or in support of acts of terrorism of a Blocked Person. No Credit Party nor, to the knowledge of any Credit Party, any of its Affiliates or agents acting or benefiting in any capacity in connection with the transactions contemplated by this Agreement, (A) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, or (B) deals in, or otherwise engages in any transaction relating to, any property or interest in property blocked pursuant to Executive Order No. 13224, any similar executive order or other Anti-Terrorism Law.

Section 3.13 Taxes. All federal, state, local and foreign income tax returns and all other material tax returns, reports and statements required to be filed by or on behalf of each Credit Party have been filed with the appropriate Governmental Authorities in all jurisdictions in which such returns, reports and statements are required to be filed and, except to the extent subject to a Permitted Contest, all Taxes (including real property Taxes) and other charges shown to be due and payable in respect thereof have been timely paid prior to the date on which any fine, penalty, interest, late charge or loss may be added thereto for nonpayment thereof. Except to the extent subject 

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to a Permitted Contest, all material state and local sales and use Taxes required to be paid by each Credit Party have been paid. All federal and state returns have been filed by each Credit Party for all periods for which returns were due with respect to employee income tax withholding, social security and unemployment taxes, and, except to the extent subject to a Permitted Contest, the amounts shown thereon to be due and payable have been paid in full or adequate provisions therefor have been made.

Section 3.14 Compliance with ERISA.

(a) Each ERISA Plan (and the related trusts and funding agreements) complies in form and in operation with, has been administered in compliance with, and the terms of each ERISA Plan satisfy, the applicable requirements of ERISA and the Code in all material respects. Each ERISA Plan which is intended to be qualified under Section 401(a) of the Code is so qualified, and the United States Internal Revenue Service has issued a favorable determination letter with respect to each such ERISA Plan which may be relied on currently. No Credit Party has incurred liability for any material excise tax under any of Sections 4971 through 5000 of the Code.

(b) Except as could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, each Credit Party is in compliance with the applicable provisions of ERISA and the provision of the Code relating to ERISA Plans and the regulations and published interpretations therein. During the thirty-six (36) month period prior to the Closing Date or the making of the Term Loan, (i) no steps have been taken to terminate any Pension Plan, and (ii) no contribution failure has occurred with respect to any Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA. No condition exists or event or transaction has occurred with respect to any Pension Plan which could result in the incurrence by any Credit Party of any material liability, fine or penalty. No Credit Party has incurred liability to the PBGC (other than for current premiums) with respect to any employee Pension Plan. All contributions (if any) have been made on a timely basis to any Multiemployer Plan that are required to be made by any Credit Party or any other member of the Controlled Group under the terms of the plan or of any collective bargaining agreement or by applicable Law; no Credit Party nor any member of the Controlled Group has withdrawn or partially withdrawn from any Multiemployer Plan, incurred any withdrawal liability with respect to any such plan or received notice of any claim or demand for withdrawal liability or partial withdrawal liability from any such plan, and no condition has occurred which, if continued, could result in a withdrawal or partial withdrawal from any such plan, and no Credit Party nor any member of the Controlled Group has received any notice that any Multiemployer Plan is in reorganization, that increased contributions may be required to avoid a reduction in plan benefits or the imposition of any excise tax, that any such plan is or has been funded at a rate less than that required under Section 412 of the Code, that any such plan is or may be terminated, or that any such plan is or may become insolvent.

Section 3.15 Consummation of Operative Documents; Brokers. Except as set forth on Schedule 3.15 and fees payable to Lender, no broker, finder or other intermediary has brought about the obtaining, making or closing of the transactions contemplated by the Operative Documents, and no Credit Party has or will have any obligation to any Person in respect of any finder’s or brokerage fees, commissions or other expenses in connection herewith or therewith.

Section 3.16 Related Transactions. All transactions contemplated by the Operative Documents to be consummated on or prior to the date hereof have been so consummated (including, without limitation, the disbursement and transfer of all funds in connection therewith) in all material respects pursuant to the provisions of the applicable Operative Documents, true and complete copies of which have been delivered to Lender, and in compliance with all applicable Law, except for such Laws the noncompliance with which would not reasonably be expected to have a Material Adverse Effect.

Section 3.17 Material Contracts. Except for the Operative Documents and the other agreements set forth on Schedule 3.17 (collectively with the Operative Documents, the “Material Contracts”), as of the Closing Date, no Credit Party is a party to (a) any “material contract” as such term is defined in Item 601(b)(10) of Regulation S-K promulgated under the Securities Act of 1933, as amended or (b) any other agreements or instruments, the breach, nonperformance or cancellation of which, or the failure of which to renew, could reasonably be expected to have a Material Adverse Effect. The consummation of the transactions contemplated by the Financing Documents will not give rise to a right of termination in favor of any party to any Material Contract (other than any Credit Party).

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Section 3.18 Compliance with Environmental Requirements; No Hazardous Materials. Except in each case as set forth on Schedule 3.18:

(a) no notice, notification, demand, request for information, citation, summons, complaint or order has been issued, no complaint has been filed, no penalty has been assessed and no investigation or review is pending, or to such Credit Party’s knowledge, threatened by any Governmental Authority or other Person with respect to any (i) alleged violation by any Credit Party of any Environmental Law, (ii) alleged failure by any Credit Party to have any Permits required in connection with the conduct of its business or to comply with the terms and conditions thereof, (iii) any generation, treatment, storage, recycling, transportation or disposal of any Hazardous Materials, or (iv) release of Hazardous Materials; and

(b) no property now owned or leased by any Credit Party and, to the knowledge of each Credit Party, no such property previously owned or leased by any Credit Party, to which any Credit Party has, directly or indirectly, transported or arranged for the transportation of any Hazardous Materials, is listed or, to such Credit Party’s knowledge, proposed for listing, on the National Priorities List promulgated pursuant to CERCLA, or CERCLIS (as defined in CERCLA) or any similar state list or is the subject of federal, state or local enforcement actions or, to the knowledge of such Credit Party, other investigations which may lead to claims against any Credit Party for clean-up costs, remedial work, damage to natural resources or personal injury claims, including, without limitation, claims under CERCLA.

Section 3.19 Intellectual Property. Each Credit Party owns, is licensed to use or otherwise has the right to use, all Intellectual Property that is material to the condition (financial or other), business or operations of such Credit Party. All Intellectual Property existing as of the Closing Date which is issued, registered or pending with any United States or foreign Governmental Authority (including, without limitation, any and all applications for the registration of any Intellectual Property with any such United States or foreign Governmental Authority) and all licenses under which any Borrower is the licensee of any such registered Intellectual Property (or any such application for the registration of Intellectual Property) owned by another Person are set forth on Schedule 3.19. Such Schedule 3.19 indicates in each case whether such registered Intellectual Property (or application therefore) is owned or licensed by such Credit Party, and in the case of any such licensed registered Intellectual Property (or application therefore), lists the name of such licensor and the name and date of the agreement pursuant to which such item of Intellectual Property is licensed, and copies of all such agreements have been provided to Lender. Except as indicated on Schedule 3.19, the applicable Credit Party is the sole and exclusive owner of the entire and unencumbered right, title and interest in and to each such registered Intellectual Property (or application therefore) purported to be owned by such Credit Party, free and clear of any Liens (except for Liens granted pursuant to the MidCap Facility Agreement) and/or licenses in favor of third parties or agreements or covenants not such sue third parties for infringement. All registered Intellectual Property of each Credit Party is duly and properly registered, filed or issued in the appropriate office and jurisdictions for such registrations, filings or issuances, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect. No Credit Party is party to, nor bound by, any material license or other agreement with respect to which any Credit Party is the licensee that prohibits or otherwise restricts such Credit Party from granting a security interest in such Credit Party’s interest in such license or agreement or other property. To such Credit Party’s knowledge, each Credit Party conducts its business without infringement or claim of infringement of any Intellectual Property rights of others. There is no infringement or claim of infringement by others of any Intellectual Property rights of any Credit Party including infringement and claims disclosed on Schedule 3.19, which infringement or claim of infringement could reasonably be expected to have a Material Adverse Effect.

Section 3.20 Solvency. After giving effect to the Loan advance and the liabilities and obligations of each Credit Party under the Operative Documents, each Borrower and each additional Credit Party is Solvent.

Section 3.21 Full Disclosure. None of the written information (financial or otherwise) furnished by or on behalf of any Credit Party to Lender in connection with the consummation of the transactions contemplated by the Operative Documents, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading in light of the circumstances under which such statements were made. All financial projections delivered to Lender by any Credit Party (or its agents) have been prepared on the basis of the assumptions stated therein. Such projections represent such Credit Party’s best estimate of such Credit Party’s future financial performance and such assumptions are believed by such Credit Party to be 

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fair and reasonable in light of current business conditions; provided, however, that the Credit Parties can give no assurance that such projections will be attained.

Section 3.22 Interest Rate. The rate of interest paid under the Term Note and the method and manner of the calculation thereof do not violate any usury or other law or applicable Laws, any of the Organizational Documents, or any of the Operative Documents.

Section 3.23 Subsidiaries. The Credit Parties do not own any stock, partnership interests, limited liability company interests or other equity securities except for (i) the Subsidiaries or (ii) Permitted Investments.

Section 3.24 Limited Offering of the Warrants. The offer and sale of the Warrants are not required to be registered pursuant to the provisions of Section 5 of the Securities Act or the registration or qualification provisions of the blue sky laws of any state. None of the Borrowers nor any agent on the Borrowers’ behalf, has solicited or will solicit any offers to sell all or any part of the Warrants to any Person so as to bring the sale of the Warrants by the Borrowers within the registration provisions of the Securities Act or any state securities laws. All prior offerings and sales of securities of the Borrowers were in compliance with all applicable federal and state securities laws.

Section 3.25 Registration Right; Issuance Taxes.

(a) Except as described in the Warrants, the Registration Rights Agreement or any registration rights agreement filed by the Company with the SEC, Holdings is under no requirement to register under the Securities Act, or the Trust Indenture Act of 1939, as amended, any of its presently outstanding securities or any of its securities that may subsequently be issued.

(b) All taxes imposed on any Borrower in connection with the issuance, sale and delivery of the Warrants have been or will be fully paid, and all laws imposing such taxes have been or will be fully satisfied by the Borrowers.

ARTICLE 4 - AFFIRMATIVE COVENANTS

Each Credit Party agrees that, so long as any Credit Exposure exists:

Section 4.1 Financial Statements and Other Reports. Holdings will deliver to Lender within five (5) days of delivery or filing thereof, copies of all reports and other filings made by Borrowers with any stock exchange on which any securities of any Borrower are traded and/or the SEC, unless such reports or other filings are otherwise available on the public website of the SEC (www.SEC.gov). Each Borrower will, within thirty (30) days after the last day of each Fiscal Quarter, deliver to Lender a duly completed Compliance Certificate signed by a Responsible Officer setting forth calculations showing compliance with the financial covenants set forth in this Agreement. Promptly upon their becoming available, Borrowers shall deliver to Lender complete copies of all Material Contracts that Borrowers expect to file on the public website of the SEC in the form to be available on the public website of the SEC.

Section 4.2 Payment and Performance of Obligations. Each Borrower (a) will pay and discharge, and cause each Subsidiary to pay and discharge, on a timely basis as and when due, all of their respective obligations and liabilities (excluding Taxes), except for such obligations and/or liabilities (i) that may be the subject of a Permitted Contest, and (ii) the nonpayment or nondischarge of which could not reasonably be expected to have a Material Adverse Effect or result in a Lien against any Collateral, except for Permitted Liens, (b) pay all amounts due and owing in respect of Taxes (including without limitation, payroll and withholdings tax liabilities) on a timely basis as and when due, and in any case prior to the date on which any fine, penalty, interest, late charge or loss may be added thereto for nonpayment thereof, except for such Taxes (i) that may be the subject of a Permitted Contest, and (ii) the nonpayment or nondischarge of which could not reasonably be expected to have a Material Adverse Effect or result in a Lien against any Collateral, except for Permitted Liens, (c) will maintain, and cause each Subsidiary to maintain, in accordance with GAAP, appropriate reserves for the accrual of all of their respective obligations and liabilities, and (d) will not breach or permit any Subsidiary to breach, or permit to exist any default under, the terms of any lease, commitment, contract, instrument or obligation to which it is a party, or by which its 

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properties or assets are bound, except for such breaches or defaults which could not reasonably be expected to have a Material Adverse Effect.

Section 4.3 Maintenance of Existence. Each Credit Party will preserve, renew and keep in full force and effect and in good standing, and will cause each Subsidiary that owns assets, the aggregate value of which exceeds $25,000 at any time to preserve, renew and keep in full force and effect and in good standing (or the local equivalent), their respective existence and their respective rights, privileges and franchises necessary or desirable in the normal conduct of business.

Section 4.4 Maintenance of Property; Insurance.

(a) Each Borrower will keep, and will cause each Subsidiary to keep, all property useful and necessary in its business in good working order and condition, ordinary wear and tear excepted. If all or any part of the Collateral useful or necessary in its business becomes damaged or destroyed, each Borrower will, and will cause each Subsidiary to, promptly and completely repair and/or restore the affected Collateral in a good and workmanlike manner, regardless of whether Lender agrees to disburse insurance proceeds or other sums to pay costs of the work of repair or reconstruction.

(b) Each Borrower will maintain (i) casualty insurance on all real and personal property on an all risks basis (including the perils of flood, windstorm and quake), covering the repair and replacement cost of all such property and coverage, business interruption and rent loss coverages with extended period of indemnity (for the period required by Lender from time to time) and indemnity for extra expense, in each case without application of coinsurance and with agreed amount endorsements, (ii) general and professional liability insurance (including products/completed operations liability coverage), and (iii) such other insurance coverage in such amounts and with respect to such risks as Lender may request from time to time, pursuant to the Insurance Requirements attached hereto as Schedule 4.4; provided, however, that, in no event shall such insurance be in amounts or with coverage less than, or with carriers with qualifications inferior to, any of the insurance or carriers in existence as of the Closing Date (or required to be in existence after the Closing Date under a Financing Document). All such insurance shall be provided by insurers having an A.M. Best policyholders rating reasonably acceptable to Lender.

(c) On or prior to the Closing Date, and at all times thereafter, each Borrower will cause Lender to be named as an additional insured, assignee and lender loss payee (which shall include, as applicable, identification as mortgagee), as applicable, on each insurance policy required to be maintained pursuant to this Section 4.4 pursuant to endorsements in form and substance acceptable to Lender. Borrowers shall deliver to Lender (i) on an annual basis, and upon the request of Lender from time to time full information as to the insurance carried, (ii) within five (5) days of receipt of notice from any insurer, a copy of any notice of cancellation, nonrenewal or material change in coverage from that existing on the date of this Agreement, (iii) forthwith, notice of any cancellation or nonrenewal of coverage by any Borrower, and (iv) at least 60 days prior to expiration of any policy of insurance, evidence of renewal of such insurance upon the terms and conditions herein required.

(d) In the event any Borrower fails to provide Lender with evidence of the insurance coverage required by this Agreement, Lender may purchase insurance at Borrowers’ expense to protect Lender’s interests in the Collateral. This insurance may, but need not, protect such Borrower’s interests. The coverage purchased by Lender may not pay any claim made by such Borrower or any claim that is made against such Borrower in connection with the Collateral. Such Borrower may later cancel any insurance purchased by Lender, but only after providing Lender with evidence that such Borrower has obtained insurance as required by this Agreement. If Lender purchases insurance for the Collateral, Borrowers will be responsible for the costs of that insurance to the fullest extent provided by law, including interest and other charges imposed by Lender in connection with the placement of the insurance, until the effective date of the cancellation or expiration of the insurance. The costs of the insurance may be added to the Obligations. The costs of the insurance may be more than the cost of insurance such Borrower is able to obtain on its own.

Section 4.5 Compliance with Laws and Material Contracts. Each Borrower will comply, and cause each Subsidiary to comply, with the requirements of all applicable Laws and Material Contracts, except to the extent that failure to so comply could not reasonably be expected to (a) have a Material Adverse Effect, or (b) result in any Lien upon either (i) a material portion of the assets of any such Person in favor of any Governmental Authority, or (ii) any Collateral.

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Section 4.6 Inspection of Property; Books and Records. Each Borrower will keep, and will cause each Subsidiary to keep, proper books of record substantially in accordance with GAAP in which full, true and correct entries shall be made of all dealings and transactions in relation to its business and activities.

Section 4.7 Use of Proceeds. Borrowers shall use the proceeds of the Term Loan solely for (a) transaction fees incurred in connection with the Financing Documents, (b) refinancing of Debt owing to Globus Medical, Inc. under the terms of its credit agreement and (c) for general business purposes and working capital needs of Borrowers and their Subsidiaries as permitted hereunder. No portion of the proceeds of the Term Loan will be used for family, personal, agricultural or household use or the purchase of margin stock.

Section 4.8 Estoppel Certificates. After written request by Lender, Borrowers, within thirty (30) days and at their expense, will furnish Lender with a statement, duly acknowledged and certified, setting forth (a) the amount of the original principal amount of the Term Note, and the unpaid principal amount of the Term Note, (b) the rate of interest of the Term Note, (c) the date payments of interest and/or principal were last paid, (d) any offsets or defenses to the payment of the Obligations, and if any are alleged, the nature thereof, (e) that the Term Note and this Agreement have not been modified or if modified, giving particulars of such modification, and (f) that there has occurred and is then continuing no Default or if such Default exists, the nature thereof, the period of time it has existed, and the action being taken to remedy such Default. After written request by Lender, Borrowers, within fifteen (15) days and at their expense, will furnish Lender with a certificate, signed by a Responsible Officer of Borrowers, updating all of the representations and warranties contained in this Agreement and the other Financing Documents and certifying that all of the representations and warranties contained in this Agreement and the other Financing Documents, as updated pursuant to such certificate, are true, accurate and complete as of the date of such certificate.

Section 4.9 Notices of Litigation and Defaults. In addition to, but not in duplication of the information required to be delivered pursuant to Section 4.1, Borrowers will give prompt written notice to Lender (a) of any litigation or governmental proceedings pending or threatened (in writing) against Borrowers or other Credit Party which would reasonably be expected to have a Material Adverse Effect with respect to Borrowers or any other Credit Party or which in any manner calls into question the validity or enforceability of any Financing Document, (b) upon any Borrower becoming aware of the existence of any Default or Event of Default, (c) if any Credit Party is in breach or default under or with respect to any Material Contract, or if any Credit Party is in breach or default under or with respect to any other contract, agreement, lease or other instrument to which it is a party or by which its property is bound or affected, which breach or default could reasonably be expected to have a Material Adverse Effect, (d) of any strikes or other labor disputes pending or, to any Borrower’s knowledge, threatened against any Credit Party, (e) if there is any claim by any other Person that any Credit Party in the conduct of its business is infringing on the Intellectual Property Rights of others, which claim could reasonably be expected to have a Material Adverse Effect, and (f) of all returns, recoveries, disputes and claims related to the Collateral could reasonably be expected to have a Material Adverse Effect.

Section 4.10 Hazardous Materials; Remediation.

(a) If any release or disposal of Hazardous Materials shall occur or shall have occurred on any real property or any other assets of any Borrower or any other Credit Party, such Borrower will cause, or direct the applicable Credit Party to cause, the prompt containment and removal of such Hazardous Materials and the remediation of such real property or other assets as is necessary to comply with all Environmental Laws and to preserve the value of such real property or other assets. Without limiting the generality of the foregoing, each Borrower shall, and shall cause each other Credit Party to, comply with each Environmental Law requiring the performance at any real property by any Borrower or any other Credit Party of activities in response to the release or threatened release of a Hazardous Material.

(b) Borrowers will provide Lender within thirty (30) days after written demand therefor with a bond, letter of credit or similar financial assurance evidencing to the reasonable satisfaction of Lender that sufficient funds are available to pay the cost of removing, treating and disposing of any Hazardous Materials or Hazardous Materials Contamination and discharging any assessment which may be established on any property as a result thereof, such demand to be made, if at all, upon Lender’s reasonable business determination that the failure to remove, treat or dispose of any Hazardous Materials or Hazardous Materials Contamination, or the failure to discharge any such assessment could reasonably be expected to have a Material Adverse Effect.

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Section 4.11 Further Assurances.

(a) Each Borrower will, and will cause each Subsidiary to, at its own cost and expense, promptly and duly take, execute, acknowledge and deliver all such further acts, documents and assurances as may from time to time be necessary or as Lender may from time to time reasonably request in order to carry out the intent and purposes of the Financing Documents and the transactions contemplated thereby, including all such actions to (i) establish, create, preserve, protect and perfect a first priority Lien (subject only to Permitted Liens) in favor of Lender on the Collateral (including Collateral acquired after the date hereof), and (ii) unless Lender shall agree otherwise in writing, cause all Subsidiaries of Borrowers to be jointly and severally obligated with the other Borrowers under all covenants and obligations under this Agreement, including the obligation to repay the Obligations. Without limiting the generality of the foregoing, Borrowers shall, if requested by Lender, (x) within 60 days (or such longer period as agreed by Lender) of an acquisition by a Credit Party of any registered Intellectual Property or application for the registration of Intellectual Property, deliver to Lender a duly completed and executed supplement to the applicable Credit Party’s Patent Security Agreement or Trademark Security Agreement in the form of the respective Exhibit thereto, and (y) within 60 days (or such longer period as agreed by Lender) of an acquisition by any Credit Party of any rights under a license as a licensee with respect to any registered Intellectual Property or application for the registration of any Intellectual Property owned by another Person, execute any documents requested by Lender to establish, create, preserve, protect and perfect a first priority lien in favor of Lender, to the extent legally possible, in such Borrower’s rights under such license and shall use their commercially reasonable best efforts to obtain the written consent of the licensor which such license to the granting in favor of Lender of a Lien on such Borrower’s rights as licensee under such license. Notwithstanding anything to the contrary herein, all documentation delivered to the Lender pursuant to this Section 4.11(a)(x) or 4.11(a)(y), including but not limited to any Patent Security Agreement or Trademark Security Agreement supplements, shall be held in accordance with Lenders’ customary procedures for handling confidential information and shall not be disclosed to any officer, director, employee, agent, consultant or contractor of Lender that is involved in any capacity in the research and development, sales, marketing, clinical, manufacturing, intellectual property or medical education divisions of Lender.

(b) Upon receipt of an affidavit of an officer of Lender as to the loss, theft, destruction or mutilation of the Term Note or any other Financing Document which is not of public record, and, in the case of any such mutilation, upon surrender and cancellation of such Term Note or other applicable Financing Document, Borrowers will issue, in lieu thereof, a replacement Term Note or other applicable Financing Document, dated the date of such lost, stolen, destroyed or mutilated Term Note or other Financing Document in the same principal amount thereof and otherwise of like tenor.

(c) Upon the formation or acquisition of a new Subsidiary, or at the request of the Lender, Borrowers shall (i) pledge, have pledged or cause or have caused to be pledged to Lender pursuant to a pledge agreement in form and substance satisfactory to Lender, all of the outstanding shares of equity interests or other equity interests of such new Subsidiary owned directly or indirectly by any Borrower, along with undated stock or equivalent powers for such certificates, executed in blank; (ii) unless Lender shall agree otherwise in writing, cause such new Subsidiary to take such other actions (including entering into or joining any Security Documents) as are necessary or advisable in the reasonable opinion of Lender in order to grant Lender a first priority Lien on all real and personal property of such Subsidiary in existence as of such date and in all after acquired property, which first priority Liens are required to be granted pursuant to this Agreement; (iii) unless Lender shall agree otherwise in writing, cause such new Subsidiary to either (at the election of Lender) become a Borrower hereunder with joint and several liability for all obligations of Borrowers hereunder and under the other Financing Documents pursuant to a joinder agreement or other similar agreement in form and substance satisfactory to Lender or to become a Guarantor of the obligations of Borrowers hereunder and under the other Financing Documents pursuant to a guaranty and suretyship agreement in form and substance satisfactory to Lender; and (iv) cause such new Subsidiary to deliver certified copies of such Subsidiary’s certificate or articles of incorporation, together with good standing certificates, by-laws (or other operating agreement or governing documents), resolutions of the Board of Directors or other governing body, approving and authorize the execution and delivery of the Security Documents, incumbency certificates and to execute and/or deliver such other documents and legal opinions or to take such other actions as may be requested by Lender, in each case, in form and substance satisfactory to Lender.

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(d) Upon the request of Lender, Borrowers shall use commercially reasonable efforts to obtain a landlord’s agreement or mortgagee agreement, as applicable, from the lessor of each leased property or mortgagee of owned property with respect to any business location where any material portion of the Collateral, or the records relating to such Collateral and/or software and equipment relating to such records or Collateral, is stored or located, which agreement or letter shall be reasonably satisfactory in form and substance to Lender. Borrowers shall timely and fully pay and perform its obligations under all leases and other agreements with respect to each leased location where any Collateral, or any records related thereto, is or may be located.

Section 4.12 Power of Attorney. Each of the officers of Lender is hereby irrevocably made, constituted and appointed the true and lawful attorney for Borrowers (without requiring any of them to act as such) with full power of substitution to do the following after the occurrence and during the continuance of an Event of Default: (a) so long as Lender has provided not less than two (2) Business Days’ prior written notice to Borrower to perform the same and Borrower has failed to take such action, execute in the name of Borrowers any schedules, assignments, instruments, documents, and statements that Borrowers are obligated to give Lender under this Agreement; (b) take any action Borrowers are required to take under this Agreement; (c) so long as Lender has provided not less than two (2) Business Days’ prior written notice to Borrower to perform the same and Borrower has failed to take such action, do such other and further acts and deeds in the name of Borrowers that Lender may deem necessary or desirable to enforce any Account or other Collateral or perfect Lender’s security interest or Lien in any Collateral; and (d) do such other and further acts and deeds in the name of Borrowers that Lender may deem necessary or desirable to enforce its rights with regard to any Collateral. This power of attorney shall be irrevocable and coupled with an interest.

 

ARTICLE 5 - NEGATIVE COVENANTS

Each Borrower agrees that, so long as any Credit Exposure exists:

Section 5.1 Debt; Contingent Obligations. No Borrower will, or will permit any Subsidiary to, directly or indirectly, create, incur, assume, guarantee or otherwise become or remain directly or indirectly liable with respect to, any Debt, except for Permitted Debt. No Borrower will, or will permit any Subsidiary to, directly or indirectly, create, assume, incur or suffer to exist any Contingent Obligations, except for Permitted Contingent Obligations.

Section 5.2 Liens. No Borrower will, or will permit any Subsidiary to, directly or indirectly, create, assume or suffer to exist any Lien on any asset now owned or hereafter acquired by it, except for Permitted Liens.

Section 5.3 Restricted Distributions. No Borrower will, or will permit any Subsidiary to, directly or indirectly, declare, order, pay, make or set apart any sum for any Restricted Distribution, except for Permitted Distributions.

Section 5.4 Restrictive Agreementsu No Borrower will, or will permit any Subsidiary to, directly or indirectly (a) enter into or assume any agreement prohibiting the creation or assumption of any Lien upon its properties or assets, whether now owned or hereafter acquired (except as provided by the Financing Documents and the MidCap Facility Agreement), or (b) create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind (except as provided by the Financing Documents and the MidCap Facility Agreement) on the ability of any Subsidiary to: (i) pay or make Restricted Distributions to any Borrower or any Subsidiary; (ii) pay any Debt owed to any Borrower or any Subsidiary; (iii) make loans or advances to any Borrower or any Subsidiary; or (iv) transfer any of its property or assets to any Borrower or any Subsidiary.

Section 5.5 Payments and Modifications of Subordinated Debt. No Borrower will, or will permit any Subsidiary to, directly or indirectly (a) declare, pay, make or set aside any amount for payment in respect of Subordinated Debt, except for payments made in full compliance with and expressly permitted under the Subordination Agreement, (b) amend or otherwise modify the terms of any Subordinated Debt, except for amendments or modifications made in full compliance with the Subordination Agreement, (c) declare, pay, make or set aside any amount for payment in respect of any Debt hereinafter incurred that, by its terms, or by separate agreement, is subordinated to the Obligations, except for payments made in full compliance with and expressly permitted under the subordination provisions applicable thereto, or (d) amend or otherwise modify the terms of any such Debt if the effect of such amendment or modification is to (i) increase the interest rate or fees on, or change the 

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manner or timing of payment of, such Debt, (ii) accelerate or shorten the dates upon which payments of principal or interest are due on, or the principal amount of, such Debt, (iii) change in a manner adverse to any Credit Party or Lender any event of default or add or make more restrictive any covenant with respect to such Debt, (iv) change the prepayment provisions of such Debt or any of the defined terms related thereto, (v) change the subordination provisions thereof (or the subordination terms of any guaranty thereof), or (vi) change or amend any other term if such change or amendment would materially increase the obligations of the obligor or confer additional material rights on the holder of such Debt in a manner adverse to any Borrower, any Subsidiaries or Lender. Borrowers shall, prior to entering into any such amendment or modification, deliver to Lender reasonably in advance of the execution thereof, any final or execution form copy thereof.

Section 5.6 Consolidations, Mergers and Sales of Assets; Change in Control. No Borrower will, or will permit any Subsidiary to, directly or indirectly (a) consolidate or merge or amalgamate with or into any Person that is not a Credit Party, or (b) consummate any Asset Dispositions other than Permitted Asset Dispositions and other dispositions approved by Lender. No Borrower will suffer or permit to occur any Change in Control with respect to itself, any Subsidiary or any Guarantor other than Permitted Transfers with respect to such Persons.

Section 5.7 Purchase of Assets, Investments.  No Borrower will, or will permit any Subsidiary to, directly or indirectly, acquire or own or enter into any agreement to acquire or own any Investment in any Person other than Permitted Investments.

Section 5.8 Transactions with Affiliates. Except as otherwise disclosed on Schedule 5.8, and except for (x) transactions that are disclosed to and approved by Lender in advance of being entered into, (y) transactions which contain terms that are no less favorable to the applicable Borrower or any Subsidiary, as the case may be, than those which might be obtained from a third party not an Affiliate of any Credit Party, or (z) transactions constituting Permitted Intercompany Advances, no Borrower will, or will permit any Subsidiary to, directly or indirectly, enter into or permit to exist any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of any Borrower

Section 5.9 Modification of Organizational Documents. No Borrower will, or will permit any Subsidiary to, directly or indirectly, amend or otherwise modify any Organizational Documents of such Person, except for Permitted Modifications.

Section 5.10 Modification of Certain Agreements. No Borrower will, or will permit any Subsidiary to, directly or indirectly, amend or otherwise modify any Material Contract, if such amendment or modification could reasonably be expected to be materially adverse to the rights, interests or privileges of Lender hereunder or its ability to enforce the same.

Section 5.11 Conduct of Business. No Borrower will, or will permit any Subsidiary to, directly or indirectly, engage in any line of business other than those businesses engaged in on the Closing Date and described on Schedule 5.11 and businesses reasonably related thereto.

Secion 5.12 Lease Payments. No Borrower will, or will permit any Subsidiary to, directly or indirectly, incur or assume (whether pursuant to a Guarantee or otherwise) any liability for rental payments except in the Ordinary Course of Business.

Section 5.13 Limitation on Sale and Leaseback Transactions. No Borrower will, or will permit any Subsidiary to, directly or indirectly, enter into any arrangement with any Person whereby, in a substantially contemporaneous transaction, any Borrower or any Subsidiaries sells or transfers all or substantially all of its right, title and interest in an asset and, in connection therewith, acquires or leases back the right to use such asset.

Section 5.14 Compliance with Anti-Terrorism Laws. Lender hereby notifies Borrowers that pursuant to the requirements of Anti-Terrorism Laws, and Lender’s policies and practices, Lender is required to obtain, verify and record certain information and documentation that identifies Borrowers and its principals, which information includes the name and address of each Borrower and its principals and such other information that will allow Lender to identify such party in accordance with Anti-Terrorism Laws. No Borrower will, or will permit any Subsidiary to, directly or indirectly, knowingly enter into any Material Contracts with any Blocked Person or any Person listed on the OFAC Lists. Each Borrower shall immediately notify Lender if such Borrower has knowledge that any 

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Borrower, any additional Credit Party or any of their respective Affiliates or agents acting or benefiting in any capacity in connection with the transactions contemplated by this Agreement is or becomes a Blocked Person or (a) is convicted on, (b) pleads nolo contendere to, (c) is indicted on, or (d) is arraigned and held over on charges involving money laundering or predicate crimes to money laundering. No Borrower will, or will permit any Subsidiary to, directly or indirectly, (i) conduct any business or engage in any transaction or dealing with any Blocked Person, including, without limitation, the making or receiving of any contribution of funds, goods or services to or for the benefit of any Blocked Person, (ii) deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224, any similar executive order or other Anti-Terrorism Law, or (iii) engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in Executive Order No. 13224 or other Anti-Terrorism Law.

Section 5.15 Orthotec Litigation. Notwithstanding anything to the contrary in this Article 5 or otherwise in this Agreement or the other Financing Documents, Borrowers shall be permitted to make (i) pursuant to that certain Settlement and Release Agreement dated as of August 13, 2014 (the “Orthotec Settlement Agreement”), by and among the Alphatec Parties, the Healthpoint Parties and the OrthoTec Parties (each as defined therein), Orthotec Settlement Payments each quarter in an aggregate amount not to exceed one million one hundred thousand dollars ($1,100,000) and (ii) pursuant to that certain Forbearance Agreement dated as of July 1, 2016 (the “Forbearance Agreement”), by and among Alphatec Holdings, Inc. and its subsidiaries and affiliates, Healthpoint Capital, LLC, HealthpointCapital Partners, L.P., and HealthpointCapital Partners II, L.P. (collectively, “Healthpoint”), a payment or series of payments on or prior to September 30, 2016 to Healthpoint in an aggregate amount not to exceed nine hundred and fifty thousand dollars ($950,000); provided, however, at the time of each such payment, (i) no Default or Event of Default shall have occurred and be continuing or would result therefrom, (ii) no party to that certain Settlement Agreement or any other settlement agreement, forbearance agreement or other settlement arrangement with respect to the Orthotec, LLC matter, including the Orthotec Litigation (collectively, the “Orthotec Settlement Agreement”) shall have breached or violated any such agreement or arrangement in any material respect, which breach or violation has not been waived or cured, and the Orthotec Settlement Agreement shall be in full force and effect and (iii) such payment shall not be prohibited by or otherwise violate the terms of the MidCap Facility Agreement.

ARTICLE 6 - FINANCIAL COVENANT

Section 6.1 Additional Defined Terms. The following additional definitions are hereby appended to Section 1.1 of this Agreement:

“Defined Period” means, for purposes of calculating the Fixed Charge Coverage Ratio, for (a) each of the months ending April 30, 2020, May 31, 2020, June 30, 2020, July 31, 2020, August 31, 2020, September 30, 2020, October 31, 2020, November 30, 2020, December 31, 2020, January 31, 2021 and February 28, 2021, the respective one, two, three, four, five, six, seven, eight, nine, ten and eleven month period immediately preceding such month end date (which period shall include the month in which the respective month end date occurs), and (b) each month thereafter, the twelve (12) month period immediately preceding such month.

“Fixed Charge Coverage Ratio” means, for any Defined Period, the ratio of (a) Operating Cash Flow to (b) Fixed Charges.

“Fixed Charges” has the meaning provided in the Compliance Certificate.

“Liquidity” means, the sum of (a) unrestricted cash on the balance sheet, plus (b) Revolving Loan Availability.

“Operating Cash Flow” has the meaning provided in the Compliance Certificate.

Section 6.2 Liquidity.  Borrowers will not permit the Liquidity of Borrowers and their Subsidiaries on a Consolidated Basis, as of the last day of each month ending during the period from the date hereof through and including March 31, 2020, to be less than Five Million Dollars ($5,000,000.00).

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Section 6.3 Fixed Charge Coverage Ratio. Borrowers will not permit the Fixed Charge Coverage Ratio for any Defined Period commencing on and after the period ending April 30, 2020, as tested monthly, to be less than 1.00 to 1.00 for each month.

Section 6.4 Evidence of Compliance. Borrowers shall furnish to Lender, together with the financial reporting required of Borrowers in Section 4.1 hereof, a Compliance Certificate as evidence of Borrowers’ compliance with the covenants in this Article and evidence that no Event of Default specified in this Article has occurred. The Compliance Certificate shall include, without limitation, (a) a statement and report, on a form approved by Lender, detailing Borrowers’ calculations, and (b) if requested by Lender, back-up documentation (including, without limitation, invoices, receipts and other evidence of costs incurred during such quarter as Lender shall reasonably require) evidencing the propriety of the calculations.

ARTICLE 7 - CONDITIONS

Section 7.1 Conditions to Closing. The obligation of Lender to make the Term Loan and purchase the Warrants on the Closing Date shall be subject to the receipt by Lender of each agreement, document and instrument set forth on Schedule 7.1, each in form and substance satisfactory to Lender, and such other closing deliverables reasonably requested by Lender, and to the payment of the closing fee described in Section 2.9 and all expenses and other amounts due and payable under each Financing Document.

Section 7.2 Searches. Before the Closing Date, Lender shall have the right to perform, all at Borrowers’ expense, the searches described in clauses (a), (b), and (c) below against Borrowers and any other Credit Party, the results of which are to be consistent with Borrowers’ representations and warranties under this Agreement and the satisfactory results of which shall be a condition precedent to all advances of Loan proceeds: (a) UCC searches with the Secretary of State of the jurisdiction in which the applicable Person is organized; (b) judgment, pending litigation, federal tax lien, personal property tax lien, and corporate and partnership tax lien searches, in each jurisdiction searched under clause (a) above; and (c) searches of applicable corporate, limited liability company, partnership and related records to confirm the continued existence, organization and good standing of the applicable Person and the exact legal name under which such Person is organized.

Section 7.3 Post-Closing Requirements. Borrowers shall complete each of the post-closing obligations and/or provide to Lender each of the documents, instruments, agreements and information listed on Schedule 7.3 attached hereto on or before the date set forth for each such item thereon, each of which shall be completed or provided in form and substance satisfactory to Lender.

ARTICLE 8 - REGULATORY MATTERS

Section 8.1 Healthcare Permits.

(a) Each Credit Party (i) has each Healthcare Permit and other rights from, and has made all declarations and filings with, all applicable Governmental Authorities, all self-regulatory authorities and all courts and other tribunals necessary to engage in the ownership, management and operation of the businesses of such Credit Party, and (ii) has no knowledge that any Governmental Authority is considering limiting, suspending or revoking any such Healthcare Permit. All such Healthcare Permits are valid and in full force and effect and Credit Parties are in material compliance with the terms and conditions of all such Healthcare Permits, except where failure to be in such compliance or for a Healthcare Permit to be valid and in full force and effect would not have a Material Adverse Effect.

(b) Each Credit Party will timely file or caused to be timely filed (after giving effect to any extension duly obtained), all notifications, reports, submissions, Permit renewals and reports of every kind whatsoever required by applicable Laws (which reports will be materially accurate and complete in all respects and not misleading in any respect).

(c) Each Credit Party will maintain in full force and effect, and free from restrictions, probations, conditions or known conflicts which would materially impair the use or operation of any Credit Party, all Healthcare Permits necessary under Healthcare Laws to carry on the business of Borrowers as it is conducted on the Closing Date.

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Section 8.2 FDA Regulatory Matters.

(a) Each Credit Party has all Permits issued or allowed by the FDA or any comparable governmental authority (including but not limited to new drug applications, abbreviated new drug applications, biologics license applications, investigational new drug applications, over-the-counter drug monograph, device pre-market approval applications, device pre-market notifications, investigational device exemptions, product recertifications, manufacturing approvals and authorizations, CE Marks, pricing and reimbursement approvals, labeling approvals or their foreign equivalent, controlled substance registrations, and wholesale distributor permits (hereinafter “Healthcare Permits”) that are required to conduct its business as currently conducted, or as proposed to be conducted. To the knowledge of Borrowers, neither the FDA nor any comparable governmental authority is considering limiting, suspending, or revoking such Permits or changing the marketing classification or labeling or other significant parameter affecting the products of a Credit Party. To the knowledge of Borrowers, there is no false or misleading information or significant omission in any product application or other submission to the FDA or any comparable governmental authority. Each Credit Party has fulfilled and performed their obligations under each Permit, and no event has occurred or condition or state of facts exists which would constitute a breach or default under, or would cause revocation or termination of, any such Permit. To the knowledge of Borrowers, any third party that is a manufacturer or contractor for a Credit Party is in compliance with all Permits required by the FDA or comparable governmental authority and all Healthcare Laws insofar as they reasonably pertain to the manufacture of product components or products regulated as medical devices and marketed or distributed by a Credit Party.

(b) All products designed, developed, manufactured, prepared, assembled, packaged, tested, labeled, distributed or marketed by or on behalf of each Credit Party that are subject to the jurisdiction of the FDA or a comparable governmental authority have been and are being designed, developed, tested, manufactured, prepared, assembled, packaged, distributed, labeled and marketed in compliance with the Healthcare Laws, including, without limitation, clinical and non-clinical evaluation, product approval or clearance, good manufacturing practices, labeling, advertising and promotion, record-keeping, establishment registration and device listing, reporting of recalls, and adverse event reporting, and have been and are being tested, investigated, designed, developed, manufactured, prepared, assembled, packaged, labeled, distributed, marketed, and sold in compliance with all applicable Requirements of Law.

(c) Each Credit Party is not subject to any obligation arising under an administrative or regulatory action, proceeding, or inspection by a governmental authority, including the FDA, warning letter, notice of violation letter, consent decree, request for information or other notice, response or commitment made to or with the FDA or any comparable governmental authority. There is no act, omission, event, or circumstance of which Borrowers have knowledge that would reasonably be expected to give rise to or lead to any civil, criminal or administrative action, suit, demand, claim, complaint, hearing, investigation, demand letter, warning letter, proceeding or request for information pending against Borrowers and, to Borrowers’ knowledge, Borrowers have no liability (whether actual or contingent) for failure to comply with any Healthcare Laws. There has not been any violation of any Healthcare Laws by Borrowers in their product development efforts, submissions, record keeping and reports to the FDA or any other comparable governmental authority that could reasonably be expected to require or lead to investigation, corrective action or enforcement, regulatory or administrative action that could reasonably be expected to have a Material Adverse Effect. To the knowledge of Borrowers, there are no civil or criminal proceedings relating to Borrowers or any officer, director or employee of Borrowers that involve a matter within or related to the FDA’s any other comparable governmental authority’s jurisdiction.

(d) As of the Closing Date, Borrowers are not undergoing any inspection related to any activities or products of the Borrowers that are subject to Healthcare Laws, or any other governmental authority investigation.

(e) During the period of six calendar years immediately preceding the Closing Date, Borrowers have not introduced into commercial distribution any products manufactured by or on behalf of Borrowers or distributed any products on behalf of another manufacturer that were upon their shipment by Borrowers adulterated or misbranded in violation of 21 U.S.C. § 331. Borrowers have not received any notice or communication from the FDA or comparable governmental authority alleging material noncompliance with any Healthcare Law. No product has been seized, withdrawn, recalled, detained, or subject to a suspension (other than in the Ordinary Course of Business) of research, manufacturing, distribution or commercialization activity, and there are no facts or circumstances reasonably likely to cause (i) the seizure, denial, withdrawal, recall, detention, public health notification, safety alert or suspension of manufacturing or other activity relating to any product; (ii) a change in the 

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labeling of any product suggesting a compliance issue or risk; or (iii) a termination, seizure or suspension of manufacturing, researching, distributing or marketing of any product. No proceedings in the United States or any other jurisdiction seeking the withdrawal, recall, revocation, suspension, import detention, or seizure of any product are pending or threatened against any Borrower.

(f) Neither Borrowers nor any of their respective officers, directors, employees, agents or contractors (i) have been excluded or debarred from any federal healthcare program (including without limitation Medicare or Medicaid) or any other federal program or (ii) have received notice from the FDA or any other comparable governmental authority with respect to debarment or disqualification of any person that could reasonably be expected to have a Material Adverse Effect. Neither Borrowers nor any of their respective officers, directors, employees, agents or contractors have been convicted of any crime or engaged in any conduct for which (x) debarment is mandated or permitted by 21 U.S.C. § 335a or (y) such person or entity could be excluded from participating in the federal health care programs under Section 1128 of the Social Security Act or any similar law. No officer and to the knowledge of any Borrower, no employee or agent of a Borrower, has (aa) made any untrue statement of material fact or fraudulent statement to the FDA or any other comparable governmental authority; (bb) failed to disclose a material fact required to be disclosed to the FDA or any other comparable governmental authority; or (cc) committed an act, made a statement, or failed to make a statement that would reasonably be expected to provide the basis for the FDA or any other comparable governmental authority to invoke its policy respecting “Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities,” as set forth in 56 Fed. Reg. 46191 (September 10, 1991).

(g) Borrowers have not granted rights to design, develop, manufacture, produce, assemble, distribute, license, prepare, package, label, market or sell its products to any other person nor is it bound by any agreement that affects Borrowers’ exclusive right to design, develop, manufacture, produce, assemble, distribute, license, prepare, package, label, market or sell its products.

(h) Except as set forth on Schedule 8.2(h), (i) Borrowers and their respective contract manufacturers are, and have been for the past six calendar years, in compliance with, and each of its products in current commercial distribution is designed, manufactured, prepared, assembled, packaged, labeled, stored, installed, serviced, and processed in compliance with, the Quality System Regulation set forth in 21 C.F.R. Part 820, or comparable quality management system, including, but not limited to, ISO13485, as applicable, (ii) Borrowers are in compliance with the written procedures, record-keeping and reporting requirements required by the FDA or any comparable governmental authority pertaining to the reporting of adverse events and recalls involving any of Borrowers’ products, including, as the case may be, Medical Device Reporting set forth in 21 C.F.R. Part 803 and Reports of Corrections and Removals set forth in 21 C.F.R. Part 806, (iii) Borrowers’ products are and have been labeled, promoted, and advertised in accordance with their Permit or within the scope of an exemption from obtaining such Permit, and (iv) Borrowers’ establishments are registered with the FDA, as applicable, and each product of Borrowers, if any, is listed with the FDA under the applicable FDA registration and listing regulations for medical devices.

(i) Lender agrees that any breach of the terms of this Section 8.2 as a result of any action or inaction on the part of Structure Medical shall not be a breach of this Section 8.2 by Borrowers.

ARTICLE 9 - SECURITY AGREEMENT

Section 9.1 Generally.

(a) As security for the payment and performance of the Obligations, and for the payment and performance of all obligations under the Affiliated Financing Documents (if any), and without limiting any other grant of a Lien and security interest in any Security Document, each Credit Party hereby assigns and grants to Lender, for its benefit, subject to the MidCap Intercreditor Agreement, a continuing first priority Lien on and security interest in, upon, and to the personal property set forth on Schedule 9.1 attached hereto and made a part hereof.

(b) Each Credit Party hereby authorizes Lender to file without the signature of such Credit Party one or more UCC financing statements (or, with respect to any Credit Party organized under the laws of a jurisdiction other than the United States or any jurisdiction thereof, the local equivalent, if any) relating to liens on personal 

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property relating to all or any part of the Collateral, which financing statements may list Lender as the “secured party” and such Credit Party as the “debtor” and which describe and indicate the collateral covered thereby as all or any part of the Collateral under the Financing Documents (including an indication of the collateral covered by any such financing statement as “all assets” of such Credit Party now owned or hereafter acquired), in such jurisdictions as Lender from time to time determines are appropriate, and to file without the signature of such Credit Party any continuations of or corrective amendments to any such financing statements, in any such case in order for Lender to perfect, preserve or protect the Liens, rights and remedies of Lender with respect to the Collateral. Each Credit Party also ratifies its authorization for Lender to have filed in any jurisdiction any initial financing statements or amendments thereto if filed prior to the date hereof.

Section 9.2 Representations and Warranties and Covenants Relating to Collateral.

(a) Schedule 9.2 sets forth (i) each chief executive office and principal place of business of each Credit Party and each of their respective Subsidiaries, and (ii) all of the addresses (including all warehouses) at which any of the Collateral is located and/or books and records of any Credit Party regarding any of the Collateral are kept, which such Schedule 9.2 indicates in each case which Credit Party or Credit Parties have Collateral and/or books and records located at such address, and, in the case of any such address not owned by one or more of the Credit Parties, indicates the nature of such location (e.g., leased business location operated by such Credit Party, third party warehouse, consignment location, processor location, etc.) and the name and address of the third party owning and/or operating such location.

(b) Without limiting the generality of Section 3.2, except as indicated on Schedule 3.19 with respect to any rights of any Credit Party as a licensee under any license of Intellectual Property owned by another Person, and except for the filing of financing statements under the UCC, as applicable, no authorization, approval or other action by, and no notice to or filing with, any Governmental Authority or consent of any other Person is required for (i) the grant by each Credit Party to Lender of the security interests and Liens in the Collateral provided for under this Agreement and the other Security Documents (if any), or (ii) the exercise by Lender of its rights and remedies with respect to the Collateral provided for under this Agreement and the other Security Documents or under any applicable Law, including the UCC, if applicable, and neither any such grant of Liens in favor of Lender or exercise of rights by Lender shall violate or cause a default under any agreement between any Credit Party and any other Person relating to any such collateral, including any license to which a Credit Party is a party, whether as licensor or licensee, with respect to any Intellectual Property, whether owned by such Credit Party or any other Person.

(c) As of the Closing Date, no Credit Party has any ownership interest in any Chattel Paper (as defined in Article 9 of the UCC), letter of credit rights, commercial tort claims, Instruments, documents or investment property (other than equity interests in any Subsidiaries of such Credit Party disclosed on Schedule 3.4) and the Credit Parties shall give notice to Lender promptly upon the acquisition by any Credit Party of any such Chattel Paper, letter of credit rights, commercial tort claims, Instruments, documents, investment property. No Person other than Lender or MidCap has “control” (as defined in Article 9 of the UCC) over any Deposit Account, investment property (including Securities Accounts and commodities account), letter of credit rights or electronic chattel paper in which any Credit Party has any interest (except for such control arising by operation of law in favor of any bank or securities intermediary or commodities intermediary with whom any Deposit Account, Securities Account or commodities account of Borrowers is maintained).

(d) No Credit Party shall take any of the following actions or make any of the following changes unless the Credit Parties have given at least thirty (30) days prior written notice to Lender of Credit Parties’ intention to take any such action (which such written notice shall include an updated version of any Schedule impacted by such change) and have executed any and all documents, instruments and agreements and taken any other actions which Lender may request after receiving such written notice in order to protect and preserve the Liens, rights and remedies of Lender with respect to the Collateral: (i) change the legal name or organizational identification number of any Credit Party as it appears in official filings in the jurisdiction of its organization, (ii) change the jurisdiction of incorporation or formation of any Credit Party or allow any Credit Party to designate any jurisdiction as an additional jurisdiction of incorporation for such Credit Party, or change the type of entity that it is, or (iii) change its chief executive office, principal place of business, or the location of its records concerning the Collateral or move any Collateral to or place any Collateral on any location that is not then listed on the Schedules (other than any movement of Collateral in the Ordinary Course of Business) and/or establish any business location at any location that is not then listed on the Schedules.

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(e) Except (i) in the Ordinary Course of Business and (ii) Inventory in an aggregate amount of $25,000, no Inventory or other Collateral shall at any time be in the possession or control of any warehouse, consignee, bailee or any of Credit Parties’ agents or processors without prior written notice to Lender and the receipt by Lender, if Lender has so requested, of warehouse receipts, consignment agreements or bailee lien waivers (as applicable) reasonably satisfactory to Lender prior to the commencement of such possession or control. The Credit Parties have notified Lender that Inventory is currently located at the locations set forth on Schedule 9.2. The Credit Parties shall, upon the request of Lender, notify any such warehouse, consignee, bailee, agent or processor of the security interests and Liens in favor of Lender created pursuant to this Agreement and the Security Documents, instruct such Person to hold all such Collateral for Lender’s account subject to Lender’s instructions and shall obtain an acknowledgement from such Person that such Person holds the Collateral for Lender’s benefit.

(f) The Credit Parties shall cause all equipment and other tangible Personal Property other than Inventory to be maintained and preserved in the same condition, repair and in working order as when new, ordinary wear and tear excepted, and shall promptly make or cause to be made all repairs, replacements and other improvements in connection therewith that are necessary or desirable to such end. Upon request of Lender, the Credit Parties shall promptly deliver to Lender any and all certificates of title, applications for title or similar evidence of ownership of all such tangible Personal Property and shall cause Lender to be named as lienholder on any such certificate of title or other evidence of ownership. The Credit Parties shall not permit any such tangible Personal Property to become fixtures to real estate unless such real estate is subject to a Lien in favor of Lender.

(g) As of the Closing Date or, if any Promissory Note is entered into after the Closing Date, within thirty (30) days of the date of such Promissory Note, each Credit Party shall endorse, assign and deliver each Promissory Note to the Lender, accompanied by such instruments of transfer or assignment duly executed in blank, in form and substance reasonably satisfactory to Lender. No Credit Party shall, without the prior written consent of Lender, (A) waive or release any obligation of any person that is obligated under any Promissory Note, (B) take or omit to take any action or knowingly suffer or permit any action to be omitted or taken, the taking or omission of which would result in any right of offset against sums payable under the Promissory Notes, or (C) assign or surrender its rights and interests under any Promissory Notes or terminate, cancel, modify, change, supplement or amend the Promissory Notes.

(h) The Credit Parties shall furnish to Lender from time to time any statements and schedules further identifying or describing the Collateral and any other information, reports or evidence concerning the Collateral as Lender may reasonably request from time to time.

ARTICLE 10 - EVENTS OF DEFAULT

Section 10.1 Events of Default. For purposes of the Financing Documents, the occurrence of any of the following conditions and/or events, whether voluntary or involuntary, by operation of law or otherwise, shall constitute an “Event of Default”:

(a) (i) any Borrower shall fail to pay when due any principal, interest, premium or fee under any Financing Document or any other amount payable under any Financing Document and such failure continues for a period of five (5) days, (ii) there shall occur any default in the performance of or compliance with any of the following sections of this Agreement: Section 4.4(b), Article 5 and Article 6 and Section 7.3, or (iii) there shall occur any default in the performance of or compliance with Section 4.1 of this Agreement and such failure continues for a period of five (5) days;

(b) any Credit Party defaults in the performance of or compliance with any term contained in this Agreement or in any other Financing Document (other than occurrences described in other provisions of this Section 10.1 for which a different grace or cure period is specified or for which no grace or cure period is specified and thereby constitute immediate Events of Default) and such default is not remedied by the Credit Party or waived by Lender within fifteen (15) days after the earlier of (i) receipt by Borrower Representative of notice from Lender of such default, or (ii) actual knowledge of any Borrower or any other Credit Party of such default;

(c) any representation, warranty, certification or statement made by any Credit Party or any other Person in any Financing Document or in any certificate, financial statement or other document delivered pursuant to 

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any Financing Document is incorrect in any respect (or in any material respect if such representation, warranty, certification or statement is not by its terms already qualified as to materiality) when made (or deemed made);

(d) failure of any Credit Party to pay when due or within any applicable grace period any principal, interest or other amount on Debt (other than the Term Loan), or the occurrence of any breach, default, condition or event with respect to any Debt (other than the Term Loan), if the effect of such failure or occurrence is to cause or to permit the holder or holders of any such Debt, to cause, Debt or other liabilities having an individual principal amount in excess of $500,000 or having an aggregate principal amount in excess of $500,000 to become or be declared due prior to its stated maturity;

(e) any Credit Party or any Subsidiary of a Borrower shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action to authorize any of the foregoing;

(f) an involuntary case or other proceeding shall be commenced against any Credit Party or any Subsidiary of a Borrower seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of forty-five (45) days; or an order for relief shall be entered against any Credit Party or any Subsidiary of a Borrower under applicable federal bankruptcy, insolvency or other similar law in respect of (i) bankruptcy, liquidation, winding-up, dissolution or suspension of general operations, (ii) composition, rescheduling, reorganization, arrangement or readjustment of, or other relief from, or stay of proceedings to enforce, some or all of the debts or obligations, or (iii) possession, foreclosure, seizure or retention, sale or other disposition of, or other proceedings to enforce security over, all or any substantial part of the assets of such Credit Party or Subsidiary;

(g) (i) institution of any steps by any Person to terminate a Pension Plan if as a result of such termination any Credit Party or any member of the Controlled Group could be required to make a contribution to such Pension Plan, or could incur a liability or obligation to such Pension Plan, in excess of $250,000, (ii) a contribution failure occurs with respect to any Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA, or (iii) there shall occur any withdrawal or partial withdrawal from a Multiemployer Plan and the withdrawal liability (without unaccrued interest) to Multiemployer Plans as a result of such withdrawal (including any outstanding withdrawal liability that any Credit Party or any member of the Controlled Group have incurred on the date of such withdrawal) exceeds $100,000;

(h) one or more judgments or orders for the payment of money (not paid or fully covered by insurance maintained in accordance with the requirements of this Agreement and as to which the relevant insurance company has acknowledged coverage) aggregating in excess of $1,000,000 shall be rendered against any or all Credit Parties and either (i) enforcement proceedings shall have been commenced by any creditor upon any such judgments or orders, or (ii) there shall be any period of twenty (20) consecutive days during which a stay of enforcement of any such judgments or orders, by reason of a pending appeal, bond or otherwise, shall not be in effect;

(i) any Lien created by any of the Security Documents shall at any time fail to constitute a valid and perfected Lien on all of the Collateral purported to be encumbered thereby, subject to no prior or equal Lien except Permitted Liens, or any Credit Party shall so assert;

(j) the indictment of any Credit Party for a felony or any claim of fraud, misrepresentation or other crime of moral turpitude;

(k) a default or event of default occurs under any Guarantee of any portion of the Obligations;

(l) any Borrower makes any payment on account of any Debt that has been subordinated to any of the Obligations other than payments specifically permitted by the terms of a Subordination Agreement;

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(m) if any Borrower is or becomes an entity whose equity is registered with the SEC, and/or is publicly traded on and/or registered with a public securities exchange, such Borrower’s equity fails to remain registered with the SEC in good standing, and/or such equity fails to remain publicly traded on and registered with a public securities exchange; or

(n) there shall occur any default or event of default under the Affiliated Financing Documents or any Material Contract which results in a liability to any Borrower in excess of $5,000,000.

Notwithstanding the foregoing, if a Credit Party fails to comply with any same provision of this Agreement two (2) times in any twelve (12) month period and Lender has given to Borrower Representative in connection with each such failure any notice to which Borrowers would be entitled under this Section before such failure could become an Event of Default, then all subsequent failures by a Credit Party to comply with such provision of this Agreement shall effect an immediate Event of Default (without the expiration of any applicable cure period) with respect to all subsequent failures by a Credit Party to comply with such provision of this Agreement, and Lender thereupon may exercise any remedy set forth in this Article 10 without affording Borrowers any opportunity to cure such Event of Default.

All cure periods provided for in this Section 10.1 shall run concurrently with any cure period provided for in any applicable Financing Documents under which the default occurred.

Section 10.2 Acceleration of Term Loan. Upon the occurrence and during the continuance of an Event of Default, Lender may, by notice to Borrower Representative declare all or any portion of the Obligations to be, and the Obligations shall thereupon become, immediately due and payable, with accrued interest thereon, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Borrower and Borrowers will pay the same; provided, however, that in the case of any of the Events of Default specified in Section 10.1(e) or 10.1(f) above, without any notice to any Borrower or any other act by Lender, all of the Obligations shall become immediately and automatically due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Borrower and Borrowers will pay the same.

Section 10.3 UCC Remedies.

(a) Upon the occurrence of and during the continuance of an Event of Default under this Agreement or the other Financing Documents, Lender, in addition to all other rights, options, and remedies granted to Lender under this Agreement or at law or in equity, may exercise, subject to the MidCap Intercreditor Agreement, either directly or through one or more assignees or designees, all rights and remedies granted to it under all Financing Documents and under the UCC in effect in the applicable jurisdiction(s) and under any other applicable law; including, without limitation:

(i) the right to take possession of, send notices regarding, and collect directly the Collateral, with or without judicial process;

(ii) the right to (by its own means or with judicial assistance) enter any of Borrowers’ premises and take possession of the Collateral, or render it unusable, or to render it usable or saleable, or dispose of the Collateral on such premises in compliance with subsection (iii) below and to take possession of Borrowers’ original books and records, to obtain access to Borrowers’ data processing equipment, computer hardware and software relating to the Collateral and to use all of the foregoing and the information contained therein in any manner Lender deems appropriate, without any liability for rent, storage, utilities, or other sums, and Borrowers shall not resist or interfere with such action (if Borrowers’ books and records are prepared or maintained by an accounting service, contractor or other third party agent, Borrowers hereby irrevocably authorize such service, contractor or other agent, upon notice by Lender to such Person that an Event of Default has occurred and is continuing, to deliver to Lender or its designees such books and records, and to follow Lender’s instructions with respect to further services to be rendered);

(iii) the right to require Borrowers at Borrowers’ expense to assemble all or any part of the Collateral and make it available to Lender at any place designated by Lender; and/or 

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(iv) the right to notify postal authorities to change the address for delivery of Borrowers’ mail to an address designated by Lender and to receive, open and dispose of all mail addressed to any Borrower.

(b) Each Borrower agrees that a notice received by it at least ten (10) days before the time of any intended public sale, or the time after which any private sale or other disposition of the Collateral is to be made, shall be deemed to be reasonable notice of such sale or other disposition. If permitted by applicable law, any perishable Collateral which threatens to speedily decline in value or which is sold on a recognized market may be sold immediately by Lender without prior notice to Borrowers. At any sale or disposition of Collateral, Lender may (to the extent permitted by applicable law) purchase all or any part of the Collateral, free from any right of redemption by Borrowers, which right is hereby waived and released. Each Borrower covenants and agrees not to interfere with or impose any obstacle to Lender’s exercise of its rights and remedies with respect to the Collateral. Lender shall have no obligation to clean- up or otherwise prepare the Collateral for sale. Lender may comply with any applicable state or federal law requirements in connection with a disposition of the Collateral and compliance will not be considered to adversely affect the commercial reasonableness of any sale of the Collateral. Lender may sell the Collateral without giving any warranties as to the Collateral. Lender may specifically disclaim any warranties of title or the like. This procedure will not be considered to adversely affect the commercial reasonableness of any sale of the Collateral. If Lender sells any of the Collateral upon credit, Borrowers will be credited only with payments actually made by the purchaser, received by Lender and applied to the indebtedness of the purchaser. In the event the purchaser fails to pay for the Collateral, Lender may resell the Collateral and Borrowers shall be credited with the proceeds of the sale. Borrowers shall remain liable for any deficiency if the proceeds of any sale or disposition of the Collateral are insufficient to pay all Obligations.

(c) Without restricting the generality of the foregoing and for the purposes aforesaid, each Borrower hereby appoints and constitutes Lender its lawful attorney-in-fact with full power of substitution in the Collateral, upon the occurrence and during the continuance of an Event of Default, to (i) use unadvanced funds remaining under this Agreement or which may be reserved, escrowed or set aside for any purposes hereunder at any time, or to advance funds in excess of the face amount of the Term Note, (ii) pay, settle or compromise all existing bills and claims, which may be Liens or security interests, or to avoid such bills and claims becoming Liens against the Collateral, (iii) execute all applications and certificates in the name of such Borrower and to prosecute and defend all actions or proceedings in connection with the Collateral, and (iv) do any and every act which such Borrower might do in its own behalf; it being understood and agreed that this power of attorney in this subsection (c) shall be a power coupled with an interest and cannot be revoked.

(d) Lender is hereby granted a non-exclusive, royalty-free license or other right to use, without charge, Borrowers’ labels, mask works, rights of use of any name, any other Intellectual Property and advertising matter, and any similar property as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Lender’s exercise of its rights under this Article, Borrowers’ rights under all licenses (whether as licensor or licensee) and all franchise agreements inure to Lender’s benefit.

Section 10.4 Default Rate of Interest. At the election of Lender, after the occurrence of an Event of Default and for so long as it continues, the Term Loan and other Obligations shall bear interest at rates that are five percent (5.0%) per annum in excess of the rates otherwise payable under this Agreement.

Section 10.5 Application of Proceeds.

(a) Notwithstanding anything to the contrary contained in this Agreement, upon the occurrence and during the continuance of an Event of Default, each Borrower irrevocably waives the right to direct the application of any and all payments at any time or times thereafter received by Lender from or on behalf of such Borrower or any Guarantor of all or any part of the Obligations, and, as between Borrowers on the one hand and Lender on the other, Lender shall have the continuing and exclusive right to apply and to reapply any and all payments received against the Obligations in such manner as Lender may deem advisable notwithstanding any previous application by Lender.

(b) Following the occurrence and continuance of an Event of Default, but absent the occurrence and continuance of an Acceleration Event, Lender shall apply any and all payments received by Lender in respect of the Obligations, and any and all proceeds of Collateral received by Lender, in such order as Lender may from time to time elect.

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(c) Notwithstanding anything to the contrary contained in this Agreement, if an Acceleration Event shall have occurred, and so long as it continues, Lender shall apply any and all payments received by Lender in respect of the Obligations, and any and all proceeds of Collateral received by Lender, in the following order: first, to all fees, costs, indemnities, liabilities, obligations and expenses incurred by or owing to Lender with respect to this Agreement, the other Financing Documents or the Collateral; second, to accrued and unpaid interest on the Obligations (including any interest which, but for the provisions of the Bankruptcy Code, would have accrued on such amounts); third, to the principal amount of the Obligations outstanding; and fourth to any other indebtedness or obligations of Borrowers owing to Lender under the Financing Documents. Any balance remaining shall be delivered to Borrowers or to whomever may be lawfully entitled to receive such balance or as a court of competent jurisdiction may direct. In carrying out the foregoing and (y) amounts received shall be applied in the numerical order provided until exhausted prior to the application to the next succeeding category.

Section 10.6 Waivers.

(a) Except as otherwise provided for in this Agreement and to the fullest extent permitted by applicable law, each Borrower waives: (i) presentment, demand and protest, and notice of presentment, dishonor, intent to accelerate, acceleration, protest, default, nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all Financing Documents, the Term Note or any other notes, commercial paper, accounts, contracts, documents, Instruments, Chattel Paper and Guarantees at any time held by Lenders on which any Borrower may in any way be liable, and hereby ratifies and confirms whatever Lenders may do in this regard; (ii) all rights to notice and a hearing prior to Lender’s taking possession or control of, or to Lender’s replevy, attachment or levy upon, any Collateral or any bond or security which might be required by any court prior to allowing Lender to exercise any of its remedies; and (iii) the benefit of all valuation, appraisal and exemption Laws. Each Borrower acknowledges that it has been advised by counsel of its choices and decisions with respect to this Agreement, the other Financing Documents and the transactions evidenced hereby and thereby.

(b) Each Borrower for itself and all its successors and assigns, (i) agrees that its liability shall not be in any manner affected by any indulgence, extension of time, renewal, waiver, or modification granted or consented to by Lender; (ii) consents to any indulgences and all extensions of time, renewals, waivers, or modifications that may be granted by Lender with respect to the payment or other provisions of the Financing Documents, and to any substitution, exchange or release of the Collateral, or any part thereof, with or without substitution, and agrees to the addition or release of any Borrower, endorsers, guarantors, or sureties, or whether primarily or secondarily liable, without notice to any other Borrower and without affecting its liability hereunder; (iii) agrees that its liability shall be unconditional and without regard to the liability of any other Borrower or Lender for any tax on the indebtedness; and (iv) to the fullest extent permitted by law, expressly waives the benefit of any statute or rule of law or equity now provided, or which may hereafter be provided, which would produce a result contrary to or in conflict with the foregoing.

(c) To the extent that Lender may have acquiesced in any noncompliance with any requirements or conditions precedent to the closing of the Term Loan or to any subsequent disbursement of Loan proceeds, such acquiescence shall not be deemed to constitute a waiver by Lender of such requirements with respect to any future disbursements of Loan proceeds and Lender may at any time after such acquiescence require Borrowers to comply with all such requirements. Any forbearance by Lender in exercising any right or remedy under any of the Financing Documents, or otherwise afforded by applicable law, including any failure to accelerate the maturity date of the Term Loan, shall not be a waiver of or preclude the exercise of any right or remedy nor shall it serve as a novation of the Term Note or as a reinstatement of the Term Loan or a waiver of such right of acceleration or the right to insist upon strict compliance of the terms of the Financing Documents. Lender’s acceptance of payment of any sum secured by any of the Financing Documents after the due date of such payment shall not be a waiver of Lender’s right to either require prompt payment when due of all other sums so secured or to declare a default for failure to make prompt payment. The procurement of insurance or the payment of taxes or other Liens or charges by Lender as the result of an Event of Default shall not be a waiver of Lender’s right to accelerate the maturity of the Term Loan, nor shall Lender’s receipt of any condemnation awards, insurance proceeds, or damages under this Agreement operate to cure or waive any Credit Party’s default in payment of sums secured by any of the Financing Documents.

(d) Without limiting the generality of anything contained in this Agreement or the other Financing Documents, each Borrower agrees that if an Event of Default is continuing (i) Lender shall not be subject to any “one action” or “election of remedies” law or rule, and (ii) all Liens and other rights, remedies or privileges provided 

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to Lender shall remain in full force and effect until Lender has exhausted all remedies against the Collateral and any other properties owned by Borrowers and the Financing Documents and other security instruments or agreements securing the Term Loan have been foreclosed, sold and/or otherwise realized upon in satisfaction of Borrowers’ obligations under the Financing Documents.

(e) Nothing contained herein or in any other Financing Document shall be construed as requiring Lender to resort to any part of the Collateral for the satisfaction of any of Borrowers’ obligations under the Financing Documents in preference or priority to any other Collateral, and Lender may seek satisfaction out of all of the Collateral or any part thereof, in its absolute discretion in respect of Borrowers’ obligations under the Financing Documents. In addition, Lender shall have the right from time to time to partially foreclose upon any Collateral in any manner and for any amounts secured by the Financing Documents then due and payable as determined by Lender in its sole discretion, including, without limitation, the following circumstances: (i) in the event any Borrower defaults beyond any applicable grace period in the payment of one or more scheduled payments of principal and/or interest, Lender may foreclose upon all or any part of the Collateral to recover such delinquent payments, or (ii) in the event Lender elects to accelerate less than the entire outstanding principal balance of the Term Loan, Lender may foreclose all or any part of the Collateral to recover so much of the principal balance of the Term Loan as Lender may accelerate and such other sums secured by one or more of the Financing Documents as Lender may elect. Notwithstanding one or more partial foreclosures, any unforeclosed Collateral shall remain subject to the Financing Documents to secure payment of sums secured by the Financing Documents and not previously recovered.

(f) To the fullest extent permitted by law, each Borrower, for itself and its successors and assigns, waives in the event of foreclosure of any or all of the Collateral any equitable right otherwise available to any Credit Party which would require the separate sale of any of the Collateral or require Lender to exhaust its remedies against any part of the Collateral before proceeding against any other part of the Collateral; and further in the event of such foreclosure each Borrower does hereby expressly consent to and authorize, at the option of Lender, the foreclosure and sale either separately or together of each part of the Collateral.

Section 10.7 Injunctive Relief. The parties acknowledge and agree that, in the event of a breach or threatened breach of any Credit Party’s obligations under any Financing Documents, Lender may have no adequate remedy in money damages and, accordingly, shall be entitled to an injunction (including, without limitation, a temporary restraining order, preliminary injunction, writ of attachment, or order compelling an audit) against such breach or threatened breach, including, without limitation, maintaining any cash management and collection procedure described herein. However, no specification in this Agreement of a specific legal or equitable remedy shall be construed as a waiver or prohibition against any other legal or equitable remedies in the event of a breach or threatened breach of any provision of this Agreement. Each Credit Party waives, to the fullest extent permitted by law, the requirement of the posting of any bond in connection with such injunctive relief. By joining in the Financing Documents as a Credit Party, each Credit Party specifically joins in this Section as if this Section were a part of each Financing Document executed by such Credit Party.

Section 10.8 Marshalling; Payments Set Aside. Lender shall not be under any obligation to marshal any assets in payment of any or all of the Obligations. To the extent that Borrower makes any payment or Lender enforces its Liens or Lender exercises its right of set-off, and such payment or the proceeds of such enforcement or set-off is subsequently invalidated, declared to be fraudulent or preferential, set aside, or required to be repaid by anyone, then to the extent of such recovery, the Obligations or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefore, shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or set-off had not occurred.

ARTICLE 11- MISCELLANEOUS

Section 11.1 Survival. All agreements, representations and warranties made herein and in every other Financing Document shall survive the execution and delivery of this Agreement and the other Financing Documents and the other Operative Documents. The provisions of Section 2.6 and Articles 11 and 12 shall survive the payment of the Obligations and any termination of this Agreement and any judgment with respect to any Obligations, including any final foreclosure judgment with respect to any Security Document, and no unpaid or unperformed, current or future, Obligations will merge into any such judgment.

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Section 11.2 No Waivers. No failure or delay by Lender in exercising any right, power or privilege under any Financing Document shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein and therein provided shall be cumulative and not exclusive of any rights or remedies provided by law. Any reference in any Financing Document to the “continuing” nature of any Event of Default shall not be construed as establishing or otherwise indicating that any Borrower or any other Credit Party has the independent right to cure any such Event of Default, but is rather presented merely for convenience should such Event of Default be waived in accordance with the terms of the applicable Financing Documents.

Section 11.3 Notices.

(a) All notices, requests and other communications to any party hereunder shall be in writing (including prepaid overnight courier, facsimile transmission or similar writing) and shall be given to such party at its address, facsimile number or e-mail address set forth on the signature pages hereof or at such other address, facsimile number or e-mail address as such party may hereafter specify for the purpose by notice to Lender and Borrower Representative; provided, however, that notices, requests or other communications shall be permitted by electronic means only in accordance with the provisions of Section 11.3(b) and (c). Each such notice, request or other communication shall be effective (i) if given by facsimile, when such notice is transmitted to the facsimile number specified by this Section and the sender receives a confirmation of transmission from the sending facsimile machine, or (ii) if given by mail, prepaid overnight courier or any other means, when received or when receipt is refused at the applicable address specified by this Section 11.3(a).

(b) Notices and other communications to the parties hereto may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved from time to time by Lender. Lender or Borrower Representative may, in their discretion, agree to accept notices and other communications to them hereunder by electronic communications pursuant to procedures approved by it, provided, however, that approval of such procedures may be limited to particular notices or communications.

(c) Unless Lender otherwise prescribes, (i) notices and other communications sent to an e- mail address shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgment), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor, provided, however, that if any such notice or other communication is not sent or posted during normal business hours, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day.

Section 11.4 Severability. In case any provision of or obligation under this Agreement or any other Financing Document shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

Section 11.5 Headings. Headings and captions used in the Financing Documents (including the Exhibits, Schedules and Annexes hereto and thereto) are included for convenience of reference only and shall not be given any substantive effect.

Section 11.6 Confidentiality.

(a) Each Credit Party agrees (i) not to transmit or disclose provisions of any Financing Document to any Person (other than to Borrowers’ advisors and officers on a need-to-know basis or as otherwise may be required by Law) without Lender’s prior written consent, (ii) to inform all Persons of the confidential nature of the Financing Documents and (iii) to direct them not to disclose the same to any other Person and to require each of them to be bound by these provisions.

(b) Subject to Section 4.11(a), Lender shall hold all non-public information regarding the Credit Parties and their respective businesses identified as such by Borrowers and obtained by Lender pursuant to the requirements hereof in accordance with its customary procedures for handling information of such nature, except 

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that disclosure of such information may be made (i) to its agents, employees, Subsidiaries, Affiliates, attorneys, auditors, professional consultants, rating agencies, insurance industry associations and portfolio management services, (ii) as required by Law, subpoena, judicial order or similar order and in connection with any litigation, (iii) as may be required in connection with the examination, audit or similar investigation of such Person, and (iv) to a Person that is a trustee, investment advisor, collateral manager, servicer, noteholder or secured party in a Securitization (as hereinafter defined) in connection with the administration, servicing and reporting on the assets serving as collateral for such Securitization. For the purposes of this Section, “Securitization” shall mean (A) the pledge of the Term Loan as collateral security for loans to Lender, or (B) a public or private offering by Lender or any of its Affiliates or their respective successors and assigns, of securities which represent an interest in, or which are collateralized, in whole or in part, by the Term Loan. Confidential information shall include only such information identified as such at the time provided to Lender and shall not include information that either: (y) is in the public domain, or becomes part of the public domain after disclosure to such Person through no fault of such Person, or (z) is disclosed to such Person by a Person other than a Credit Party, provided, however, Lender does not have actual knowledge that such Person is prohibited from disclosing such information. The obligations of Lender under this Section 11.6 shall supersede and replace the obligations of Lender under any confidentiality agreement in respect of this financing executed and delivered by Lender prior to the date hereof.

Section 11.7 Waiver of Consequential and Other Damages. To the fullest extent permitted by applicable law, no Borrower shall assert, and each Borrower hereby waives, any claim against any Indemnitee (as defined below), on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of this Agreement, any other Financing Document or any agreement or instrument contemplated hereby or thereby, the transactions contemplated hereby or thereby, the Term Loan or the use of the proceeds thereof. No Indemnitee shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Financing Documents or the transactions contemplated hereby or thereby.

Section 11.8 GOVERNING LAW; SUBMISSION TO JURISDICTION.

(a) THIS AGREEMENT, EACH NOTE AND EACH OTHER FINANCING DOCUMENT, AND ALL MATTERS RELATING HERETO OR THERETO OR ARISING THEREFROM (WHETHER SOUNDING IN CONTRACT LAW, TORT LAW OR OTHERWISE), SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

(b) EACH BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW YORK COUNTY, STATE OF NEW YORK AND IRREVOCABLY AGREES THAT, SUBJECT TO LENDER’S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER FINANCING DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. EACH BORROWER EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON SUCH BORROWER BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO SUCH BORROWER AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.

Section 11.9 WAIVER OF JURY TRIAL. EACH BORROWER AND LENDER HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE FINANCING DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH BORROWER AND LENDER ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THE OTHER FINANCING DOCUMENTS, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE 

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DEALINGS. EACH BORROWER AND LENDER WARRANTS AND REPRESENTS THAT IT HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.

Section 11.10 Publication; Advertisement.

(a) Publication. No Credit Party will directly or indirectly publish, disclose or otherwise use in any public disclosure, advertising material, promotional material, press release or interview, any reference to the name, logo or any trademark of Lender or any of its Affiliates or any reference to this Agreement or the financing evidenced hereby, in any case except (i) as required by Law, subpoena or judicial or similar order, in which case the applicable Credit Party shall give Lender prior written notice of such publication or other disclosure, or (ii) with Lender’s prior written consent.

(b) Advertisement. Each Credit Party hereby authorizes Lender to publish the name of such Credit Party, the existence of the financing arrangements referenced under this Agreement, the primary purpose and/or structure of those arrangements, the amount of credit extended under each facility, the title and role of each party to this Agreement, and the total amount of the financing evidenced hereby in any “tombstone”, comparable advertisement or press release which Lender elects to submit for publication. In addition, each Credit Party agrees that Lender may provide lending industry trade organizations with information necessary and customary for inclusion in league table measurements after the Closing Date.With respect to any of the foregoing, Lender shall provide Borrowers with an opportunity to review and confer with Lender regarding the contents of any such tombstone, advertisement or information, as applicable, prior to its submission for publication and, following such review period, Lender may, from time to time, publish such information in any media form desired by Lender, until such time that Borrowers shall have requested Lender cease any such further publication.

Section 11.11 Counterparts; Integration. This Agreement and the other Financing Documents may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. Signatures by facsimile or by electronic mail delivery of an electronic version of any executed signature page shall bind the parties hereto. This Agreement and the other Financing Documents constitute the entire agreement and understanding among the parties hereto and supersede any and all prior agreements and understandings, oral or written, relating to the subject matter hereof.

Section 11.12 No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.

Section 11.13 Lender Approvals. Unless expressly provided herein to the contrary, any approval, consent, waiver or satisfaction of Lender with respect to any matter that is the subject of this Agreement, the other Financing Documents may be granted or withheld by Lender in its sole and absolute discretion and credit judgment. No provision of this Agreement or any other Financing Document may be materially amended, waived or otherwise modified unless such amendment, waiver or other modification is in writing and is signed or otherwise approved by Borrowers and Lender.

Section 11.14 Expenses; Indemnity

(a) Borrowers hereby agree to promptly pay (i) all costs and expenses of Lender (including, without limitation, the fees, costs and expenses of counsel to, and independent appraisers and consultants retained by Lender) in connection with the examination, review, due diligence investigation, documentation, negotiation, closing and syndication of the transactions contemplated by the Financing Documents, in connection with the performance by Lender of its rights and remedies under the Financing Documents and in connection with the continued administration of the Financing Documents including (A) any amendments, modifications, consents and waivers to and/or under any and all Financing Documents, and (B) any periodic public record searches conducted by or at the request of Lender (including, without limitation, title investigations, UCC searches, fixture filing searches, judgment, pending litigation and tax lien searches and searches of applicable corporate, limited liability, partnership and related records concerning the continued existence, organization and good standing of certain Persons); (ii) without limitation of the preceding clause (i), all costs and expenses of Lender in connection with the creation, 

44

 

perfection and maintenance of Liens pursuant to the Financing Documents; (iii) without limitation of the preceding clause (i), all costs and expenses of Lender in connection with (A) protecting, storing, insuring, handling, maintaining or selling any Collateral, (B) any litigation, dispute, suit or proceeding relating to any Financing Document, and (C) any workout, collection, bankruptcy, insolvency and other enforcement proceedings under any and all of the Financing Documents; (iv) without limitation of the preceding clause (i), all costs and expenses of Lender in connection with Lender’s reservation of funds in anticipation of the funding of the Term Loan to be made hereunder; and (v) all costs and expenses incurred by Lenders in connection with any litigation, dispute, suit or proceeding relating to any Financing Document and in connection with any workout, collection, bankruptcy, insolvency and other enforcement proceedings under any and all Financing Documents, whether or not Lender is a party thereto. If Lender uses in-house counsel for any of these purposes, Borrowers further agree that the Obligations include reasonable charges for such work commensurate with the fees that would otherwise be charged by outside legal counsel selected by Lender for the work performed. This Section 11.14(a) shall not apply to any Taxes of any Lender. Notwithstanding anything to the contrary in this Section 11.14(a), Lender shall bear its own costs and expenses in connection with due diligence and the preparation of documentation related to the Term Loan including the fees and expenses of Lender’s counsel.

(b) Each Borrower hereby agrees to indemnify, pay and hold harmless Lender and the officers, directors, employees, trustees, agents, investment advisors, collateral managers, servicers, and counsel of Lender (collectively called the “Indemnitees”) from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including the fees and disbursements of counsel for such Indemnitee) in connection with any investigative, response, remedial, administrative or judicial matter or proceeding, whether or not such Indemnitee shall be designated a party thereto and including any such proceeding initiated by or on behalf of a Credit Party, and the reasonable expenses of investigation by engineers, environmental consultants and similar technical personnel and any commission, fee or compensation claimed by any broker (other than any broker retained by Lender) asserting any right to payment for the transactions contemplated hereby, which may be imposed on, incurred by or asserted against such Indemnitee as a result of or in connection with the transactions contemplated hereby or by the other Operative Documents (including (i)(A) as a direct or indirect result of the presence on or under, or escape, seepage, leakage, spillage, discharge, emission or release from, any property now or previously owned, leased or operated by Borrower, any Subsidiary or any other Person of any Hazardous Materials, (B) arising out of or relating to the offsite disposal of any materials generated or present on any such property, or (C) arising out of or resulting from the environmental condition of any such property or the applicability of any governmental requirements relating to Hazardous Materials, whether or not occasioned wholly or in part by any condition, accident or event caused by any act or omission of Borrowers or any Subsidiary, and (ii) proposed and actual extensions of credit under this Agreement) and the use or intended use of the proceeds of the Term Loan, except that Borrowers shall have no obligation hereunder to an Indemnitee with respect to any liability resulting from the gross negligence, willful misconduct or bad faith of such Indemnitee, as determined by a final non-appealable judgment of a court of competent jurisdiction. To the extent that the undertaking set forth in the immediately preceding sentence may be unenforceable, Borrowers shall contribute the maximum portion which it is permitted to pay and satisfy under applicable Law to the payment and satisfaction of all such indemnified liabilities incurred by the Indemnitees or any of them. This Section 11.14(b) shall not apply to any Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.

(c) Notwithstanding any contrary provision in this Agreement, the obligations of Borrowers under this Section 11.14 shall survive the payment in full of the Obligations and the termination of this Agreement. NO INDEMNITEE SHALL BE RESPONSIBLE OR LIABLE TO THE BORROWERS OR TO ANY OTHER PARTY TO ANY FINANCING DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER THIS AGREEMENT OR ANY OTHER FINANCING DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.

Section 11.15 Payments. Payments of principal, interest and fees in respect of the Term Loan will be settled on the date of receipt if received by Lender on the last Business Day of a month or on the Business Day immediately following the date of receipt if received on any day other than the last Business Day of a month.

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Section 11.16 Reinstatement. This Agreement shall remain in full force and effect and continue to be effective should any petition or other proceeding be filed by or against any Credit Party for liquidation or reorganization, should any Credit Party become insolvent or make an assignment for the benefit of any creditor or creditors or should an interim receiver, receiver, receiver and manager or trustee be appointed for all or any significant part of any Credit Party’s assets, and shall continue to be effective or to be reinstated, as the case may be, if at any time payment and performance of the Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Obligations, whether as a fraudulent preference reviewable transaction or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

Section 11.17 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of Borrowers and Lender and their respective successors and permitted assigns. No Credit Party may assign, delegate or otherwise transfer any of its rights or other obligations hereunder or under any other Financing Document without the prior written consent of Lender. Lender may assign, delegate or otherwise transfer any of its rights or obligations hereunder (including participations) only upon (a) the written consent by the Borrowers and (b) surrender and cancellation (with reissuance to the assignee) of the Term Note; provided, however, that the written consent of the Borrowers shall not be required for an assignment or the sale of a participation in the Term Note by Lender (w) to an Affiliate of Lender, (x) in connection with a sale or transfer of all or substantially all of the assets or capital stock of Lender to a third party, (y) an Event of Default shall have occurred or (z) or the sale of any participation in the Term Note. Borrower Representative shall keep at its principal executive office a register for the registration and registration of transfers of the Term Note. The name and address of each holder of one or more Term Notes, each transfer thereof and the name and address of each transferee of one or more Term Notes shall be registered in such register. Prior to due presentment for registration of transfer, the Person in whose name Term Note shall be registered shall be deemed and treated as the owner and holder thereof for all purposes hereof. If Lender sells a participation in the Term Note, Lender shall, acting solely for this purpose as a non-fiduciary agent of the Borrowers, maintain a register on which it enters the name and address of each participant and the principal amounts (and stated interest) of each participant’s interest in the Term Loan or other obligations under the Financing Documents; provided that Lender shall have no obligation to disclose all or any portion of the participant register (including the identity of any participant or any information relating to a participant’s interest in any commitments, loans, letters of credit or its other obligations under any Financing Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the participant register shall be conclusive absent manifest error, and Lender shall treat each Person whose name is recorded in the participant register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.

Section 11.18 USA PATRIOT Act Notification.  Lender hereby notifies Borrowers that pursuant to the requirements of the USA PATRIOT Act, it is required to obtain, verify and record certain information and documentation that identifies Borrowers, which information includes the name and address of Borrower and such other information that will allow Lender to identify Borrowers in accordance with the USA PATRIOT Act.

Section 11.19 Right to Perform, Preserve and Protect. If any Credit Party fails to perform any obligation hereunder or under any other Financing Document, Lender itself may, but shall not be obligated to, cause such obligation to be performed at Borrowers’ expense. Lender is further authorized by Borrowers to make expenditures from time to time which Lender, in its reasonable business judgment, deems necessary or desirable to (a) preserve or protect the business conducted by Borrowers, the Collateral, or any portion thereof, and/or (b) enhance the likelihood of, or maximize the amount of, repayment of the Loan and other Obligations. Each Borrower hereby agrees to reimburse Lender on demand for any and all costs, liabilities and obligations incurred by Lender pursuant to this Agreement.

ARTICLE 12 - GUARANTY

Section 12.1 Guaranty. Each Guarantor hereby unconditionally guarantees, as a primary obligor and not merely as a surety, jointly and severally with each other Guarantor when and as due, whether at maturity, by acceleration, by notice of prepayment or otherwise, the due and punctual performance of all of the Obligations. Each 

46

 

payment made by any Guarantor pursuant to this Section 12 shall be made in lawful money of the United States in immediately available funds.

Section 12.2 Payment of Amounts Owed. The Guarantee hereunder is an absolute, unconditional and continuing guaranty of the full and punctual payment and performance of all of the Obligations and not of their collectability only and is in no way conditioned upon any requirement that Lender first attempt to collect any of the Obligations from any Borrower or resort to any collateral security or other means of obtaining payment. In the event of any default by Borrowers in the payment of the Obligations, after the expiration of any applicable cure or grace period, each Guarantor agrees, on demand by Lender (which demand may be made concurrently with notice to Borrowers that the Borrowers are in default of their obligations), to pay the Obligations, regardless of any defense, right of set-off or recoupment or claims which any Borrower or Guarantor may have against Lender. All of the remedies set forth in this Agreement, in any other Financing Agreement or at law or equity shall be equally available to Lender, and the choice by Lender of one such alternative over another shall not be subject to question or challenge by any Guarantor or any other person, nor shall any such choice be asserted as a defense, setoff, recoupment or failure to mitigate damages in any action, proceeding, or counteraction by Lender to recover or seeking any other remedy under this Guarantee, nor shall such choice preclude Lender from subsequently electing to exercise a different remedy.

Section 12.3Certain Waivers by Guarantor. To the fullest extent permitted by law, each Guarantor does hereby:

(a) waive notice of acceptance of this Agreement by Lender and any and all notices and demands of every kind which may be required to be given by any statute, rule or law;

(b) agree to refrain from asserting, until after repayment in full of the Obligations, any defense, right of set-off, right of recoupment or other claim which such Guarantor may have against any Borrower;

(c) waive any defense, right of set-off, right of recoupment or other claim which such Guarantor may have against Lender;

(d) waive any and all rights such Guarantor may have under any anti-deficiency statute or other similar protections;

(e) waive all rights at law or in equity to seek subrogation, contribution, indemnification or any other form of reimbursement or repayment from any Borrower, any other Guarantor or any other person or entity now or hereafter primarily or secondarily liable for any of the Obligations until the Obligations have been paid in full;

(f) waive presentment for payment, demand for payment, notice of nonpayment or dishonor, protest and notice of protest, diligence in collection and any and all formalities which otherwise might be legally required to charge such Guarantor with liability;

(g) waive the benefit of all appraisement, valuation, marshalling, forbearance, stay, extension, redemption, homestead, exemption and moratorium laws now or hereafter in effect;

(h) waive any defense based on the incapacity, lack of authority, death or disability of any other person or entity or the failure of Lender to file or enforce a claim against the estate of any other person or entity in any administrative, bankruptcy or other proceeding;

(i) waive any defense based on an election of remedies by Lender, whether or not such election may affect in any way the recourse, subrogation or other rights of such Guarantor against any Borrower, any other Guarantor or any other person in connection with the Obligations;

(j) waive any defense based on the failure of Lender to (i) provide notice to such Guarantor of a sale or other disposition of any of the security for any of the Obligations, or (ii) conduct such a sale or disposition in a commercially reasonable manner;

(k) waive any defense based on the negligence of Lender in administering this Agreement or the other Financing Documents (including, but not limited to, the failure to perfect any security interest in any Collateral), or 

47

 

taking or failing to take any action in connection therewith, provided, however, that such waiver shall not apply to the gross negligence or willful misconduct of Lender, as determined by the final, non-appealable decision of a court having proper jurisdiction;

(l) waive the defense of expiration of any statute of limitations affecting the liability of suchGuarantor hereunder or the enforcement hereof;

(m) waive any right to file any Claim (as defined below) as part of, and any right to request consolidation of any action or proceeding relating to a Claim with, any action or proceeding filed or maintained by Lender to collect any Obligations of such Guarantor to Lender hereunder or to exercise any rights or remedies available to Lender under the Financing Documents, at law, in equity or otherwise;

(n) agree that Lender shall not have any obligation to obtain, perfect or retain a security interest in any property to secure any of the Obligations (including any mortgage or security interest contemplated by the Financing Documents), or to protect or insure any such property;

(o) waive any obligation Lender may have to disclose to such Guarantor any facts Lender now or hereafter may know or have reasonably available to it regarding the Borrowers or Borrowers’ financial condition, whether or not Lender has a reasonable opportunity to communicate such facts or have reason to believe that any such facts are unknown to such Guarantor or materially increase the risk to such Guarantor beyond the risk such Guarantor intends to assume hereunder;

(p) agree that Lender shall not be liable in any way for any decrease in the value or marketability of any property securing any of the Obligations which may result from any action or omission of Lender in enforcing any part of this Agreement;

(q) waive any defense based on any invalidity, irregularity or unenforceability, in whole or in part, of any one or more of the Financing Documents;

(r) waive any defense based on any change in the composition of Borrowers, and

(s) waive any defense based on any representations and warranties made by such Guarantor herein or by any Borrower herein or in any of the Financing Documents.

For purposes of this section, the term “Claim” shall mean any claim, action or cause of action, defense, counterclaim, set-off or right of recoupment of any kind or nature against Lender, its officers, directors, employees, agents, members, actuaries, accountants, trustees or attorneys, or any affiliate of Lender in connection with the making, closing, administration, collection or enforcement by Lender of the Obligations.

Section 12.4Guarantor’s Obligations Not Affected by Modifications of Financing Documents. Each Guarantor further agrees that such Guarantor’s liability as guarantor shall not be impaired or affected by any renewals or extensions which may be made from time to time, with or without the knowledge or consent of Guarantor for the time for payment of interest or principal or by any forbearance or delay in collecting interest or principal hereunder, or by any waiver by Lender under this Agreement or any other Financing Documents, or by Lenders’ failure or election not to pursue any other remedies it may have against any Borrower or Guarantor, or by any change or modification in the Term Note, this Agreement or any other Financing Document, or by the acceptance by Lender of any additional security or any increase, substitution or change therein, or by the release by Lender of any security or any withdrawal thereof or decrease therein, or by the application of payments received from any source to the payment of any obligation other than the Obligations even though Lender might lawfully have elected to apply such payments to any part or all of the Obligations, it being the intent hereof that, subject to Lenders’ compliance with the terms of this Section 12 and the Financing Documents, each Guarantor shall remain liable for the payment of the Obligations, until the Obligations have been paid in full, notwithstanding any act or thing which might otherwise operate as a legal or equitable discharge of a surety. Each Guarantor further understands and agrees that Lender may at any time enter into agreements with Borrowers to amend, modify and/or increase the principal amount of, interest rate applicable to or other economic and non-economic terms of this Agreement or the other Financing Documents, and may waive or release any provision or provisions of this Agreement or the other Financing Documents, and, with reference to such instruments, may make and enter into any 

48

 

such agreement or agreements as Lender and Borrowers may deem proper and desirable, without in any manner impairing this Guarantee or any of Lender’s rights hereunder or each Guarantor’s obligations hereunder, and each Guarantor’s obligations hereunder shall apply to the this Agreement and other Financing Documents as so amended, modified, extended, renewed or increased.

Section 12.5Reinstatement; Deficiency. This guaranty shall continue to be effective or be reinstated (as the case may be) if at any time payment of all or any part of any sum payable pursuant to this Agreement or any other Financing Document is rescinded or otherwise required to be returned by Lender upon the insolvency, bankruptcy, dissolution, liquidation, or reorganization of any Borrower, or upon or as a result of the appointment of a receiver, intervenor, custodian or conservator of or trustee or similar officer for, any Borrower or any substantial part of its property, or otherwise, all as though such payment to Lender had not been made, regardless of whether Lender contested the order requiring the return of such payment. In the event of the foreclosure of the Financing Documents and of a deficiency, each Guarantor hereby promises and agrees forthwith to pay the amount of such deficiency notwithstanding the fact that recovery of said deficiency against Borrowers would not be allowed by applicable law; however, the foregoing shall not be deemed to require that Lender institute foreclosure proceedings or otherwise resort to or exhaust any other collateral or security prior to or concurrently with enforcing this guaranty.

Section 12.6Subordination of Borrowers’ Obligations to Guarantors; Claims in Bankruptcy.

(a) Any indebtedness of any Borrower to any Guarantor (including, but not limited to, any right of such Guarantor to a return of any capital contributed to a Borrower), whether now or hereafter existing, is hereby subordinated to the payment of the Obligations. Each Guarantor agrees that, until the Obligations have been paid in full, such Guarantor will not seek, accept, or retain for its own account, any payment from any Borrower on account of such subordinated debt. Any payments to any Guarantor on account of such subordinated debt shall be collected and received by such Guarantor in trust for Lender and shall be immediately paid over to Lender on account of the Obligations without impairing or releasing the obligations of such Guarantor hereunder.

(b) Each Guarantor shall promptly file in any bankruptcy or other proceeding in which the filing of claims is required by law, all claims and proofs of claims that such Guarantor may have against any Borrower or any other Guarantor and does hereby assign to Lender or its nominee (and will, upon request of Lender, reconfirm in writing the assignment to Lender or its nominee of) all rights of such Guarantor under such claims. If such Guarantor does not file any such claim, Lender, as attorney‐in‐fact for such Guarantor, is hereby irrevocably authorized to do so in the name of such Guarantor, or in Lender’s discretion, to assign the claim to a designee and cause proof of claim to be filed in the name of Lender’s designee. In all such cases, whether in administration, bankruptcy or otherwise, the person or persons authorized to pay such claim shall pay to Lender the full amount thereof and, to the full extent necessary for that purpose, each Guarantor hereby assigns to Lender all of such Guarantor’s rights to any such payments or distributions to which such Guarantor would otherwise be entitled, such assignment being a present and irrevocable assignment of all such rights.

Section 12.7Maximum Liability. The provisions of this Section 12 are severable, and in any action or proceeding involving any state corporate law, or any state, federal or foreign bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if the obligations of any Guarantor under this Section 12 would otherwise be held or determined to be avoidable, invalid or unenforceable on account of the amount of such Guarantor’s liability under this Section 12, then, notwithstanding any other provision of this Section 12 to the contrary, the amount of such liability shall, without any further action by the Guarantors or Lender, be automatically limited and reduced to the highest amount that is valid and enforceable as determined in such action or proceeding (such highest amount determined hereunder being the relevant Guarantor’s “Maximum Liability”). This Section 12.7 with respect to the Maximum Liability of each Guarantor is intended solely to preserve the rights of Lender to the maximum extent not subject to avoidance under applicable law, and no Guarantor nor any other Person shall have any right or claim under this Section 12.7 with respect to such Maximum Liability, except to the extent necessary so that the obligations of any Guarantor hereunder shall not be rendered voidable under applicable law. Each Guarantor agrees that the Obligations may at any time and from time to time exceed the Maximum Liability of each Guarantor without impairing this guaranty or affecting the rights and remedies of the Lender hereunder, provided that, nothing in this sentence shall be construed to increase any Guarantor’s obligations hereunder beyond its Maximum Liability.

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Section 12.8Guarantor’s Investigation. Each Guarantor acknowledges receipt of a copy of each of this Agreement and the other Financing Documents. Each Guarantor has made an independent investigation of the other Credit Parties and of the financial condition of the other Credit Parties. Lender has not made and Lender does not make any representations or warranties as to the income, expense, operation, finances or any other matter or thing affecting any Credit Party nor has Lender made any representations or warranties as to the amount or nature of the Obligations of any Credit Party to which this Section 12 applies as specifically herein set forth, nor has Lender or any officer, agent or employee of Lender or any representative thereof, made any other oral representations, agreements or commitments of any kind or nature, and each Guarantor hereby expressly acknowledges that no such representations or warranties have been made and such Guarantor expressly disclaims reliance on any such representations or warranties

Section 12.9Termination. The provisions of this Section 12 shall remain in effect until the payment and satisfaction in full, in immediately available funds, of the Term Loan and other Obligations and termination of this Agreement.

Section 12.10Representative. Each Guarantor hereby designates Borrower Representative and its representatives and agents on its behalf for the purpose of giving and receiving all notices and other consents hereunder or under any other Financing Document and taking all other actions on behalf of such Guarantor under the Financing Documents. Borrower Representative hereby accepts such appointment.

[SIGNATURES APPEAR ON FOLLOWING PAGE(S)]

 

 

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IN WITNESS WHEREOF, intending to be legally bound, and intending that this Agreement constitute an agreement executed under seal, each of the parties have caused this Agreement to be executed under seal the day and year ftrst above mentioned.

 

	
BORROWERS:
	
ALPHATEC HOLDINGS, INC.,

	
 
	
a Delaware corporation

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Jeffrey Black

	
 
	
Name:
	
Jeffrey Black

	
 
	
Title:
	
Chief Financial Officer

	
 
	
Address:
	
 

	
 
	
5818 El Camino Real

	
 
	
Carlsbad, CA 92008

	
 
	
Attn:
	
 

	
 
	
Email:
	
 

	
 
	
 

	
 
	
 

	
 
	
ALPHATEC SPINE, INC., 

	
 
	
a California corporation

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Jeffrey Black

	
 
	
Name:
	
Jeffrey Black

	
 
	
Title:
	
Chief Financial Officer

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
ALPHATEC SPINE, INC.,

	
 
	
 
	
a California corporation

	
 
	
 
	
 

	
 
	
By:
	
/s/ Jeffrey Black

	
 
	
Name:
	
Jeffrey Black

	
 
	
Title:
	
Chief Financial Officer

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
SAFEOP SURGICAL, INC.,

	
 
	
 
	
a Delaware corporation

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Jeffrey Black

	
 
	
Name:
	
Jeffrey Black

	
 
	
Title:
	
Chief Financial Officer

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

 

[Signatures Continue on Following Page]

Signature Page to Credit Agreement

 

 

 

	
LENDER:
	
SQUADRON MEDICAL FINANCE SOLUTIONS LLC, as
	
	
 
	
Lender
	
	
 
	
By:
	
/s/ David R. Pelizzon

	
 
	
Name:
	
David R. Pelizzon

	
 
	
Title:
	
President

	
 
	
 
	
 

	
 
	
Address:

	
 
	
18 Hartford Avenue 

	
 
	
Granby, CT 06035

	
 
	
Email: dpeli zzon@sqdncap.com

	
 
	
 
	
 

	
 
	
Payment Account Designation:

	
 
	
See attached

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

 

 

Signature Page to Credit Agreement

 

 

 

EXHIBITS

 

	
EXHIBITS
	
 

	
 
	
 

	
Exhibit A
	
List of Guarantors

	
 
	
 

	
Exhibit B
	
Compliance Certificate

	
 
	
 

	
Exhibit C
	
Form of Payment Notification

 

 

 

 

Exhibit A to Credit Agreement

LIST OF GUARANTORS

 

As of the Closing Date, none.

 

US_AVTUVE-143086127

 

Exhibit B to Credit Agreement

COMPLIANCE CERTIFICATE

 

This Compliance Certificate is given by________________________________________________, a Responsible Officer of Alphatec Holdings, Inc., a Delaware corporation (the “Borrower Representative”), pursuant to that certain Credit, Security and Guaranty Agreement, dated as of _____ _____, 2018, by and among the Borrower Representative and Alphatec Spine, Inc., a California corporation, and SafeOp Surgical, Inc., a Delaware corporation, and any additional Borrower that may hereafter be added thereto (each, a “Borrower”, and collectively, “Borrowers”), the other Credit Parties party thereto, and Squadron Medical Finance Solutions, LLC, as Lender (as such agreement may have been amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”). Capitalized terms used herein without definition shall have the meanings set forth in the Credit Agreement.

 

The undersigned Responsible Officer hereby certifies to Lender that:

 

a) I have reviewed the terms of the Credit Agreement and have made, or caused to be made under my supervision, a review in reasonable detail of the transactions and conditions of the Borrower Representative and its Consolidated Subsidiaries during the accounting period covered by such financial statements, and such review has not disclosed the existence during or at the end of such accounting period, and I have no knowledge of the existence as of the date hereof, of any condition or event that constitutes a Default or an Event of Default, except as set forth in Schedule 1 hereto, which includes a description of the nature and period of existence of such Default or an Event of Default and what action Borrowers have taken, are undertaking and propose to take with respect thereto;

 

b) except as noted on Schedule 2 attached hereto, Schedule 9.2 to the Credit Agreement contains a complete and accurate list of (i) each chief executive office and principal place of business of each Credit Party and each of their respective Subsidiaries and (ii) all addresses (including warehouses) at which any of the Collateral is located and/or books and records of any Credit Party regarding any of the Collateral are kept, and Schedule 2 specifically notes any changes in the names under which Credit Parties and each of their respective Subsidiaries conduct business;

 

c) except as noted on Schedule 3 attached hereto, the undersigned has no knowledge of (i) any federal or state tax liens having been filed against the Credit Parties or any Collateral, or (ii) any failure of any Credit Party to make required payments of withholding or other tax obligations of such Credit Party during the accounting period to which the attached statements pertain or any subsequent period;

 

d) except as noted on Schedule 4 attached hereto or Schedule 3.6 to the Credit Agreement, the undersigned has no knowledge of (i) any current, pending or threatened litigation against the Credit Parties which would reasonably be expected to have a Material Adverse Effect with respect to Borrowers or any other Credit Party or which in any manner calls into question the validity or enforceability of any Financing Document or (ii) any default by the Credit Parties under any Material Contract to which such Credit Party is a party; provided, however, that the information required pursuant to this clause (d) shall be deemed to have been delivered if the Credit Parties deliver to Lender that certain litigation letter or disclosure statement delivered to Borrower Representative’s independent public accountants on a quarterly basis at substantially the same time such letter or disclosure statement is delivered to Borrower Representatives independent public accountants;

 

e) [except as noted on Schedule 5 attached hereto, no Credit Party has acquired, by purchase, by the approval or granting of any application for registration (whether or not such application was previously disclosed to Lender by Borrowers) or otherwise, any Intellectual Property that is registered with any United States or foreign Governmental Authority, or has filed with any such United States or foreign Governmental Authority, any new application for the registration of any Intellectual Property, or acquired rights under a license as a licensee with respect to any such registered Intellectual Property (or any such application for the registration of Intellectual Property) owned by another Person, that has not previously been reported to Lender on Schedule 3.19 to the Credit Agreement or any Schedule 5 to any previous Compliance Certificate delivered by the Borrower Representative to Lender;] [To be included in the Compliance Certificate provided at the end of each Fiscal Quarter only]

 

 

US_AVTUVE-143086127

 

f) except as noted on Schedule 6 attached hereto and except in the ordinary course of business, no Credit Party has acquired, since the Closing Date, by purchase or otherwise, any Chattel Paper, Letter of Credit Rights, Instruments, Documents or Investment Property that has not previously been reported to Lender on any Schedule 6 to any previous Compliance Certificate delivered by Borrower Representative to Lender;

 

g) [except as noted on Schedule 7 attached hereto, no Credit Party is aware of any commercial tort claim that has not previously been reported to Lender on any Schedule 7 to any previous Compliance Certificate delivered by Borrower Representative to Lender; and] [To be included in the Compliance Certificate provided at the end of each Fiscal Quarter only]

 

h) Borrowers are in compliance with the covenants contained in Article 6 of the Credit Agreement, as demonstrated by the calculation of such covenants as set forth in the attached worksheets [see attached worksheets], and such calculations and the certifications contained therein are true, correct and complete;

The foregoing certifications and computations are made as of ________________________________, 20___ (end of month) and as of _____________, 20___ 

 

	
 
	
Sincerely,

	
 
	
ALPHATEC HOLDINGS, INC., as

	
 
	
Borrower Representative

	
 
	
By:

	
 
	
Name:

	
 
	
Title:

 

 

 

 

US_AVTUVE-143086127

 

Worksheet for Calculation of EBITDA

 

	
EBITDA for the applicable Defined Period is calculated as follows:
	
 

	
 
	
 

	
Net income (or loss) for the Defined Period of Borrowers and their Consolidated Subsidiaries, but excluding: (a) the income (or loss) of any Person (other than Subsidiaries of Borrowers) in which Borrowers or any of their Subsidiaries has an ownership interest unless received by Borrower or their Subsidiary in a cash distribution; and (b) the income (or loss) of any Person accrued prior to the date it became a Subsidiary of Borrowers or is merged into or consolidated with

Borrowers
	
 

	
 

	
 

	
 

	
$
	
 

	
 
	
 
	
 
	
 

	
Plus:
	
Any provision for (or minus any benefit from) income and franchise taxes deducted in the determination of net income for the Defined Period
	
$
	
 

	
 
	
 
	
 
	
 

	
Plus:
	
Interest expense, net of interest income, deducted in the determination of net income for the Defined Period
	
$
	
 

	
 
	
 
	
 
	
 

	
Plus:
	
Stock-based compensation expense
	
$
	
 

	
 
	
 
	
 
	
 

	
Plus:
	
Amortization and depreciation deducted in the determination of net income for the Defined Period (including impairment charges to goodwill and write downs of intangible assets)
	
$
	
 

	
 
	
 
	
 
	
 

	
Plus:
	
Non-recurring expenses approved by Agent (including transaction expenses and restructuring charges related to acquisitions)
	
$
	
 

	
 
	
 
	
 
	
 

	
Plus:
	
Any effect for (or minus any benefit from) foreign currency deducted in the determination of net income for the Defined Period
	
$
	
 

	
 
	
 
	
 
	
 

	
EBITDA for the Defined Period:
	
$
	
 

	
 
	
 
	
 
	
 

	
 
	
Worksheet for Calculation of Fixed Charges
	
 
	
 

	
 
	
 
	
 
	
 

	
Fixed Charges for the applicable Defined Period is calculated as follows:
	
 
	
 

	
 
	
 
	
 

	
Interest expense ($_______), net of interest income ($______), interest paid in kind ($____) and amortization of capitalized fees and expenses incurred to consummate the transactions contemplated by the Financing Documents and included in interest expense ($____), included in the determination of net income of Borrowers and their Consolidated Subsidiaries for the Defined Period (“Total Interest Expense”)
	
 
	
 

	
 
	
 

	
$
	
 

	
 
	
 
	
 

	
Plus:
	
Any provision for (or minus any benefit from) income or franchise taxes included in the determination of net income for the Defined Period *
	
$
	
 

	
 
	
 
	
 
	
 

	
Plus:
	
Payments of principal and interest for the Defined Period with respect to all Debt (including the portion of scheduled payments under capital leases allocable to principal and excluding scheduled repayments of Revolving Loans and other Debt subject to reborrowing to the extent not accompanied by a concurrent and permanent reduction of the Revolving Loan Commitment (or equivalent loan commitment))
	
$
	
 

	
 
	
 
	
 
	
 

	
Plus:
	
Permitted Distributions
	
$
	
 

	
 
	
 
	
 
	
 

	
Fixed Charges for the applicable Defined Period:
	
$
	
 

	
 
	
 
	
 
	
 

 

 

	
Worksheet for Calculation of Operating Cash Flow

	
 
	
 
	
 

	
Operating Cash Flow for the applicable Defined Period is calculated as follows:
	
 
	
 

	
 
	
 
	
 
	
 

	
EBITDA for the Defined Period (calculated pursuant to the EBITDA Worksheet)
	
$
	
 

	
 
	
 
	
 
	
 

	
Minus:
	
Unfinanced capital expenditures for the Defined Period
	
$
	
 

 

 

 

 

	
Minus:
	
To the extent not already reflected in the calculation of EBITDA, other capitalized costs, defined as the gross amount paid in cash and capitalized during the Defined Period, as long term assets, other than amounts capitalized during the Defined Period as capital expenditures for property, plant and equipment or similar fixed asset accounts
	
$
	
 

	
 
	
 
	
 

	
Operating Cash Flow for the Defined Period:
	
$
	
 

	
 

	
Covenant Compliance:

	
 
	
 
	
 
	
 

	
(To be included in the Compliance Certificate for each month ending after April 30, 2020.)

	
 
	
 
	
 

	
Fixed Charge Coverage Ratio for the Defined Period
	
 _____ to 1.0

	
 
	
 

	
Minimum Fixed Charge Coverage Ratio for the Defined Period
	
[***] to 1.0

	
 
	
 
	
 

	
In Compliance
	
 Yes / No

	
 
	
 
	
 
	
 

	
Worksheet for Calculation of Liquidity

	
 
	
 
	
 
	
 

	
(To be included in the Compliance Certificate for each month ending prior to March 31, 2020.)

	
 
	
 
	
 
	
 

	
Balance Sheet Cash
	
$
	
 

	
 
	
 
	
 
	
 

	
Plus:
	
Revolving Loan Availability
	
$
	
 

	
 
	
 
	
 
	
 

	
Liquidity
	
 
	
$
	
 

	
 
	
 
	
 
	
 

	
Covenant Compliance:

	
 
	
 
	
 
	
 

	
Liquidity
	
 
	
 
	
 

	
 
	
 
	
> $[***]

	
In Compliance
	
Yes / No

 

US_ACTIVE-143086127

 

Exhibit C to Credit Agreement

 

PAYMENT NOTIFICATION

 

This Payment Notification is given by_________________________, a Responsible Officer of Alphatec Holdings, Inc., a Delaware corporation (the “Borrower Representative”), pursuant to that certain Credit, Security and Guaranty Agreement, dated as of [____ ___], 2018, by and among the Borrower Representative, Alphatec Spine, Inc., a California corporation, and SafeOp Surgical, Inc., a Delaware corporation, and any additional Borrower that may hereafter be added thereto (each, a “Borrower”, and collectively, “Borrowers”), and Squadron Medical Finance Solutions, LLC, a Delaware limited liability company, as Lender (as such agreement may have been amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”). Capitalized terms used herein without definition shall have the meanings set forth in the Credit Agreement.

 

Please be advised that funds in the amount of $__________will be wire transferred to Lender on__________________, 20 ___. Such funds shall constitute [an optional] [a mandatory] prepayment of the Term Loans, with such prepayments to be applied in the manner specified in Section 2.1(c). [Such mandatory prepayment is being made pursuant to Section _____________Credit Agreement.] of the

 

Note: Funds must be received in the Payment Account by no later than 12:00 noon Eastern time for same day application

 

IN WITNESS WHEREOF, the undersigned officer has executed and delivered this Payment Notification this ________ day of _______, 20 ____.

 

	
Sincerely,

	
ALPHATEC HOLDINGS, INC.,

	
as Borrower Representative

	
 
	
 

	
 
	
 

	
By: 
	
 

	
Name: 
	
 

	
Title:
	
 

 

US_ACTIVE-143086127atec-ex1027_209.htm

 

Exhibit 10.27

Execution Version

INTERCREDITOR AGREEMENT

This INTERCREDITOR AGREEMENT (this “Agreement”), dated as of November 6, 2018, is entered into by and between MIDCAP FUNDING IV TRUST, in its capacity as agent under the ABL Documents (as defined below) (including its successors and assigns in such capacity from time to time, “ABL Agent”) and SQUADRON MEDICAL FINANCE SOLUTIONS LLC, as lender under the Term Loan Documents (as defined below) (including its successors and assigns in such capacity from time to time, including any successor pursuant to any initial or subsequent Refinancing of the Term Loan Credit Agreement, “Term Lender”), and is acknowledged and agreed by the ABL Borrowers, the Term Loan Borrowers and the other Obligors. 

RECITALS:

WHEREAS, ALPHATEC HOLDINGS, INC., a Delaware corporation (“Holdings”), ALPHATEC SPINE, INC., a California corporation (“Alphatec Spine”), SAFEOP SURGICAL INC., a Delaware corporation (“SafeOp” and each of Holdings, Alphatec Spine, SafeOp, together with their successors and assigns, including any receiver, trustee or debtor-in-possession and each other Person from time to time party thereto as a borrower, each, an “ABL Borrower,” and collectively, the “ABL Borrowers”), the other Credit Parties (as defined therein) (together with their successors and assigns, including any receiver, trustee or debtor-in-possession, the “ABL Credit Parties”), the Lenders (as defined therein) (together with their successors and assigns, including any successor pursuant to any initial or subsequent Refinancing of the ABL Credit Agreement, the “ABL Lenders”) and the ABL Agent have entered into that certain Amended and Restated Credit, Security and Guaranty Agreement, dated as of August 30, 2013 (as amended, restated or otherwise modified from time to time, the “ABL Credit Agreement”), pursuant to which the ABL Lenders have made and will from time to time make loans and provide other financial accommodations to the ABL Borrowers; 

WHEREAS, Holdings and each of the other ABL Borrowers (together with their successors and assigns, including any receiver, trustee or debtor-in-possession and each other Person from time to time party thereto as a borrower, each, a “Term Loan Borrower,” and collectively, the “Term Loan Borrowers”), the other Credit Parties (as defined therein) (together with their successors and assigns, including any receiver, trustee or debtor-in-possession, the “Term Credit Parties”) and the Term Lender have entered into that certain Credit, Security and Guaranty Agreement, dated as of even date herewith (as amended or otherwise modified from time to time, the “Term Loan Credit Agreement”), pursuant to which the Term Lender has made a term loan and provided other financial accommodations to the Term Loan Borrowers; 

WHEREAS, the ABL Borrowers have granted to the ABL Agent, for the benefit of the ABL Creditors, a Lien on substantially all of their assets, all as more particularly described in the ABL Documents and the Term Loan Borrowers have granted to the Term Lender, for the benefit of the Term Loan Creditors, a Lien on substantially all of their assets, all as more particularly described in the Term Loan Documents; WHEREAS, it is the intent of the parties hereto, including the ABL Agent on behalf of the ABL Credit Parties and the Term Lender on behalf of the Term Loan Creditors by its or its representative’s acknowledgement signature hereto, that the ABL Obligations (as defined below) are and will continue to be secured by first priority liens in favor of the ABL Creditors on the ABL Priority Collateral (as defined below) and second priority liens in favor of the ABL Creditors on the Term Loan Priority Collateral (as defined below); 

WHEREAS, it is the intent of the parties hereto, including the ABL Agent on behalf of the ABL Credit Parties and the Term Lender on behalf of the Term Credit Parties by its or its representative’s acknowledgement signature hereto, that the Term Loan Obligations (as defined below) are and will continue to be secured by first priority liens in favor of the Term Loan Creditors on the Term Loan Priority Collateral and second priority liens in favor of the Term Loan Creditors on the ABL Priority Collateral; and WHEREAS, the ABL Agent, on behalf of the ABL Creditors, and the Term Lender, on behalf of the Term Loan Creditors, wish to set forth their agreement as to certain of their respective rights and obligations with respect to the assets of the Borrowers and the other Obligors and their understanding relative to their respective positions in certain assets of the Borrowers and the other Obligors.  

 

 

 

AGREEMENT

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties hereto agree as follows:

	
Section 1.
	
Definitions.

1.1General Terms. As used in this Agreement, the following terms shall have the respective meanings indicated below, such meanings to be applicable equally to both the singular and the plural forms of the terms defined: 

“ABL Agent” has the meaning set forth in the preamble to this Agreement. 

“ABL Collateral Documents” has the meaning set forth in Section 3.2(b). 

“ABL Credit Agreement” has the meaning set forth in the recitals to this Agreement.

“ABL Creditors” means the ABL Agent, the ABL Lenders and the other Persons from time to time holding ABL Obligations. 

“ABL Default” means any “Event of Default” or similar term, as such term is defined under the ABL Documents. 

“ABL Default Notice” means, with respect to any ABL Default, a written notice from the ABL Agent to the Term Lender indicating that an ABL Default has occurred, and describing such ABL Default in reasonable detail. 

“ABL Documents” means the ABL Credit Agreement, all Financing Documents (as such term is defined in the ABL Credit Agreement) and all other agreements, instruments and other documents at any time executed or delivered by any Obligor or any other Person with, to or in favor of the ABL Agent or any other ABL Creditor in connection therewith or related thereto, including such documents evidencing initial and subsequent Refinancings of the ABL Obligations, in each case, as the same may be amended, amended and restated, supplemented, modified, replaced, substituted, renewed or Refinanced from time to time in accordance with the provisions of the Agreement. 

“ABL Lenders” has the meaning set forth in the recitals hereto.

“ABL Obligations” means all Obligations of the Obligors under (a) the ABL Credit Agreement and the other ABL Documents, including the guaranties under the ABL Documents, and (b)each other agreement or instrument granting or providing for the perfection of a Lien securing any of the foregoing. Notwithstanding any other provision hereof, the term “ABL Obligations” will include all accrued interest, fees, costs, and other charges incurred under the ABL Credit Agreement and the other ABL Documents, whether incurred before or after the commencement of an Insolvency Proceeding, and whether or not allowed or allowable in an Insolvency Proceeding. To the extent that any payment with respect to the ABL Obligations (whether by or on behalf of any Obligor, as proceeds of security, enforcement of any right of set-off, or otherwise) is declared to be fraudulent or preferential in any respect, set aside, avoided, or required to be paid to a debtor in possession, trustee, receiver, or similar Person, then the obligation or part thereof originally intended to be satisfied will be deemed to be reinstated and outstanding as if such payment had not occurred.

“ABL Priority Collateral” means all of ABL Borrowers’ right, title and interest in and to the following Collateral, whether now owned or hereafter created, acquired or arising, and all proceeds and products thereof: (A) (1) all of ABL Borrowers’ Accounts, other than Accounts which constitute identifiable proceeds of Term Loan Priority Collateral, (2) all of the following arising from or in connection with all of ABL Borrowers’ Accounts, other than Accounts which constitute identifiable proceeds of Term Loan Priority Collateral: (i) money, (ii) contract rights, (iii) chattel paper, (iv) documents, (v) general intangibles (including, but not limited to payment intangibles), (vi) deposit accounts (excluding (1) property contained in any such deposit account, which property constitutes Term Loan Priority Collateral or identifiable proceeds of the Term Loan Priority Collateral, and (2) any Term Loan Proceeds 

2

 

Account, but excluding the property contained in any Term Loan Proceeds Account, which property constitutes ABL Priority Collateral or identifiable proceeds of the ABL Priority Collateral), (vii) securities accounts (excluding (1) property contained in any such securities account, which property constitutes Term Loan Priority Collateral or identifiable proceeds of the Term Loan Priority Collateral, and (2) any Term Loan Proceeds Account, but excluding the property contained in any Term Loan Proceeds Account, which property constitutes ABL Priority Collateral or identifiable proceeds of the ABL Priority Collateral), (viii) securities arising from such Accounts (excluding, for the avoidance of doubt, any Stock issued by any Grantor), (ix) investment property arising from such Accounts (excluding, for the avoidance of doubt, any Stock issued by any Grantor), and (x) Instruments arising from such Accounts, and (3) all of ABL Borrowers’ rights, remedies, security, Liens and supporting obligations, in, to and in respect of the foregoing (including, without limitation, rights of stoppage in transit, replevin, repossession and reclamation and other rights and remedies of an unpaid vendor, lienor or secured party, guarantees or other contracts of suretyship with respect to the Accounts, deposits or other security for the obligation of any Account Debtor); (B) to the extent not listed above, all of ABL Borrowers’ now owned or hereafter acquired deposit accounts or securities accounts into which Accounts or the proceeds of Accounts or other ABL Priority Collateral are deposited (including the Lockbox Account (as defined in the ABL Credit Agreement) but excluding the property contained in any securities account, which property constitutes Term Loan Priority Collateral or identifiable proceeds of the Term Loan Priority Collateral), and all signature cards, account agreements and other documents relating to such deposit accounts or securities accounts; (C) all of ABL Borrowers’ right, title and interest in, to and in respect of all goods to the extent that by sale or consumption have resulted in Accounts, including, without limitation, all goods described in invoices or other documents or instruments with respect to, or otherwise representing or evidencing, any Account; (D) all other property of every kind and description with respect to, evidencing or relating to its Accounts, including, without limitation, all existing and future customer lists, choses in action, claims, books, records, ledger cards, contracts, licenses, formulae, tax and other types of refunds, returned and unearned insurance premiums, rights and claims under insurance policies, and computer programs, tapes, programs, discs, information, software, records, and data, all computers, word processors, printers, switches, interfaces, source codes, mask works, software, web servers, website service contracts, internet connection contract or line lease, website hosting service contract, website license agreements, back-up copies of website content, contracts with website advertisers, scripts, codes or Active-X controls, technology escrow agreements, website content development agreements, all rights, of whatever form, in and to domain names, instructional material, and connectors and all parts, accessories, additions, substitutions, or options together with all property or equipment used in connection with any of the above or which are used to operate or cause to operate any features, special applications, format controls, options or software of any or all of the above-mentioned items, solely to the extent the same relates to the Accounts; and (E) any and all claims, rights and interests in any of the above and all substitutions for, additions, attachments, accessories, accessions and improvements to and replacements, products, proceeds and insurance proceeds of any or all of the foregoing, irrespective of whether such proceeds are deposited into a deposit account and/or are transferred from one deposit account to another deposit account and all supporting obligations of all of the foregoing. 

“Affiliate” means, with respect to any Person, each officer, director, general partner or joint-venturer of such Person and any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person. For purpose of this definition, “control” means the possession of either (a) the power to vote, or the beneficial ownership of, 5% or more of the voting securities of such Person or (b) the power to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise. 

“Agreement” has the meaning set forth in the preamble hereof. 

“Assignment” has the meaning set forth in Section 5.1. 

“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy”, as the same may be amended, modified or supplemented from time to time, and any successor statute thereto. 

“Bankruptcy Law” means the Bankruptcy Code and any other federal, state or foreign bankruptcy, insolvency, receivership or similar law affecting creditors’ rights or any other or similar proceedings seeking any stay, reorganization, arrangement, composition or readjustment of obligations or indebtedness. 

“Borrower” and “Borrowers” means the ABL Borrowers and the Term Loan Borrowers.

3

 

“Business Day” means any day except a Saturday, Sunday or other day on which either the New York Stock Exchange is closed, or on which commercial banks in Washington, DC and New York City are authorized by law to close. 

“Collateral” means all assets, property and interests in property and proceeds thereof now owned or hereafter acquired by the Obligors in or upon which a Lien (including any Liens granted in an Insolvency Proceeding) is granted or required or purported to be granted by such Obligor in favor of any Secured Creditor as security for all or any part of the Obligations whether or not such Lien is valid, perfected or enforceable. 

“Credit Party” has the meaning set forth in the recitals hereof. “Defaulting Creditor” has the meaning set forth in Section 5.6(c).

“DIP Financing” means the obtaining of credit or incurring debt secured by Liens on all or any portion of the Collateral pursuant to section 364 of the Bankruptcy Code (or similar Bankruptcy Law). 

“DIP Liens” has the meaning set forth in Section 6.2.

“Discharge of ABL Obligations” means (a) actual payment in full in cash of the principal of and interest (including interest accruing on or after the commencement of an Insolvency Proceeding, whether or not such interest would be allowed or allowable in such proceeding) on all outstanding Indebtedness (as defined in the ABL Credit Agreement) included in the ABL Obligations, (b) actual payment or, in the case of contingent obligations, cash collateralization in full in cash of all other ABL Obligations (including, without duplication of clause (d) below, indemnification obligations in respect of known contingencies and fees, costs or charges accruing on or after the commencement of an Insolvency Proceeding, whether or not such fees, costs or charges would be allowed or allowable in the proceeding) that are due and payable or otherwise accrued and owing at or prior to the time the amounts referenced in clause (a) above are paid (other than contingent indemnification Obligations for which no claim or demand for payment, whether oral or written, has been made at such time), and (c) no Person has any further right to obtain any loans, bankers’ acceptances, or other extensions of credit under the documents relating to such ABL Obligations. 

“Discharge of Term Loan Obligations” means (a) actual payment in full in cash of the principal of and interest (including interest accruing on or after the commencement of an Insolvency Proceeding, whether or not such interest would be allowed or allowable in such proceeding) on all outstanding Indebtedness included in the Term Loan Obligations, (b) actual payment in full in cash of all other Term Loan Obligations (including indemnification obligations in respect of known contingencies and fees, costs or charges accruing on or after the commencement of an Insolvency Proceeding, whether or not such fees, costs or charges would be allowed or allowable in the proceeding) that are due and payable or otherwise accrued and owing at or prior to the time such principal and interest are paid (other than contingent indemnification Obligations for which no claim or demand for payment, whether oral or written, has been made at such time), (c) termination or expiration of all commitments to extend credit that would be Term Loan Obligations, and (d) no Person has any further right to obtain any loans or other extensions of credit under the documents relating to such Term Loan Obligations. 

“Disposition” means any sale, lease, exchange, transfer or other disposition, and “Dispose” and “Disposed of” shall have correlative meanings. 

“Distribution” means, with respect to any indebtedness or obligation, (a) any payment or distribution by any Person of cash, securities or other property, by setoff or otherwise, on account of such indebtedness or obligation or (b) any redemption, purchase or other acquisition of such indebtedness or obligation by any Person. 

“Documents” means the ABL Documents and the Term Loan Documents, or any of them.

“Enforcement Action” means (a) to take any action to foreclose, execute, levy, or collect on, take possession or control (by set off or otherwise) of, sell or otherwise realize upon (judicially or non-judicially), or lease, license, or otherwise dispose of (whether publicly or privately), any Collateral, or otherwise exercise or enforce remedial rights with respect to any Collateral under the ABL Documents or the Term Loan Documents (including by 

4

 

way of set-off, recoupment, notification of a public or private sale or other disposition pursuant to the UCC or other applicable law, notification to account debtors, notification to depositary banks under deposit account control agreements, securities intermediaries under securities accounts or commodities intermediaries under commodities accounts, or exercise of rights under landlord consents, bailee waivers or similar agreements, if applicable, but excluding the execution and delivery of documentation solely to obtain control (as defined in Section 3.3(a)) over deposit accounts or securities accounts to the extent permitted by Section 3.3), (b) to, or to enter into (or, if each of the ABL Agent consents thereto as to ABL Priority Collateral and the Term Lender consents thereto as to Term Loan Priority Collateral after the occurrence and during the continuation of an Event of Default, any Obligor enters into) any agreement in order to, have a third party to, solicit bids to effect the liquidation or disposition of Collateral or to engage or retain sales brokers, marketing agents, investment bankers, accountants, appraisers, auctioneers, or other third Persons for the purposes of marketing, promoting, or selling any Collateral, (c) to receive a transfer of any Collateral (other than a payment in respect of Obligations initiated by a Borrower while no Event of Default is continuing) in satisfaction of Indebtedness or any other Obligation secured thereby or make a “credit bid” for the purpose of doing so (whether or not in an Insolvency Proceeding), (d) to notify account debtors to make payments to such Secured Creditor or its agents, (e) to otherwise enforce a security interest or exercise another right or remedy, as a secured creditor or an unsecured creditor, pertaining to the Collateral at law, in equity, or pursuant to the ABL Documents or Term Loan Documents (including exercising voting rights in respect of equity or debt interests comprising any of the Collateral), (f) to effect the Disposition of any Collateral by any Obligor after the occurrence and during the continuation of an Event of Default, (g) to take any other remedial actions as a Secured Creditor against any Collateral, (h) to commence any legal proceedings or actions against or with respect to any Obligor or any of such Obligor’s assets for the purpose of effecting or facilitating any of the actions described in clauses (a) through (g) above, or (i) to commence any Insolvency Proceeding against any Obligor; provided, however, the imposition of any default rate of interest in accordance with the ABL Documents and/or the Term Loan Documents, as applicable, shall not, in and of itself, constitute an “Enforcement Action”. 

“Event of Default” means each “Event of Default” or similar term, as such term is defined in any ABL Document or any Term Loan Document. 

“Excess ABL Obligations” means any excess above the sum of (a) the Maximum ABL Amount, and (b) any principal loaned or advanced pursuant to DIP Financing by the ABL Creditors in excess of the Maximum ABL Amount, but subject to the additional principal amount provided for under to Section 6.2(C), as applicable, plus any interest, fees or other amounts payable under the ABL Credit Agreement or other ABL Loan Documents solely with respect to such excess. 

“Governmental Authority” means any nation, sovereign or government, any state or other political subdivision thereof, any agency, authority or instrumentality thereof and any entity or authority exercising executive, legislative, taxing, judicial, regulatory or administrative functions of or pertaining to government, including any central bank, stock exchange, regulatory body, arbitrator, public sector entity, supra-national entity (including the European Union and the European Central Bank) and any self-regulatory organization (including the National Association of Insurance Commissioners). 

“Indemnified ABL Person” has the meaning set forth in Section 5.1.

“Insolvency Proceeding” means, as to any Obligor, any of the following: (a) any case, action or proceeding before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors, or (b) any general assignment for the benefit of creditors, composition, marshaling of assets for creditors, or other, similar arrangement in respect of its creditors generally or any substantial portion of its creditors; in each case in (a) and (b) above, undertaken under U.S. federal, state or foreign law, including the Bankruptcy Code. 

“Junior Adequate Protection Liens” has the meaning set forth in Section 6.3(b).

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment, charge, deposit arrangement, encumbrance, easement, lien (statutory or otherwise), security interest or other security arrangement and any other preference, priority or preferential arrangement of any kind or nature whatsoever, including any conditional 

5

 

sale contract or other title retention agreement, the interest of a lessor under a capital lease and any synthetic or other financing lease having substantially the same economic effect as any of the foregoing. 

“Maximum ABL Amount” means the sum of (a) $22,500,000 less permanent reductions of commitments under the revolving credit facility after the date hereof under the ABL Credit Agreement (excluding any permanent reductions in such commitments resulting from the commencement of any Insolvency Proceeding or resulting from the exercise by any or all of the ABL Creditors of their right to reduce or terminate such commitments following the occurrence and during the continuance of any ABL Default), so long as the principal amount of any revolving credit advances in excess of the revolving credit commitments as so reduced, and accrued, unpaid interest thereon, have been paid in full, excluding reductions resulting from a Refinancing or a “roll-up” of such Obligations in connection with a DIP Financing, plus (b) unpaid amounts in respect of interest, indemnities, fees (including, without limitation, prepayment and deferred origination fees), costs and premium (if any) in respect of any of the foregoing (including any such amounts that have been paid in-kind or capitalized).  

“New ABL Agent” has the meaning set forth in Section 4.4(a). 

“New ABL Documents” has the meaning set forth in Section 4.4(a). 

“New ABL Obligations” has the meaning set forth in Section 4.4(a). 

“New Term Lender” has the meaning set forth in Section 4.4(b). 

“New Term Loan Documents” has the meaning set forth in Section 4.4(b). 

“New Term Loan Obligations” has the meaning set forth in Section 4.4(b).

“Obligations” means with respect to any Obligor, all amounts, obligations, liabilities, covenants and duties of every type and description owing by such Obligor to any Secured Creditor arising out of, under, or in connection with, any agreement, whether direct or indirect (regardless of whether acquired by assignment), absolute or contingent, due or to become due, whether liquidated or not, now existing or hereafter arising and however acquired, and whether or not evidenced by any instrument or for the payment of money (including all interest, fees, and charges whether or not accruing after the filing of any Insolvency Proceeding with respect to any Obligations, whether or not a claim for such post-filing or post-petition interest, fees, and charges is allowed or allowable in any such proceeding), including all other fees, expenses (including fees, charges and disbursement of counsel), interest, commissions, charges, costs, disbursements, indemnities and reimbursement of amounts paid and other sums chargeable to such Obligor under any agreement. 

“Obligor” means each Borrower, each Credit Party and each other Person that is a subsidiary of Holdings liable on or in respect of the ABL Obligations or Term Loan Obligations or that has granted or purported to grant a Lien on any assets as Collateral or to secure, directly or indirectly, the ABL Obligations or Term Loan Obligations, together with such Person’s successors and assigns, including a receiver, trustee or debtor-in-possession on behalf of such Person. 

“Party” means a party to this Agreement (other than the Obligors).

“Permitted ABL Disposition” shall mean a Disposition (excluding any collection of any ABL Priority Collateral consisting of an obligation) of any Collateral in connection with an Enforcement Action by any ABL Creditors and, with respect to a Term Loan Priority Collateral, after the expiration of the applicable Standstill Period, and in all cases, subject to the terms of Section 3.1 of this Agreement, which Disposition is commercially reasonable in all respects and undertaken on an arm’s length basis with parties that are not Affiliates of any of the ABL Creditors; provided, however, that the ABL Creditors may effect such Disposition through a “credit bid” so long as upon the closing of the Disposition, the Term Loan receive cash in an amount sufficient to effect a Discharge of Term Loan Obligations. 

6

 

“Permitted Term Loan Disposition” shall mean a Disposition (excluding any collection of any Term Loan Priority Collateral consisting of an obligation) of any Collateral in connection with an Enforcement Action by any Term Loan Creditors and, with respect to ABL Priority Collateral, after the expiration of the applicable Standstill Period and, in all cases, subject to the terms of Section 3.1 of this Agreement, which Disposition is commercially reasonable in all respects and undertaken on an arm’s length basis with parties that are not Affiliates of any of the Term Loan Creditors; provided, however, that the Term Loan Creditors may effect such Disposition through a “credit bid” so long as upon the closing of the Disposition, the ABL Creditors receive cash in an amount sufficient to effect a Discharge of ABL Obligations. 

“Person” means an individual, partnership, corporation (including a business trust and a public benefit corporation), joint stock company, estate, association, firm, enterprise, trust, limited liability company, unincorporated association, joint venture, other entity or Governmental Authority. 

“Pledged Collateral” has the meaning set forth in Section 3.3(a).

“Proceeds” means (a) all “proceeds,” as defined in Article 9 of the UCC, of the Collateral, and (b) whatever is recovered when any Collateral is sold, exchanged, collected or Disposed of, whether voluntarily or involuntarily, including any additional or replacement Collateral provided during any Insolvency Proceeding and any payment or property received in an Insolvency Proceeding on account of, or from, Collateral, an interest in Collateral or the value of any Collateral. 

“Purchase Date” has the meaning set forth in Section 5.2(a). 

“Purchasers” has the meaning set forth in Section 5.1. 

“Purchase Event” has the meaning set forth in Section 5.1. 

“Purchase Notice” has the meaning set forth in Section 5.2(a). 

“Purchase Obligations” has the meaning set forth in Section 5.1. 

“Purchase Price” has the meaning set forth in Section 5.3. 

“Recovery” has the meaning set forth in Section 6.8.

“Refinance” means, in respect of any ABL Obligations or Term Loan Obligations or the commitments related thereto, to refinance, replace, refund, or repay, or to issue other Obligations or commitments in exchange or replacement for such Obligations or commitments relating thereto (whether or not fully utilized) in whole or in part, whether with the same or different lenders, agents, or arrangers. “Refinanced” and “Refinancing” have correlative meanings. 

“Release Documents” means termination statements, releases, and other documents reasonably necessary or advisable to release, release of record, or evidence the release of a Lien or of a guaranty obligation in connection with the disposition of Stock of an Obligor. 

“Secured Creditors” means the ABL Creditors and the Term Loan Creditors, or any of them.

“Senior Adequate Protection Liens” has the meaning set forth in Section 6.2.

“Standstill Period” means, as applicable, (a) in respect of the ABL Priority Collateral, the period commencing on the date of a Term Loan Default and ending upon the date which is the earlier of (i) 180 days after the ABL Agent has received a Term Loan Default Notice with respect to such Term Loan Default and (ii) the date on which the Discharge of ABL Obligations shall have occurred; provided that in the event that as of any day during such 180 days, no Term Loan Default is continuing, then the Standstill Period shall be deemed not to have commenced or (b) in respect of the Term Loan Priority Collateral, the period commencing on the date of an ABL Default and ending 

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upon the date which is the earlier of (i) 180 days after the Term Lender has received an ABL Default Notice with respect to such ABL Default and (ii) the date on which the Discharge of Term Loan Obligations shall have occurred; provided that in the event that as of any day during such 180 days, no ABL Default is continuing, then the Standstill Period shall be deemed not to have commenced. 

“Stock” means all shares of capital stock (whether denominated as common stock or preferred stock), equity interests, beneficial, partnership or membership interests, joint venture interests, participations or other ownership or profit interests in or equivalents (regardless of how designated) of or in a Person (other than an individual), whether voting or non-voting. 

“Term Lender” has the meaning set forth in the preamble to this Agreement. 

“Term Loan Collateral Documents” has the meaning set forth in Section 3.2(a) hereof. 

“Term Loan Credit Agreement” has the meaning set forth in the recitals to this Agreement.

“Term Loan Creditors” means the Term Lender and the other Persons from time to time holding Term Loan Obligations. 

“Term Loan Default” means any “Event of Default” or similar term, as such term is defined under the Term Loan Documents. 

“Term Loan Default Notice” means, with respect to any Term Loan Default, a written notice from the Term Lender to the ABL Agent stating that such notice is a “Term Loan Default Notice,” indicating that a Term Loan Default has occurred, and describing such Term Loan Default in reasonable detail.  

“Term Loan Documents” means the Term Loan Credit Agreement, all Financing Documents (as such term is defined in the Term Loan Credit Agreement) and all other agreements, instruments and other documents at any time executed or delivered by any Obligor or any other Person with, to or in favor of the Term Lender or any Term Loan Creditor in connection therewith or related thereto, including such documents evidencing successive Refinancings of the Term Loan Obligations, in each case, as the same may be amended, amended and restated, supplemented, modified, replaced, substituted, renewed or Refinanced from time to time in accordance with the provisions of this Agreement. 

“Term Loans” means the loans or advances outstanding under the Term Loan Documents.

“Term Loan Obligations” means all Obligations of the Obligors under (a) the Term Loan Credit Agreement and the other Term Loan Documents, (b) the guaranties under the Term Loan Documents, and (c) each other agreement or instrument granting or providing for the perfection of a Lien securing any of the foregoing. Notwithstanding any other provision hereof, the term “Term Loan Obligations” will include accrued interest, fees, costs, and other charges incurred under the Term Loan Credit Agreement and the other Term Loan Documents, whether incurred before or after the commencement of an Insolvency Proceeding, and whether or not allowed or allowable in an Insolvency Proceeding. To the extent that any payment with respect to the Term Loan Obligations (whether by or on behalf of any Obligor, as proceeds of security, enforcement of any right of set-off or recoupment, or otherwise) is declared to be fraudulent or preferential in any respect, set aside, avoided, or required to be paid to a debtor in possession, trustee, receiver, or similar Person, then the obligation or part thereof originally intended to be satisfied will be deemed to be reinstated and outstanding as if such payment had not occurred. 

“Term Loan Priority Collateral” means the Collateral other than the ABL Priority Collateral.

“Term Loan Proceeds Account” means a deposit account or securities account established by and in the name of one or more Term Loan Borrowers and subject to the first priority Lien in favor of the Term Loan Creditors into which the loans or advances made under the Term Loan are deposited.  

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“UCC” means the Uniform Commercial Code of any applicable jurisdiction and, if the applicable jurisdiction shall not have any Uniform Commercial Code, the Uniform Commercial Code as in effect in the State of Maryland. 

1.2Certain Matters of Construction. Unless otherwise stated or the context clearly requires otherwise: (a) references to the ABL Agent or the Term Lender will refer to the ABL Agent or the Term Lender acting on behalf of itself and on behalf of all of the other ABL Creditors or Term Loan Creditors, respectively; (b) definitions of terms apply equally to the singular and plural forms; pronouns will include the corresponding masculine, feminine, and neuter forms; (c) “will” and “shall” have the same meaning; (d) in computing periods from a specified date to a later specified date, (i) the words “from” and “commencing on” (and the like) mean “from and including,” (ii) the words “to,” “until” and “ending on” (and the like) mean “to but excluding” and (iii) the word “through” means “to and including”; (e) except as otherwise provided in this Agreement, any action permitted under this Agreement may be taken at any time and from time to time; (f) all indications of time of day mean New York City time; (g) “including” means “including, but not limited to”; (h) “A or B” means “A or B or both”; (i) references to a statute refer to the statute and all regulations promulgated under or implementing the statute as in effect at the relevant time, references to a specific provision of a statute or regulation include successor provisions; (j) references to a section of the Bankruptcy Code also refer to any similar provision of other Bankruptcy Law; (k) references to an agreement (including this Agreement) refer to the agreement as the same may be amended, supplemented or modified at the relevant time; (l) references to a Governmental Authority include any successor Governmental Authority; (m) section references refer to sections of this Agreement, references to numbered sections refer to all included sections (for example, a reference to Section 6 also refers to Sections 6.1, 6.1(a), etc.), and references to a section or article in an agreement, statute, or regulation include successor and renumbered sections and articles of that or any successor agreement, statute, or regulation; (n) references to a Person include the Person’s permitted successors and assigns; (o) “herein,” “hereof,” “hereunder,” and words of similar import refer to this Agreement in its entirety and not to any particular provision; and (p) “asset” and “property” have the same meaning and refer to both real and personal, tangible and intangible assets and property, including cash, securities, accounts, and general intangibles, wherever located. 

	
Section 2.
	
Security Interests; Priorities. 

2.1Priorities. Each Secured Creditor hereby acknowledges that other Secured Creditors have been granted Liens upon the Collateral to secure their respective Obligations.  

(a) ABL Priority Collateral. Notwithstanding the date, time, method, manner, or order of grant, attachment, or perfection of any Liens securing the Term Loan Obligations granted with respect to the ABL Priority Collateral or of any Liens securing the ABL Obligations granted with respect to the ABL Priority Collateral and notwithstanding any contrary provision of the UCC, the Bankruptcy Code, or any other applicable law or the Term Loan Documents or the ABL Documents (other than this Agreement) or any defect or deficiencies or alleged defect or deficiencies in, the Liens securing the ABL Obligations or the Term Loan Obligations or whether ABL Agent or Term Lender, directly or through agents, holds possession of, or has control over, all or any part of the Collateral, or any other circumstance whatsoever, Term Lender hereby agrees that: 

(i)other than as expressly set forth herein with respect to Excess ABL Obligations, any Lien with respect to the ABL Priority Collateral securing any ABL Obligations now or hereafter held by or on behalf of, or created for the benefit of, ABL Agent or any other ABL Creditor or any agent or trustee therefore shall be senior in all respects and prior to any Lien with respect to the ABL Priority Collateral securing any Term Loan Obligations; and 

(ii)any Lien with respect to the ABL Priority Collateral securing any Term Loan Obligations now or hereafter held by or on behalf of, or created for the benefit of, Term Lender, any Term Loan Creditor or any agent or trustee therefor shall be junior and subordinate in all respects to all Liens with respect to the ABL Priority Collateral securing any ABL Obligations (other than the Excess ABL Obligations); and 

(iii)notwithstanding any provision herein to the contrary and subject to and without waiver of all other rights, claims and defenses of the Term Loan Creditors hereunder, Excess ABL Obligations shall be junior and subordinate to all Term Loan Obligations and upon the occurrence and continuance of a Term Loan Default shall not be paid until the Discharge of Term Loan Obligations. 

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(b) Term Loan Priority Collateral. Notwithstanding the date, time, method, manner, or order of grant, attachment, or perfection of any Liens securing the ABL Obligations granted with respect to the Term Loan Priority Collateral or of any Liens securing the Term Loan Obligations granted with respect to the Term Loan Priority Collateral and notwithstanding any contrary provision of the UCC, the Bankruptcy Code, or any other applicable law or the ABL Documents or the Term Loan Documents (other than this Agreement) or any defect or deficiencies or alleged defect or deficiencies in, the Liens securing the Term Loan Obligations or the ABL Obligations or whether Term Lender or ABL Agent, directly or through agents, holds possession of, or has control over, all or any part of the Collateral, or any other circumstance whatsoever, ABL Agent hereby agrees that: 

(i)any Lien with respect to the Term Loan Priority Collateral securing any Term Loan Obligations now or hereafter held by or on behalf of, or created for the benefit of, Term Lender or any other Term Loan Creditor or any agent or trustee therefore shall be senior in all respects and prior to any Lien with respect to the Term Loan Priority Collateral securing any ABL Obligations; and 

(ii)any Lien with respect to the Term Loan Priority Collateral securing any ABL Obligations now or hereafter held by or on behalf of, or created for the benefit of, ABL Agent, any ABL Creditor or any agent or trustee therefor shall be junior and subordinate in all respects to all Liens with respect to the Term Loan Priority Collateral securing any Term Loan Obligations. 

(c) The foregoing provisions of this Section 2.1 and any other provision to the contrary contained in this Agreement notwithstanding, the subordination of Liens provided for in this Agreement shall continue to be effective with respect to any and all parts of (i) the ABL Priority Collateral from and after the date hereof whether such Liens are declared, or ruled to be, invalid, unenforceable, void or not allowed by a court of competent jurisdiction in a final, non-appealable order as a result of any action taken by ABL Agent, or any failure by ABL Agent to take any action, with respect to any financing statement (including any amendment to or continuation thereof), mortgage or other perfection document, and (ii) the Term Loan Priority Collateral from and after the date hereof whether such Liens are declared, or ruled to be, invalid, unenforceable, void or not allowed by a court of competent jurisdiction in a final, non-appealable order as a result of any action taken by Term Lender, or any failure by Term Lender to take any action, with respect to any financing statement (including any amendment to or continuation thereof), mortgage or other perfection document. 

2.2No Alteration of Priority, License.

(a) Except as otherwise expressly provided herein, the priority of the Liens securing the Obligations to the ABL Creditors and Term Loan Creditors, and the rights and obligations of the Parties under this Agreement, will remain in full force and effect irrespective of (i) how a Lien was acquired (whether by grant, possession, statute, operation of law, subrogation, judgment or otherwise), (ii) the time, manner, or order of the grant, attachment, filing, recordation, or perfection of a Lien, (iii) any conflicting provision of the UCC or other applicable law, (iv) any defect or deficiencies in, or non-perfection (including any failure to perfect or lapse in perfection), setting aside, recharacterization, or avoidance of, any Lien or an ABL Document or a Term Loan Document, (v) the modification, subordination or recharacterization of an ABL Obligation or a Term Loan Obligation, (vi) the modification of an ABL Document or the modification of a Term Loan Document, (vii) the voluntary or involuntary subordination of a Lien on Collateral securing an ABL Obligation or a Term Loan Obligation to a Lien securing another obligation of an Obligor or other Person, (viii) the exchange of a security interest in any Collateral for a security interest in other Collateral, (ix) the commencement of an Insolvency Proceeding, or (x) any other circumstance whatsoever, including a circumstance that might be a defense available to, or a discharge of, an Obligor in respect of an ABL Obligation or a Term Loan Obligation or holder of such Obligation and notwithstanding any conflicting terms or conditions which may be contained in any of the Documents.  

(b) For the purpose of enabling ABL Agent to exercise rights and remedies under the ABL Documents to collect and/or realize upon the ABL Priority Collateral at such time as ABL Agent shall be entitled to exercise such rights and remedies in accordance therewith and with this Agreement, to the extent it has the lawful right to do so, Term Lender hereby grants to ABL Agent (on behalf of itself and the other ABL Creditors) an irrevocable, nonexclusive, worldwide license (exercisable without payment of royalty or other compensation), to use or sublicense any Intellectual Property (to the extent constituting Term Loan Priority Collateral) now owned or hereafter acquired by it necessary to enable such collection and/or realization, and including in such license access to 

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all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof.  

2.3Perfection; Contesting Liens.

(a) Except as provided in Section 3.3 as between the ABL Creditors and Term Loan Creditors, (i) the ABL Agent will be solely responsible for perfecting and maintaining the perfection of its Liens on the Collateral, and (ii) the Term Lender will be solely responsible for perfecting and maintaining the perfection of its Liens on the Collateral. This Agreement is intended solely to govern the respective Lien priorities as between the ABL Creditors and the Term Loan Creditors and does not impose on the ABL Creditors or the Term Loan Creditors any obligations in respect of the disposition of Proceeds of foreclosure on any Collateral that would conflict with a prior perfected claim in favor of another Person, an order or decree of a court or other Governmental Authority, or applicable law.  

(b) Except for obligations expressly provided for herein, the ABL Agent and the ABL Creditors will have no liability to any Term Loan Creditor for (and the Term Lender hereby waives, on behalf of itself and the other Term Loan Creditors, any claim arising from) any action or inaction by an ABL Creditor with respect to any ABL Document, ABL Obligations or Collateral, including (i) the maintenance, preservation, or collection of the ABL Obligations or any Collateral, and (ii) the foreclosure upon, or the sale, liquidation, maintenance, preservation, or other disposition of, any Collateral, including any such action or inaction that results in a default or event of default under the Term Loan Documents. Except for obligations expressly provided for herein, the Term Lender and the Term Loan Creditors will have no liability to any ABL Creditor for (and the ABL Agent hereby waives, on behalf of itself and the other ABL Creditors, any claim arising from) any action or inaction by a Term Loan Creditor with respect to any Term Loan Document, Term Loan Obligations or Collateral, including (x) the maintenance, preservation, or collection of the Term Loan Obligations or any Collateral, and (y) the foreclosure upon, or the sale, liquidation, maintenance, preservation, or other disposition of, any Collateral permitted hereunder, including any such action or inaction that results in a default or event of default under the ABL Documents.  

(c) The ABL Agent will not have by reason of this Agreement or any other document a fiduciary relationship with any ABL Creditor or any Term Loan Creditor. The Term Lender will not have by reason of this Agreement or any other document a fiduciary relationship with any ABL Creditor. The parties recognize that the interests of the ABL Agent and the Term Lender may differ, and, except for obligations expressly provided for herein, the ABL Agent may act in its own interest or in the interest of the ABL Creditors without taking into account the interests of any Term Loan Creditor and the Term Lender may act in its own interest or in the interest of the Term Loan Creditors without taking into account the interests of any ABL Creditor.  

(d) The ABL Agent will not (and hereby waives any right to) contest, encourage or support any Person in contesting, directly or indirectly, in any proceeding (including an Insolvency Proceeding) the validity, enforceability, perfection, characterization or priority of any Lien securing or purportedly securing a Term Loan Obligation provided, however that nothing in this Agreement shall be construed to prevent or impair the rights of ABL Agent or any Creditor to enforce the terms of this Agreement, including the provisions of this Agreement relating to the priority of the Liens securing the ABL Obligations as provided in Sections 2.1 and 3. The Term Lender will not (and hereby waives any right to) contest, encourage or support any Person in contesting, directly or indirectly, in any proceeding (including an Insolvency Proceeding) the validity, enforceability, perfection, characterization or priority of any Lien securing or purportedly securing an ABL Obligation provided, however that nothing in this Agreement shall be construed to prevent or impair the rights of Term Lender or any Term Loan Creditor to enforce the terms of this Agreement, including the provisions of this Agreement relating to the priority of the Liens securing the Term Loan Obligations as provided in Sections 2.1 and 3.  

2.4Payment Over; Application of Proceeds of Collateral.

(a) Until the Discharge of ABL Obligations other than Excess ABL Obligations, whether or not an Insolvency Proceeding has commenced, any ABL Priority Collateral, Distributions in respect thereof or Proceeds thereof received by any Term Loan Creditor, including any such ABL Priority Collateral constituting Proceeds, or any payment or Distribution, that may be received by any Term Loan Creditor (i) in connection with the exercise of any right or remedy (including any right of set-off or recoupment) with respect to the ABL Priority Collateral, (ii) in connection with any insurance policy claim or any condemnation award (or deed in lieu of condemnation) in respect 

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of the ABL Priority Collateral, (iii) from the collection or other Disposition of, or realization on, the ABL Priority Collateral in any Enforcement Action or (except as provided in Section 6.10) pursuant to any Insolvency Proceeding or (iv) in violation of this Agreement, shall be segregated and held in trust and promptly paid over to the ABL Agent, for the benefit of the ABL Creditors, in the same form as received, with any necessary endorsements to be applied to the ABL Obligations in accordance with the ABL Credit Agreement. The ABL Agent is authorized to make such endorsements as agent for the Term Loan Creditor. This authorization is coupled with an interest and is irrevocable until the Discharge of ABL Obligations. All ABL Priority Collateral and all Proceeds thereof received after the Discharge of ABL Obligations other than Excess ABL Obligations shall be forthwith paid over, in the kind or funds and currency received, to the Term Loan Creditors for application to the Term Loan Obligations (unless otherwise required by law or court order) and, after the Discharge of Term Loan Obligations, to the ABL Creditors in respect of any Excess ABL Obligations and next to whomever may be lawfully entitled thereto. 

(b) Until the Discharge of Term Loan Obligations, whether or not an Insolvency Proceeding has commenced, any Term Loan Priority Collateral, Distributions in respect thereof or Proceeds thereof received by any ABL Creditor, including any such Term Loan Priority Collateral constituting Proceeds, or any payment or Distribution, that may be received by any ABL Creditor (i) in connection with the exercise of any right or remedy (including any right of set-off or recoupment) with respect to the Term Loan Priority Collateral, (ii) in connection with any insurance policy claim or any condemnation award (or deed in lieu of condemnation) in respect of the Term Loan Priority Collateral, (iii) from the collection or other Disposition of, or realization on, the Term Loan Priority Collateral in any Enforcement Action or (except as provided in Section 6.10) pursuant to any Insolvency Proceeding or (iv) in violation of this Agreement, shall be segregated and held in trust and promptly paid over to the Term Lender, for the benefit of the Term Loan Creditors, in the same form as received, with any necessary endorsements to be applied to the Term Loan Obligations in accordance with the Term Loan Credit Agreement. The Term Lender is authorized to make such endorsements as agent for the ABL Creditor. This authorization is coupled with an interest and is irrevocable until the Discharge of Term Loan Obligations. All Term Loan Priority Collateral and all Proceeds thereof received after the Discharge of Term Loan Obligations shall be forthwith paid over, in the kind or funds and currency received, to the ABL Creditors for application to the ABL Obligations (unless otherwise required by law or court order) and next to whomever may be lawfully entitled thereto. 

2.5Release of Collateral upon Enforcement Action or Permitted Sale or Disposition. 

(a) If the ABL Agent releases its Lien on all or any portion of the ABL Priority Collateral in connection with: (i) an Enforcement Action, (ii) a sale in the ordinary course pursuant to Section 363 of the Bankruptcy Code, the entry of an order of the Bankruptcy Court pursuant to Section 363 of the Bankruptcy Code, or in connection with the confirmation of a plan of reorganization in any Insolvency Proceeding, or (iii) a Disposition of any ABL Priority Collateral other than pursuant to an Enforcement Action (whether or not there is an Event of Default under the ABL Documents), then, except as otherwise provided below, any Lien of the Term Lender on such ABL Priority Collateral will be automatically and simultaneously released to the same extent, and the Term Lender will be deemed to have consented under the Term Loan Documents to such transaction free and clear of the Term Lender’s security interest (it being understood that the Term Lender shall still, subject to the terms of this Agreement, have a security interest with respect to the Proceeds of such ABL Priority Collateral except to the extent applied to ABL Obligations in accordance with priorities in this Agreement) and to have waived the provisions of the Term Loan Documents to the extent necessary to permit such transaction and will promptly execute and deliver to the ABL Agent such Release Documents as the ABL Agent requests to effectively release or confirm the release of such Lien of the Term Lender and take such further actions as the ABL Agent shall reasonably require in order to release or terminate such Term Lender’s Liens on such ABL Priority Collateral (or release any Obligor that is an issuer of the equity that is the subject of such transaction and each subsidiary thereof); provided that such release will not occur without the consent of the Term Lender for (x) an Enforcement Action, as to any ABL Priority Collateral the net cash Proceeds of the Disposition of which will not be applied to permanently repay (or otherwise reduce in the case of a “credit bid”) the ABL Obligations or any DIP Financing, or (y) a Disposition (other than a Disposition described in (i) or (ii) above), if the Disposition is prohibited by a provision of the Term Loan Credit Agreement other than solely as the result of the existence of a default or event of default under the Term Loan Documents.  

(b) If the Term Lender releases its Lien on all or any portion of the Term Loan Priority Collateral in connection with: (i) an Enforcement Action, (ii) a sale in the ordinary course pursuant to Section 363 of the Bankruptcy Code, the entry of an order of the Bankruptcy Court pursuant to Section 363 of the Bankruptcy Code, or 

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in connection with the confirmation of a plan of reorganization in any Insolvency Proceeding, or (iii) a Disposition of any Term Loan Priority Collateral other than pursuant to an Enforcement Action (whether or not there is an Event of Default under the Term Loan Documents), then, except as otherwise provided below, any Lien of the ABL Agent on such Term Loan Priority Collateral will be automatically and simultaneously released to the same extent, and the ABL Agent will be deemed to have consented under the ABL Loan Documents to such transaction free and clear of the ABL Agent’s security interest (it being understood that the ABL Agent shall still, subject to the terms of this Agreement, have a security interest with respect to the Proceeds of such Term Loan Priority Collateral except to the extent applied to Term Loan Obligations in accordance with priorities in this Agreement) and to have waived the provisions of the ABL Loan Documents to the extent necessary to permit such transaction and will promptly execute and deliver to the Term Lender such Release Documents as the Term Lender requests to effectively release or confirm the release of such Lien of the ABL Agent and take such further actions as the Term Lender shall reasonably require in order to release or terminate such ABL Agent’s Liens on such Term Loan Priority Collateral (or release any Obligor that is an issuer of the equity that is the subject of such transaction and each subsidiary thereof); provided that such release will not occur without the consent of the ABL Agent for (x) an Enforcement Action, as to any Term Loan Priority Collateral the net cash Proceeds of the Disposition of which will not be applied to permanently repay (or otherwise reduce in the case of a “credit bid”) the Term Loan Obligations, or (y) a Disposition (other than a Disposition described in (i) or (ii) above), if the Disposition is prohibited by a provision of the ABL Credit Agreement other than solely as the result of the existence of a default or event of default under the ABL Loan Documents.  

2.6Power of Attorney.

(a) The Term Lender hereby appoints the ABL Agent and any officer or agent of the ABL Agent, with full power of substitution, as its true and lawful attorney-in-fact with full power and authority in the place and stead of the Term Lender and the other Term Loan Creditors or in the ABL Agent’s own name, in the ABL Agent’s discretion to take any action and to execute any and all documents and instruments that may be reasonable and appropriate for the purpose of carrying out the terms of Section 2.5, including any endorsements or other instruments of transfer or release. This appointment is coupled with an interest and is irrevocable until the Discharge of ABL Obligations or such time as this Agreement is terminated in accordance with its terms. No Person to whom this power of attorney is presented, as authority for the ABL Agent (or any officer or agent of the ABL Agent) to take any action or actions contemplated hereby, shall be required to inquire into or seek confirmation from any Term Loan Creditor as to the authority of the ABL Agent (or any such officer or agent) to take any action described herein, or as to the existence of or fulfillment of any condition to this power of attorney, which is intended to grant to the ABL Agent (or any officer or agent of the ABL Agent) the authority to take and perform the actions contemplated herein. The Term Lender irrevocably waives any right to commence any suit or action, in law or equity, against any Person which acts in reliance upon or acknowledges the authority granted under this power of attorney. The Term Lender hereby ratifies all that said attorneys shall do or cause to be done in accordance with the power of attorney granted in this Section 2.6.  

(b) The ABL Agent hereby appoints the Term Lender and any officer or agent of the Term Lender, with full power of substitution, as its true and lawful attorney-in-fact with full power and authority in the place and stead of the ABL Agent and the other ABL Creditors or in the Term Lender’s own name, in the Term Lender’s discretion to take any action and to execute any and all documents and instruments that may be reasonable and appropriate for the purpose of carrying out the terms of Section 2.5, including any endorsements or other instruments of transfer or release. This appointment is coupled with an interest and is irrevocable until the Discharge of Term Loan Obligations or such time as this Agreement is terminated in accordance with its terms. No Person to whom this power of attorney is presented, as authority for the Term Lender (or any officer or agent of the Term Lender) to take any action or actions contemplated hereby, shall be required to inquire into or seek confirmation from any ABL Creditor as to the authority of the Term Lender (or any such officer or agent) to take any action described herein, or as to the existence of or fulfillment of any condition to this power of attorney, which is intended to grant to the Term Lender (or any officer or agent of the Term Lender) the authority to take and perform the actions contemplated herein. The ABL Agent irrevocably waives any right to commence any suit or action, in law or equity, against any Person which acts in reliance upon or acknowledges the authority granted under this power of attorney. The ABL Agent hereby ratifies all that said attorneys shall do or cause to be done in accordance with the power of attorney granted in this Section 2.6.  

2.7Waiver. Each of the Secured Creditors, (a) waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations under the Documents and notice of or proof of reliance by the Secured 

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Creditors upon this Agreement and protest, demand for payment or notice except to the extent otherwise specified herein and (b) acknowledges and agrees that the other Secured Creditors have relied upon the Lien priority and other provisions hereof in entering into the Documents and in making funds available to the Borrowers thereunder. 

2.8Notice of Interest in Collateral. This Agreement is intended, in part, to constitute an authenticated notification of a claim by each Secured Creditor to the other Secured Creditors of an interest in the Collateral in accordance with the provisions of Sections 9-611 and 9-621 of the UCC. 

2.9New Liens. Until termination of this Agreement in accordance with Section 8.1, the parties hereto agree that no additional Liens shall be granted or permitted on any asset of any Borrower or any other Obligor or subsidiary of any Borrower or any other Obligor (i) to secure any Term Loan Obligation unless a Lien on such asset shall also be granted to secure the ABL Obligations concurrently therewith, or (ii) to secure any ABL Obligations unless a Lien on such asset shall also be granted to secure the Term Loan Obligations concurrently therewith, which, in each case, shall be subject to the priorities set forth in this Agreement. To the extent that the foregoing provisions of this Section are not complied with for any reason, without limiting any other rights and remedies available to the ABL Agent, ABL Creditors, Term Lender or Term Loan Creditors, as applicable, ABL Agent, on behalf of the ABL Creditors, and Term Lender, on behalf of the Term Loan Creditors, each agree that any amounts received by or distributed to any of them pursuant to or as a result of Liens granted in contravention of this Section 2.9 shall be subject to the terms of this Agreement, including the turnover provisions of Section 2.4.  

2.10Identity of Liens and Obligors. The Parties intend that the Obligors under ABL Documents and the Collateral securing the ABL Obligations and the Obligors under the Term Loan Documents and the Collateral securing the Term Loan Obligations be identical, but subject to the respective priorities set forth herein. Accordingly, subject to the other provisions of this Agreement, the Parties will use commercially reasonable efforts to cooperate: 

(a) to determine, upon the reasonable written request of the ABL Agent or the Term Lender, the identity of the Obligors and the specific assets included in the Collateral securing their respective Obligations and to undertake the necessary actions to create and perfect the Liens thereon; 

(b) to provide that any Lien obtained by any Secured Creditor in respect of any judgment obtained in respect of any Obligations shall be subject in all respects to the terms of this Agreement. 

(c) upon request by ABL Agent or Term Lender, to cooperate in good faith (and to direct their counsel to cooperate in good faith) from time to time in order to determine the specific items included in the ABL Priority Collateral and the Term Loan Priority Collateral and the steps taken or to be taken to perfect their respective Liens thereon and the identity of the respective parties obligated under the ABL Documents and the Term Loan Documents; and 

(d) the ABL Collateral Documents and Term Loan Collateral Documents shall have, in all material respects, the same terms and conditions other than with respect to the priority set forth herein. 

	
Section 3.
	
Enforcement of Security.

3.1Exercise of Remedies against Collateral and Standstill.

(a) Subject to clause (c) below, until the Discharge of ABL Obligations (other than the Excess ABL Obligations), the ABL Creditors will have the exclusive right to (1) commence and maintain Enforcement Actions (including the rights to set-off or “credit bid” their debt) against the ABL Priority Collateral, (2) subject to Section 2.5, make determinations regarding the release or disposition of, or restrictions with respect to, the ABL Priority Collateral, and (3) otherwise enforce the rights and remedies of a secured creditor under the UCC and other applicable law and the Bankruptcy Laws of any applicable jurisdiction in respect of the ABL Priority Collateral in such order and in such manner as the ABL Creditors may determine in their sole discretion without consulting with or obtaining the consent of any Term Loan Creditor and regardless of whether any such exercise is adverse to the interests of any Term Loan Creditor, except as otherwise required pursuant to the UCC and applicable law, subject to the relative priorities described in Section 2.1. In conducting any public or private sale under the UCC, 10 days’ notice shall be 

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deemed to be commercially reasonable notice. The ABL Agent and the other ABL Creditors may take Enforcement Actions against ABL Loan Priority Collateral pursuant to the provisions of the ABL Documents all in such manner as they may determine in the exercise of their sole discretion. Such Enforcement Actions may include the rights of an agent appointed by them to sell or otherwise dispose of ABL Priority Collateral upon foreclosure, to incur expenses in connection with such sale or disposition, and to exercise all the rights and remedies of a secured creditor under the UCC and of a secured creditor under the Bankruptcy Laws of any applicable jurisdiction. Except as provided in this Section 3.1 and Section 3.2 below, notwithstanding any rights or remedies available to a Term Loan Creditor under any of the Term Loan Documents, applicable law or otherwise, a Term Loan Creditor shall not take any Enforcement Action in respect of ABL Priority Collateral. Until the Discharge of ABL Obligations, but subject to Section 2.1, each Term Loan Creditor agrees it (1) shall not take any action that would hinder any exercise of remedies or the taking of any Enforcement Action against the ABL Priority Collateral permitted under the ABL Documents, and (2) waives any right it may have as a junior lien creditor or otherwise to object to the manner in which the ABL Agent or the ABL Creditors may seek to take any Enforcement Action in respect of the ABL Priority Collateral (including any right to object to an ABL Creditor accepting any ABL Priority Collateral in full or partial satisfaction of ABL Obligations under Section 9-620 of the UCC), regardless of whether any action or omission by or on behalf of the ABL Agent and the ABL Creditors is adverse to the interest of the Term Loan Creditors. 

(b) Subject to clause (d) below, until the Discharge of Term Loan Obligations, the Term Loan Creditors will have the exclusive right to (1) commence and maintain Enforcement Actions (including the rights to set-off or “credit bid” their debt) against the Term Loan Priority Collateral, (2) subject to Section 2.5, make determinations regarding the release or disposition of, or restrictions with respect to, the Term Loan Priority Collateral, and (3) otherwise enforce the rights and remedies of a secured creditor under the UCC and other applicable law and the Bankruptcy Laws of any applicable jurisdiction in respect of the Term Loan Priority Collateral in such order and in such manner as the Term Loan Creditors may determine in their sole discretion without consulting with or obtaining the consent of any ABL Creditor and regardless of whether any such exercise is adverse to the interests of any ABL Creditor, except as otherwise required pursuant to the UCC and applicable law, subject to the relative priorities described in Section 2.1. In conducting any public or private sale under the UCC, 10 days’ notice shall be deemed to be commercially reasonable notice. The Term Lender and the other Term Loan Creditors may take Enforcement Actions against Term Loan Priority Collateral pursuant to the provisions of the Term Loan Documents all in such manner as they may determine in the exercise of their sole discretion. Such Enforcement Actions may include the rights of an agent appointed by them to sell or otherwise dispose of Term Loan Priority Collateral upon foreclosure, to incur expenses in connection with such sale or disposition, and to exercise all the rights and remedies of a secured creditor under the UCC and of a secured creditor under the Bankruptcy Laws of any applicable jurisdiction. Except as provided in this Section 3.1 and Section 3.2 below, notwithstanding any rights or remedies available to an ABL Creditor under any of the ABL Documents, applicable law or otherwise, an ABL Creditor shall not take any Enforcement Action in respect of Term Loan Priority Collateral. Until the Discharge of Term Loan Obligations, but subject to Section 2.1, each ABL Creditor agrees it (1) shall not take any action that would hinder any exercise of remedies or the taking of any Enforcement Action against the Term Loan Priority Collateral permitted under the Term Loan Documents, and (2) waives any right it may have as a junior lien creditor or otherwise to object to the manner in which the Term Lender or the Term Loan Creditors may seek to take any Enforcement Action in respect of the Term Loan Priority Collateral (including any right to object to a Term Loan Creditor accepting any Term Loan Priority Collateral in full or partial satisfaction of Term Loan Obligations under Section 9-620 of the UCC), regardless of whether any action or omission by or on behalf of the Term Lender and the Term Loan Creditors is adverse to the interest of the ABL Creditors. 

(c) Notwithstanding the preceding Section 3.1(a), Term Loan Creditors may commence and may continue an Enforcement Action with respect to ABL Priority Collateral following the occurrence and during the continuance of a Term Loan Default only if: (1) the Standstill Period with respect thereto shall have elapsed; (2) the ABL Agent is not then pursuing with commercially reasonable diligence an Enforcement Action with respect to all or a material portion of the ABL Priority Collateral or attempting with commercially reasonable diligence to vacate any stay or prohibition against such exercise; (3) any acceleration of the Term Loan Obligations has not been rescinded; (4) the Term Lender has provided the ABL Agent at least 10 Business Days prior written notice of its intention to take such Enforcement Action, which notice (A) may be given during, but not prior to, the pendency of any Standstill Period applicable thereto, and (B) if such Enforcement Action will include any Disposition, such Disposition shall be a Permitted Term Loan Disposition and such notice shall specify the principal proposed terms of the sale, identity of the expected purchasers (if known) and the type and amount of consideration expected to be received; (5) the ABL 

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Agent is not then engaged in either of (A) the notification of account debtors to make payments to the ABL Agent or its agents, or (B) exercising dominion over any cash or security accounts of any Obligor; and (6) the applicable Obligor is not then a debtor in an Insolvency Proceeding. 

(d) Notwithstanding the preceding Section 3.1(b), ABL Creditors may commence and may continue an Enforcement Action with respect to Term Loan Priority Collateral following the occurrence and during the continuance of a ABL Default only if: (1) the Standstill Period with respect thereto shall have elapsed; (2) the Term Lender is not then pursuing with commercially reasonable diligence an Enforcement Action with respect to all or a material portion of the Term Loan Priority Collateral or attempting with commercially reasonable diligence to vacate any stay or prohibition against such exercise; (3) any acceleration of the ABL Obligations has not been rescinded; (4) the ABL Agent has provided the Term Lender at least 10 Business Days prior written notice of its intention to take such Enforcement Action, which notice (A) may be given during, but not prior to, the pendency of any Standstill Period applicable thereto, and (B) if such Enforcement Action will include any Disposition, such Disposition shall be a Permitted ABL Disposition and such notice shall specify the principal proposed terms of the sale, identity of the expected purchasers (if known) and the type and amount of consideration expected to be received; (5) the Term Lender is not then engaged in either of (A) the notification of account debtors to make payments to the Term Lender or its agents, or (B) exercising dominion over any cash or security accounts of any Obligor; and (6) the applicable Obligor is not then a debtor in an Insolvency Proceeding. 

3.2Permitted Actions.

(a) Notwithstanding Section 3.1(a), and subject to Section 2.1, a Term Loan Creditor may (a) file a proof of claim or statement of interest, vote, subject to Section 6.9, on a plan of reorganization (including a vote to accept or reject a plan of partial or complete liquidation, reorganization, arrangement, composition, or extension), and make other filings, arguments, and motions, with respect to the Term Loan Obligations and the Term Loan Priority Collateral in any Insolvency Proceeding commenced by or against any Obligor; (b) take action to create, perfect, preserve, or protect (but not enforce) its Lien on the ABL Priority Collateral, so long as such actions are not adverse to the priority status in accordance with this Agreement of Liens on the ABL Priority Collateral securing the ABL Obligations or the ABL Creditors’ rights to exercise remedies or otherwise not in accordance with this Agreement; (c) file necessary pleadings in opposition to a claim objecting to or otherwise seeking the disallowance of a Term Loan Obligation or a Lien securing the Term Loan Obligations; (d) join (but not exercise any control over) a judicial foreclosure or Lien enforcement proceeding with respect to the ABL Priority Collateral initiated by the ABL Agent, to the extent that such action could not reasonably be expected to interfere materially with the Enforcement Action, but no Term Loan Creditor may receive any Proceeds thereof unless expressly permitted herein; (e) bid for or purchase ABL Priority Collateral at any public, private, or judicial foreclosure upon such ABL Priority Collateral initiated by any ABL Creditor, or any sale of ABL Priority Collateral during an Insolvency Proceeding; provided that such bid may not include a “credit bid” in respect of any Term Loan Obligations unless the net cash Proceeds of such bid are otherwise sufficient to cause the Discharge of ABL Obligations (other than the Excess ABL Obligations) and are applied to cause such Discharge of the ABL Obligations (other than the Excess ABL Obligations), in each case, at the closing of the sale based on such bid; (f) accelerate any Term Loan Obligations in accordance with the provisions of the Term Loan Documents (except for acceleration which occurs automatically and without notice under the Term Loan Documents or by operation of Bankruptcy Laws); and (g) seek adequate protection during an Insolvency Proceeding to the extent expressly permitted by Section 6, in the case of each of clauses (a) through (g), in a manner not inconsistent with the other terms of this Agreement. Except as expressly provided for herein, (1) no provision hereof shall be construed to prohibit the payment by a Borrower of interest, regularly scheduled principal payments and other amounts owed in respect of the Term Loan Obligations so long as (A) no Event of Default shall have occurred and be continuing (both before and after giving effect to the payment of such interest and/or principal as demonstrated by a Compliance Certificate (as defined in the Term Loan Documents) prepared on a pro forma basis and delivered prior to each such payment), and (B) the receipt thereof is not the direct or indirect result of any Enforcement Action by Term Loan Creditors, and (2) unless and until the Discharge of the ABL Obligations (other than the Excess ABL Obligations) shall have occurred, the sole right of the Term Loan Creditors with respect to the ABL Priority Collateral is to hold a Lien on the ABL Priority Collateral pursuant to any documents or instruments granting or purporting to grant a Lien (directly or indirectly) on real or personal property to secure a Term Loan Obligation or granting rights or remedies with respect to such Liens (the “Term Loan Collateral Documents”) for the period and to the extent granted therein and to receive the proceeds thereof, if any, after such Discharge of the ABL Obligations shall have occurred. 

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(b) Notwithstanding Section 3.1(c), and subject to Section 2.1, an ABL Creditor may (a) file a proof of claim or statement of interest, vote, subject to Section 6.9, on a plan of reorganization (including a vote to accept or reject a plan of partial or complete liquidation, reorganization, arrangement, composition, or extension), and make other filings, arguments, and motions, with respect to the ABL Obligations and the ABL Priority Collateral in any Insolvency Proceeding commenced by or against any Obligor; (b) take action to create, perfect, preserve, or protect (but not enforce) its Lien on the Term Loan Priority Collateral, so long as such actions are not adverse to the priority status in accordance with this Agreement of Liens on the Term Loan Priority Collateral securing the Term Loan Obligations or the Term Loan Creditors’ rights to exercise remedies or otherwise not in accordance with this Agreement; (c) file necessary pleadings in opposition to a claim objecting to or otherwise seeking the disallowance of an ABL Obligation or a Lien securing the ABL Obligations; (d) join (but not exercise any control over) a judicial foreclosure or Lien enforcement proceeding with respect to the Term Loan Priority Collateral initiated by the Term Lender, to the extent that such action could not reasonably be expected to interfere materially with the Enforcement Action, but no ABL Creditor may receive any Proceeds thereof unless expressly permitted herein; (e) bid for or purchase Term Loan Priority Collateral at any public, private, or judicial foreclosure upon such Term Loan Priority Collateral initiated by any Term Loan Creditor, or any sale of Term Loan Priority Collateral during an Insolvency Proceeding; provided that such bid may not include a “credit bid” in respect of any ABL Obligations unless the net cash Proceeds of such bid are otherwise sufficient to cause the Discharge of Term Loan Obligations and are applied to cause such Discharge of the Term Loan Obligations, in each case, at the closing of the sale based on such bid; (f) accelerate any ABL Obligations in accordance with the provisions of the ABL Documents (except for acceleration which occurs automatically and without notice under the ABL Documents or by operation of Bankruptcy Laws); and (g) seek adequate protection during an Insolvency Proceeding to the extent expressly permitted by Section 6, in the case of each of clauses (a) through (g), in a manner not inconsistent with the other terms of this Agreement. Except as expressly provided for herein, (1) no provision hereof shall be construed to prohibit the payment by a Borrower of interest, regularly scheduled principal payments and other amounts owed in respect of the ABL Obligations so long as (A) no Event of Default shall have occurred and be continuing (both before and after giving effect to the payment of such interest and/or principal as demonstrated by a Compliance Certificate (as defined in the ABL Documents) prepared on a pro forma basis and delivered prior to each such payment), and (B) the receipt thereof is not the direct or indirect result of any Enforcement Action by ABL Creditors, and (2) unless and until the Discharge of the Term Loan Obligations shall have occurred, the sole right of the ABL Creditors with respect to the Term Loan Priority Collateral is to hold a Lien on the Term Loan Priority Collateral pursuant to any documents or instruments granting or purporting to grant a Lien (directly or indirectly) on real or personal property to secure an ABL Obligation or granting rights or remedies with respect to such Liens (the “ABL Collateral Documents”) for the period and to the extent granted therein and to receive the proceeds thereof, if any, after such Discharge of the Term Loan Obligations shall have occurred. 

3.3Collateral In Possession.

(a) If the ABL Agent or the Term Lender has any tangible personal property or deposit accounts or securities accounts in its possession or control (“Pledged Collateral”), then, subject to Section 2.1 and this Section 3.3, it will possess or control such Pledged Collateral as bailee or agent for perfection for the benefit of the other party as secured party, so as to satisfy the requirements of sections 8-106(d)(3), 8-301(a)(2), and 9-313(c) of the UCC. The ABL Agent or the Term Lender will have no obligation to any ABL Creditor or Term Loan Creditor to ensure that any Pledged Collateral is genuine or owned by any of the Obligors or to preserve rights or benefits of any Person except as expressly set forth in this Section 3.3. In this Section 3.3, “control” has the meaning given that term in sections 8-106 and 9-314 of the UCC. 

(b) The duties or responsibilities of the ABL Agent or the Term Lender, as applicable, under this Section 3.3 will be limited solely to possessing or controlling the applicable Pledged Collateral as bailee or agent for perfection in accordance with this Section 3.3 and delivering such Pledged Collateral upon a Discharge of Obligations, as provided in subsection (d) below. Each of the ABL Agent and the Term Lender make no representation or warranty as to whether the provision of this Section 3.3 are sufficient to perfect the security interest in any Collateral in which the ABL Agent or the Term Lender, as applicable, has such possession or control. 

(c) Upon the Discharge of ABL Obligations (other than the Excess ABL Obligations), ABL Agent will deliver or transfer (subject to the terms of any control agreement) control of any Pledged Collateral in its possession or control, together with any necessary endorsements (which endorsements will be without recourse and 

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without any representation or warranty), first, to the Term Lender if any Term Loan Obligations remain outstanding, and second, to the applicable Obligor or Obligors or, in the case of clauses first and second, as a court of competent jurisdiction may otherwise direct. 

(d) Upon the Discharge of Term Loan Obligations, Term Lender will deliver or transfer (subject to the terms of any control agreement) control of any Pledged Collateral in its possession or control, together with any necessary endorsements (which endorsements will be without recourse and without any representation or warranty), first, to the ABL Agent if any ABL Obligations remain outstanding, and second, to the applicable Obligor or Obligors or, in the case of clauses first and second, as a court of competent jurisdiction may otherwise direct. 

3.4Waiver of Marshaling and Similar Rights. Until the Discharge of ABL Obligations, the Term Lender and each other Term Loan Creditor, to the fullest extent permitted by applicable law, waives as to the ABL Agent and each other ABL Creditor all requirements regarding, and agrees not to demand, request, plead or otherwise claim the benefit of, any marshaling, appraisal, valuation or other similar right that may otherwise be available under applicable law in respect of the Term Loan Priority Collateral. Until the Discharge of Term Loan Obligations, the ABL Agent and each other ABL Creditor, to the fullest extent permitted by applicable law, waives as to the Term Lender and each other Term Loan Creditor all requirements regarding, and agrees not to demand, request, plead or otherwise claim the benefit of, any marshaling, appraisal, valuation or other similar right that may otherwise be available under applicable law in respect of the ABL Loan Priority Collateral. 

3.5Insurance and Condemnation Awards. Until the Discharge of ABL Obligations (other than the Excess ABL Obligations), and subject to the rights of the Obligors under the ABL Documents, ABL Agent will have the exclusive right to adjust settlement for any losses covered by an insurance policy covering the ABL Priority Collateral, and to approve an award granted in a condemnation or similar proceeding (or a deed in lieu of condemnation) affecting the ABL Priority Collateral, and all proceeds of such policy, award, or deed will be applied in accordance with Section 2.4 and thereafter, if no Term Loan Obligations are outstanding, to the payment to the owner of the subject property, such other Person as may be entitled thereto, or as a court of competent jurisdiction may otherwise direct. Until the Discharge of Term Loan Obligations, and subject to the rights of the Obligors under the Term Loan Documents, Term Lender will have the exclusive right to adjust settlement for any losses covered by an insurance policy covering the Term Loan Priority Collateral, and to approve an award granted in a condemnation or similar proceeding (or a deed in lieu of condemnation) affecting the Term Loan Priority Collateral, and all proceeds of such policy, award, or deed will be applied in accordance with Section 2.4 and thereafter, if no ABL Obligations are outstanding, to the payment to the owner of the subject property, such other Person as may be entitled thereto, or as a court of competent jurisdiction may otherwise direct. 

	
Section 4.
	
Covenants.

4.1Amendments to ABL Documents. Until the termination of this Agreement in accordance with Section 8.1 has occurred, and notwithstanding anything to the contrary contained in the ABL Documents, the ABL Creditors shall not, without the prior written consent of the Term Lender, amend, restate, supplement, modify, substitute, renew or Refinance any or all of the ABL Documents to (i) directly or indirectly increase the interest rate in respect of the ABL Obligations (excluding, without limitation, imposition of the default rate set forth in the ABL Documents in effect as of the date hereof) by more than 3.0% per annum on a weighted average basis, (ii) shorten the maturity or weighted average life to maturity of the ABL Obligations, require that any payment on the ABL Obligations be made earlier than the date originally scheduled for such payment or that any commitment expire any earlier than the date originally scheduled therefor, or add or make more restrictive any mandatory prepayment, redemption, repurchase, sinking fund or similar requirement, (iii) add or modify in a manner adverse to any Obligor or any Term Loan Creditor any covenant, agreement or event of default under the ABL Documents, (iv) restrict the amendment of the Term Loan Documents except as set forth in Section 4.1, (v) increase the principal amount of the ABL Obligations (other than, subject to clause (i) above, as a result of interest thereon, fees or other Obligations under the ABL Documents having been paid in-kind or capitalized) or (vi) amend or waive the conditions precedent to funding the ABL Loans. 

4.2Amendments to Term Loan Documents. Until termination of this Agreement in accordance with Section 8.1 has occurred, and notwithstanding anything to the contrary contained in the Term Loan Documents, the Term Loan Creditors shall not, without the prior written consent of the ABL Agent, amend, restate, supplement, 

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modify, substitute, renew or Refinance any or all of the Term Loan Documents to (i) directly or indirectly increase the interest rate in respect of the Term Loan Obligations (excluding, without limitation, imposition of the default rate set forth in the Term Loan Documents in effect as of the date hereof) by more than 3.0% per annum on a weighted average basis, (ii) shorten the maturity or weighted average life to maturity of the Term Loan Obligations, require that any payment on the Term Loan Obligations be made earlier than the date originally scheduled for such payment or that any commitment expire any earlier than the date originally scheduled therefor, or add or make more restrictive any mandatory prepayment, redemption, repurchase, sinking fund or similar requirement, (iii) add or modify in a manner adverse to any Obligor or any ABL Creditor any covenant, agreement or event of default under the Term Loan Documents, (iv) restrict the amendment of the ABL Documents except as set forth in Section 4.1, (v) increase the principal amount of the Term Loan Obligations (other than, subject to clause (i) above, as a result of interest thereon, fees or other Obligations under the Term Loan Documents having been paid in-kind or capitalized) or (vi) amend or waive the conditions precedent to funding the Term Loan Loans; and 

4.3Amendments to Collateral Documents. If an ABL Creditor or Term Loan Creditor and an Obligor modify any documents or instruments granting or purporting to grant a Lien (directly or indirectly) on real or personal property to secure an ABL Obligation or a Term Loan Obligation, as applicable, or granting rights or remedies with respect to such Liens, the modification will apply automatically to any comparable provision of a Term Loan Collateral Document or the ABL Collateral Documents, as applicable, without the consent of the other Secured Creditors and without any action by Term Lender, ABL Agent or any Obligor; provided that no such modification will (a) remove or release the Lien of the Term Loan Creditors or the ABL Creditors on such Collateral, except to the extent that (1) the release is permitted hereunder and (2) there is a corresponding release of the Lien of the other Secured Creditors on the Collateral, (b) impose duties on the Term Lender or the ABL Agent without its consent, (c) permit other Liens on the Collateral not permitted under the terms of the Term Loan Documents or the ABL Documents, as applicable, other than as provided in Section 6, or (d) by its terms be materially adverse to the interest of the Term Loan Creditors to a greater extent than the ABL Creditors or the ABL Creditors to a greater extent than the Term Loan Creditors, as applicable (other than by virtue of their relative priorities and rights and obligations hereunder).  

4.4Effect of Refinancing.

(a)If the Discharge of ABL Obligations is being effected through a Refinancing, provided that (1) the ABL Agent gives a notice of such Refinancing to the Term Lender prior to such Refinancing (except as otherwise provided in Section 6.2) and (2) the credit agreement and the other documents evidencing such new ABL Obligations (the “New ABL Documents”) do not effect an amendment, supplement or other modification of the terms of the ABL Obligations in a manner that is prohibited by Section 4.1, then (A) such Discharge of ABL Obligations shall be deemed not to have occurred for all purposes of this Agreement, (B) the indebtedness under such Refinancing and all other obligations under the credit documents evidencing such indebtedness (the “New ABL Obligations”) shall be treated as ABL Obligations (or Excess ABL Obligations, as the case may be) for all purposes of this Agreement, (C) the New ABL Documents shall be treated as the ABL Documents and (D) the agent (or, if not a syndicated credit, the lender) under the New ABL Documents (the “New ABL Agent”) shall be deemed to be the ABL Agent for all purposes of this Agreement. Upon receipt of a notice of Refinancing under the preceding sentence, which notice shall include the identity of the New ABL Agent, the Term Lender shall promptly enter into such documents and agreements (including amendments or supplements to this Agreement) as the New ABL Agent may reasonably request in order to provide to the New ABL Agent and the holders of the New ABL Obligations the rights and powers set forth herein; provided that the failure of the Term Lender to enter into such documents and agreements shall not affect the rights of the party that consummates the Refinancing to rely on and enforce the terms of this Agreement.  

(b)If the Discharge of Term Loan Obligations is being effected through a Refinancing, provided that (1) the Term Lender gives a notice of such Refinancing to the ABL Agent prior to such Refinancing and (2) the credit agreement and the other documents evidencing such New Term Loan Obligations (the “New Term Loan Documents”) do not effect an amendment, supplement or other modification of the terms of the Term Loan Obligations in a manner that is prohibited by Section 4.2, then (A) such Discharge of Term Loan Obligations shall be deemed not to have occurred for all purposes of this Agreement, (B) the indebtedness under such Refinancing and all other obligations under the credit documents evidencing such indebtedness (the “New Term Loan Obligations”) shall be treated as Term Loan Obligations for all purposes of this Agreement, (C) the New Term Loan Documents shall be treated as the Term Loan Documents and (D) the lender (or, if a syndicated credit, the agent) under the New 

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Term Loan Documents (the “New Term Lender”) shall be deemed to be the Term Lender for all purposes of this Agreement. Upon receipt of a notice of Refinancing under the preceding sentence, which notice shall include the identity of the New Term Lender, the ABL Agent shall promptly enter into such documents and agreements (including amendments or supplements to this Agreement) as the New Term Lender may reasonably request in order to provide to the New Term Lender the rights and powers set forth herein; provided that the failure of the ABL Agent to enter into such documents and agreements shall not affect the rights of the party that consummates the Refinancing to rely on and enforce the terms of this Agreement.  

(c)By their acknowledgement hereto, Obligors agree to cause the agreement, document or instrument pursuant to which any New ABL Agent or any New Term Lender is appointed to provide that the New ABL Agent or New Term Lender, as applicable, agrees to be bound by the terms of this Agreement. 

	
Section 5.
	
Term Loan Creditors’ Purchase Option. 

5.1Purchase Option. If there is (a) an acceleration of the ABL Obligations in accordance with the ABL Credit Agreement or (b) the commencement of an Insolvency Proceeding (each a “Purchase Event”), then Term Loan Creditors or any nominees thereof who are Affiliates of the Term Loan Creditors or Term Lender and who agree to bound to this Agreement (“Purchasers”) may, within 45 calendar days of the first such Purchase Event to occur (unless such 45th day is not a Business Day in which event the period shall be extended to the next Business Day), and not afterwards, purchase all, but not less than all, of the ABL Obligations other than the Excess ABL Obligations (the “Purchase Obligations”) for the Purchase Price. The ABL Agent shall provide notice of the occurrence of a Purchase Event of the kind in Section 5.1(a) (an “Acceleration Notice”) to the Term Lender; provided that any failure to provide such notice shall not be a default or breach of this Agreement, but the time periods in Section 5.2 shall not begin to run until such notice has been sent. Such Acceleration Notice shall contain a good faith estimate of the outstanding ABL Obligations on or about the date of such Acceleration Notice, it being understood that the ABL Obligations include a revolving credit facility, pursuant to which Borrowers may borrow, repay and re-borrow amounts thereunder, that any such good faith estimate will be subject to such borrowings and repayments. Notwithstanding anything in the ABL Documents to the contrary, no consent of any Obligor to such purchase shall be required. Such purchase will be made pursuant to an “Assignment” (as such term is defined in the ABL Credit Agreement in effect as of the date hereof, but including only those representations and warranties of the Assignor thereunder as are specified in Section 5.6), whereby the Purchasers will assume all funding commitments, if any, and Obligations of ABL Creditors under the ABL Documents, and (3) otherwise be subject to the terms and conditions of this Section 5. Each ABL Creditor will retain all rights to indemnification provided in the relevant ABL Documents for all claims and other amounts relating to facts and circumstances relating to such ABL Creditor’s holdings of the ABL Obligations (except to the extent such claims and other amounts were included in the Purchase Price), and such rights shall be secured by the Liens securing the ABL Obligations. No amendment, modification or waiver following any purchase under this Section 5 of any indemnification provisions under the ABL Documents shall be effective as to any ABL Creditor or any Affiliate or officer, director, employee or other related indemnified person of such ABL Creditor (“Indemnified ABL Person”) without the prior written consent of such Indemnified ABL Person, and such indemnification provisions shall continue in full force and effect for the benefit of the Indemnified ABL Persons whether or not any ABL Documents otherwise remain in effect. 

5.2Purchase Notice.

(a)The Purchasers desiring to purchase all of the Purchase Obligations will deliver a written notice (the “Purchase Notice”) to the ABL Agent no later than forty (40) days after the occurrence of a Purchase Event that (1) is signed by the Purchasers, (2) states that it is a Purchase Notice under this Section 5 and in the case of a Purchaser who is a nominee of a Term Loan Creditor, states that such Purchaser agrees to bound to the terms of this Agreement, (3) states that each Purchaser is irrevocably electing to purchase, in accordance with this Section 5, the percentage of all of the Purchase Obligations stated in the Purchase Notice for that Purchaser, which percentages must aggregate exactly 100% for all Purchasers, (4) contains a representation and warranty by each Purchaser that the Purchase Notice conforms with the Term Loan Documents and any other binding agreement among the Term Loan Creditors and any nominee of such Term Loan Creditors, and (5) designates a purchase date (the “Purchase Date”) on which the purchase will occur, that is (x) at least one (1) but not more than five (5) Business Days after the ABL Agent’s receipt of the Purchase Notice, and (y) not more than 45 calendar days after the Purchase Event (unless such 45th day is not a Business Day in which event the period shall be extended to the next Business Day). A Purchase 

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Notice will be ineffective if it is received by the ABL Agent after the occurrence giving rise to the Purchase Event is waived, cured, or otherwise ceases to exist.

(b)Upon the ABL Agent’s receipt of an effective Purchase Notice conforming to this Section 5.2, the Purchasers will be irrevocably obligated to purchase, and the ABL Creditors will be irrevocably obligated to sell, the ABL Obligations (other than the Excess ABL Obligations) in accordance with and subject to this Section 5. If so instructed by the Purchasers in the Purchase Notice, the ABL Creditors shall not complete any Enforcement Action (other than (1) the exercise of control over any Obligor’s deposit or securities accounts, (2) the collection of proceeds of accounts and payment intangibles, and (3) Enforcement Actions taken under circumstances that the ABL Agent reasonably believes necessary or appropriate to prevent or mitigate the destruction of, physical harm to, impairment of or material decrease in value of the Collateral or the rights and interests of the ABL Creditors therein (including without limitation any loss of priority of the Liens of the ABL Creditors)), so long as the purchase and sale of the ABL Obligations provided for in this Section 5 shall have closed within five (5) Business Days of the Purchasers’ delivery of a Purchase Notice to the ABL Creditors and the ABL Creditors shall have received payment in full of the ABL Obligations as provided for in Section 5.3 within such five (5) Business Day period. 

5.3Purchase Price. The purchase price (“Purchase Price”) for the Purchase Obligations will equal the sum of (a) outstanding ABL Obligations (excluding Excess ABL Obligations but expressly including any breakage costs actually incurred and all prepayment fees, deferred origination fees, exit and other fees in respect of ABL Obligations (excluding Excess ABL Obligations)) that would be required to be paid to the ABL Creditors if such ABL Obligations (excluding Excess ABL Obligations) were prepaid on the Purchase Date, and (b) amounts according to the good faith estimate of the ABL Agent of contingent indemnity Obligations in respect of claims which are known to the ABL Agent or ABL Creditors and items the proceeds of which have been credited to the ABL Agent but such items are subject to a hold or have not yet been paid; provided, however, that with respect to this Section 5.3(b), (i) any amount paid by Purchasers with respect to a contingency which does not occur (in its entirety or in part) shall be promptly repaid (to the extent of the non-occurring contingency) to the Purchasers upon occurrence of a good faith determination by the ABL Creditors that such contingency has not occurred (in its entirety or in part), and (ii) any amount paid by Purchasers with respect to an item held or not paid but which is subsequently paid to the ABL Agent or ABL Creditors, shall be promptly repaid to Purchasers following receipt thereof by the ABL Agent or ABL Creditors.  

5.4Purchase Closing. On the Purchase Date, (a) the Purchasers will execute and deliver the Assignment, (b) the Purchasers will pay the Purchase Price to ABL Agent by wire transfer of immediately available funds, and (c) each of the Purchasers will execute and deliver to the ABL Agent a waiver and release of, and covenant not to sue the ABL Agent or ABL Creditors with respect to: (i) all claims arising out of this Agreement relating to the ABL Obligations (other than Excess ABL Obligations), (ii) the relationship between the ABL Creditors and the Term Loan Creditors in connection with ABL Documents and the Term Loan Documents except as such relationship relates to Excess ABL Obligations, and (iii) the transactions contemplated hereby as a result of exercising the purchase option contemplated by this Section 5; provided that such waiver, release and covenant not to sue shall not be executed and delivered for the benefit of a Defaulting Creditor (as defined in Section 5.6(c)) unless and until the ABL Obligations (other than Excess ABL Obligations) of such Defaulting Creditor are purchased by the Purchasers. 

5.5Actions After Purchase Closing.

Promptly after the closing of the purchase of all Purchase Obligations, the ABL Agent will distribute the Purchase Price to the ABL Creditors in accordance with the terms of the ABL Documents. 

5.6No Recourse or Warranties; Defaulting Creditors.

(a)The ABL Creditors will be entitled to rely on the statements, representations, and warranties in the Purchase Notice without investigation, even if the ABL Creditors are notified that any such statement, representation, or warranty is not or may not be true. 

(b)The purchase and sale of the Purchase Obligations under this Section 5 will be without recourse and without any representation or warranty whatsoever by the ABL Creditors, except that the ABL Creditors shall represent and warrant that on the Purchase Date, immediately before giving effect to the purchase, the ABL 

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Creditors own and have the requisite power and corporate, company or similar authority to sell the Purchase Obligations free and clear of all Liens. 

(c)The obligations of the ABL Creditors to sell their respective Purchase Obligations under this Section 5 are several and not joint and several. If an ABL Creditor breaches its obligation to sell its Purchase Obligations under this Section 5 (a “Defaulting Creditor”), no other ABL Creditor will be obligated to purchase the Defaulting Creditor’s Purchase Obligations for resale to the holders of the Term Loan Obligations. An ABL Creditor that complies with this Section 5 will not be in default of this Agreement or otherwise be deemed liable for any action or inaction of any Defaulting Creditor; provided that nothing in this subsection (c) will affect the Purchasers’ obligation to purchase all of the Purchase Obligations (other than the Purchase Obligations of a Defaulting Creditor who fails to cure such default within 180 days). 

(d)Each Obligor hereby consents to any assignment effected to one or more Purchasers pursuant to this Section 5. 

	
Section 6.
	
Bankruptcy Matters. 

6.1Bankruptcy. This Agreement shall be applicable both before and after the filing of any petition by or against any Obligor under the Bankruptcy Code or any other Insolvency Proceeding and all converted or succeeding cases in respect thereof. The relative rights of the ABL Creditors and the Term Loan Creditors in respect of any Collateral or Proceeds thereof shall continue after the filing of such petition on the same basis as prior to the date of such filing. All references in this Agreement to any Obligor will include such Person as a debtor-in-possession and any receiver, trustee or other estate representative for such Person in an Insolvency Proceeding. This Agreement is a “subordination agreement” under section 510(a) of the Bankruptcy Code and shall be enforceable in any Insolvency Proceeding. 

6.2Post-Petition Financing. Until the Discharge of ABL Obligations (excluding Excess ABL Obligations), if an Insolvency Proceeding has commenced, no Term Loan Creditor will, directly or indirectly, contest, protest, or object to, and each Term Loan Creditor will be deemed to have consented to, and hereby consents in advance to, (1) any use, sale, or lease of “cash collateral” (as defined in section 363(a) of the Bankruptcy Code) and (2) any Borrower or any other Obligor obtaining DIP Financing if the ABL Agent consents to such use, sale, or lease, or DIP Financing; provided that (A) in the case of a DIP Financing, the Term Lender is not required as a condition to such DIP Financing to release its Lien on the Term Loan Priority Collateral as the same may exist at the time of such DIP Financing, (B) any Term Loan Creditor may seek adequate protection as permitted by Sections 6.3, (C) any Term Loan Creditor may object to the amount of any DIP Financing if, after taking into account the principal amount of such DIP Financing (after giving effect to any Refinancing or “roll-up” of ABL Obligations) on any date, the sum of the then outstanding amount of any ABL Obligations and the then outstanding principal amount of any DIP Financing (including the unfunded commitments under such DIP Financing) would exceed $57,600,000, and (D) the Liens on ABL Priority Collateral securing such DIP Financing are pari passu with, or superior in priority to the Liens securing such ABL Obligations. The Term Loan Creditors further agree that: (i) adequate notice to the Term Loan Creditors for such DIP Financing or use of cash collateral shall be deemed to have been given to the Term Loan Creditors if the Term Lender receives notice in advance of the hearing to approve such DIP Financing or use of cash collateral on an interim basis and at least five (5) Business Days in advance of the hearing to approve such DIP Financing or use of cash collateral on a final basis, (ii) giving effect to clause (iii) of this Section 6.2, such DIP Financing (and such ABL Obligations) may be secured by Liens on all or a part of the assets of the Obligors that shall be (A) as to ABL Priority Collateral, superior in priority to the Liens on the assets of the Obligors held by any other Person and (B) as to Term Loan Priority Collateral, superior in priority to the Liens on such assets of the Obligor held by any Person other than the Term Loan Creditors, (iii) the Term Loan Creditors consent to, and will, subordinate (and will be deemed hereunder to have subordinated) their Liens (A) to the Liens on ABL Priority Collateral securing such DIP Financing (the “DIP Liens”) on the same terms (but on a basis junior to the Liens of the ABL Creditors) as the Liens of the ABL Creditors are subordinated thereto (and such subordination will not alter in any manner the terms of this Agreement), (B) to any “replacement Liens” or Liens on additional collateral granted to the ABL Creditors as adequate protection of their interests in the Collateral (the “Senior Adequate Protection Liens”) and (C) to any “carve-out” agreed to by the ABL Agent or the other ABL Creditors and (iv) any customary “carve-out” or other similar administrative priority expense or claim consented to in writing by the ABL Agent (or granted pursuant to any order in any Insolvency Proceeding as to which the ABL Agent did not object) to be paid prior to the Discharge of ABL Obligations will be 

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deemed for purposes of Section 6.2 to be a use of cash collateral. No Term Loan Creditor may, directly or indirectly, provide or propose, or support any other Person in providing or proposing, DIP Financing to an Obligor unless none of the ABL Creditors have agreed to provide (or have not consented to another Person providing) DIP Financing and any Liens and administrative priority claims granted in connection with the DIP Financing are subordinated to the Liens in favor of the ABL Creditors on the ABL Priority Collateral and claims of the ABL Creditors in respect of the ABL Obligations.  

6.3Adequate Protection

(a)(i) no Term Loan Creditor will contest, protest, or object to (A) any request by an ABL Creditor for “adequate protection” under any Bankruptcy Law on account of the ABL Priority Collateral consistent with the provisions hereof, (B) an objection by an ABL Creditor to a motion, relief, action, or proceeding based on an ABL Creditor claiming a lack of adequate protection with respect to the ABL Priority Collateral, or (C) any request by the ABL Agent for relief from any stay or other relief based upon a lack of adequate protection or any other reason in respect of the ABL Priority Collateral and (ii) no ABL Creditor will contest, protest, or object to (A) any request by a Term Loan Creditor for “adequate protection” under any Bankruptcy Law on account of the Term Loan Priority Collateral consistent with the provisions hereof, (B) an objection by a Term Loan Creditor to a motion, relief, action, or proceeding based on a Term Loan Creditor claiming a lack of adequate protection with respect to the Term Loan Priority Collateral, or (C) any request by the Term Lender for relief from any stay or other relief based upon a lack of adequate protection or any other reason in respect of the Term Loan Priority Collateral. 

(b)Notwithstanding the preceding Section 6.2, in an Insolvency Proceeding: 

(i)except as permitted in this Sections 6.3, (A) no Term Loan Creditors may seek or request adequate protection or relief from the automatic stay imposed by section 362 of the Bankruptcy Code in respect of the ABL Priority Collateral, (B) if an ABL Creditor seeks and/or is granted Senior Adequate Protection Liens in respect of the ABL Priority Collateral, then the Term Lender may seek or request adequate protection in the form of a Lien on the ABL Priority Collateral subject to the Senior Adequate Protection Liens (the “Junior Adequate Protection Liens”), which Junior Adequate Protection Liens will be subordinated to (1) the Liens securing the ABL Obligations on the same basis as the other Liens on ABL Priority Collateral securing the Term Loan Obligations are subordinated to the Liens on ABL Priority Collateral securing ABL Obligations under this Agreement, (2) to the DIP Liens on ABL Priority Collateral on the same terms (but on a basis junior to the Liens of the ABL Creditors) as the Liens of the ABL Creditors are subordinated thereto (and such subordination will not alter in any manner the terms of this Agreement), and (3) any “carve-out” or other similar administrative priority expense or claim agreed to by the ABL Agent or the other ABL Creditors; provided that any failure of the Term Loan Creditors to obtain such Junior Adequate Protection Liens shall not impair or otherwise affect the agreements, undertakings and consents of the Term Loan Creditors hereunder; and (C) if an ABL Creditor is granted adequate protection in the form of a claim under section 507(b) of the Bankruptcy Code, then the Term Lender may seek or request adequate protection in the form of a subordinate claim under section 507(b) of the Bankruptcy Code. Any claim by a Term Loan Creditor under section 507(b) of the Bankruptcy Code relating to ABL Priority Collateral will be subordinate in right of payment to any claim of the ABL Creditors (and the lenders under any DIP Financing) under section 507(b) of the Bankruptcy Code relating to ABL Priority Collateral and any payment thereof will be deemed to be Proceeds of such Collateral and the Term Loan Creditors hereby waive their rights under section 1129(a)(9) of the Bankruptcy Code and consent and agree that such section 507(b) claims may be paid under a plan of reorganization in any form having a value on the effective date of such plan equal to the allowed amount of such claims. Except as expressly set forth herein, the Term Loan Creditors shall not seek or request adequate protection in any Insolvency Proceeding and the ABL Creditors may oppose any adequate protection proposed to be made by any Obligor to the Term Loan Creditors. Furthermore, in the event that any Term Loan Creditor actually receives any payment of (or through) adequate protection in any Insolvency Proceeding (including any payment in respect of a claim granted under Section 507(b) of the Bankruptcy Code) relating to ABL Priority Collateral, the same shall be segregated and held in trust and promptly paid over to the ABL Agent, for the benefit of the ABL Creditors, in the same form as received, with any necessary endorsements, and each Term Loan Creditor hereby authorizes the ABL Agent to make any such endorsements as agent for the Term Lender (which authorization, being coupled with an interest, is irrevocable) to be held or applied by the ABL Agent in accordance with the terms of the ABL Documents 

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until the Discharge of ABL Obligations (other than Excess ABL Obligations) shall have occurred before any of the same may be retained by one or more of the Term Loan Creditors. Each Term Loan Creditor irrevocably authorizes, empowers and directs any debtor, debtor in possession, receiver, trustee, liquidator, custodian, conservator or other Person having authority to pay or otherwise deliver all such payments to the ABL Agent. 

(ii)except as permitted in this Sections 6.3, (A) no ABL Creditors may seek or request adequate protection or relief from the automatic stay imposed by section 362 of the Bankruptcy Code in respect of the Term Loan Priority Collateral, (B) if a Term Loan Creditor seeks and/or is granted Senior Adequate Protection Liens in respect of the Term Loan Priority Collateral, then the ABL Agent may seek or request Junior Adequate Protection Liens on the Term Loan Priority Collateral subject to the Senior Adequate Protection Liens of the Term Loan Lender, which Junior Adequate Protection Liens will be subordinated to (1) the Liens securing the Term Loan Obligations on the same basis as the other Liens on Term Loan Priority Collateral securing the ABL Obligations are subordinated to the Liens on Term Loan Priority Collateral securing Term Loan Obligations under this Agreement, (2) to the DIP Liens on Term Loan Priority Collateral, if applicable, on the same terms (but on a basis junior to the Liens of the Term Loan Creditors) as the Liens of the Term Loan Creditors are subordinated thereto (and such subordination will not alter in any manner the terms of this Agreement), and (3) any “carve-out” or other similar administrative priority expense or claim agreed to by the Term Lender or the other Term Loan Creditors; provided that any failure of the ABL Creditors to obtain such Junior Adequate Protection Liens shall not impair or otherwise affect the agreements, undertakings and consents of the ABL Creditors hereunder; and (C) if a Term Loan Creditor is granted adequate protection in the form of a claim under section 507(b) of the Bankruptcy Code, then the ABL Agent may seek or request adequate protection in the form of a subordinate claim under section 507(b) of the Bankruptcy Code. Any claim by an ABL Creditor under section 507(b) of the Bankruptcy Code relating to Term Loan Priority Collateral will be subordinate in right of payment to any claim of the Term Loan Creditors (and the lenders under any DIP Financing) under section 507(b) of the Bankruptcy Code relating to Term Loan Priority Collateral and any payment thereof will be deemed to be Proceeds of such Collateral and the ABL Creditors hereby waive their rights under section 1129(a)(9) of the Bankruptcy Code and consent and agree that such section 507(b) claims may be paid under a plan of reorganization in any form having a value on the effective date of such plan equal to the allowed amount of such claims. Except as expressly set forth herein, the ABL Creditors shall not seek or request adequate protection in any Insolvency Proceeding and the Term Loan Creditors may oppose any adequate protection proposed to be made by any Obligor to the ABL Creditors. Furthermore, in the event that any ABL Creditor actually receives any payment of (or through) adequate protection in any Insolvency Proceeding (including any payment in respect of a claim granted under Section 507(b) of the Bankruptcy Code) relating to Term Loan Priority Collateral, the same shall be segregated and held in trust and promptly paid over to the Term Lender, in the same form as received, with any necessary endorsements, and each ABL Creditor hereby authorizes the Term Lender to make any such endorsements as agent for the ABL Agent (which authorization, being coupled with an interest, is irrevocable) to be held or applied by the Term Lender in accordance with the terms of the Term Loan Documents until the Discharge of Term Loan Obligations shall have occurred before any of the same may be retained by one or more of the ABL Creditors. Each ABL Creditor irrevocably authorizes, empowers and directs any debtor, debtor in possession, receiver, trustee, liquidator, custodian, conservator or other Person having authority to pay or otherwise deliver all such payments to the Term Lender.  

6.4Sale of Collateral; Waivers.

(a)Notwithstanding anything to the contrary contained herein, the Term Loan Creditors will not contest, protest, or object, and will be deemed to have consented pursuant to section 363(f) of the Bankruptcy Code, to a Disposition of ABL Priority Collateral, or the process or procedures for obtaining bids for and effecting a Disposition of ABL Priority Collateral (including the right of the ABL Creditors to “credit bid” and the retention by the Obligors of professionals in connection with any potential Disposition), or any motion or order in connection with any such Disposition, process or procedures, under section 363 of the Bankruptcy Code (or any other provision of the Bankruptcy Code or applicable Bankruptcy Law), if the ABL Agent consents to such Disposition, such process or procedures or such motion or order; provided that (a) either (i) pursuant to court order, the Liens of the Term Loan Creditors attach to the net Proceeds of such Disposition with the same priority and validity as the Liens held by the Term Loan Creditors on such ABL Priority Collateral, and the Liens remain subject to the terms of this Agreement, 

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or (ii) the net Proceeds of a Disposition of ABL Priority Collateral received by ABL Agent in excess of those necessary to achieve the Discharge of ABL Obligations (other than Excess ABL Obligations) are distributed in accordance with the requirements of this Agreement, the UCC and applicable law, and (b) the net cash Proceeds of any Disposition under Section 363(b) of the Bankruptcy Code are permanently applied to the DIP Financing or to the ABL Obligations or are set aside for a wind-down, liquidation or similar fund. Notwithstanding the foregoing, the Term Lender, on behalf of itself and the other Term Loan Creditors, may raise any objections to any such Disposition that could be raised by any creditor of the Obligors whose claims were not secured by any Liens on such Collateral, provided such objections are not inconsistent with any other term or provision of this Agreement and are not based on the status of the Term Lender or the Term Loan Creditors as secured creditors (without limiting the foregoing, neither the Term Lender nor the Term Loan Creditors may raise any objections based on rights afforded by Sections 363(e) and (f) of the Bankruptcy Code to secured creditors (or by any comparable provision of any Bankruptcy Law)) with respect to the Liens granted to the Term Lender that are subordinate to the Liens granted to the ABL Agent. 

(b)Notwithstanding anything to the contrary contained herein, the ABL Creditors will not contest, protest, or object, and will be deemed to have consented pursuant to section 363(f) of the Bankruptcy Code, to a Disposition of Term Loan Priority Collateral, or the process or procedures for obtaining bids for and effecting a Disposition of Term Loan Priority Collateral (including the right of the Term Loan Creditors to “credit bid” and the retention by the Obligors of professionals in connection with any potential Disposition), or any motion or order in connection with any such Disposition, process or procedures, under section 363 of the Bankruptcy Code (or any other provision of the Bankruptcy Code or applicable Bankruptcy Law), if the Term Lender consents to such Disposition, such process or procedures or such motion or order; provided that (a) either (i) pursuant to court order, the Liens of the ABL Creditors attach to the net Proceeds of such Disposition with the same priority and validity as the Liens held by the ABL Creditors on such Term Loan Priority Collateral, and the Liens remain subject to the terms of this Agreement, or (ii) the net Proceeds of a Disposition of Term Loan Priority Collateral received by Term Lender in excess of those necessary to achieve the Discharge of Term Loan Obligations are distributed in accordance with the requirements of this Agreement, the UCC and applicable law, and (b) the net cash Proceeds of any Disposition under Section 363(b) of the Bankruptcy Code are permanently applied to the Term Loan Obligations or are set aside for a wind-down, liquidation or similar fund. Notwithstanding the foregoing, the ABL Agent, on behalf of itself and the other ABL Creditors, may raise any objections to any such Disposition that could be raised by any creditor of the Obligors whose claims were not secured by any Liens on such Collateral, provided such objections are not inconsistent with any other term or provision of this Agreement and are not based on the status of the ABL Agent or the ABL Creditors as secured creditors (without limiting the foregoing, neither the ABL Agent nor the ABL Creditors may raise any objections based on rights afforded by Sections 363(e) and (f) of the Bankruptcy Code to secured creditors (or by any comparable provision of any Bankruptcy Law)) with respect to the Liens granted to the ABL Agent that are subordinate to the Liens granted to the Term Lender. 

6.5No Waiver. Nothing in this Section 6 limits an ABL Creditor from objecting in an Insolvency Proceeding or otherwise to any action taken by the Term Loan Creditor, including the Term Loan Creditor’s seeking adequate protection (other than adequate protection for the Term Loan Creditors expressly contemplated by Sections 6.3), proposing a DIP Financing inconsistent with the provisions hereof or asserting any of its rights and remedies under the Term Loan Documents or otherwise. Nothing in this Section 6 limits a Term Loan Creditor from objecting in an Insolvency Proceeding or otherwise to any action taken by the ABL Creditor, including the ABL Creditor’s seeking adequate protection (other than adequate protection for the ABL Creditors expressly contemplated by Sections 6.3), proposing a DIP Financing inconsistent with the provisions hereof or asserting any of its rights and remedies under the ABL Documents or otherwise. 

6.6Relief from the Automatic Stay. Until the Discharge of ABL Obligations (other than the Excess ABL Obligations), no Term Loan Creditor may seek relief from the automatic stay or any other stay in an Insolvency Proceeding in respect of the ABL Priority Collateral without the ABL Agent’s prior written consent or oppose any request by the ABL Agent for relief from such stay. Until the Discharge of Term Loan Obligations, no ABL Creditor may seek relief from the automatic stay or any other stay in an Insolvency Proceeding in respect of the Term Loan Priority Collateral without the Term Lender’s prior written consent or oppose any request by the Term Lender for relief from such stay.  

6.7Waiver. So long as the respective rights and remedies available to Term Lender (for itself and on behalf of Term Loan Creditors) hereunder solely with respect to the Term Loan Priority Collateral are not impaired 

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thereby, the Term Lender and the Term Loan Creditors waive (a) any claim they may now or hereafter have arising out of the ABL Creditors’ election in any proceeding instituted under Chapter 11 of the Bankruptcy Code of the application of Section 1111(b)(2) of the Bankruptcy Code, out of any cash collateral or financing arrangement or out of any grant of security interest in the ABL Priority Collateral in any Insolvency Proceeding, or (b) any claim arising under Sections 506(c) or 552 of the Bankruptcy Code. So long as the respective rights and remedies available to ABL Agent (for itself and on behalf of ABL Creditors) hereunder solely with respect to the ABL Priority Collateral are not impaired thereby, the ABL Agent and ABL Creditors waive (x) any claim they may now or hereafter have arising out of the Term Loan Creditors’ election in any proceeding instituted under Chapter 11 of the Bankruptcy Code of the application of Section 1111(b)(2) of the Bankruptcy Code, out of any cash collateral or financing arrangement or out of any grant of security interest in the Term Loan Priority Collateral in any Insolvency Proceeding, or (y) any claim arising under Sections 506(c) or 552 of the Bankruptcy Code. 

6.8Avoidance Issues; Reinstatement. If an ABL Creditor or a Term Loan Creditor receives payment or property on account of an ABL Obligation or Term Loan Obligation, respectively, and the payment is subsequently invalidated, avoided, declared to be fraudulent or preferential, set aside, or otherwise required to be transferred to a trustee, receiver, or an Obligor or an the estate of an Obligor (a “Recovery”), then, to the extent of the Recovery, the respective ABL Obligations or Term Loan Obligations intended to have been satisfied by the payment will be reinstated as ABL Obligations or Term Loan Obligations, as applicable, on the date of the Recovery, and no Discharge of ABL Obligations or Discharge of Term Loan Obligations, as applicable, will be deemed to have occurred for all purposes hereunder. If this Agreement is terminated prior to a Recovery, this Agreement will be reinstated in full force and effect, and such prior termination will not diminish, release, discharge, impair, or otherwise affect the obligations of the Parties from the date of reinstatement. Upon any such reinstatement of ABL Obligations, each Term Loan Creditor will deliver to ABL Agent, and upon any such reinstatement of the Term Loan Obligations, each ABL Creditor will deliver to Term Lender, any Collateral or Proceeds thereof received between the date of Discharge of Term Loan Obligations or the Discharge of the ABL Loan Obligations, as applicable, and the Recovery to the extent such other party would have a prior right to such Collateral or Proceeds had this Agreement been in effect at the time received. No Term Loan Creditor or ABL Creditor may benefit from a Recovery, and any distribution made to a Term Loan Creditor or ABL Creditor as a result of a Recovery will be paid over to the ABL Agent for application to the ABL Obligations or the Term Lender for application to the Term Loan Obligations, as applicable, in accordance with this Agreement. 

6.9Certain Voting Rights. No Term Loan Creditor shall, without the consent of the ABL Agent, directly or indirectly propose, support or vote in favor of any a plan of reorganization or similar dispositive restructuring plan in connection with an Insolvency Proceeding that provides for treatment of the ABL Creditors, the ABL Obligations, the Term Loan Creditors or the Term Loan Obligations in a manner, or that is otherwise, inconsistent with this Agreement. No ABL Creditor shall, without the consent of the Term Lender, directly or indirectly propose, support or vote in favor of any a plan of reorganization or similar dispositive restructuring plan in connection with an Insolvency Proceeding that provides for treatment of the Term Loan Creditors, the Term Loan Obligations, the ABL Creditors or the ABL Obligations in a manner, or that is otherwise, inconsistent with this Agreement. 

6.10Reorganization Securities. Nothing in this Agreement prohibits or limits the right of a Term Loan Creditor or ABL Creditor, as applicable to receive and retain (a) any debt or equity securities that are issued by a reorganized debtor pursuant to a plan of reorganization or similar dispositive restructuring plan in connection with an Insolvency Proceeding; provided that any debt or equity securities received (i) prior to the Discharge of ABL Obligations (other than Excess ABL Obligations) by a Term Loan Creditor on account of a Term Loan Obligation that constitutes a distribution from or on account of the ABL Priority Collateral, an interest in the ABL Priority Collateral or the value of ABL Priority Collateral, whether such distribution is made in respect of a “secured claim” within the meaning of section 506(b) of the Bankruptcy Code or (except as provided below) otherwise, will be paid over or otherwise transferred to the ABL Agent for application in accordance with this Agreement, unless such distribution is made under a plan that is consented to by the affirmative vote of all classes composed of the secured claims of the ABL Creditors (and such classes do not include the claims of any creditors other than ABL Creditors) or (ii) prior to the Discharge of Term Loan Obligations by an ABL Creditor on account of an ABL Obligation that constitutes a distribution from or on account of the Term Loan Priority Collateral, an interest in Term Loan Priority Collateral or the value of Term Loan Priority Collateral, whether such distribution is made in respect of a “secured claim” within the meaning of section 506(b) of the Bankruptcy Code or (except as provided below) otherwise, will be paid over or otherwise transferred to the Term Lender for application in accordance with this Agreement, unless such 

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distribution is made under a plan that is consented to by the affirmative vote of all classes composed of the secured claims of the Term Loan Creditors (and such classes do not include the claims of any creditors other than Term Loan Creditors), or (b) any Distribution received (i) after the Discharge of ABL Obligations (other than Excess ABL Obligations) by a Term Loan Creditor pursuant to a plan of reorganization or similar dispositive restructuring plan in connection with an Insolvency Proceeding in respect of any claim classified under such plan as an unsecured claim in accordance with section 506(a)(1) of the Bankruptcy Code or (ii) after the Discharge of Term Loan Obligations by an ABL Creditor pursuant to a plan of reorganization or similar dispositive restructuring plan in connection with an Insolvency Proceeding in respect of any claim classified under such plan as an unsecured claim in accordance with section 506(a)(1) of the Bankruptcy Code.  

6.11Post-Petition Interest.

(a)Neither the Term Lender nor any other Term Loan Creditor shall oppose or seek to challenge any claim by the ABL Agent or any other ABL Creditor for allowance in any Insolvency Proceeding of ABL Obligations consisting of post-petition interest, fees or expenses to the extent of the value of the Lien on the Collateral of the ABL Creditors (after taking into account the Lien of the Term Loan Creditors on the Term Loan Priority Collateral). 

(b)Neither the ABL Agent nor any other ABL Creditor shall oppose or seek to challenge any claim by the Term Lender or any other Term Loan Creditor for allowance in any Insolvency Proceeding of Term Loan Obligations consisting of post-petition interest, fees or expenses to the extent of the value of the Lien on the Collateral of the Term Loan Creditors (after taking into account the Lien of the ABL Creditors on the ABL Priority Collateral). 

6.12Separate Grants of Security and Separate Classification. Each Secured Creditor acknowledges and agrees that (a) the grants of Liens pursuant to the ABL Documents and the Term Loan Documents constitute two separate and distinct grants of Liens and (b) because of their differing rights in the Collateral, the Term Loan Obligations are fundamentally different from the ABL Obligations and must be separately classified in any plan of reorganization proposed or adopted in an Insolvency Proceeding. The Term Loan Creditors shall not seek in any Insolvency Proceeding to be treated as part of the same class of creditors as the ABL Creditors and shall not oppose any pleading or motion by the ABL Creditors for the ABL Creditors and the Term Loan Creditors to be treated as separate classes of creditors.  The ABL Creditors shall not seek in any Insolvency Proceeding to be treated as part of the same class of creditors as the Term Loan Creditors and shall not oppose any pleading or motion by the Term Loan Creditors for the ABL Creditors and the Term Loan Creditors to be treated as separate classes of creditors. Notwithstanding the foregoing, if it is held that the ABL Obligations and the Term Loan Obligation constitute only one secured claim (rather than separate classes of claims), then the Secured Creditors hereby acknowledge and agree that all distributions shall be made as if there were separate classes of senior and junior secured claims against the Obligors in respect of the Collateral, with the effect being that, to the extent that (i) the aggregate value of the ABL Priority Collateral exceeds the amount of the ABL Obligations incurred and accrued before the commencement of any Insolvency Proceeding, the ABL Creditors shall be entitled to receive, in addition to amounts distributed to them in respect of principal, pre-petition interest and other claims, all amounts owing in respect of post-petition interest, and fees, costs and charges incurred subsequent to the commencement of the applicable Insolvency Proceeding before any distribution is made in respect of any of the claims held by the Term Loan Creditors and (ii) the aggregate value of the Term Loan Priority Collateral exceeds the amount of the Term Loan Obligations incurred and accrued before the commencement of any Insolvency Proceeding, the Term Loan Creditors shall be entitled to receive, in addition to amounts distributed to them in respect of principal, pre-petition interest and other claims, all amounts owing in respect of post-petition interest, and fees, costs and charges incurred subsequent to the commencement of the applicable Insolvency Proceeding before any distribution is made in respect of any of the claims held by the ABL Creditors. The Term Loan Creditors and ABL Creditors hereby agree to turn over to the ABL Creditors or Term Loan Creditors, as applicable, amounts otherwise received or receivable by them to the extent necessary to effectuate the intent of the preceding sentence, even if such turnover has the effect of reducing the claim or recovery of the Term Loan Creditors or the ABL Creditors, as the case may be. 

6.13Rights as Unsecured Lenders. In any Insolvency Proceeding, the ABL Creditors and the Term Loan Creditors may exercise any rights and remedies that could be exercised by an unsecured creditor in accordance with the terms of the ABL Documents or Term Loan Documents, as applicable and, in each case, applicable law in a manner not inconsistent with the terms of this Agreement.  

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Section 7.
	
Representations and Warranties 

7.1Representations and Warranties of Each Party. Each of ABL Agent and Term Lender hereto represents and warrants to the other parties hereto as follows:  

(a)It is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has all requisite power and authority to execute and deliver this Agreement and perform its obligations hereunder. 

(b)This Agreement has been duly executed and delivered by such party and constitutes a legal, valid and binding obligation of such party, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or similar laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability. 

(c)The execution, delivery and performance by such party of this Agreement (i) do not require any consent or approval of, registration or filing with or any other action by any governmental authority and (ii) will not violate any provision of law, statute, rule or regulation, or of the certificate or articles of incorporation or other constitutive documents or by-laws of such party or any order of any governmental authority or any provision of any material indenture, material agreement or other material instrument binding upon such party. 

(d)Term Lender or the ABL Agent, as applicable, have been appointed and authorized by its respective Secured Creditors to enter into this Agreement on its behalf and to take all actions on its behalf and to exercise such powers under the this Agreement as are delegated by the terms thereof to such Term Lender or ABL Agent, as applicable, together with all such powers as are reasonably incidental thereto. Each of Term Lender and ABL Agent is authorized and empowered to amend, modify, or waive any provisions of this Agreement on behalf of the respective Secured Creditors without further notice or consent from its respective Secured Creditors. In performing its functions and duties under this Agreement, each of Term Lender and ABL Agent shall act solely as agent of its respective Secured Creditors and does not assume and shall not be deemed to have assumed any obligation toward or relationship of agency or trust with or for any Obligor. 

	
Section 8.
	
Miscellaneous.

8.1Termination. Subject to Section 4.4, this Agreement shall terminate and be of no further force and effect upon the first to occur of (a) the Discharge of ABL Obligations, (b) the Discharge of Term Loan Obligations or (c) mutual agreement of the ABL Agent (on behalf of the ABL Creditors) and the Term Lender (on behalf of the Term Loan Creditors). 

8.2Successors and Assigns; No Third Party Beneficiaries.

(a)This Agreement shall be binding upon each Secured Creditor and its respective successors and assigns and shall inure to the benefit of each Secured Creditor and its respective successors, participants and assigns. However, no provision of this Agreement shall inure to the benefit of any other Person, including a trustee, debtor-in-possession, creditor trust or other representative of an estate or creditor of any Borrower, or other Obligor, including where such estate or creditor representative is the beneficiary of a Lien on Collateral by virtue of the avoidance of such Lien in an Insolvency Proceeding. If either the ABL Agent or Term Lender resigns or is replaced pursuant to the ABL Credit Agreement or Term Loan Credit Agreement, as applicable, its successor will be a party to this Agreement with all the rights, and subject to all the obligations, of this Agreement. Notwithstanding any other provision of this Agreement, this Agreement may not be assigned to any Person except as expressly contemplated herein. 

(b)Each Secured Creditor reserves the right to grant participations in, or otherwise sell, assign, transfer or negotiate all or any part of, or any interest in, their respective Obligations. No Secured Creditor shall be obligated to give any notices to or otherwise in any manner deal directly with any participant in the Obligations and 

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no participant shall be entitled to any rights or benefits under this Agreement, except through the Secured Creditor with which it is a participant. 

8.3Notices. All notices and other communications provided for hereunder shall be in writing and shall be mailed, sent by overnight courier, telecopied or delivered, as follows: 

(a) if to the ABL Agent, to it at the following address:

MidCap Funding IV Trust, as ABL Agent

c/o MidCap Financial Services, LLC, as servicer

7255 Woodmont Avenue, Suite 200 

Bethesda, Maryland 20814

Attn: Account Manager for Alphatec transaction

Facsimile: 301-941-1450

(b) if to the Term Lender, to it at the following address:

Squadron Medical Finance Solutions LLC 

18 Hartford Avenue

Granby, CT 06035 

Attn: David R. Pelizzon

Email: dpelizzon@sqdncap.com 

With a copy, which shall not constitute notice, to:

Reed Smith LLP 

10 South Wacker Drive

Suite 4000

Chicago, Illinois 60606

Attn.: Joel R. Schaider

Phone: 312-207-6448 

Facsimile: 312-207-6400

Email: jschaider@reedsmith.com 

or, as to each party, at such other address as shall be designated by such party in a written notice to the other parties complying as to delivery with the terms of this Section 8.3. All such notices and other communications shall be effective (1) if sent by registered mail, return receipt requested, when received, (2) if sent by facsimile, when transmitted and a confirmation is received; provided that the same is on a Business Day and, if not, on the next Business Day or (3) if delivered by messenger or overnight courier, upon delivery; provided that the same is on a Business Day and, if not, on the next Business Day. 

8.4Counterparts. This Agreement may be executed by the parties hereto in several counterparts, and each such counterpart shall be deemed to be an original and all of which shall constitute together but one and the same agreement. 

8.5GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF MARYLAND. 

8.6CONSENT TO JURISDICTION AND VENUE. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT SHALL BE BROUGHT EXCLUSIVELY IN THE COURTS OF THE STATE OF MARYLAND LOCATED IN THE COUNTY OF MONTGOMERY OR OF THE UNITED STATES OF AMERICA FOR THE DISTRICT OF MARYLAND AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE ABL AGENT ON BEHALF OF THE ABL CREDITORS AND THE TERM LENDER ON BEHALF OF THE TERM LOAN CREDITORS HEREBY ACCEPTS FOR ITSELF AND IN 

29

 

RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, THAT ANY OF THEM MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH JURISDICTIONS.  

8.7MUTUAL WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING WITH RESPECT TO, OR DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED THEREIN OR RELATED THERETO (WHETHER FOUNDED IN CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT, AS APPLICABLE, BY THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.7. 

8.8Amendments. No amendment or waiver of any provision of this Agreement, and no consent to any departure by any Person from the terms hereof, shall in any event be effective unless it is in writing and signed by the ABL Agent and the Term Lender. In no event shall the consent of any Obligor be required in connection with any amendment or other modification of this Agreement. 

8.9No Waiver. No failure or delay on the part of any Secured Creditor in exercising any power or right under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right. 

8.10Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provisions in any other jurisdiction. 

8.11Further Assurances. Each party hereto agrees to cooperate fully with each other party hereto to effectuate the intent and provisions of this Agreement and, from time to time, to take such further action and to execute and deliver such additional documents and instruments (in recordable form, if requested) as the ABL Agent or Term Lender may reasonably request to effectuate the terms of and the Lien priorities contemplated by this Agreement. 

8.12Headings. The section headings contained in this Agreement are and shall be without meaning or content whatsoever and are not part of this Agreement. 

8.13Credit Analysis. The Secured Creditors shall each be responsible for keeping themselves informed of (a) the financial condition of the Obligors and all other endorsers, obligors or guarantors of the Obligations and (b) all other circumstances bearing upon the risk of nonpayment of the Obligations, and have made and shall continue to make, independently and without reliance upon each other, their own credit analysis and decision in entering into the ABL Documents and Term Loan Documents to which they are parties and taking or not taking any action thereunder. No Secured Creditor shall have any duty to advise any other Secured Creditor of information known to it regarding such condition or any such other circumstances, and no disclosure of any such information shall create any obligation to provide any further information or be deemed to constitute or require any representation or warranty from the disclosing Secured Party regarding that or any other information. No Secured Creditor assumes any liability to any other Secured Creditor or to any other Person with respect to: (i) the financial or other condition of Obligors and all other endorsers, obligors or guarantors of the Obligations, (ii) the enforceability, validity, value or collectability of the Obligations, any Collateral therefor or any guarantee or security which may have been granted in connection with any of the Obligations, (iii) any Obligor’s title or right to transfer any Collateral or security or (iv) any other circumstance that might bear on the risk of nonpayment of any Obligations. 

8.14Waiver of Claims. To the maximum extent permitted by law, each party hereto waives any claim it might have against any Secured Creditor with respect to, or arising out of, any action or failure to act or any error of 

30

 

judgment or negligence, mistake or oversight whatsoever on the part of any other party hereto or their respective directors, officers, employees or agents with respect to any exercise of rights or remedies under the Documents or any transaction relating to the Collateral in accordance with this Agreement. None of the Secured Creditors, nor any of their respective directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or, except as specifically provided in this Agreement, shall be under any obligation to Dispose of any Collateral upon the request of any Obligor or any Secured Creditor or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof. 

8.15Conflicts. In the event of any conflict between the provisions of this Agreement and the provisions of the Documents, the provisions of this Agreement shall govern. 

8.16Specific Performance. Each of the ABL Agent and the Term Lender may demand specific performance of this Agreement and, on behalf of itself and the respective other Secured Creditors, hereby irrevocably waives any defense based on the adequacy of a remedy at law and any other defense that might be asserted to bar the remedy of specific performance in any action which may be brought by the respective Secured Creditors. The rights and remedies provided in this Agreement will be cumulative and not exclusive of other rights or remedies provided by law. 

8.17Provisions Solely to Define Relative Rights. The provisions of this Agreement are and are intended solely for the purpose of defining the relative rights of the Secured Creditors. None of the Obligors or any other creditor thereof shall have any rights hereunder, and none of the Obligors may rely on the terms hereof. Nothing in this Agreement is intended to or shall impair the obligations of Obligors, which are absolute and unconditional, to pay the ABL Obligations and the Term Loan Obligations as and when the same shall become due and payable in accordance with their respective, or to affect the relative rights of the lenders of any Obligor, other than the relative rights between the ABL Agent and the ABL Creditors, on the one hand, and the Term Lender and the Term Loan Creditors, on the other. 

8.18Subrogation. If (i) a Term Loan Creditor pays or distributes cash, property, or other assets to an ABL Creditor under this Agreement, it will be subrogated to the rights of the ABL Creditor with respect to the value of such payment or distribution and (ii) an ABL Creditor pays or distributes cash, property, or other assets to a Term Loan Creditor under this Agreement, it will be subrogated to the rights of the Term Loan Creditor with respect to the value of such payment or distribution; provided that such Secured Creditor waives all rights of subrogation arising hereunder or otherwise in respect of any such payment or distribution until, in the case of the Term Loan Creditors, the Discharge of ABL Obligations (other than Excess ABL Obligations) or in the case of the ABL Creditors, the Discharge of the Term Loan Obligations.  

8.19Entire Agreement. This Agreement and the Documents embody the entire agreement of the Obligors, the ABL Agent, the ABL Creditors, the Term Lender and the Term Loan Creditors with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings relating to the subject matter hereof and thereof and any draft agreements, negotiations or discussions involving any Obligor and any of the ABL Agent, the ABL Creditors, the Term Lender and the Term Loan Creditors relating to the subject matter hereof. 

8.20Survival. All covenants, agreements, representations and warranties made by any party in this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement. The terms of this Agreement shall survive, and shall continue in full force and effect, in any Insolvency Proceeding.  

8.21Effect of the Discharge of the ABL Obligations or the Term Loan Obligations. It is agreed and understood that (a) upon and after Discharge of the Term Loan Obligations, for so long as the ABL Obligations shall remain outstanding, the rights and priorities of the Term Lender and the other Term Loan Creditors shall inure to the benefit ABL Agent and other ABL Creditors and ABL Agent may exercise the rights of the Term Lender as set forth herein and (b) upon and after Discharge of the ABL Obligations, for so long as the Term Loan Obligations shall remain outstanding, the rights and priorities of the ABL Agent and the other ABL Creditors shall inure to the benefit Term Lender and other Term Loan Creditors and Term Lender may exercise the rights of the ABL Agent as set forth herein. 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

 

31

 

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

 

	
ABL AGENT:

	
 

	
MIDCAP FUNDING IV TRUST, as ABL Agent

	
 

	
By: Apollo Capital Management, L.P.,

its investment manager

	
 

	
By: Apollo Capital Management GP, LLC,

its general partner

	
 

	
By:
	
/s/ Maurice Amsellem
	
 

	
Name:
	
Maurice Amsellem

	
Title:
	
Authorized Signatory

 

MidCap / Alphatec / Squadron Intercreditor

 

 

	
TERM LENDER:

	
 

	
SQUADRON MEDICAL FINANCE SOLUTIONS

	
LLC. as Term Lender

	
 

	
By:
	
/s/ David R. Pelizzon
	
 

	
Name:
	
David R. Pelizzon

	
Title:
	
President

 

MidCap / Alphatec / Squadron Intercreditor

 

Each of the undersigned hereby acknowledges and agrees to the foregoing terms and provisions.

 

	
BORROWERS:

	
 

	
ALPHATEC HOLDINGS, INC.,

	
a Delaware corporation

	
 

	
By:
	
/s/ Jeffrey Black
	
 

	
Name:
	
Jeffrey Black

	
Title:
	
Chief Financial Officer

 

 

	
ALPHATEC SPINE, INC.,

	
a California corporation

	
 

	
By:
	
/s/ Jeffrey Black
	
 

	
Name:
	
Jeffrey Black

	
Title:
	
Chief Financial Officer

 

 

	
SAFEOP SURGICAL, INC.,

	
a Delaware corporation

	
 

	
By:
	
/s/ Jeffrey Black
	
 

	
Name:
	
Jeffrey Black

	
Title:
	
Chief Financial Officer

 

MidCap / Alphatec / Squadron Intercreditor

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