EX-10.6 5 d608281dex106.htm EX-10.6 EX-10.6

Exhibit 10.6

EXECUTION COPY

 

 

 

$35,000,000

SENIOR SECURED CREDIT AGREEMENT

dated as of July 27, 2012

among

LIFETIME BRANDS, INC.,

as Borrower,

THE SUBSIDIARY GUARANTORS PARTY HERETO,

as Subsidiary Guarantors,

THE LENDERS PARTY HERETO

and

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent and Collateral Agent

 

 

 


TABLE OF CONTENTS

 

Section

        Page  

ARTICLE I

  

DEFINITIONS

     1   

SECTION 1.01

   Defined Terms      1   

SECTION 1.02

   Classification of Loans and Borrowings      25   

SECTION 1.03

   Terms Generally      25   

SECTION 1.04

   Accounting Terms; GAAP      25   

SECTION 1.05

   Resolution of Drafting Ambiguities      26   

ARTICLE II

  

THE CREDITS

     26   

SECTION 2.01

   Commitments      26   

SECTION 2.02

   Loans      26   

SECTION 2.03

   Borrowing Procedure      27   

SECTION 2.04

   Evidence of Debt; Repayment of Loans      28   

SECTION 2.05

   Fees      29   

SECTION 2.06

   Interest on Loans      29   

SECTION 2.07

   Termination of Commitments      30   

SECTION 2.08

   Interest Elections      30   

SECTION 2.09

   Repayment and Amortization of Loans      31   

SECTION 2.10

   Optional and Mandatory Prepayments of Loans      31   

SECTION 2.11

   Alternate Rate of Interest      33   

SECTION 2.12

   Yield Protection      34   

SECTION 2.13

   Breakage Payments      35   

SECTION 2.14

   Payments Generally; Pro Rata Treatment; Sharing of Setoffs      35   

SECTION 2.15

   Taxes      37   

SECTION 2.16

   Mitigation Obligations; Replacement of Lenders      40   

SECTION 2.17

   Defaulting Lenders      41   

ARTICLE III

  

REPRESENTATIONS AND WARRANTIES

     42   

SECTION 3.01

   Organization; Powers      42   

SECTION 3.02

   Authorization; Enforceability      42   

SECTION 3.03

   Governmental Approvals; No Conflicts      42   

SECTION 3.04

   Financial Condition; No Material Adverse Change      42   

SECTION 3.05

   Properties      43   

SECTION 3.06

   Litigation      43   

SECTION 3.07

   Compliance with Laws and Agreements      43   

SECTION 3.08

   Investment Company Status      43   

 

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Section

        Page  

SECTION 3.09

   Taxes      43   

SECTION 3.10

   ERISA      44   

SECTION 3.11

   Disclosure      44   

SECTION 3.12

   Material Agreements      44   

SECTION 3.13

   Solvency      44   

SECTION 3.14

   Insurance      45   

SECTION 3.15

   Capitalization and Subsidiaries      45   

SECTION 3.16

   No Burdensome Restrictions      45   

SECTION 3.17

   Federal Reserve Regulations      45   

SECTION 3.18

   Security Interest in Collateral      45   

SECTION 3.19

   Employment Matters      45   

SECTION 3.20

   Common Enterprise      46   

SECTION 3.21

   Anti-Terrorism Law      46   

SECTION 3.22

   Environmental Matters      47   

SECTION 3.23

   LTB Ownership of Grupo Vasconia      47   

ARTICLE IV

  

CONDITIONS TO CREDIT EXTENSION

     47   

SECTION 4.01

   Conditions to Credit Extension      47   

ARTICLE V

  

AFFIRMATIVE COVENANTS

     50   

SECTION 5.01

   Financial Statements, Reports, etc. Furnish to the Administrative Agent and each Lender:      50   

SECTION 5.02

   Litigation and Other Notices      53   

SECTION 5.03

   Existence; Businesses and Properties      53   

SECTION 5.04

   Insurance      54   

SECTION 5.05

   Obligations and Taxes      54   

SECTION 5.06

   Employee Benefits      54   

SECTION 5.07

   Maintaining Records; Access to Properties and Inspections; Annual Meetings      55   

SECTION 5.08

   Use of Proceeds      55   

SECTION 5.09

   Compliance with Environmental Laws; Environmental Reports      55   

SECTION 5.10

   [Reserved]      56   

SECTION 5.11

   Additional Collateral; Further Assurances      56   

SECTION 5.12

   Security Interests      57   

SECTION 5.13

   Information Regarding Collateral      57   

ARTICLE VI

  

NEGATIVE COVENANTS

     58   

SECTION 6.01

   Indebtedness      58   

SECTION 6.02

   Liens      60   

 

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Section

        Page  

SECTION 6.03

   Fundamental Changes      62   

SECTION 6.04

   Investments, Loans, Advances, Guarantees and Acquisitions      63   

SECTION 6.05

   Asset Sales      65   

SECTION 6.06

   Sale and Leaseback Transactions      66   

SECTION 6.07

   [Reserved]      66   

SECTION 6.08

   Restricted Payments      66   

SECTION 6.09

   Transactions with Affiliates      66   

SECTION 6.10

   Financial Covenants      67   

SECTION 6.11

   Prepayments of Other Indebtedness; Modifications of Organizational Documents; Material Indebtedness and Other Documents, etc.; Limitation on Overadvances      67   

SECTION 6.12

   Restrictive Agreements      68   

SECTION 6.13

   Fiscal Year      68   

SECTION 6.14

   Anti-Terrorism Law; Anti-Money Laundering      69   

SECTION 6.15

   Limitation on Use of Stock Proceeds to Prepay Loans      69   

SECTION 6.16

   Availability Under First Lien Credit Agreement      69   

SECTION 6.17

   Swap Agreements      69   

SECTION 6.18

   LTB as Passive Holding Company      69   

SECTION 6.19

   First Lien Secured Obligations      70   

ARTICLE VII

  

GUARANTEE

     70   

SECTION 7.01

   The Loan Party Guarantee      70   

SECTION 7.02

   Obligations Unconditional      71   

SECTION 7.03

   Reinstatement      71   

SECTION 7.04

   Subrogation; Subordination      72   

SECTION 7.05

   Remedies      72   

SECTION 7.06

   Instrument for the Payment of Money      72   

SECTION 7.07

   Continuing Guarantee      72   

SECTION 7.08

   General Limitation on Guarantee Obligations      72   

SECTION 7.09

   Release of Subsidiary Guarantors      73   

SECTION 7.10

   Right of Contribution      73   

ARTICLE VIII

  

EVENTS OF DEFAULT

     73   

SECTION 8.01

   Events of Default      73   

SECTION 8.02

   Rescission      76   

SECTION 8.03

   Application of Proceeds      76   

ARTICLE IX

  

THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT

     77   

SECTION 9.01

   Appointment and Authority      77   

 

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Section

        Page  

SECTION 9.02

   Rights as a Lender      77   

SECTION 9.03

   Exculpatory Provisions      77   

SECTION 9.04

   Reliance by Agent      78   

SECTION 9.05

   Delegation of Duties      78   

SECTION 9.06

   Resignation of Agent      79   

SECTION 9.07

   Non-Reliance on Agent and Other Lenders      79   

SECTION 9.08

   [Reserved]      79   

ARTICLE X

  

MISCELLANEOUS

     80   

SECTION 10.01

   Notices      80   

SECTION 10.02

   Waivers; Amendment      82   

SECTION 10.03

   Expenses; Indemnity; Damage Waiver      84   

SECTION 10.04

   Successors and Assigns      86   

SECTION 10.05

   Survival of Agreement      88   

SECTION 10.06

   Counterparts; Integration; Effectiveness      88   

SECTION 10.07

   Severability      89   

SECTION 10.08

   Right of Setoff      89   

SECTION 10.09

   Governing Law; Jurisdiction; Consent to Service of Process      89   

SECTION 10.10

   Waiver of Jury Trial      90   

SECTION 10.11

   Headings      90   

SECTION 10.12

   Treatment of Certain Information; Confidentiality      90   

SECTION 10.13

   USA PATRIOT Act Notice      91   

SECTION 10.14

   Interest Rate Limitation      91   

SECTION 10.15

   Post Closing Requirements      91   

SCHEDULES

 

Schedule 1.01(a)    Effective Date Commitments
Schedule 1.01(b)    Subsidiary Guarantors
Schedule 3.05    Properties
Schedule 3.06    Disclosed Matters
Schedule 3.14    Insurance
Schedule 3.15    Capitalization and Subsidiaries
Schedule 3.22    Environmental Matters
Schedule 6.01    Existing Indebtedness
Schedule 6.02    Existing Liens
Schedule 6.04    Existing Investments
Schedule 6.12    Existing Restrictions
EXHIBITS   
Exhibit A    Form of Assignment and Assumption
Exhibit B    Form of Compliance Certificate
Exhibit C    Form of Interest Election Request
Exhibit D    Form of Joinder Agreement

 

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Exhibit E    List of Closing Documents
Exhibit F    Form of Note
Exhibit G    Form of Security Agreement
Exhibit H    Form of Opinion of Company Counsel
Exhibit I    Form of Opinion of Mexico Local Counsel
Exhibit J    Form of Intercompany Note
Exhibits K1-K2    Form of United States Tax Compliance Certificates
Exhibit L    Form of Intercreditor Agreement

 

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SENIOR SECURED CREDIT AGREEMENT

This SENIOR SECURED CREDIT AGREEMENT (this “Agreement”), dated as of July 27, 2012, among LIFETIME BRANDS, INC., a Delaware corporation (“Borrower”), the Subsidiary Guarantors (such term and each other capitalized term used but not defined herein having the meaning given to it in Article I), the Lenders, and JPMORGAN CHASE BANK, N.A., as administrative agent (in such capacity, “Administrative Agent”) for the Lenders and as collateral agent (in such capacity, “Collateral Agent”) for the Secured Parties.

WITNESSETH:

WHEREAS, Borrower has requested the Lenders to extend credit in the form of Loans on the Effective Date, in an aggregate principal amount of $35,000,000.

WHEREAS, the proceeds of the Loans are to be used in accordance with Section 5.08.

WHEREAS, Borrower has entered into the First Lien Credit Agreement providing for first lien asset-based revolving loans.

NOW, THEREFORE, the Lenders are willing to extend such credit to Borrower on the terms and subject to the conditions set forth herein. Accordingly, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01 Defined Terms. As used in this Agreement, the following terms shall have the meanings specified below:

ABR”, when used in reference to any Loan or Borrowing, is used when such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.

ABR Borrowing” shall mean a Borrowing comprised of ABR Loans.

ABR Loan” shall mean any Loan bearing interest at a rate determined by reference to the Alternate Base Rate in accordance with the provisions of Article II.

“Acquisition Consideration” shall mean the purchase consideration for any Permitted Acquisition and all other payments by Borrower or any of its Subsidiaries in exchange for, or as part of, the consideration for any Permitted Acquisition, whether paid in cash or by exchange of Equity Interests of Borrower or its Subsidiaries or of properties or otherwise and whether payable at or prior to the consummation of such Permitted Acquisition or deferred payment at any future time, whether or not any such future payment is subject to the occurrence of any contingency, and which represents the purchase price and any assumptions of Indebtedness, “earn-outs” and other agreements to make any payment the amount of which is, or the terms of payment of which are, in any respect subject to or contingent upon the revenues, income, cash flow or profits (or the like) of any person or business; provided that any such future payment that is subject to a contingency shall be considered Acquisition Consideration only to the extent of the reserve, if any, required under GAAP at the time of such sale to be established in respect thereof by Borrower or any of its Subsidiaries.


Adjusted LIBOR Rate” shall mean, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the sum of (a) the LIBOR Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.

Administrative Agent” shall have the meaning assigned to such term in the preamble hereto and includes each other Person appointed as the successor pursuant to Article IX.

Administrative Questionnaire” shall mean an Administrative Questionnaire in a form supplied by the Administrative Agent.

Affected Foreign Subsidiary” shall mean any Foreign Subsidiary to the extent greater than 65% of the Equity Interests of such Foreign Subsidiary being pledged to support the Secured Obligations would cause a Deemed Dividend Issue.

Affiliate” shall mean, when used with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

Agents” shall mean the Administrative Agent and the Collateral Agent; and “Agent” shall mean any of them.

Agreement” shall have the meaning assigned to such term in the preamble hereto.

“Alternate Base Rate” shall mean, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus  12 of 1% and (c) the Adjusted LIBOR Rate for a one month Interest Period on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1%; provided that, for the avoidance of doubt, the Adjusted LIBOR Rate for any day shall be based on the rate appearing on the Reuters Screen LIBOR01 Page (or on any successor or substitute page of such page) at approximately 11:00 a.m. London time on such day (without any rounding). Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBOR Rate shall be effective from and including the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBOR Rate, respectively.

Amortization Date” shall mean, January 31st, April 30th, July 31st, and October 31st of each calendar year during the term of this Agreement.

Anti-Terrorism Laws” shall have the meaning assigned to such term in Section 3.21.

Applicable Pledge Percentage” shall mean (i) 65% of the total voting power of all outstanding Voting Stock of such Affected Foreign Subsidiary and (ii) 100% of the Equity Interests not constituting Voting Stock of such Affected Foreign Subsidiary, except that any such Equity Interests constituting “stock entitled to vote” within the meaning of Treasury Regulation Section 1.956-2(c)(2) shall be treated as Voting Stock for purposes of this definition.

 

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Approved Fund” shall mean any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

Asset Sale” shall mean (a) any conveyance, sale, lease, sublease, assignment, transfer or other disposition (including by way of merger or consolidation and including any Sale and Leaseback Transaction) of any property excluding sales of inventory and dispositions of cash and Cash Equivalents, in each case, in the ordinary course of business, by Borrower or any of its Subsidiaries and (b) any issuance or sale of any Equity Interests of any Subsidiary of Borrower, in each case, to any Person other than (i) Borrower, (ii) any Subsidiary Guarantor or (iii) any other Subsidiary.

Assignment and Assumption” shall mean an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 10.04(b)), and accepted by the Administrative Agent, in substantially the form of Exhibit A, or any other form approved by the Administrative Agent and the Borrower (such approval not to be unreasonably withheld or delayed).

Availability” shall have the meaning ascribed to such term in the First Lien Credit Agreement as in effect on July 27, 2012 and thereafter as such meaning may be modified in accordance with the Intercreditor Agreement.

Banking Services” shall have the meaning ascribed thereto in the First Lien Credit Agreement as in effect on July 27, 2012 and thereafter as such meaning may be modified in accordance with the Intercreditor Agreement.

Banking Services Obligations” shall have the meaning ascribed thereto in the First Lien Credit Agreement as in effect on July 27, 2012 and thereafter as such meaning may be modified in accordance with the Intercreditor Agreement.

Bankruptcy Event” shall mean, with respect to any Person, such Person becomes the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business, appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment, provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by a Governmental Authority or instrumentality thereof, provided, further, that such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or any other jurisdiction or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Governmental Authority or instrumentality), to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.

Board” shall mean the Board of Governors of the Federal Reserve System of the United States.

Board of Directors” shall mean, with respect to any Person, (i) in the case of any corporation, the board of directors of such Person, (ii) in the case of any limited liability company, the board or committee of managers of such Person, (iii) in the case of any partnership, the Board of Directors of the general partner of such Person and (iv) in any other case, the functional equivalent of the foregoing.

 

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Borrower” shall have the meaning assigned to such term in the preamble hereto.

Borrowing” shall mean Loans of the same Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect.

Borrowing Base” shall mean each of the Domestic Borrowing Base and the Foreign Borrowing Base, as such terms are defined in the First Lien Credit Agreement as in effect on July 27, 2012 and thereafter as such meaning may be modified in accordance with the Intercreditor Agreement.

Borrowing Request” shall mean a request by Borrower in accordance with the terms of Section 2.03.

Burdensome Restrictions” shall mean any consensual encumbrance or restriction of the type described in Section 6.12.

Business Day” shall mean any day that is not a Saturday, Sunday or other day on which banks in New York City are authorized or required by law to remain closed; provided, however, that when used in connection with a Eurodollar Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.

Capital Assets” shall mean, with respect to any Person, all equipment, fixed assets and real property or improvements of such Person, or replacements or substitutions therefor or additions thereto, that, in accordance with GAAP, have been or should be reflected as additions to property, plant or equipment on the balance sheet of such Person.

Capital Expenditures” shall mean, for any period, without duplication, all expenditures made directly or indirectly by Borrower and its Subsidiaries during such period for Capital Assets (whether paid in cash or other consideration, financed by the incurrence of Indebtedness or accrued as a liability), but excluding expenditures made in connection with the replacement, substitution or restoration of property pursuant to Sections 2.10(c) and (f).

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

Cash Equivalents” shall mean, as to any Person, (a) securities issued, or directly, unconditionally and fully guaranteed or insured, by the United States or any agency or instrumentality thereof; provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than one year from the date of acquisition by such Person; (b) securities issued, or directly, unconditionally and fully guaranteed or insured, by any state of the U.S. or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either S&P or Moody’s, (c) time deposits and certificates of deposit of any Lender or any commercial bank having, or which is the principal banking subsidiary of a bank holding company

 

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organized under the laws of the United States, any state thereof or the District of Columbia or any U.S. branch of a foreign bank having, capital and surplus aggregating in excess of $250,000,000 and a rating of “A” (or such other similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act) with maturities of not more than one year from the date of acquisition by such Person; (d) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (a) above entered into with any bank meeting the qualifications specified in clause (c) above, which repurchase obligations are secured by a valid perfected security interest in the underlying securities; (e) commercial paper issued by any Lender or Person incorporated in the United States rated at least A-2 or the equivalent thereof by S&P or at least P-2 or the equivalent thereof by Moody’s, and in each case maturing not more than one year after the date of acquisition by such Person; (f) investments in money market funds substantially all of whose assets are comprised of securities of the types described in clauses (a) through (e) above; and (g) demand deposit accounts maintained in the ordinary course of business.

Casualty Event” shall mean any involuntary loss of title, any involuntary loss of, damage to or any destruction of, or any condemnation or other taking (including by any Governmental Authority) of, any property of Borrower or any of its Subsidiaries. “Casualty Event” shall include but not be limited to any taking of all or any part of any real property of any Person or any part thereof, in or by condemnation or other eminent domain proceedings pursuant to any Requirement of Law, or by reason of the temporary requisition of the use or occupancy of all or any part of any real property of any Person or any part thereof by any Governmental Authority, civil or military, or any settlement in lieu thereof but not an Asset Sale.

Change in Control” shall mean (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Exchange Act and the rules of the Securities and Exchange Commission thereunder as in effect on the date hereof), of Equity Interests representing more than 40% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of Borrower; (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of Borrower by Persons who were neither (i) nominated by the board of directors of Borrower nor (ii) appointed by directors so nominated; (c) the acquisition of direct or indirect Control of Borrower by any Person or group; or (d) the occurrence of a change in control, or other similar provision, as defined in any agreement or instrument evidencing any Material Indebtedness (triggering a default or mandatory prepayment, which default or mandatory prepayment has not been waived in writing).

Change in Law” shall mean (a) the adoption of any law, rule, regulation or treaty (including any rules or regulations issued under or implementing any existing law) after the date of this Agreement, (b) any change in any law, rule, regulation or treaty or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender (or, for purposes of Section 2.12(b), by any lending office of such Lender or by such Lender’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement; provided that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder, issued in connection therewith or in implementation thereof, and (ii) all requests, rules, guidelines and directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted, issued or implemented.

 

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Charges” shall have the meaning assigned to such term in Section 10.14.

Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

Collateral” shall mean any and all property owned, leased or operated by any Loan Party, now existing or hereafter acquired, that may at any time be or become subject to a security interest or Lien in favor of the Administrative Agent, on behalf of itself and the Secured Parties, to secure the Secured Obligations.

Collateral Access Agreement” shall have the meaning assigned to such term in the Security Agreement.

Collateral Agent” shall have the meaning assigned to such term in the preamble hereto.

Collateral Documents” shall mean, collectively, the Security Agreement and any other documents granting a Lien upon the Collateral as security for payment of the Secured Obligations.

Collection Account” shall have the meaning assigned to such term in the Security Agreement.

Commitments” shall mean, with respect to each Lender, the commitment of such Lender to make a Loan hereunder on the Effective Date in the amount set forth in Schedule 1.01(a), or in the Assignment and Assumption pursuant to which such Lender shall have assumed its Commitment, as applicable, as the same may be (a) reduced from time to time pursuant to Section 2.07 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 10.04. The initial aggregate amount of the Lenders’ Commitments is $35,000,000.

Companies” shall mean Borrower and its Subsidiaries; and “Company” shall mean any one of them.

Compliance Certificate” shall mean a certificate of a Financial Officer substantially in the form of Exhibit B.

Confidential Information Memorandum” shall mean that certain confidential information memorandum in the form used during the syndication of the Loans.

Contested Collateral Lien Conditions” shall mean, with respect to any Permitted Encumbrance of the type described in clauses (a) and (b) of the definition thereof, the following conditions:

(a) Borrower shall cause any proceeding instituted contesting such Lien to stay the sale or forfeiture of any portion of the Collateral on account of such Lien; and

(b) at the option and at the request of the Administrative Agent, to the extent such Lien is in an amount in excess of $100,000, the appropriate Loan Party shall maintain cash reserves in an amount sufficient to pay and discharge such Lien and the Administrative Agent’s reasonable estimate of all interest and penalties related thereto.

Control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “Controlling” and “Controlled” shall have meanings correlative thereto.

 

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Credit Extension” shall mean the making of a Loan by a Lender.

Credit Party” shall mean any Agent or any other Lender.

Debt Issuance” shall mean the incurrence by Borrower or any of its Subsidiaries of any Indebtedness after the Effective Date (other than as permitted by Section 6.01).

Deemed Dividend Issue” shall mean, with respect to any Foreign Subsidiary, such Foreign Subsidiary’s accumulated and undistributed earnings and profits being deemed to be repatriated to Borrower or the applicable parent Domestic Subsidiary under Section 956 of the Code and the effect of such repatriation causing adverse tax consequences to Borrower or such parent Domestic Subsidiary, in each case as determined by Borrower in its commercially reasonable judgment acting in good faith and in consultation with its legal and tax advisors.

Default” shall mean any event, occurrence or condition which is, or upon notice, lapse of time or both would constitute, an Event of Default.

Default Interest” shall have the meaning assigned to such term in Section 2.06(c).

Defaulting Lender” shall mean any Lender that (a) has failed, within two (2) Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans, or (ii) pay over to any Credit Party any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Borrower or any Credit Party in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a Loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within three (3) Business Days after request by a Credit Party or the Borrower, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Loans and participations under this Agreement; provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon such Credit Party’s or the Borrower’s, as applicable, receipt of such certification in form and substance satisfactory to it, the Borrower and the Administrative Agent, or (d) has become the subject of a Bankruptcy Event.

Default Rate” shall have the meaning assigned to such term in Section 2.06(c).

Deposit Account Control Agreement” shall have the meaning assigned to such term in the Security Agreement.

Disclosed Matters” shall mean the actions, suits and proceedings and the environmental matters disclosed in Schedule 3.06.

 

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Disqualified Capital Stock” shall mean any Equity Interest which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event (a) matures (excluding any maturity as the result of an optional redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the six-months anniversary of the Final Maturity Date, (b) is convertible into or exchangeable (unless at the sole option of the issuer thereof) for (i) debt securities or (ii) any Equity Interests referred to in (a) above, in each case at any time on or prior to the six-month anniversary of the Final Maturity Date, or (c) contains any repurchase obligation which may come into effect prior to payment in full of all Obligations; provided however, that any Equity Interests that would not constitute Disqualified Capital Stock but for provisions thereof giving holder thereof (or the holders of any security into or for which such Equity Interests is convertible, exchangeable or exercisable) the right to require the issuer thereof to redeem such Equity Interests upon the occurrence of a change of control or an asset sale occurring prior to the first anniversary of the Final Maturity Date shall not constitute Disqualified Capital Stock if such Equity Interests provide that the issuer thereof will not redeem any Equity Interests pursuant to such provision prior to the repayment in full of the Obligations.

dollars” or “$” shall mean lawful money of the United States.

Domestic Subsidiary” shall mean a Subsidiary organized under the laws of a jurisdiction located in the United States of America.

“EBITDA” shall mean, for any period, Net Income for such period plus (a) without duplication and to the extent deducted in determining Net Income for such period, the sum of (i) Interest Expense for such period, (ii) income tax expense for such period (net of tax refunds), (iii) all amounts attributable to depreciation and amortization expense for such period, (iv) any non-cash charges for such period (including non-cash charges for such period associated with incurring the First Lien Secured Obligations, but excluding any non-cash charge in respect of an item that was included in Net Income in a prior period), (v) any advisory and other professional services fees and related expenses paid in connection with Permitted Acquisitions (other than, for the avoidance of doubt the Specified Transactions) and any investments made pursuant to Section 6.04(m) (other than, for the avoidance of doubt the Specified Transactions) in an aggregate amount with respect to all such fees and expenses not to exceed $3,000,000 for any twelve-month period, (vi) any advisory and other professional fees and related expenses paid in connection with the Specified Transactions, in an aggregate amount with respect to all such fees and expenses not to exceed $2,000,000 for the twelve-month period ending on October 28, 2012, (vii) non-recurring charges incurred during such period, which shall not exceed in the aggregate for all periods, $2,000,000, and (viii) any extraordinary losses from sales, exchanges and other dispositions of property not in the ordinary course of business, minus (b) without duplication and to the extent included in Net Income, (i) any cash payments made during such period in respect of non-cash charges described in clause (a)(iv) taken in a prior period and (ii) the sum of any extraordinary gains from sales, exchanges and other dispositions of property not in the ordinary course of business, all calculated for Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP.

Effective Date” shall mean the date on which the conditions specified in Section 4.01 are satisfied (or waived in accordance with Section 10.02).

Eligible Assignee” shall mean (i) any Lender, (ii) an Affiliate of any Lender, (iii) an Approved Fund and (iv) any other Person approved by the Administrative Agent and Borrower (each such approval not to be unreasonably withheld or delayed); provided that (x) the Borrower shall be

 

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deemed to have consented to such Person unless it shall object thereto by written notice to the Administrative Agent within five (5) Business Days after having received notice thereof from the Administrative Agent, (y) “Eligible Assignee” shall not include Borrower or any of its Subsidiaries or any natural Person and (z) no approval of Borrower shall be required during the continuance of an Event of Default.

Environment” shall mean ambient air, indoor air, surface water and groundwater (including potable water, navigable water and wetlands), the land surface or subsurface strata, natural resources, or as otherwise defined in any Environmental Law.

Environmental Laws” shall mean all laws, rules, regulations, the common law, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the Environment, preservation or reclamation of natural resources, the management, Release or threatened Release of any Hazardous Material or to health and safety matters.

Environmental Liability” shall mean any liability, contingent or otherwise (including any liability for damages, costs or environmental remediation, fines, penalties or indemnities), of Borrower or any Subsidiary resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage or treatment of any Hazardous Materials, (c) the presence of or exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

Equity Interest” shall mean, with respect to any Person, any and all shares, interests, participations or other equivalents, including membership interests (however designated, whether voting or nonvoting), of equity of such Person, including, if such Person is a partnership, partnership interests (whether general or limited) and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of property of, such partnership, whether outstanding on the date hereof or issued after the Effective Date, but excluding debt securities convertible or exchangeable into such equity.

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

ERISA Affiliate” shall mean any trade or business (whether or not incorporated) that, together with Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

ERISA Event” shall mean (a) any “reportable event,” as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30 day notice period is waived); (b) with respect to any Plan, the failure to satisfy the minimum funding standard under Section 412 of the Code and Section 302 of ERISA, whether or not waived, the failure to make by its due date a required installment under Section 430(j) of the Code with respect to any Plan or the failure to make any required contribution to a Multiemployer Plan; (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by Borrower

 

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or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal of Borrower or any of its ERISA Affiliates from any Plan or Multiemployer Plan; or (g) the receipt by Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from Borrower or any ERISA Affiliate of any notice, concerning the imposition upon Borrower or any of its ERISA Affiliates of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

Eurodollar Borrowing” shall mean a Borrowing comprised of Eurodollar Loans.

Eurodollar Loan” shall mean any Loan bearing interest at a rate determined by reference to the Adjusted LIBOR Rate in accordance with the provisions of Article II.

Event of Default” shall have the meaning assigned to such term in Section 8.01.

Excess Amount” shall have the meaning assigned to such term in Section 2.10(h).

Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

Excluded Taxes” shall mean, with respect to any Agent, any Lender, or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder or under any other Loan Document, (a) Taxes imposed on or measured by its overall net income (however denominated), and franchise Taxes imposed on it (in lieu of net income taxes), by a jurisdiction (or any political subdivision thereof) as a result of such recipient being organized or having its principal office in such jurisdiction, or in the case of any Lender, in having its applicable lending office in such jurisdiction, (b) any Taxes in the nature of the branch profits tax within the meaning of Section 884 of the Code imposed by any jurisdiction described in clause (a), (c) other than an assignee pursuant to a request by Borrower under Section 2.16 hereof, any U.S. federal withholding tax that is imposed on amounts payable to such Person pursuant to any laws in effect at the time such Person becomes a party hereto (or designates a new lending office), except to the extent that such Person (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from any Loan Party with respect to such withholding tax pursuant to Section 2.15(a) hereto, (d) any withholding tax that is attributable to such Person’s failure to comply with Section 2.15(e) hereto, and (e) any U.S. federal withholding Taxes imposed under FATCA.

Executive Order” shall have the meaning assigned to such term in Section 3.21.

Existing Credit Agreement” shall mean the Second Lien Credit Agreement, dated as of June 9, 2010, by and among the Borrower, the Subsidiary Guarantors, the financial institutions from time to time parties thereto as lenders, and Citibank, N.A., as administrative agent and collateral agent, as the same may have been amended, restated, supplemented or otherwise modified from time to time prior to the date hereof.

FATCA” shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof.

 

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Federal Funds Effective Rate” shall mean, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System of the United States arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

“Fees” shall mean all fees payable under Section 2.05.

Final Maturity Date” shall mean July 27, 2018.

Financial Officer” of any Person shall mean the chief financial officer, principal accounting officer, treasurer, vice president of finance or controller of such Person.

FIRREA” shall mean the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended.

First Lien Administrative Agent” shall have the meaning assigned to the term “Administrative Agent” under the First Lien Credit Agreement.

First Lien Credit Agreement” shall mean that certain Amended and Restated Credit Agreement, dated as of October 28, 2011, among Borrower, the Subsidiary Guarantors, JPMorgan Chase Bank, N.A., as Administrative Agent, and certain other financial institutions party thereto from time to time, as amended, restated, supplemented or modified from time to time to the extent permitted by this Agreement and the Intercreditor Agreement, including, without limitation, by the First Lien Credit Agreement Amendment. Any reference to the First Lien Credit Agreement hereunder shall be deemed a reference to any First Lien Credit Agreement then in existence.

First Lien Credit Agreement Amendment” shall mean that certain Amendment No. 2 to the First Lien Credit Agreement, dated as of July 27, 2012, by and among Borrower, the Subsidiary Guarantors, JPMorgan Chase Bank, N.A., as Administrative Agent, and certain other financial institutions party thereto from time to time.

First Lien Lender” shall mean the lenders under the First Lien Credit Agreement, and their successors and assigns.

First Lien Loan Documents” shall mean the First Lien Credit Agreement and the other Loan Documents as defined in the First Lien Credit Agreement, including the security documents, guaranties and the notes issued thereunder.

First Lien Loans” shall mean the senior secured first lien loans made under the First Lien Credit Agreement.

First Lien Obligations” shall have the meaning assigned to the term “Obligations” in the First Lien Credit Agreement as in effect on July 27, 2012 and thereafter as such meaning may be modified in accordance with the Intercreditor Agreement.

 

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First Lien Security Documents” shall have the meaning assigned to the term “Collateral Documents” in the First Lien Credit Agreement as in effect on July 27, 2012 and thereafter as such meaning may be modified in accordance with the Intercreditor Agreement.

First Lien Secured Obligations” shall have the meaning assigned to the term “Secured Obligations” in the First Lien Credit Agreement as in effect on July 27, 2012 and thereafter as such meaning may be modified in accordance with the Intercreditor Agreement.

Fiscal Quarter” shall mean, for the Loan Parties and their Subsidiaries, each calendar quarter occurring during a Fiscal Year (i.e. the quarters ending March 31th, June 30th, September 30th and December 31st of a Fiscal Year).

Fiscal Year” shall mean, for the Loan Parties and their Subsidiaries, each calendar year ending on December 31st.

Fixed Charge Coverage Ratio” shall mean, for any period, the ratio of (a) EBITDA minus the unfinanced portion of Capital Expenditures to (b) Fixed Charges, all calculated for Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP.

Fixed Charges” shall mean, with reference to any period, without duplication, (a) cash Interest Expense, plus (b) the aggregate amount of prepayments and scheduled principal payments of Indebtedness by Borrower and its Subsidiaries made during such period (other than prepayments and repayments of First Lien Secured Obligations), determined in accordance with GAAP, plus (c) the positive difference, if any, of (i) the expense for income taxes paid in cash during such period by Borrower and its Subsidiaries minus (ii) the aggregate amount of any cash income taxes refunded in such period, plus (d) the aggregate amount of Restricted Payments paid by Borrower in cash during such period.

Foreign Plan” shall mean any employee benefit plan, program, policy, arrangement or agreement maintained or contributed to by any Company with respect to employees employed outside the United States.

Foreign Subsidiary” shall mean a Subsidiary that is not a Domestic Subsidiary.

Fund” shall mean any Person that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

GAAP” shall mean generally accepted accounting principles in the United States applied on a consistent basis.

Governmental Authority” shall mean the government of the United States or any other nation, or of any political subdivision thereof, whether state, provincial or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

Grupo Vasconia” shall mean Grupo Vasconia, S.A.B., a Mexican corporation.

 

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Guaranteed Obligations” shall have the meaning assigned to such term in Section 7.01.

Guarantee” of or by any Person (the “guarantor”) shall mean any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.

Hazardous Materials” shall mean all chemicals, materials, substances, wastes, pollutants, or contaminates including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls or radon gas of any nature in any form regulated pursuant to any Environmental Law.

Hostile Acquisition” shall mean (a) the acquisition of the Equity Interests of a Person through a tender offer or similar solicitation of the owners of such Equity Interests which has not been approved (prior to such acquisition) by the board of directors (or any other applicable governing body) of such Person or by similar action if such Person is not a corporation and (b) any such acquisition as to which such approval has been withdrawn.

Indebtedness” of any Person shall mean, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty, (j) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances, (k) obligations under any liquidated earn-out, and (l) any other Off-Balance Sheet Liability; provided, that the term Indebtedness shall not include endorsements for collection or deposit in the ordinary course of business. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

 

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Indemnified Taxes” shall mean all Taxes, other than Excluded Taxes and Other Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document.

Indemnitee” shall have the meaning assigned to such term in Section 10.03(b).

Information” shall have the meaning assigned to such term in Section 10.12.

Intercompany Note” shall mean a promissory note substantially in the form of Exhibit J.

Intercreditor Agreement” shall mean that certain Intercreditor Agreement, dated as of July 27, 2012, by and among the Agents, JPMorgan Chase Bank, N.A., in its capacity as administrative agent under the First Lien Loan Documents, and each of the Loan Parties party thereto, substantially in the form of Exhibit L, as amended, modified or supplemented from time to time.

Interest Election Request” shall mean a request by Borrower to convert or continue a Borrowing in accordance with Section 2.08(b), substantially in the form of Exhibit C.

Interest Expense” shall mean, with reference to any period, total interest expense (including that attributable to Capital Lease Obligations) of Borrower and its Subsidiaries for such period with respect to all outstanding Indebtedness of Borrower and its Subsidiaries (including all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing and net costs under Swap Agreements in respect of interest rates to the extent such net costs are allocable to such period in accordance with GAAP), calculated on a consolidated basis for Borrower and its Subsidiaries for such period in accordance with GAAP. For purposes of clarity, “Interest Expense” shall not include any non-cash “mark-to-market” accounting adjustments in respect of such Swap Agreements.

Interest Payment Date” shall mean (a) with respect to any ABR Loan, the last Business Day of each calendar month and the Final Maturity Date, (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Loan with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period and (c) the Final Maturity Date.

Interest Period” shall mean, with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter, as Borrower may elect; provided that (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, and (b) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

 

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Joinder Agreement” shall mean a joinder agreement substantially in the form of Exhibit D.

Lenders” shall mean (a) the financial institutions that have become a party hereto pursuant to this Agreement on the Effective Date and (b) any financial institution that has become a party hereto pursuant to an Assignment and Assumption, other than, in each case, any such financial institution that has ceased to be a party hereto pursuant to an Assignment and Assumption.

LIBOR Rate” shall mean, with respect to any Eurodollar Borrowing for any Interest Period, the rate appearing on Reuters Screen LIBOR01 Page (or on any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then the “LIBOR Rate” with respect to such Eurodollar Borrowing for such Interest Period shall be the rate at which dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of the Administrative Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period

Lien” shall mean, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, assignment by way of security, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

Loan Documents” shall mean this Agreement, the Intercreditor Agreement, the Notes (if any), and the Security Documents and all other agreements, instruments, documents and certificates identified in Section 4.01 executed and delivered to, or in favor of, the Agent, any Lenders or any Secured Parties and including all other pledges, powers of attorney, consents, assignments, contracts, notices, letter of credit agreements and all other written matter whether heretofore, now or hereafter executed by or on behalf of any Loan Party, or any employee of any Loan Party, and delivered to the Administrative Agent, any Lender or any Secured Party in connection with the Agreement or the transactions contemplated thereby. Any reference in the Agreement or any other Loan Document to a Loan Document shall include all appendices, exhibits or schedules thereto, and all amendments, restatements, supplements or other modifications thereto, and shall refer to the Agreement or such Loan Document as the same may be in effect at any and all times such reference becomes operative.

Loan Parties” shall mean Borrower and the Subsidiary Guarantors.

Loan Party Guarantees” shall mean the Guarantees issued pursuant to Article VII by the Subsidiary Guarantors.

Loan Payment Percentage” shall mean the following percentages for the following Amortization Dates, beginning with the Amortization Date on July 31, 2013 (the “First Amortization Date”) and with all Amortization Dates thereafter being treated sequentially (by way of example only, the

 

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Amortization Date occurring on July 31, 2013 would be the first Amortization Date for purposes hereof, and the Amortization Date occurring on July 31, 2014 would be the fifth Amortization Date for purposes hereof): (i) 10% for the First Amortization Date, (ii) 2.5% for each of the first four Amortization Dates to occur after the First Amortization Date, (iii) 3.75% for each of the fifth through and including the twelfth Amortization Dates to occur after the First Amortization Date, (iii) 5.0% for each of the thirteenth through and including the sixteenth Amortization Dates to occur after the First Amortization Date and (iv) 7.5% for each Amortization Date thereafter.

Loans” shall mean the term loans made by the Lenders to Borrower pursuant to Section 2.01.

LTB” shall mean LTB de Mexico, S.A. de C.V., a Mexican corporation.

Margin Stock” shall have the meaning assigned to such term in Regulation U.

Material Adverse Effect” shall mean a material adverse effect on (a) the business, assets, operations, prospects or condition (financial or otherwise) of Borrower and its Subsidiaries, taken as a whole, (b) the ability of any Loan Party to perform any of its obligations under the Loan Documents to which it is a party, (c) the Collateral, or the Collateral Agent’s Liens (on behalf of itself and the Secured Parties) on the Collateral or the priority of such Liens, or (d) the rights of or benefits available to the Agents, the Lenders or the Secured Parties thereunder.

Material Indebtedness” shall mean Indebtedness (other than the Loans), or obligations in respect of one or more Swap Agreements, of any one or more of Borrower and its Subsidiaries in an aggregate principal amount exceeding $5,000,000. For purposes of determining Material Indebtedness, the “obligations” of Borrower or any Subsidiary in respect of any Swap Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that Borrower or such Subsidiary would be required to pay if such Swap Agreement were terminated at such time.

Maximum Rate” shall have the meaning assigned to such term in Section 10.14.

Moody’s” shall mean Moody’s Investors Service, Inc.

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

Net Cash Proceeds” shall mean:

(a) with respect to any Asset Sale (other than any issuance or sale of Equity Interests), the cash proceeds received by Borrower or any of its Subsidiaries (including cash proceeds subsequently received (as and when received by Borrower or any of its Subsidiaries) in respect of non-cash consideration initially received) net of (i) selling expenses (including reasonable brokers’ fees or commissions, legal, accounting and other professional and transactional fees, transfer and similar taxes and Borrower’s good faith estimate of income taxes paid or payable in connection with such sale); (ii) amounts provided as a reserve, in accordance with GAAP, against (x) any liabilities under any indemnification obligations or purchase price adjustments associated with such Asset Sale or (y) any other liabilities retained by Borrower or any of its Subsidiaries associated with the properties sold in such Asset Sale including pension and other post-employment benefit liabilities related to environmental matters and liabilities and

 

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indemnification obligations associated with such Asset Sale; provided that, to the extent and at the time any such amounts are released from such reserve, such amounts shall constitute Net Cash Proceeds); (iii) Borrower’s good faith estimate of payments required to be made with respect to unassumed liabilities relating to the properties sold within 180 days of such Asset Sale; provided that, to the extent such cash proceeds are not used to make payments in respect of such unassumed liabilities sold within 180 days of such Asset Sale, such cash proceeds shall constitute Net Cash Proceeds); (iv) the principal amount, premium or penalty, if any, interest and other amounts on any Indebtedness for borrowed money which is secured by a Lien on the properties sold in such Asset Sale (so long as such Lien was permitted to encumber such properties under the Loan Documents at the time of such sale) and which is repaid with such proceeds (other than any such Indebtedness assumed by the purchaser of such properties);

(b) with respect to any Debt Issuance, any Preferred Stock Issuance or any other issuance or sale of Equity Interests by Borrower or any Subsidiaries, the cash proceeds thereof to Borrower or such Subsidiary, net of customary fees, commissions, discounts, transfer taxes, costs and other expenses incurred in connection therewith; and

(c) with respect to any Casualty Event, the cash insurance proceeds, condemnation awards and other compensation received in respect thereof, net of all reasonable costs and expenses incurred in connection with the collection of such proceeds, awards or other compensation in respect of such Casualty Event.

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

Notes” shall mean any notes evidencing the Loans issued pursuant to this Agreement, if any, substantially in the form of Exhibit F.

Obligations” shall mean (a) obligations of Borrower and the other Loan Parties from time to time arising under or in respect of the due and punctual payment of (i) the principal of and premium, if any, and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, and (ii) all other monetary obligations, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of Borrower and the other Loan Parties under this Agreement and the other Loan Documents, and (b) the due and punctual performance of all covenants, agreements, obligations and liabilities of Borrower and the other Loan Parties under or pursuant to this Agreement and the other Loan Documents.

 

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OFAC” shall have the meaning assigned to such term in Section 3.21.

Off-Balance Sheet Liability” of a Person shall mean (a) any repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person, (b) any indebtedness, liability or obligation under any so-called “synthetic lease” transaction entered into by such Person, or (c) any Indebtedness, liability or obligation arising with respect to any other transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the balance sheets of such Person (other than operating leases).

Officers’ Certificate” shall mean a certificate executed by the chairman of the Board of Directors (if an officer), the chief executive officer, the president, vice president or one of the Financial Officers, each in his or her official (and not individual) capacity.

Organizational Documents” shall mean, with respect to any Person, (i) in the case of any corporation, the certificate of incorporation and by-laws (or similar documents) of such Person, (ii) in the case of any limited liability company, the certificate of formation and operating agreement (or similar documents) of such Person, (iii) in the case of any limited partnership, the certificate of formation and limited partnership agreement (or similar documents) of such Person, (iv) in the case of any general partnership, the partnership agreement (or similar document) of such Person and (v) in any other case, the functional equivalent of the foregoing.

Other Taxes” shall mean any and all present or future stamp or documentary Taxes or any other excise, property or similar Taxes arising from any payment made hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

Participant” shall have the meaning assigned to such term in Section 10.04(d).

Participant Register” shall have the meaning assigned to such term in Section 10.04(d).

PBGC” shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

Permitted Acquisition” shall mean (a) any acquisition of all or a significant portion of the assets of, or more than 50% of the Equity Interests in, a Person or division or line of business of a Person, to the extent the Required Lenders give prior written consent thereto and (b) any other acquisition (whether by purchase, lease (other than a customary real estate lease), merger, consolidation or otherwise, but excluding in any event a Hostile Acquisition) or series of related acquisitions by the Borrower or any of its Subsidiaries of (i) all or a significant portion of the assets of or (ii) more than 50% of the Equity Interests in, a Person or division or line of business of a Person, if, at the time of and immediately after giving effect thereto, (A) either (x) the aggregate consideration paid in respect of all Permitted Acquisitions pursuant to this clause (b) during the Fiscal Year of the Borrower in which such acquisition(s) occurs does not exceed $5,000,000 or (y) the Permitted Acquisition Test is satisfied, (B) such Person or division or line of business is engaged in the same or a similar line of business as the Borrower and the Subsidiaries or business reasonably related thereto, and (C) in the case of an acquisition or merger involving the Borrower or a Subsidiary, the Borrower or such Subsidiary is the surviving entity of such merger and/or consolidation.

 

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Permitted Acquisition Test” shall mean, with respect to any acquisition or series of related acquisitions by the Borrower or any Subsidiary, a test that is satisfied if each of the following conditions is met: (a) no Default has occurred and is continuing prior to giving effect to such acquisition(s) or would arise after giving effect (including pro forma effect) thereto, (b) Availability exceeds $25,000,000 after giving pro forma effect to such acquisition(s) for a period of three consecutive months prior to such acquisition(s), (c) the Fixed Charge Coverage Ratio, on a pro forma basis after giving effect to such acquisition(s) (but without giving effect to any synergies or cost savings), determined for the four consecutive Fiscal Quarters ending on the last day of the most recently ended Fiscal Quarter of the Borrower for which financial statements are available, as if such acquisition(s) (and any related incurrence or repayment of Indebtedness, with any new Indebtedness being deemed amortized over such testing period in accordance with its terms) had occurred on the first day of such testing period, is equal to or greater than 1.10 to 1.00, and (d) the aggregate consideration paid in respect of all Permitted Acquisitions during the Fiscal Year of the Borrower in which such acquisition(s) occurs does not exceed $35,000,000; provided, however, that (x) if the aggregate consideration paid in respect of all Permitted Acquisitions made in any Fiscal Year shall be less than the maximum amount permitted pursuant to this clause (d) for such Fiscal Year (after giving effect to any carryover), then an amount of such shortfall not exceeding $10,000,000 of such maximum amount may be added to the amount of Permitted Acquisitions permitted pursuant to this clause (d) for the immediately succeeding Fiscal Year and (y) in no event shall the maximum amount of aggregate consideration paid in respect of all Permitted Acquisitions permitted pursuant to this clause (d) during any Fiscal Year exceed $45,000,000.

Permitted Encumbrances” shall mean:

 

  (a) Liens imposed by law for Taxes that are not yet due or are being contested and the contest thereof shall satisfy the Contested Collateral Lien Conditions;

 

  (b) carriers’, warehousemen’s, mechanics’, materialmen’s, landlords’, repairmen’s and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than thirty (30) days or are being contested and the contest thereof shall satisfy the Contested Collateral Lien Conditions;

 

  (c) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations;

 

  (d) deposits to secure the performance of bids, trade contracts, government contracts, leases, statutory or regulatory obligations, surety, customs and appeal bonds, performance and return of money bonds and other obligations of a like nature, in each case in the ordinary course of business;

 

  (e) judgment liens in respect of judgments that do not constitute an Event of Default under clause (i) of Article VIII ;

 

  (f) easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or interfere with the ordinary conduct of business of the Borrower or any Subsidiary; and

 

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  (g) Liens solely on cash earnest money deposits made by the Borrower or any Subsidiary in connection with any letter of intent or purchase agreement permitted hereunder;

provided that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness.

Permitted Investments shall mean:

 

  (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof;

 

  (b) investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from S&P or from Moody’s;

 

  (c) investments in certificates of deposit, banker’s acceptances and time deposits maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by any Lender, or by any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof which has a combined capital and surplus and undivided profits of not less than $500,000,000;

 

  (d) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above; and

 

  (e) money market funds that (i) comply with the criteria set forth in Securities and Exchange Commission Rule 2a-7 under the Investment Company Act of 1940, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least $5,000,000,000.

Person” shall mean any natural Person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

Plan” shall mean any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

Pledged Specified Assets” shall mean 65% of the Equity Interests in LTB de Mexico, S.A. de C.V., a Subsidiary.

 

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Preferred Stock” shall mean, with respect to any Person, any and all preferred or preference Equity Interests (however designated) of such Person whether now outstanding or issued after the Effective Date.

Preferred Stock Issuance” shall mean the issuance or sale by Borrower or any of its Subsidiaries of any Preferred Stock after the Effective Date (other than as permitted by Section 6.01).

“Prime Rate” shall mean the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank, N.A. as its prime rate at its offices at 270 Park Avenue in New York City; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.

Projections” shall have the meaning assigned to such term in Section 5.01(f).

property” shall mean any right, title or interest in or to property or assets of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible and including Equity Interests or other ownership interests of any Person and whether now in existence or owned or hereafter entered into or acquired, but for the avoidance of doubt, property for purposes of the definition of the word Collateral does not include any real property owned by a Loan Party.

Purchase Money Obligation” shall mean, for any Person, the obligations of such Person in respect of Indebtedness (including Capital Lease Obligations) incurred for the purpose of financing all or any part of the purchase price of any property (including Equity Interests of any Person) or the cost of installation, construction or improvement of any property and any refinancing thereof; provided, however, that (i) such Indebtedness is incurred within one year after such acquisition, installation, construction or improvement of such property by such Person and (ii) the amount of such Indebtedness does not exceed 100% of the cost of such acquisition, installation, construction or improvement, as the case may be.

Qualified Capital Stock” of any Person shall mean any Equity Interests of such Person that are not Disqualified Capital Stock.

Register” shall have the meaning assigned to such term in Section 10.04(c).

Regulation D” shall mean Regulation D of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

Regulation T” shall mean Regulation T of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

Regulation U” shall mean Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

Regulation X” shall mean Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

Related Parties” shall mean, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.

 

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Release” shall mean any release, spill, emission, discharge, deposit, disposal, leaking, pumping, pouring, dumping, emptying, injection or leaching into the Environment, or into, from or through any building, structure or facility.

Required Lenders” shall mean Lenders having more than 50% of the sum of all Loans outstanding.

Requirements of Law” shall mean, collectively, any and all applicable requirements of any Governmental Authority including any and all applicable laws, judgments, orders, decrees, ordinances, rules, regulations, statutes or case law.

Response” shall mean (a) “response” as such term is defined in CERCLA, 42 U.S.C. § 9601(24), and (b) all other actions required by any Governmental Authority or voluntarily undertaken to (i) clean up, remove, treat, abate or otherwise remediate any Hazardous Material in the Environment; (ii) prevent the Release or threat of Release, or minimize the further Release, of any Hazardous Material; or (iii) perform studies and investigations in connection with, or as a precondition to, or to determine the necessity of the activities described in or to determine the necessity of the activities described therein, clause (i) or (ii) above.

Responsible Officer” of any Person shall mean any executive officer or Financial Officer of such Person and any other officer or similar official thereof with responsibility for the administration of the obligations of such Person in respect of this Agreement.

Restricted Payment” shall mean any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests in Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interests in Borrower or any Subsidiary or any option, warrant or other right to acquire any such Equity Interests in Borrower or any Subsidiary.

S&P” shall mean Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business.

Sale and Leaseback Transaction” has the meaning assigned to such term in Section 6.06.

Secured Obligations” shall mean the Obligations.

Secured Parties” shall mean, collectively, the Administrative Agent, the Collateral Agent and the Lenders.

Securities Act” shall mean the Securities Act of 1933.

Security Agreement” shall mean that certain Pledge and Security Agreement substantially in the form of Exhibit G (including any and all supplements thereto), dated as of the date hereof, between the Loan Parties and the Administrative Agent, for the benefit of the Secured Parties, and any other pledge or security agreement entered into after the date of this Agreement by any other Loan Party (as required by this Agreement or any other Loan Document), or any other Person, as the same may be amended, restated or otherwise modified from time to time.

 

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Significant Subsidiary” shall mean each Subsidiary (i) which, as of the end of the most recent fiscal quarter of the Borrower for which financial statements have been delivered pursuant to Section 5.01(a) or (b) (or, if prior to the date of the delivery of the first financial statements to be delivered pursuant to Section 5.01(a) or (b), the most recent financial statements referred to in Section 3.04(a)), contributed greater than five percent (5%) of consolidated total assets determined in accordance with GAAP or (ii) which contributed greater than five percent (5%) of consolidated total revenues determined in accordance with GAAP for the period ending on such date; provided that, if, as of the end of any fiscal quarter, the aggregate amount of consolidated total assets or consolidated total revenues attributable to all Subsidiaries that are not Significant Subsidiaries exceeds fifteen percent (15%) of consolidated total assets as of the end of such fiscal quarter or fifteen percent (15%) of consolidated total revenues for the period ending on such date, respectively, the Borrower (or, in the event the Borrower has failed to do so within ten (10) days, the Administrative Agent) shall designate sufficient Subsidiaries as “Significant Subsidiaries” to eliminate such excess, and such designated Subsidiaries shall for all purposes of this Agreement constitute Significant Subsidiaries.

Specified Assets” shall mean all Equity Interests in LTB de Mexico, S.A. de C.V., a Subsidiary.

Specified Transactions” shall mean (a) the purchase, directly or indirectly, by the Borrower of all of the issued and outstanding Equity Interests in Creative Tops Holdings Limited and Creative Tops Far East Limited and (b) the purchase, directly or indirectly, by the Borrower of 40% of the outstanding Equity Interests of GS Internacional S/A.

Statutory Reserve Rate” shall mean a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve, liquid asset, fees or similar requirements (including any marginal, special, emergency or supplemental reserves or other requirements) expressed as a decimal established by the Board to which the Administrative Agent is subject with respect to the Adjusted LIBOR Rate, for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board). Such reserve, liquid asset, fees or similar requirements shall include those imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve, liquid asset or similar requirement.

Subsidiary” shall mean, with respect to any Person (the “parent”) at any date, (i) any Person the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, (ii) any other corporation, limited liability company, association or other business entity of which securities or other ownership interests representing more than 50% of the voting power of all Equity Interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Board of Directors thereof are, as of such date, owned, controlled or held by the parent and/or one or more subsidiaries of the parent, (iii) any partnership (a) the sole general partner or the managing general partner of which is the parent and/or one or more subsidiaries of the parent or (b) the only general partners of which are the parent and/or one or more subsidiaries of the parent and (iv) any other Person that is otherwise Controlled by the parent and/or one or more subsidiaries of the parent. Unless the context requires otherwise, “Subsidiary” refers to a Subsidiary of Borrower.

 

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Subsidiary Guarantor” shall mean each Subsidiary listed on Schedule 1.01(b), and each other Subsidiary that is or becomes a party to this Agreement pursuant to Section 5.11.

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

Swap Obligations” of a Person shall mean any and all obligations (after giving effect to any netting agreements) of such Person, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (a) any and all Swap Agreements permitted hereunder with a Lender or an Affiliate of a Lender, and (b) any and all cancellations, buybacks, reversals, terminations or assignments of any such Swap Agreement transaction.

Tax Return” shall mean any and all returns, statements, filings, attachments and other documents or certifications required to be filed in respect of Taxes.

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

Test Period” shall mean, at any time, the four consecutive Fiscal Quarters of Borrower then last ended (in each case taken as one accounting period) for which financial statements have been or are required to be delivered pursuant to Section 5.01(a) or (b).

Transaction Documents” shall mean the Loan Documents and the First Lien Loan Documents.

Transactions” shall mean, collectively, the transactions to occur on or prior to the Effective Date pursuant to the Transaction Documents, including (a) the execution, delivery and performance of the Loan Documents and the borrowings hereunder; (b) the repayment in full and the termination of any commitment to make extensions of credit under the Existing Credit Agreement; (c) the execution and delivery of the First Lien Credit Agreement Amendment and the performance of the First Lien Loan Documents and the borrowings (if any) on the Effective Date thereunder; and (d) the payment of all fees and expenses to be paid on or prior to the Effective Date and owing in connection with the foregoing.

Transferred Guarantor” shall have the meaning assigned to such term in Section 7.09.

Treasury Services Agreement” shall mean any agreement relating to treasury, depositary and cash management services or automated clearinghouse transfer of funds.

Type,” when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBOR Rate or the Alternate Base Rate.

 

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UCC” shall mean the Uniform Commercial Code as in effect from time to time (except as otherwise specified) in any applicable state or jurisdiction.

United States” shall mean the United States of America.

Voting Stock” shall mean, with respect to any Person, any class or classes of Equity Interests pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the Board of Directors of such Person.

Wholly Owned Subsidiary” shall mean, as to any Person, (a) any corporation 100% of whose capital stock (other than directors’ qualifying shares or other nominal issuances in order to comply with local laws) is at the time owned by such Person and/or one or more Wholly Owned Subsidiaries of such Person and (b) any partnership, association, joint venture, limited liability company or other entity in which such Person and/or one or more Wholly Owned Subsidiaries of such Person have a 100% equity interest at such time.

Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

SECTION 1.02 Classification of Loans and Borrowings. For purposes of this Agreement, Loans may be classified and referred to by Type (e.g., a “Eurodollar Loan”). Borrowings also may be classified and referred to by Type (e.g., a “Eurodollar Borrowing”).

SECTION 1.03 Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise (a) any definition of or reference to any Loan Document, agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s permitted successors and assigns, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (e) any reference to any law or regulation herein shall refer to such law or regulation as amended, modified or supplemented from time to time, (f) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights and (g) “knowledge” or “aware” or words of similar import shall mean, when used in reference to Borrower and its subsidiaries, the actual knowledge of any Responsible Officer.

SECTION 1.04 Accounting Terms; GAAP. Except as otherwise expressly provided herein, all financial statements to be delivered pursuant to this Agreement shall be prepared in accordance with GAAP as in effect from time to time and all terms of an accounting or financial nature shall be construed and interpreted in accordance with GAAP. In the event that any “Accounting Change” as defined below shall occur and such change results in a change in the method of calculation of financial

 

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covenants, standard or terms in this Agreement, then Borrower and Administrative Agent agree to enter into negotiations in order to amend such provisions of this Agreement so as to equitably reflect such Accounting Change with the desired result that the criteria for evaluating Borrower’s financial condition shall be the same after such Accounting Change as if such Accounting Change had not occurred; provided that provisions of this Agreement in effect on the date of such Accounting Change shall remain in effect until the effective date of any such amendment. “Accounting Change” refers to any change in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants or, if applicable, the Securities and Exchange Commission or successors thereto or agencies with similar functions). 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, (i) without giving effect to any election under Accounting Standards Codification 825-10-25 (previously referred to as Statement of Financial Accounting Standards 159) (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of Borrower or any Subsidiary at “fair value”, as defined therein and (ii) without giving effect to any treatment of Indebtedness in respect of convertible debt instruments under Financial Accounting Standards Board Staff Position APB 14-1 to value any such Indebtedness in a reduced or bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof.

SECTION 1.05 Resolution of Drafting Ambiguities. Each Loan Party acknowledges and agrees that it was represented by counsel in connection with the execution and delivery of the Loan Documents to which it is a party, that it and its counsel reviewed and participated in the preparation and negotiation hereof and thereof and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation hereof or thereof.

ARTICLE II

THE CREDITS

SECTION 2.01 Commitments. Subject to the terms and conditions and relying upon the representations and warranties herein set forth, each Lender agrees, severally and not jointly, to make Loans to Borrower on the Effective Date in an aggregate principal amount equal to such Lender’s Commitment. Amounts paid or prepaid in respect of Loans may not be reborrowed.

SECTION 2.02 Loans.

(a) Each Loan shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their applicable Commitments; provided that the failure of any Lender to make its Loan shall not in itself relieve any other Lender of its obligation to lend hereunder (it being understood, however, that no Lender shall be responsible for the failure of any other Lender to make any Loan required to be made by such other Lender). ABR Loans comprising any Borrowing shall be in an aggregate principal amount that is (i) $500,000 or any integral multiple of $500,000 in excess thereof or (ii) equal to the remaining available balance of the applicable Commitments. Eurodollar Loans comprising any Borrowing shall be in an aggregate principal amount that is (i) $500,000 or any integral multiple of $500,000 in excess thereof or (ii) equal to the remaining available balance of the applicable Commitments.

 

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(b) Subject to Sections 2.11 and 2.12, each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as Borrower may request pursuant to Section 2.03. Each Lender may at its option make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of Borrower to repay such Loan in accordance with the terms of this Agreement. Borrowings of more than one Type may be outstanding at the same time; provided that Borrower shall not be entitled to request any Borrowing that, if made, would result in more than five (5) Eurodollar Borrowings outstanding hereunder at any one time. For purposes of the foregoing, Borrowings having different Interest Periods, regardless of whether they commence on the same date, shall be considered separate Borrowings.

(c) Each Lender shall make each Loan to be made by it hereunder on the Effective Date by wire transfer of immediately available funds to such account in New York City as the Administrative Agent may designate not later than noon, New York City time, and the Administrative Agent shall promptly credit the amounts so received to an account as directed by Borrower in the applicable Borrowing Request maintained with the Administrative Agent or, if a Borrowing shall not occur on such date because any condition precedent herein specified shall not have been met, return the amounts so received to the respective Lenders.

(d) Unless the Administrative Agent shall have received notice from a Lender prior to the date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s portion of such Borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the date of such Borrowing in accordance with paragraph (c) above, and the Administrative Agent may, in reliance upon such assumption, make available to Borrower on such date a corresponding amount. If the Administrative Agent shall have so made funds available, then, to the extent that such Lender shall not have made such portion available to the Administrative Agent, each of such Lender and Borrower severally agrees to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to Borrower until the date such amount is repaid to the Administrative Agent at (i) in the case of Borrower, the interest rate applicable at the time to the Loans comprising such Borrowing and (ii) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation. If such Lender shall repay to the Administrative Agent such corresponding amount, such amount shall constitute such Lender’s Loan as part of such Borrowing for purposes of this Agreement, and Borrower’s obligation to repay the Administrative Agent such corresponding amount pursuant to this Section 2.02(d) shall cease.

(e) Notwithstanding any other provision of this Agreement, Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Final Maturity Date.

SECTION 2.03 Borrowing Procedure. To request a Borrowing, Borrower shall deliver via telephonic or email notice, (i) in the case of a Eurodollar Borrowing, not later than 1:00 p.m., New York City time, three (3) Business Days before the date of the proposed Borrowing or (ii) in the case of an ABR Borrowing, not later than 1:00 p.m., New York City time, on the date of the proposed Borrowing. Each Borrowing Request shall be irrevocable and shall specify the following information in compliance with Section 2.02:

(a) the aggregate amount of such Borrowing;

 

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(b) the date of such Borrowing, which shall be a Business Day;

(c) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;

(d) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”;

(e) the location and number of Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.02(c); and

(f) that the conditions set forth in Sections 4.01 have been satisfied as of the date of the notice.

If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then Borrower shall be deemed to have selected an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.

SECTION 2.04 Evidence of Debt; Repayment of Loans.

(a) Promise to Repay. Borrower hereby unconditionally promises to pay to the Administrative Agent, for the account of each Lender, the principal amount of each Loan of such Lender as provided in Section 2.09.

(b) Lender and Administrative Agent Records. Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the Indebtedness of Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement. The Administrative Agent shall maintain accounts in which it will record (i) the amount of each Loan made hereunder, the Type thereof and the Interest Period applicable thereto; (ii) the amount of any principal or interest due and payable or to become due and payable from Borrower to each Lender hereunder; and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof. The entries made in the accounts maintained pursuant to this paragraph shall be prima facie evidence of the existence and amounts of the obligations therein recorded; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligations of Borrower to repay the Loans in accordance with their terms.

(c) Promissory Notes. Any Lender by written notice to Borrower (with a copy to the Administrative Agent) may request that Loans made by it be evidenced by a promissory note. In such event, Borrower shall prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered permitted assigns) in the form of Exhibit F, as the case may be. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 10.04) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered permitted assigns).

 

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SECTION 2.05 Fees.

(a) Agent Fees. Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between Borrower and the Administrative Agent.

(b) All Fees shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution, if and as appropriate, among the Lenders. Once paid, none of the Fees shall be refundable under any circumstances.

SECTION 2.06 Interest on Loans.

(a) ABR Loans. Subject to the provisions of Section 2.06(c), the Loans comprising each ABR Borrowing shall bear interest at a rate per annum equal to the Alternate Base Rate plus 4.00%.

(b) Eurodollar Loans. Subject to the provisions of Section 2.06(c), the Loans comprising each Eurodollar Borrowing shall bear interest at a rate per annum equal to the Adjusted LIBOR Rate for the Interest Period in effect for such Borrowing plus 5.00%.

(c) Default Rate. Notwithstanding the foregoing, during any Default, all Obligations shall, to the extent permitted by applicable law, bear interest, (the “Default Interest”), after as well as before judgment, at a per annum rate equal to (i) in the case of principal and premium, if any, of or interest on any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section 2.06 or (ii) in the case of any other amount, 2% plus the rate the non-default rate then applicable to ABR Loans as provided in Section 2.06(a) (in either case, the “Default Rate”). Such Default Interest shall be payable on demand.

(d) Interest Payment Dates. Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan; provided that (i) interest accrued pursuant to Section 2.06(c) shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan, accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.

(e) Interest Calculation. All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate or Adjusted LIBOR Rate shall be determined by the Administrative Agent in accordance with the provisions of this Agreement and such determination shall be conclusive absent manifest error.

 

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SECTION 2.07 Termination of Commitments. The Commitments shall automatically and permanently be reduced to zero on the Effective Date immediately after giving effect to the making of the Loans and in any event, no later than 3:00 pm New York City time on July 27, 2012.

SECTION 2.08 Interest Elections.

(a) Generally. Each Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section. Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing. Notwithstanding anything to the contrary, Borrower shall not be entitled to request any conversion or continuation that, if made, would result in more than five Eurodollar Borrowings outstanding hereunder at any one time.

(b) Interest Election Notice. To make an election pursuant to this Section, Borrower shall deliver notice by hand delivery or telecopier, a duly completed and executed Interest Election Request to the Administrative Agent not later than the time that a Borrowing Request would be required under Section 2.03. Each Interest Election Request shall be irrevocable. Each Interest Election Request shall specify the following information in compliance with Section 2.02:

(i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, or if outstanding Borrowings are being combined, allocation to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);

(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period.”

If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then Borrower shall be deemed to have selected an Interest Period of one month’s duration.

Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

(c) Automatic Conversion to ABR Borrowing. If an Interest Election Request with respect to a Eurodollar Borrowing is not timely delivered prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if

 

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(x) an Event of Default of the type described in clauses (a), (b), (g) or (h) of Section 8.01 has occurred and is continuing, the Administrative Agent or the Required Lenders may require, by notice to Borrower, that (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto and (y) any Event of Default other than those specified in clauses (a), (b), (g) or (h) of Section 8.01 has occurred and is continuing, the Administrative Agent or the Required Lenders may require, by notice to the Borrower, that no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing in excess of one month during the continuance of such Event of Default.

SECTION 2.09 Repayment and Amortization of Loans. The Borrower shall repay the Loans on each Amortization Date, commencing on July 31, 2013, in an amount equal to the then applicable Loan Payment Percentage times the aggregate principal amount of the Loans on the Effective Date (subject to adjustment pursuant to Section 2.10 as a result of prepayments). To the extent not previously paid, all unpaid Loans shall be fully repaid by the Borrower on the Final Maturity Date.

SECTION 2.10 Optional and Mandatory Prepayments of Loans.

(a) Optional Prepayments. Borrower shall have the right at any time and from time to time to prepay any Borrowing, in whole or in part, subject to the requirements of this Section 2.10; provided that each partial prepayment shall be in an amount that is an integral multiple of $1,000,000, or, if less, the outstanding principal amount of such Borrowing, together with any accrued and unpaid interest thereon.

(b) [Reserved].

(c) Asset Sales. Subject to the provisions of the First Lien Loan Documents as in effect on July 27, 2012 (or thereafter as such provisions may be modified in accordance with the Intercreditor Agreement), not later than three Business Days following the receipt of any Net Cash Proceeds of any Asset Sale by Borrower or any of its Subsidiaries, Borrower shall make prepayments in accordance with Sections 2.10(h) and (i) in an aggregate amount equal to 100% of such Net Cash Proceeds; provided that:

(i) no such prepayment shall be required under this Section 2.10(c)(i) with respect to (A) any Asset Sale permitted by Section 6.05(a), (B) the disposition of property which constitutes a Casualty Event, or (C) Asset Sales for fair market value resulting in no more than $500,000 in Net Cash Proceeds per Asset Sale (or series of related Asset Sales) and less than $2,000,000 in Net Cash Proceeds in any Fiscal Year; provided that clause (C) shall not apply in the case of any Asset Sale described in clause (b) of the definition thereof; and

(ii) so long as no Default shall then exist or arise therefrom and the aggregate of such Net Cash Proceeds of Asset Sales shall not exceed $2,000,000 in any Fiscal Year of Borrower, such proceeds shall not be required to be so applied on such date to the extent that Borrower shall have delivered an Officers’ Certificate to the Administrative Agent on or prior to such date stating that such Net Cash Proceeds are expected to be reinvested or committed by bona fide written contract to be reinvested in fixed or capital assets within 180 days following the date of such Asset Sale (which Officers’ Certificate shall set forth the estimates of the proceeds to be so expended); provided that if all or any portion of such Net Cash Proceeds is not so reinvested or

 

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committed by bona fide written contract to be reinvested within such 180-day period, such unused or uncommitted portion shall be applied on the last day of such period as a mandatory prepayment as provided in this Section 2.10(c); provided, further, that if the property subject to such Asset Sale constituted Collateral, then all property purchased with the Net Cash Proceeds thereof pursuant to this subsection shall be made subject to the Lien of the applicable Security Documents in favor of the Collateral Agent, for its benefit and for the benefit of the other Secured Parties in accordance with Sections 5.11 and 5.12.

(d) Debt Issuance or Preferred Stock Issuance. Subject to the provisions of the First Lien Loan Documents as in effect on July 27, 2012 (or thereafter as such provisions may be modified in accordance with the Intercreditor Agreement), not later than three Business Days following the receipt of any Net Cash Proceeds of any Debt Issuance or Preferred Stock Issuance by Borrower or any of its Subsidiaries, Borrower shall make prepayments in accordance with Sections 2.10(h) and (i) in an aggregate amount equal to 100% of such Net Cash Proceeds.

(e) [Reserved].

(f) Casualty Events. Subject to the provisions of the First Lien Loan Documents as in effect on July 27, 2012 (or thereafter as such provisions may be modified in accordance with the Intercreditor Agreement), not later than three Business Days following the receipt of any Net Cash Proceeds in excess of $500,000 from a Casualty Event by Borrower or any of its Subsidiaries, Borrower shall make prepayments in accordance with Sections 2.10(h) and (i) in an aggregate amount equal to 100% of such Net Cash Proceeds; provided that:

(i) so long as no Default shall then exist or arise therefrom, such proceeds shall not be required to be so applied on such date to the extent that such proceeds are used or committed by bona fide written contract to be used to repair, replace or restore any property in respect of which such Net Cash Proceeds were paid to reinvest in other fixed or capital assets, or applied to payment of expenses associated with such Casualty Event, including professional fees, claims adjustment expenses and costs of replacing lost revenues, no later than 180 days following the date of receipt of such proceeds; provided that if the property subject to such Casualty Event constituted Collateral under the Security Documents, then all property purchased with the Net Cash Proceeds thereof pursuant to this subsection shall be made subject to the Lien of the applicable Security Documents in favor of the Collateral Agent, for its benefit and for the benefit of the other Secured Parties in accordance with Sections 5.11 and 5.12; and

(ii) if any portion of such Net Cash Proceeds shall not be so applied or committed by bona fide written contract to be applied within such 180-day period, such unused or uncommitted portion shall be applied on the last day of such period as a mandatory prepayment as provided in this Section 2.10(f).

(g) [Reserved].

(h) Application of Prepayments. Any prepayment of a Borrowing shall be applied to prepay the Loans in the inverse order of maturity, subject to the provisions of this Section 2.10(h).

Amounts to be applied pursuant to this Section 2.10 to the prepayment of Loans shall be applied first to reduce outstanding ABR Loans. Any amounts remaining after each such application shall be applied to prepay Eurodollar Loans. Notwithstanding the foregoing, if the amount of any prepayment of Loans required under this Section 2.10 shall be in excess of the amount of the ABR Loans at the time

 

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outstanding (an “Excess Amount”), only the portion of the amount of such prepayment as is equal to the amount of such outstanding ABR Loans shall be immediately prepaid and, at the election of Borrower, the Excess Amount shall be either (A) deposited in an escrow account on terms reasonably satisfactory to the Collateral Agent and applied to the prepayment of Eurodollar Loans on the last day of the then next-expiring Interest Period for Eurodollar Loans; provided that (i) interest in respect of such Excess Amount shall continue to accrue thereon at the rate provided hereunder for the Loans which such Excess Amount is intended to repay until such Excess Amount shall have been used in full to repay such Loans and (ii) at any time while a Default has occurred and is continuing, the Administrative Agent may, and upon written direction from the Required Lenders shall, apply any or all proceeds then on deposit to the payment of such Loans in an amount equal to such Excess Amount or (B) prepaid immediately, together with any amounts owing to the Lenders under Section 2.13.

(i) Notice of Prepayment; Lender Right to Decline Prepayment. Borrower shall notify the Administrative Agent by written notice of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of prepayment and (ii) in the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time, one Business Day before the date of prepayment. Each such notice shall be irrevocable. Each such notice shall specify the prepayment date, the principal amount of each Borrowing or portion thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably detailed calculation of the amount of such prepayment. Promptly following receipt of any such notice, the Administrative Agent shall advise the Lenders of the contents thereof. Any Lender may elect, by notice in writing to the Administrative Agent at least one Business Day or any shorter time period as the Administrative Agent may determine, prior to the applicable prepayment date, to decline all of any mandatory prepayments of its Loans pursuant to Section 2.10, in which case the aggregate amount of the prepayment that would have been applied to prepay such Loans but was so declined shall be promptly re-offered to prepay the Loans of those Lenders who have initially accepted such prepayment (such re-offer to be made to each such Lender based on the percentage which such Lender based on the percentage which such Lender’s Loans represents of the aggregate Loans of all such Lenders who have initially accepted such prepayment); and in the event of such a re-offer, the relevant Lenders may elect, by notice to the Administrative Agent within one Business Day of receiving notification of such re-offer, to decline all of the amount of such prepayment that is re-offered to them, in which case such amount shall be retained by Borrower. Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing and otherwise in accordance with this Section 2.10. Prepayments shall be accompanied by all Fees applicable under Section 2.05 and all accrued interest to the extent required by Section 2.06.

SECTION 2.11 Alternate Rate of Interest. If prior to the commencement of any Interest Period for a Eurodollar Borrowing:

(a) the Administrative Agent determines (which determination shall be final and conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBOR Rate for such Interest Period; or

(b) the Administrative Agent is advised in writing by the Required Lenders that the Adjusted LIBOR Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period;

then the Administrative Agent shall give written notice thereof to Borrower and the Lenders as promptly as practicable thereafter and, until the Administrative Agent notifies Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective.

 

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SECTION 2.12 Yield Protection.

(a) Increased Costs Generally. If after the date hereof any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in, by any Lender (except any reserve requirement reflected in the Adjusted LIBOR Rate);

(ii) subject any Lender or the Administrative Agent to any Taxes (other than (A) Indemnified Taxes, (B) Excluded Taxes and (C) Other Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or

(iii) impose on any Lender or the London interbank market any other condition, cost or expense affecting this Agreement or Eurodollar Loans made by such Lender;

and the result of any of the foregoing shall be to increase the cost to the Administrative Agent or such Lender of making or maintaining any Eurodollar Loan (or in the case of clause (ii) above, any Loan), or of maintaining its obligation to make any such Loan, or to reduce the amount of any sum received or receivable by the Administrative Agent or such Lender (whether of principal, interest or any other amount), then, upon written request of the Administrative Agent or such Lender, Borrower will pay to the Administrative Agent or such Lender such additional amount or amounts as will compensate the Administrative Agent or such Lender for such additional costs incurred or reduction suffered.

(b) Capital Requirements. If any Lender determines (in good faith and in its reasonable discretion) that any Change in Law affecting such Lender or any lending office of such Lender or such Lender’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by such Lender, to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy and liquidity), then from time to time Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.

(c) Certificates for Reimbursement. A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section 2.12 and delivered to Borrower shall be conclusive absent manifest error. Borrower shall pay such Lender the amount shown as due on any such certificate within 15 days after receipt thereof.

(d) Delay in Requests. Failure or delay on the part of any Lender to demand compensation pursuant to this Section 2.12 shall not constitute a waiver of such Lender’s right to demand such compensation; provided that Borrower shall not be required to compensate a Lender pursuant to this

 

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Section for any increased costs incurred or reductions suffered more than 180 days prior to the date that such Lender notifies Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180 day period referred to above shall be extended to include the period of retroactive effect thereof) .

SECTION 2.13 Breakage Payments. In the event of (a) the payment or prepayment, whether optional or mandatory, of any principal of any Eurodollar Loan earlier than the last day of an Interest Period applicable thereto (including as a result of the occurrence and continuance of an Event of Default), (b) the conversion of any Eurodollar Loan earlier than the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Loan on the date specified in any notice delivered pursuant hereto or (d) the assignment of any Eurodollar Loan earlier than the last day of the Interest Period applicable thereto as a result of a request by Borrower pursuant to Section 2.16(b), then, in any such event, at the request of applicable Lenders Borrower shall compensate each applicable Lender for the loss, cost and expense (other than loss of anticipated profit) attributable to such event. In the case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBOR Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the Eurodollar market. A certificate of any applicable Lender setting forth in reasonable detail any amount or amounts that such Lender is entitled to receive pursuant to this Section 2.13 shall be delivered to Borrower (with a copy to the Administrative Agent) and shall be prima facie evidence thereof. Borrower shall pay such Lender the amount shown as due on any such certificate within ten (10) days after receipt thereof.

SECTION 2.14 Payments Generally; Pro Rata Treatment; Sharing of Setoffs.

(a) Payments Generally. Borrower shall make each payment required to be made by it hereunder or under any other Loan Document (whether of principal, premium, interest, fees or of amounts payable under Section 2.12, 2.13, 2.15 or 10.03, or otherwise) on or before the time expressly required hereunder or under such other Loan Document for such payment (or, if no such time is expressly required, prior to 2:00 p.m., New York City time), on the date when due, in immediately available funds, without setoff, deduction or counterclaim (except as expressly provided herein). Any amounts received after such time on any date may, in the reasonable discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to such account as the Administrative Agent shall specify from time to time by notice to Borrower. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment under any Loan Document shall be due on a day that is not a Business Day, unless specified otherwise, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments under each Loan Document shall be made in dollars, except as expressly specified otherwise.

 

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(b) Pro Rata Treatment.

(i) Each payment by Borrower of interest in respect of the Loans shall be applied to the amounts of such obligations owing to the Lenders pro rata according to the respective amounts then due and owing to the Lenders (subject to Section 2.6(c)).

(ii) Each payment on account of principal of the Loans shall be allocated among the Lenders pro rata based on the principal amount of the Loans held by the Lenders.

(c) Insufficient Funds. If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, interest and fees then due hereunder, such funds shall be applied (i) first, toward payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, toward payment of principal then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal then due to such parties.

(d) Sharing of Set-Off. Subject to the terms of the Intercreditor Agreement, if any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or other Obligations resulting in such Lender’s receiving payment of a proportion of the aggregate amount of its Loans and accrued interest thereon or other Obligations greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans and such other obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them; provided that:

(i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and

(ii) the provisions of this paragraph shall not be construed to apply to (x) any payment made by Borrower pursuant to and in accordance with the express terms of this Agreement or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than to Borrower or any Subsidiary thereof (as to which the provisions of this paragraph shall apply).

Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable Requirements of Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to such participation as fully (and subject to the same limitations regarding payroll, tax, withholding, trust and petty cash accounts) as if such Lender were a direct creditor of such Loan Party in the amount of such participation. If under applicable bankruptcy, insolvency or any similar law any Secured Party receives a secured claim in lieu of a setoff or counterclaim to which this Section 2.14(d) applies, such Secured Party shall to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights to which the Secured Party is entitled under this Section 2.14(d) to share in the benefits of the recovery of such secured claim.

 

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(e) Borrower Default. Unless the Administrative Agent shall have received notice from Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders hereunder that Borrower will not make such payment, the Administrative Agent may assume that Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders the amount due. In such event, if Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

(f) Failure to Pay by Lender. If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.02(c), 2.14(e) or 10.03(c), then the Administrative Agent may, in its reasonable discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.

SECTION 2.15 Taxes.

(a) Payments Free of Taxes. Unless required by applicable law (as determined in good faith by the applicable withholding agent), any and all payments by or on account of any obligation of any Loan Party hereunder or under any other Loan Document shall be made free and clear of and without reduction or withholding for any Indemnified Taxes or Other Taxes, provided that if the applicable withholding agent shall be required by applicable law to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable by the applicable Loan Party shall be increased as necessary so that after all required deductions (including deductions applicable to additional sums payable under this section) have been made, each Agent or Lender, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) the applicable withholding agent shall make such deductions and (iii) the applicable withholding agent shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

(b) Payment of Other Taxes by Loan Parties. Without limiting the provisions of subsection (a) above, the relevant Loan Party shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

(c) Indemnification by Borrower. Borrower shall indemnify each Agent and each Lender, within 10 days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) payable by such Agent or such Lender, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to Borrower by a Lender (with a copy to Administrative Agent), or by an Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

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

 

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(e) Status of Lenders. Each Lender shall, at such times as are reasonably requested by Borrower or the Administrative Agent, provide Borrower and the Administrative Agent with any documentation prescribed by law, or reasonably requested by the Borrower or the Administrative Agent, certifying as to any entitlement of such Lender to an exemption from, or reduction in, any withholding Tax with respect to any payments to be made to such Lender under the Loan Documents. Each such Lender shall, whenever a lapse in time or change in circumstances renders such documentation expired, obsolete or inaccurate in any material respect, deliver promptly to Borrower and the Administrative Agent updated or other appropriate documentation (including any new documentation reasonably requested by the applicable withholding agent) or promptly notify the Borrower and the Administrative Agent of its inability to do so. Unless the applicable withholding agent has received forms or other documents satisfactory to it indicating that payments under any Loan Document to or for a Lender are not subject to withholding tax or are subject to such Tax at a rate reduced by an applicable tax treaty, Borrower, Administrative Agent or other applicable withholding agent shall withhold amounts required to be withheld by applicable Law from such payments at the applicable statutory rate.

Without limiting the generality of the foregoing:

(1) Each Lender that is a United States Person (as defined in Section 7701(a)(30) of the Code) shall deliver to Borrower and the Administrative Agent on or before the date on which it becomes a party to this Agreement two properly completed and duly signed original copies of Internal Revenue Service Form W-9 (or any successor form) certifying that such Lender is exempt from U.S. federal backup withholding.

(2) Each Lender that is not a United States Person (as defined in Section 7701(a)(30) of the Code) shall deliver to Borrower and the Administrative Agent on or before the date on which it becomes a party to this Agreement (and from time to time thereafter when required by Law or upon the reasonable request of Borrower or the Administrative Agent) whichever of the following is applicable:

(I) two duly completed copies of Internal Revenue Service Form W-8BEN (or any successor forms) claiming eligibility for benefits of an income tax treaty to which the United States of America is a party,

(II) two duly completed copies of Internal Revenue Service Form W-8ECI (or any successor forms),

(III) in the case of a Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate, in substantially the form of Exhibits K1-K2 (any such certificate a “United States Tax Compliance Certificate”), or any other form approved by the Administrative Agent, to the effect that such Lender is not (A) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of Borrower within the meaning of Section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code, and that no payments in connection with the Loan Documents are effectively connected with such Lender’s conduct of a U.S. trade or business and (y) two duly completed copies of Internal Revenue Service Form W-8BEN (or any successor forms),

 

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(IV) to the extent a Lender is not the beneficial owner (for example, where the Lender is a partnership, or is a Lender that has granted a participation), Internal Revenue Service Form W-8IMY (or any successor forms) of the Lender, accompanied by a Form W-8ECI, W-8BEN, United States Tax Compliance Certificate, Form W-9, Form W-8IMY (or other successor forms) or any other required information from each beneficial owner, as applicable (provided that, if the Lender is a partnership (and not a participating Lender) and one or more beneficial owners are claiming the portfolio interest exemption, the United States Tax Compliance Certificate shall be provided by such Lender on behalf of such beneficial owner(s)), or

(V) any other form prescribed by applicable requirements of U.S. federal income tax law as a basis for claiming exemption from or a reduction in U.S. federal withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable requirements of law to permit the Borrower and the Administrative Agent to determine the withholding or deduction required to be made.

Each Lender shall, from time to time after the initial delivery by such Lender of the forms described above, whenever a lapse in time or change in such Lender’s circumstances renders such forms, certificates or other evidence so delivered expired, obsolete or inaccurate, promptly (1) deliver to Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) renewals, amendments or additional or successor forms, properly completed and duly executed by such Lender, together with any other certificate or statement of exemption required in order to confirm or establish such Lender’s status or that such Lender is entitled to an exemption from or reduction in U.S. federal withholding tax or (2) notify Administrative Agent and Borrower of its inability to deliver any such forms, certificates or other evidence.

Notwithstanding any other provision of this clause (e), a Lender shall not be required to deliver any form that such Lender is not legally eligible to deliver.

(f) Treatment of Certain Refunds. If any Agent or any Lender determines, in its sole discretion, that it has received a refund of any Indemnified Taxes or Other Taxes as to which it has been indemnified by a Loan Party or with respect to which a Loan Party has paid additional amounts pursuant to this Section, it shall pay promptly to such Loan Party an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by such Loan Party under this Section with respect to the Indemnified Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such Agent or such Lender, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund net of any Taxes payable by any Agent or Lender), provided that the applicable Loan Party, upon the request of such Agent or such Lender, agrees to repay the amount paid over to such Loan Party (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to such Agent or such Lender in the event such Agent or such Lender is required to repay such refund to such Governmental Authority. This subsection shall not be construed to require such Agent or any Lender to make available its tax returns (or any other information relating to its taxes that it deems confidential) to Borrower or any other Person.

(g) Payments made by Administrative Agent. For the avoidance of doubt, any payments made by the Administrative Agent to any Lender shall be treated as payments made by the applicable Loan Party.

 

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(h) Lender treated as Partnership. If any Lender is treated as partnership for purposes of an applicable Indemnified Tax or Other Tax, any withholding made by such Lender shall be treated as if such withholding had been made by the Borrower or the Administrative Agent.

(i) FATCA. If a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this Section 2.15(i), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

(j) Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes or Other Taxes attributable to such Lender (but only to the extent that any Loan Party has not already indemnified the Administrative Agent for such Indemnified Taxes or Other Taxes and without limiting the obligation of the Loan Parties to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 10.04(d) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this Section 2.15(j).

SECTION 2.16 Mitigation Obligations; Replacement of Lenders.

(a) Designation of a Different Lending Office. If any Lender requests compensation under Section 2.12, or requires Borrower to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.15, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates or file any certificate or document with a Government Authority that it is legally entitled to file to the extent reasonably requested by Borrower and not materially adverse to such Lender if, in the reasonable judgment of such Lender, such designation, assignment or filing (i) would eliminate or reduce amounts payable pursuant to Section 2.12 or 2.15, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation, assignment or filing. A certificate setting forth such costs and expenses submitted by such Lender to Borrower shall be conclusive absent manifest error.

 

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(b) Replacement of Lenders. If any Lender requests compensation under Section 2.12, or if Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.15, or if any Lender becomes a Defaulting Lender, or if Borrower exercises its replacement rights under Section 10.02(d), then Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.04), all of its interests, rights and obligations under this Agreement and the other Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that:

(i) Borrower shall have paid to the Administrative Agent the processing and recordation fee specified in Section 10.04(b);

(ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees (including all prepayment fees required under Section 2.05(c) as if the date of such replacement were the date of optional prepayment of such Lender’s Loans) and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 2.13 and 2.15), from the assignee (to the extent of such outstanding principal and accrued interest and fees) or Borrower (in the case of all other amounts);

(iii) in the case of any such assignment resulting from a claim for compensation under Section 2.12 or payments required to be made pursuant to Section 2.15, such assignment will result in a reduction in such compensation or payments thereafter; and

(iv) such assignment does not conflict with applicable Requirements of Law.

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling Borrower to require such assignment and delegation cease to apply.

SECTION 2.17 Defaulting Lenders. Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then, for so long as such Lender is a Defaulting Lender, the Loans of such Defaulting Lender shall not be included in determining whether the Required Lenders have taken or may take any action hereunder (including any consent to any amendment, waiver or other modification pursuant to Section 10.02(b)); provided, that this Section 2.17 shall not apply to the vote of a Defaulting Lender in the case of an amendment, waiver or other modification requiring the consent of such Lender or each Lender affected thereby. In the event that the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower agree that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then such Lender shall cease to be a Defaulting Lender as of the date established by Administrative Agent and Borrower.

 

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ARTICLE III

REPRESENTATIONS AND WARRANTIES

Each Loan Party represents and warrants to the Administrative Agent, the Collateral Agent and each of the Lenders that as of the Effective Date:

SECTION 3.01 Organization; Powers. Each of the Loan Parties and each of its Subsidiaries is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, and is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

SECTION 3.02 Authorization; Enforceability. The Transactions are within each Loan Party’s organizational powers and have been duly authorized by all necessary organizational actions and, if required, actions by equity holders. The Loan Documents to which each Loan Party is a party have been duly executed and delivered by such Loan Party and constitute a legal, valid and binding obligation of such Loan Party, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

SECTION 3.03 Governmental Approvals; No Conflicts. The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect and except for filings necessary to perfect Liens created pursuant to the Loan Documents, (b) will not violate any Requirement of Law applicable to any Loan Party or any of its Subsidiaries, (c) will not violate or result in a default under any indenture, agreement or other instrument binding upon any Loan Party or any of its Subsidiaries or its assets, or give rise to a right thereunder to require any payment to be made by any Loan Party or any of its Subsidiaries, and (d) will not result in the creation or imposition of any Lien on any asset of any Loan Party or any of its Subsidiaries, except Liens created pursuant to the Loan Documents.

SECTION 3.04 Financial Condition; No Material Adverse Change.

(a) Borrower has heretofore furnished to the Lenders its annual report on Form 10-K, which contains Borrower’s consolidated balance sheet and statements of income, stockholders equity and cash flows (i) as of and for the Fiscal Year ended December 31, 2011, reported on by Ernst & Young LLP, independent public accountants, (ii) its quarterly report on Form 10-Q which contains Borrower’s consolidated financial statements as of and for the Fiscal Quarter ended March 31, 2012, certified by its chief financial officer, and (iii) available financial information for the April and May 2012 calendar months. Such financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of Borrower and its consolidated Subsidiaries as of such dates and for such periods in accordance with GAAP, subject to year end audit adjustments and the absence of footnotes in the case of the statements referred to in clauses (ii) and (iii) above.

(b) No event, change or condition has occurred that has had, or could reasonably be expected to have, a Material Adverse Effect, since December 31, 2011.

(c) Borrower has heretofore delivered to the Lenders Borrower’s unaudited pro forma consolidated balance sheet and statements of income and cash flows and pro forma EBITDA, for the Fiscal Year ended December 31, 2011, and as of and for the four quarter period ended March 31, 2012, in each case after giving effect to the Transactions as if they had occurred on such date in the case of the balance sheet and as of the beginning of all periods presented in the case of the statements of income and cash flows.

 

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(d) On or prior to the Effective Date, Borrower has delivered to the Administrative Agent forecasts for the financial performance of Borrower and its Subsidiaries (x) on an annual basis through December 31, 2017 and (y) on a quarterly basis, through December 31, 2014. The forecasts of financial performance of Borrower and its subsidiaries furnished to the Lenders have been prepared in good faith by Borrower and based on assumptions believed by Borrower to reasonable when made, it being understood by the Lenders however that forecasts as to future events are not historical facts and that the actual results during the period or periods covered by the forecasts may differ from the forecasted results and that the differences may be material.

SECTION 3.05 Properties.

(a) As of the date of this Agreement, Schedule 3.05 sets forth the address of each parcel of real property that is owned or leased by each Loan Party. Each of such leases and subleases is valid and enforceable in accordance with its terms and is in full force and effect, and no default by any party to any such lease or sublease exists which could result in the termination of such lease or sublease in accordance with its terms. Each of the Loan Parties and its Subsidiaries has good and indefeasible title to, or valid leasehold interests in, all its real and personal property, free of all Liens other than those permitted by Section 6.02.

(b) Each Loan Party and its Subsidiaries owns, or is licensed to use, all trademarks, trade names, copyrights, patents and other intellectual property necessary to its business as currently conducted, and the use thereof by the Loan Parties and its Subsidiaries does not infringe in any material respect upon the rights of any other Person, and the Loan Parties’ rights thereto are not subject to any licensing agreement or similar arrangement.

SECTION 3.06 Litigation. Except as set forth in Schedule 3.06, there are no actions, suits, proceedings or investigations by or before any arbitrator or Governmental Authority pending against or, to the knowledge of any Loan Party, threatened against or affecting the Loan Parties or any of their Subsidiaries (i) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect (other than the Disclosed Matters) or (ii) that involve this Agreement or the Transactions.

SECTION 3.07 Compliance with Laws and Agreements. Each Loan Party and its Subsidiaries is in compliance with all Requirements of Law applicable to it or its property and all indentures, agreements and other instruments binding upon it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. No Default has occurred and is continuing.

SECTION 3.08 Investment Company Status. No Loan Party nor any of its Subsidiaries is an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940.

SECTION 3.09 Taxes. Each Loan Party and its Subsidiaries has timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which such Loan Party or such Subsidiary, as applicable, has set aside on its books adequate reserves or (b) to the extent that the failure to do so could not be expected to result in a Material Adverse Effect. No tax liens have been filed and no claims are being asserted with respect to any such Taxes.

 

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SECTION 3.10 ERISA.

(a) No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect.

(b) Except as would not reasonably be expected to result in a Material Adverse Effect (i) each Foreign Plan has been maintained in compliance with its terms and with the requirements of any and all applicable requirements of law and has been maintained, where required, in good standing with applicable regulatory authorities and (ii) no Loan Party nor any of its Subsidiaries has incurred any obligation in connection with the termination of or withdrawal from any Foreign Plan.

SECTION 3.11 Disclosure. Borrower has disclosed to the Lenders all agreements, instruments and corporate or other restrictions to which it or any Subsidiary is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. None of the reports, financial statements, certificates or other information furnished by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the negotiation of this Agreement or any other Loan Document (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time delivered and, if such projected financial information was delivered prior to the Effective Date, as of the Effective Date.

SECTION 3.12 Material Agreements. No Loan Party is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in (i) any material agreement or contract to which it is a party or (ii) any agreement or instrument evidencing or governing Indebtedness.

SECTION 3.13 Solvency.

(a) Immediately after the consummation of the Transactions to occur on the Effective Date, (i) the fair value of the assets of each Loan Party, at a fair valuation, will exceed its debts and liabilities, subordinated, contingent or otherwise; (ii) the present fair saleable value of the property of each Loan Party will be greater than the amount that will be required to pay the probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (iii) each Loan Party will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (iv) each Loan Party will not have unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted after the Effective Date.

(b) No Loan Party intends to, or will permit any of its Subsidiaries to, and no Loan Party believes that it or any of its Subsidiaries will, incur debts beyond its ability to pay such debts as they mature, taking into account the timing of and amounts of cash to be received by it or any such Subsidiary and the timing of the amounts of cash to be payable on or in respect of its Indebtedness or the Indebtedness of any such Subsidiary.

 

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SECTION 3.14 Insurance. Schedule 3.14 sets forth a description of all insurance maintained by or on behalf of the Loan Parties and the Subsidiaries as of the Effective Date. As of the Effective Date, all premiums in respect of such insurance have been paid, except those noted on Schedule 3.14 as installment payments that are still due. Borrower believes that the insurance maintained by or on behalf of Borrower and the Subsidiaries is adequate.

SECTION 3.15 Capitalization and Subsidiaries. Schedule 3.15 sets forth (a) a correct and complete list of the name and relationship to Borrower of each and all of Borrower’s Subsidiaries, (b) a true and complete listing of each class of each of Borrower’s authorized Equity Interests, of which all of such issued shares are validly issued, outstanding, fully paid and non-assessable, and owned beneficially and of record by the Persons identified on Schedule 3.15, and (c) the type of entity of Borrower and each of its Subsidiaries. All of the issued and outstanding Equity Interests owned by any Loan Party been (to the extent such concepts are relevant with respect to such ownership interests) duly authorized and issued and are fully paid and non-assessable.

SECTION 3.16 No Burdensome Restrictions. No Loan Party is subject to any Burdensome Restrictions except Burdensome Restrictions permitted under Section 6.12.

SECTION 3.17 Federal Reserve Regulations. Neither Borrower nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying Margin Stock. No part of the proceeds of any Loan have been used or will be used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board, including Regulations T, U and X.

SECTION 3.18 Security Interest in Collateral. The provisions of this Agreement and the other Loan Documents create legal and valid Liens on all the Collateral in favor of the Administrative Agent, for the benefit of the Administrative Agent and the Lenders, and such Liens constitute perfected and continuing Liens on the Collateral, securing the Secured Obligations, enforceable against the applicable Loan Party and all third parties, and having priority over all other Liens on the Collateral except in the case of (a) the Collateral (other than the Specified Assets), for which the Administrative Agent shall have priority over all other Liens other than those created under the First Lien Loan Documents and permitted hereby and those described in clauses (b) and (c) of this Section 3.18, (b) Liens permitted under Section 6.02 (other than clause (o) thereof), to the extent any such Liens would have priority over the Liens in favor of the Administrative Agent pursuant to any applicable law, and (c) Liens perfected only by possession (including possession of any certificate of title) or control to the extent the Administrative Agent has not obtained or does not maintain possession or control of such Collateral.

SECTION 3.19 Employment Matters. As of the Effective Date, there are no strikes, lockouts or slowdowns against any Loan Party or any Subsidiary pending or, to the knowledge of Borrower, threatened. The hours worked by and payments made to employees of the Loan Parties and the Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable Federal, state, local or foreign law dealing with such matters. All payments due from any Loan Party or any Subsidiary, or for which any claim may be made against any Loan Party or any Subsidiary, on account of wages and employee health and welfare insurance and other benefits, have been paid or accrued as a liability on the books of the Loan Party or such Subsidiary.

 

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SECTION 3.20 Common Enterprise. The successful operation and condition of each of the Loan Parties is dependent on the continued successful performance of the functions of the group of the Loan Parties as a whole and the successful operation of each of the Loan Parties is dependent on the successful performance and operation of each other Loan Party. Each Loan Party expects to derive benefit (and its board of directors or other governing body has determined that it may reasonably be expected to derive benefit), directly and indirectly, from (i) successful operations of each of the other Loan Parties and (ii) the credit extended by the Lenders to Borrower hereunder, both in their separate capacities and as members of the group of companies. Each Loan Party has determined that execution, delivery and performance of this Agreement and any other Loan Documents to be executed by such Loan Party is within its purpose, will be of direct and indirect benefit to such Loan Party, and is in its best interest.

SECTION 3.21 Anti-Terrorism Law.

(a) No Loan Party and, to the knowledge of the Loan Parties, none of its Affiliates is in violation of any Requirement of Law relating to terrorism or money laundering (“Anti-Terrorism Laws”), including Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001 (the “Executive Order”), and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56.

(b) No Loan Party and to the knowledge of the Loan Parties, no Affiliate or broker or other agent of any Loan Party acting or benefiting in any capacity in connection with the Loans is any of the following:

(i) a Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order;

(ii) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order;

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

(iv) a Person that commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order; or

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

(c) No Loan Party and, to the knowledge of the Loan Parties, no broker or other agent of any Loan Party acting in any capacity in connection with the Loans (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Person described in paragraph (b) above, (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order, or (iii) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.

 

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SECTION 3.22 Environmental Matters. Except as set forth in Schedule 3.22 and except as to matters that could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect: (i) no written notice has been received by any Loan Party or any Subsidiary, and there are no judicial, administrative or other actions, suits, claims or proceedings pending or, to any Loan Party’s or any Subsidiary’s knowledge, threatened which allege a violation of or liability under any Environmental Laws, in each case relating to any Loan Party or any Subsidiary, (ii) each Loan Party and Subsidiary and their respective operations and properties are in compliance with and each of them has all permits, licenses and other approvals necessary for its operations to comply with all applicable Environmental Laws and is in compliance with the terms of such permits, licenses and other approvals and with all other applicable Environmental Laws, (iii) there has been no Release or threat of Release of any Hazardous Material at, on, under or from any property currently owned, operated or leased or, to any Loan Party’s or Subsidiary’s knowledge, formerly owned, operated or leased that could reasonably be expected to give rise to any cost, liability or obligation of any Loan Party or any Subsidiary under Environmental Laws, and no Hazardous Material has been generated, owned, treated, stored, handled or controlled by any Loan Party or any Subsidiary and transported to or Released at any location in a manner that could reasonably be expected to give rise to any cost, liability or obligation of any Loan Party or any Subsidiary under any Environmental Laws, (iv) no Loan Party or Subsidiary is a party or subject to any order, decree or agreement which imposes any obligation or liability under any Environmental Laws, and (v) no Loan Party or Subsidiary is conducting or paying for, in whole or in part, any Response at any location.

SECTION 3.23 LTB Ownership of Grupo Vasconia. LTB owns directly 30% of the fully diluted Equity Interests of Grupo Vasconia as of the Effective Date, free and clear of all Liens and has good title to such Equity Interests; all such Equity Interests have been duly and validly issued.

ARTICLE IV

CONDITIONS TO CREDIT EXTENSION

SECTION 4.01 Conditions to Credit Extension. The obligation of each Lender to fund on the Effective Date the Credit Extension requested to be made by it shall be subject to the prior or concurrent satisfaction (or waiver of such condition by the Administrative Agent) of each of the conditions precedent set forth in this Section 4.01.

(a) Credit Agreement and Loan Documents. The Administrative Agent (or its counsel) shall have received (i) from each party hereto either (A) a counterpart of this Agreement signed on behalf of such party or (B) written evidence satisfactory to the Administrative Agent (which may include facsimile or PDF transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement and (ii) duly executed copies of the Loan Documents and such other certificates, documents, instruments and agreements as the Administrative Agent shall reasonably request in connection with the transactions contemplated by this Agreement and the other Loan Documents, including any promissory notes requested by a Lender pursuant to Section 2.04 payable to the order of each such requesting Lender, a written opinion of the Loan Parties’ counsel, addressed to the Administrative Agent and the Lenders in substantially the form of Exhibit H, a written opinion of Mexico local counsel, addressed to the Administrative Agent and the Lenders in substantially the form of Exhibit I, all in form and substance reasonably satisfactory to the Administrative Agent and its counsel and as further described in the list of closing documents attached as Exhibit E.

 

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(b) Financial Statements and Projections. The Lenders shall have received (i) audited consolidated financial statements of Borrower for the 2011 Fiscal Year, (ii) unaudited interim consolidated financial statements of Borrower for each Fiscal Quarter ended after the date of the latest applicable financial statements delivered pursuant to clause (i) of this paragraph as to which such financial statements are available and (iii) satisfactory projections through 2017.

(c) Closing Certificates; Certified Certificate of Incorporation; Good Standing Certificates. The Administrative Agent shall have received (i) a certificate of each Loan Party, dated the Effective Date and executed by its Secretary or Assistant Secretary, which shall (A) certify the resolutions of its Board of Directors, members or other body authorizing the execution, delivery and performance of the Loan Documents to which it is a party, (B) identify by name and title and bear the signatures of the Financial Officers and any other officers of such Loan Party authorized to sign the Loan Documents to which it is a party, and (C) contain appropriate attachments, including the certificate or articles of incorporation or organization of each Loan Party certified by the relevant authority of the jurisdiction of organization of such Loan Party and a true and correct copy of its bylaws or operating, management or partnership agreement, and (ii) a good standing certificate for each Loan Party from its jurisdiction of organization.

(d) No Default Certificate. The Administrative Agent shall have received a certificate, signed by the chief financial officer of Borrower and dated the Effective Date (i) stating that no Default has occurred and is continuing, (ii) stating that the representations and warranties contained in Article III are true and correct as of such date, and (iii) certifying any other factual matters as may be reasonably requested by the Administrative Agent.

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

(f) Lien Searches. The Administrative Agent shall have received the results of a recent lien search in each of the jurisdictions where any Loan Party is organized or where its chief executive office is located, and such search shall reveal no liens on any of the assets of the Loan Parties except for Liens permitted by Section 6.02 or discharged on or prior to the Effective Date pursuant to a pay-off letter or other documentation reasonably satisfactory to the Administrative Agent.

(g) Pay-Off Letter. The Administrative Agent shall have received evidence satisfactory to it that the Existing Credit Agreement has been terminated and cancelled, and all Indebtedness thereunder has been fully repaid, and that all Liens granted under or in connection therewith have been terminated or, in the case of notice filings such as UCC financing statements, that the Administrative Agent or Borrower is authorized to terminate such Liens of record.

(h) First Lien Financing. The Administrative Agent shall have received a duly executed copy of the First Lien Credit Agreement Amendment, in form and substance acceptable to the Administrative Agent.

(i) [Reserved].

(j) [Reserved].

 

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(k) Collateral Access and Control Agreements. The Administrative Agent shall have received each (i) Collateral Access Agreement required to be provided pursuant to Section 4.13 of the Security Agreement and (ii) Deposit Account Control Agreement required to be provided pursuant to Section 4.14 of the Security Agreement.

(l) Solvency. The Administrative Agent shall have received a solvency certificate in form and substance reasonably satisfactory to the Administrative Agent from a Financial Officer.

(m) Borrowing Base Certificate. The Administrative Agent shall have received a Borrowing Base Certificate (as defined in the First Lien Credit Agreement) which calculates the Borrowing Base as of the end of the calendar month immediately preceding the calendar month in which the Effective Date occurs, unless the Effective Date occurs before the 20th day of the month, in which case Borrower shall deliver a Borrowing Base Certificate as of the end of the next preceding calendar month.

(n) Closing Availability. After giving effect to all Borrowings (as defined in the First Lien Credit Agreement) to be made on the Effective Date and the issuance of any Letters of Credit (as defined in the First Lien Credit Agreement) on the Effective Date and payment of all fees and expenses due hereunder, and with all of the Loan Parties’ Indebtedness, liabilities, and obligations current, the Availability under the First Lien Credit Agreement shall not be less than $40,000,000.

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

(p) Filings, Registrations and Recordings. Each document (including any UCC financing statement) required by the Collateral Documents or under law or reasonably requested by the Administrative Agent to be filed, registered or recorded in order to create in favor of the Administrative Agent, for the benefit of the Secured Parties, a perfected Lien on the Collateral described therein, prior and superior in right to any other Person (other than with respect to Liens expressly permitted by Section 6.02), shall be in proper form for filing, registration or recordation.

(q) Insurance. The Administrative Agent shall have received evidence of insurance coverage in form, scope and substance reasonably satisfactory to the Administrative Agent and otherwise in compliance with the terms of Section 5.04 hereof and of Section 4.12 of the Security Agreement.

(r) [Reserved].

(s) Other Documents. The Administrative Agent shall have received such other documents and information as the Administrative Agent, any Lender or their respective counsel may have reasonably requested.

(t) [Reserved].

 

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(u) Mexican Share Pledge. The Administrative Agent shall have received (i) a pledge agreement in form and substance reasonably satisfactory to the Administrative Agent, relating to the Administrative Agent’s security interest in the Pledged Specified Assets, perfected under applicable local law and (ii) a certificate representing the shares of Pledged Specified Assets, together with an undated stock power for such certificate executed in blank by a duly authorized officer of the pledge or by the pledgor thereof.

(v) Notice. The Administrative Agent shall have received a Borrowing Request as required by Section 2.03 (or such notice shall have been deemed given in accordance with Section 2.03).

(w) No Default. Borrower and each other Loan Party shall be in compliance in all material respects with all the terms and provisions set forth herein and in each other Loan Document on its part to be observed or performed, and, at the time of and immediately after giving effect to the Credit Extensions on the Effective Date and the application of the proceeds thereof, no Default shall have occurred and be continuing on the Effective Date.

(x) Representations and Warranties. Each of the representations and warranties made by any Loan Party set forth in Article III hereof or in any other Loan Document shall be true and correct in all material respects (except that any representation and warranty that is qualified as to “materiality” or “Material Adverse Effect” shall be true and correct in all respects) on and as of the Credit Extension on the Effective Date, except to the extent such representations and warranties expressly relate to an earlier date.

(y) No Legal Bar. No order, judgment or decree of any Governmental Authority shall purport to restrain any Lender from making any Loans to be made by it.

The Administrative Agent shall notify Borrower and the Lenders of the Effective Date, and such notice shall be conclusive and binding.

ARTICLE V

AFFIRMATIVE COVENANTS

Each Loan Party warrants, covenants and agrees with each Lender that so long as this Agreement shall remain in effect (excluding contingent indemnification obligations for which no claim has been asserted) and until the Commitments have been terminated and the principal of and interest on each Loan, all Fees and all other expenses or amounts payable under any Loan Document shall have been paid in full, unless the Required Lenders shall otherwise consent in writing, each Loan Party will, and will cause each of its Subsidiaries to:

SECTION 5.01 Financial Statements, Reports, etc. Furnish to the Administrative Agent and each Lender:

(a) Within ninety (90) days after the end of each Fiscal Year of the Borrower, its audited consolidated and unaudited consolidating balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the previous Fiscal Year, all reported on (in the case of audited statements) by Ernst & Young LLP or other independent public accountants of recognized national standing (without a “going concern” or like qualification or exception and without any qualification or

 

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exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Borrower and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied (it being understood and agreed that unaudited consolidating financial information provided pursuant to this subsection (a) shall, in respect of Subsidiaries, only show individually Significant Subsidiaries);

(b) Within forty-five (45) days after the end of each of the first three Fiscal Quarters of the Borrower, its consolidated and consolidating balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for such Fiscal Quarter and the then elapsed portion of the Fiscal Year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous Fiscal Year, all certified by one of its Financial Officers as presenting fairly in all material respects the financial condition and results of operations of the Borrower and its consolidated Subsidiaries on a consolidated and consolidating basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes (it being understood and agreed that unaudited consolidating financial information provided pursuant to this subsection (b) shall, in respect of Subsidiaries, only show individually Significant Subsidiaries);

(c) Within thirty (30) days after the end of each calendar month of the Borrower, excluding the months of January, March, June, September and December, its consolidated and consolidating balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for such calendar month and the then elapsed portion of the Fiscal Year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous Fiscal Year, all certified by one of its Financial Officers as presenting fairly in all material respects the financial condition and results of operations of the Borrower and its consolidated Subsidiaries on a consolidated and consolidating basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes (it being understood and agreed that unaudited consolidating financial information provided pursuant to this subsection (c) shall, in respect of Subsidiaries, only show individually Significant Subsidiaries);

(d) Concurrently with any delivery of financial statements under clauses (a), (b), or (c), a Compliance Certificate (i) certifying, in the case of the financial statements delivered under clause (b) or (c), as presenting fairly in all material respects the financial condition and results of operations of the Borrower and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes, (ii) certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (iii) setting forth reasonably detailed calculations of the Fixed Charge Coverage Ratio, the aggregate amount of Capital Expenditures and EBITDA (and, if applicable, Indebtedness) for the most recently ended Test Period and demonstrating compliance with Section 6.10 and (iv) stating whether any change in GAAP or in the application thereof has occurred since the date of the audited financial statements referred to in Section 3.04 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate;

(e) Concurrently with any delivery of financial statements under clause (a) above, a certificate of the accounting firm that reported on such financial statements stating whether they obtained knowledge during the course of their examination of such financial statements of any Default (which certificate may be limited to the extent required by accounting rules or guidelines);

 

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(f) As soon as available, but in any event not later than the fifteenth calendar day of each Fiscal Year of the Borrower, a copy of the plan and forecast (including a projected consolidated and consolidating balance sheet, income statement and funds flow statement) of the Borrower for each month of the upcoming Fiscal Year (the “Projections”) in a form heretofore provided to the Administrative Agent;

(g) Promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by the Borrower or any Subsidiary with the Securities and Exchange Commission, or any Governmental Authority succeeding to any or all of the functions of said Commission, or with any national securities exchange, or distributed by the Borrower to its shareholders generally, as the case may be;

(h) Promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the Borrower or any Subsidiary, or compliance with the terms of this Agreement, as the Administrative Agent, the Collateral Agent or any Lender may reasonably request;

(i) Copies of all Borrowing Base Certificates (as defined in the First Lien Credit Agreement), appraisals and field examinations or similar reports or information as and when provided under the First Lien Loan Documents;

(j) Monthly, a report specifying the amounts outstanding under Sections 6.01(l) and (m).

(k) Concurrently with any delivery of financial statements under Section 5.01(a), a certificate of a Financial Officer setting forth the information required pursuant to the Security Agreement or confirming that there has been no change in such information since the date of the Security Agreement;

(l) Concurrently with any delivery of financial statements under Section 5.01(a), an accurate organizational chart as required by Section 3.15(a), or confirmation that there are no changes to Exhibit A to the Security Agreement;

(m) Provide copies of any Organizational Documents that have been amended or modified in accordance with the terms hereof within 15 days after such amendment or modification and deliver a copy of any notice of default given or received by any Company under any Organizational Document within 15 days after such Company gives or receives such notice;

Documents required to be delivered pursuant to clauses (a) and (b) of this Section 5.01 may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date on which such documents are filed for public availability on the Securities and Exchange Commission’s Electronic Data Gathering and Retrieval System; provided that Borrower shall notify (which may be by facsimile or electronic mail) the Administrative Agent of the filing of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents.

 

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SECTION 5.02 Litigation and Other Notices. Furnish to the Administrative Agent written notice of the following promptly (and, in any event, within five Business Days of the Borrower obtaining knowledge of the occurrence thereof):

(a) any Default, specifying the nature and extent thereof and the corrective action (if any) taken or proposed to be taken with respect thereto;

(b) receipt of any notice of any governmental investigation or any litigation or proceeding commenced or threatened against any Loan Party that (i) seeks damages in excess of $5,000,000, (ii) seeks injunctive relief, (iii) is asserted or instituted against any Plan, its fiduciaries or its assets, (iv) alleges criminal misconduct by any Loan Party, (v) alleges the violation of any law regarding, or seeks remedies in connection with, any Environmental Laws, (vi) contests any tax, fee, assessment, or other governmental charge in excess of $5,000,000, or (vii) involves any material product recall;

(c) any development that has resulted in, or could reasonably be expected to result in a Material Adverse Effect;

(d) the occurrence of any Casualty Event in the amount of $5,000,000 or more, whether or not covered by insurance; and

(e) the incurrence of any material Lien (other than Liens permitted under Section 6.02) on, or claim asserted against any of the Collateral.

SECTION 5.03 Existence; Businesses and Properties.

(a) Do or cause to be done all things commercially reasonable and necessary to preserve, renew and maintain in full force and effect its legal existence, except as otherwise expressly permitted under Section 6.03 or Section 6.05 or, in the case of Borrower or any Subsidiary, where the failure to perform such obligations, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.

(b) Do or cause to be done all commercially reasonable things necessary to obtain, preserve, renew, extend and keep in full force and effect the rights, licenses, permits, privileges, franchises, authorizations, patents, copyrights, trademarks and trade names material to the conduct of its business; maintain and operate such business in substantially the manner in which it is presently conducted and operated; comply with all applicable Requirements of Law (including any and all zoning, building, Environmental Law, ordinance, code or approval or any building permits or any restrictions of record or agreements affecting any of Borrower’s real property) and decrees and orders of any Governmental Authority, whether now in effect or hereafter enacted, except where the failure to comply, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect; and at all times maintain, preserve and protect all property material to the conduct of such business and keep such property in good repair, working order and condition (other than wear and tear occurring in the ordinary course of business and damage by casualty or condemnation) and from time to time make, or cause to be made, all reasonably necessary repairs, renewals, additions, improvements and replacements thereto reasonably necessary in order that the business carried on in connection therewith may be properly conducted at all times; provided that nothing in this Section 5.03(b) shall prevent (i) sales of property, consolidations or mergers by or involving any Company in accordance with Section 6.03 or Section 6.05; (ii) the withdrawal by any Company of its qualification as a foreign corporation in any jurisdiction where such withdrawal, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect; or (iii) the abandonment, cancellation or similar action by any Company of any rights, franchises, licenses, trademarks, trade names, copyrights or patents that such Person reasonably determines are not necessary to the conduct of its business or no longer commercially desirable or economically practical to maintain, or the licensing of intellectual property rights in this ordinary course of business.

 

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SECTION 5.04 Insurance. Each Loan Party will, and will cause each Subsidiary to, maintain with financially sound and reputable carriers having a financial strength rating of at least A- by A.M. Best Company (a) insurance in such amounts (with no greater risk retention) and against such risks (including loss or damage by fire and loss in transit; theft, burglary, pilferage, larceny, embezzlement, and other criminal activities; business interruption; and general liability) and such other hazards, as is customarily maintained by companies of established repute engaged in the same or similar businesses operating in the same or similar locations and (b) all insurance required pursuant to the Collateral Documents. The Borrower will furnish to the Lenders, upon request of the Administrative Agent, information in reasonable detail as to the insurance so maintained.

SECTION 5.05 Obligations and Taxes.

(a) Payment of Obligations. Discharge promptly when due all Taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or in respect of its property (including in its capacity as a withholding agent), before the same shall become delinquent or in default, as well as all lawful claims for labor, services, materials and supplies or otherwise that, if unpaid, might give rise to a Lien other than a Permitted Encumbrance upon such properties or any part thereof; provided that such payment and discharge shall not be required with respect to any such Tax, assessment, charge, levy or claim so long as (x)(i) the validity or amount thereof shall be contested in good faith by appropriate proceedings timely instituted and diligently conducted and the applicable Company shall have set aside on its books adequate reserves or other appropriate provisions with respect thereto in accordance with GAAP and (ii) such contest operates to suspend collection of the contested obligation, Tax, assessment or charge and enforcement of a Lien other than a Permitted Encumbrance or (y) the failure to pay would not reasonably be expected to result in a Material Adverse Effect.

(b) Filing of Returns. Timely file all material Tax Returns required to be filed by it.

SECTION 5.06 Employee Benefits. Except to the extent any non-compliance would not reasonably be expected to result in a Material Adverse Effect (a) comply in all material respects with the applicable provisions of ERISA and the Code and (b) furnish to the Administrative Agent (x) as soon as possible after, and in any event within 10 days after any Responsible Officer of any Company or any ERISA Affiliates of any Company knows or has reason to know that any ERISA Event has occurred that, alone or together with any other ERISA Event could reasonably be expected to result in liability of the Companies or any of their ERISA Affiliates in an aggregate amount that would reasonably be expected to result in a Material Adverse Effect or the imposition of a Lien, a statement of a Financial Officer of Borrower setting forth details as to such ERISA Event and the action, if any, that the Companies propose to take with respect thereto, and (y) upon reasonable request by the Administrative Agent, copies of (i) each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed by any Company or any ERISA Affiliate with the Internal Revenue Service with respect to each Plan; (ii) the most recent actuarial valuation report for each Plan; (iii) all written notices received by any Company or any ERISA Affiliate from a Multiemployer Plan sponsor or any governmental agency concerning an ERISA Event; and (iv) such other documents or governmental reports or filings relating to any Plan (or employee benefit plan sponsored or contributed to by any Company) as the Administrative Agent shall reasonably request.

 

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SECTION 5.07 Maintaining Records; Access to Properties and Inspections; Annual Meetings.

(a) Keep proper books of record and account in which full, true and correct entries in conformity with GAAP in all material respects and all Requirements of Law are made of all material dealings and transactions in relation to its business and activities. Each Company will permit any representatives designated by the Administrative Agent to visit and inspect the financial records and the property of such Company at reasonable times during normal business hours with reasonable prior notice and as often as reasonably requested and to make extracts from and copies of such financial records, and permit any representatives designated by the Administrative Agent or any Lender (though the Administrative Agent) to discuss the affairs, finances, accounts and condition of any Company with the officers and employees thereof and advisors therefor (including independent accountants); provided, however, that (x) the Loan Parties shall not be required to pay the expenses of more than one such visit and inspection during any Fiscal Year unless any Event of Default has occurred and is continuing and (y) each Lender shall at times coordinate with Administrative Agent the frequency and timing of any such visits and inspections so as to reasonably minimize the burden imposed on the Loan Parties.

(b) Within 150 days after the end of each Fiscal Year of the Borrower, at the reasonable request of the Administrative Agent or Required Lenders, hold a meeting (by conference call at a mutually agreeable time), the costs of such venue or call to be paid by Borrower) with all Lenders who choose to participate on such call, on which call shall be reviewed the financial results of the previous Fiscal Year and the financial condition of the Companies and the budgets presented for the current Fiscal Year of the Companies.

SECTION 5.08 Use of Proceeds. Use the proceeds of the Loans only for the financing of the Transactions, the repayment of Indebtedness under the Existing Credit Agreement and, unless an Event of Default then exists or would arise therefrom, reduction of amounts that may be outstanding (if any) under the First Lien Credit Agreement.

SECTION 5.09 Compliance with Environmental Laws; Environmental Reports.

(a) Except to the extent failure to do so could not reasonably be expected to result in a Material Adverse Effect, (i) comply, and cause all lessees and other Persons occupying real property of any Company to comply, with all Environmental Laws and Environmental Permits applicable to its operations and real property; (ii) obtain and renew all Environmental Permits applicable to its operations and real property; and (iii) conduct all Responses required by, and in accordance with, Environmental Laws; provided that no Company shall be required to undertake any Response to the extent that its obligation to do so is being contested in good faith and by proper proceedings and appropriate reserves are being maintained with respect to such circumstances in accordance with GAAP.

(b) If a Default caused by reason of a breach of Section 3.22 or Section 5.09(a) shall have occurred and be continuing for more than 20 days without the Companies commencing activities that would reasonably be expected to cure such Default in accordance with Environmental Laws, at the written request of the Administrative Agent or the Required Lenders through the Administrative Agent, provide to the Lenders within 45 days after such written request, at the expense of Borrower, an environmental assessment report regarding the matters which are the subject of such Default, including, where and as appropriate, soil and/or groundwater sampling, prepared by an environmental consulting firm and, in form and substance, reasonably acceptable to the Administrative Agent and indicating where related to the matters which are the subject of such Default the presence or absence of Hazardous Materials and the estimated cost of any compliance or Response to address such matters.

 

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SECTION 5.10 [Reserved].

SECTION 5.11 Additional Collateral; Further Assurances.

(a) Borrower and each Subsidiary that is a Loan Party shall cause each of its Domestic Subsidiaries formed or acquired after the Effective Date to become a Loan Party by executing the Joinder Agreement and taking all actions required by the Collateral Documents to create the liens created thereunder within thirty (30) days (or such later date as may be agreed upon by the Administrative Agent) of such formation, or acquisition, such Joinder Agreement to be accompanied by appropriate corporate resolutions, other corporate organizational and authorization documentation and legal opinions in form and substance reasonably satisfactory to the Administrative Agent. Upon execution and delivery thereof, each such Person (i) shall automatically become a Subsidiary Guarantor hereunder and thereupon shall have all of the rights, benefits, duties, and obligations in such capacity under the Loan Documents and (ii) will grant Liens to the Administrative Agent, for the benefit of the Secured Parties, in any property of such Loan Party which constitutes Collateral, including any parcel of real property located in the U.S. owned by any Loan Party.

(b) Without limiting the generality of the foregoing, Borrower and each Subsidiary that is a Loan Party will cause the Applicable Pledge Percentage of the issued and outstanding Equity Interests in each Subsidiary directly owned by Borrower or any Domestic Subsidiary to be subject at all times to a second priority, perfected Lien (except in the case of the Pledged Specified Assets, which will be subject at all times to a first priority, perfected Lien) in favor of the Administrative Agent for the benefit of the Secured Parties, to secure the Secured Obligations in accordance with the terms and conditions of the Collateral Documents or such other security documents as the Administrative Agent shall reasonably request. Notwithstanding the foregoing, no such pledge agreement in respect of the Equity Interests of a Foreign Subsidiary formed after the Effective Date shall be required hereunder (i) until not later than 30 days after the formation of such Foreign Subsidiary, or such shorter time as provided in the First Lien Credit Agreement (or such later date as may be agreed upon by the Administrative Agent) or (ii) to the extent the Administrative Agent or its counsel determines that, in light of the cost and expense associated therewith, such pledge would not provide material credit support for the benefit of the Secured Parties pursuant to legally valid, binding and enforceable pledge agreements.

(c) Without limiting the foregoing, each Loan Party will, and will cause each Subsidiary to, execute and deliver, or cause to be executed and delivered, to the Administrative Agent such documents, agreements and instruments (including, without limitation, deposit account control agreements and securities account control agreements), and will take or cause to be taken such further actions (including the filing and recording of financing statements and other documents and such other actions or deliveries of the type required by Section 4.01, as applicable), which may be required by law or which the Administrative Agent may, from time to time, reasonably request to carry out the terms and conditions of this Agreement and the other Loan Documents and to ensure perfection and priority of the Liens created or intended to be created by the Collateral Documents, all in form and substance reasonably satisfactory to the Administrative Agent and all at the expense of the Loan Parties.

(d) If any material assets (including any real property or improvements thereto or any interest therein) are acquired by the Borrower or any Subsidiary that is a Loan Party after the Effective Date (other than assets constituting Collateral under the Security Agreement that become

 

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subject to the Lien in favor of the Administrative Agent upon acquisition thereof), Borrower will notify the Administrative Agent and the Lenders thereof, and, if requested by the Administrative Agent or the Required Lenders, Borrower will cause such assets to be subjected to a Lien securing the Secured Obligations and will take, and cause the Subsidiary Loan Parties to take, such actions as shall be necessary or reasonably requested by the Administrative Agent to grant and perfect such Liens, including actions described in paragraph (c) of this Section, all at the expense of the Loan Parties.

(e) Notwithstanding anything in this Agreement (including without limitation, this Section 5.11 or Section 5.12) to the contrary, (i) no Foreign Subsidiary shall be a primary obligor or guarantor (pursuant to Article VII or otherwise) or pledgor of any assets or otherwise be responsible for, in each case, any Obligations incurred by or on behalf of any Loan Party in any manner that would cause a Deemed Dividend Issue and (ii) no Foreign Subsidiary which is and remains an Affected Foreign Subsidiary shall be liable hereunder for any of the Loans made to, or any other Obligations incurred on behalf of any Loan Party.

SECTION 5.12 Security Interests. Subject to the terms of the Intercreditor Agreement, promptly, upon the reasonable request of the Administrative Agent, the Collateral Agent or any Lender, at Borrower’s expense, execute, acknowledge and deliver, or cause the execution, acknowledgment and delivery of, and thereafter register, file or record, or cause to be registered, filed or recorded, in an appropriate governmental office, any document or instrument supplemental to or confirmatory of the Security Documents in accordance with the terms thereof or otherwise deemed by the Administrative Agent or the Collateral Agent reasonably necessary or desirable for the continued validity, perfection and priority of the Liens on the Collateral covered thereby subject to no other Liens except as permitted by the applicable Security Document or Liens permitted under Section 6.02, or obtain any consents or waivers as may be necessary in connection therewith. In addition, Borrower shall, deliver or cause to be delivered to the Collateral Agent from time to time such other documentation, consents, authorizations, approvals and orders in form and substance reasonably satisfactory to the Collateral Agent as the Collateral Agent shall reasonably deem necessary to perfect or maintain the Liens on the Collateral pursuant to the Security Documents in accordance with the terms thereof. Notwithstanding the foregoing, for purposes of intellectual property, Borrower shall have no obligations to perfect Collateral Agent’s or Secured Parties’ interest in Intellectual Property outside the U.S. under any Security Agreement. Upon the exercise by the Administrative Agent, the Collateral Agent or any Lender of any power, right, privilege or remedy pursuant to any Loan Document which requires any consent, approval, registration, qualification or authorization of any Governmental Authority the Borrower shall execute and deliver all applications, certifications, instruments and other documents and papers that the Administrative Agent, the Collateral Agent or such Lender may reasonably require.

SECTION 5.13 Information Regarding Collateral. Not effect any change (i) in any Loan Party’s legal name, (ii) in the location of any Loan Party’s chief executive office, (iii) in any Loan Party’s identity or organizational structure, (iv) in any Loan Party’s Federal Taxpayer Identification Number or organizational identification number, if any, or (iv) in any Loan Party’s jurisdiction of organization (in each case, including by merging with or into any other entity, reorganizing, dissolving, liquidating, reorganizing or organizing in any other jurisdiction), until (A) it shall give the Collateral Agent not less than 15 days’ written notice, or such lesser notice period agreed to by the Collateral Agent, of its intention so to do, clearly describing such change and providing such other information in connection therewith as the Collateral Agent or the Administrative Agent may reasonably request and (B) it shall have taken all action reasonably satisfactory to the Collateral Agent to maintain the perfection and priority of the security interest of the Collateral Agent for the benefit of the Secured Parties in the Collateral. Each Loan Party agrees to promptly provide the Collateral Agent with certified

 

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Organizational Documents reflecting any of the changes described in the preceding sentence. Each Loan Party also agrees to promptly notify the Collateral Agent of any change in the location of any office in which it maintains books or records relating to material Collateral owned by it or any office or facility at which Collateral is located (including the establishment of any such new office or facility), other than changes in location to a leased property subject to a Landlord Access Agreement.

ARTICLE VI

NEGATIVE COVENANTS

Until the Commitments have terminated and the principal of and interest on each Loan and all Fees, expenses and other amounts payable under any Loan Document have been paid in full (other than contingent indemnification obligations not yet due and payable), the Loan Parties covenant and agree with the Lenders that:

SECTION 6.01 Indebtedness. No Loan Party will, nor will it permit any Subsidiary to, create, incur or suffer to exist any Indebtedness, except:

(a) the Obligations and, subject to the last sentence of this Section 6.01, the First Lien Obligations; provided that any extension, renewal or replacement of the Indebtedness constituting First Lien Obligations shall be subject to the requirements of clause (f) hereof;

(b) Indebtedness existing on the date hereof and set forth in Schedule 6.01 and extensions, renewals and replacements of any such Indebtedness in accordance with clause (f) hereof;

(c) Indebtedness of the Borrower to any Subsidiary and of any Subsidiary to the Borrower or any other Subsidiary; provided that (i) Indebtedness of any Subsidiary that is not a Loan Party to the Borrower or any Subsidiary that is a Loan Party shall be subject to Section 6.04 and (ii) Indebtedness of the Borrower to any Subsidiary and Indebtedness of any Subsidiary that is a Loan Party to any Subsidiary that is not a Loan Party shall be subordinated to the Secured Obligations on terms reasonably satisfactory to the Administrative Agent;

(d) Guarantees by the Borrower of Indebtedness of any Subsidiary and by any Subsidiary of Indebtedness of the Borrower or any other Subsidiary; provided that (i) the Indebtedness so Guaranteed is permitted by this Section 6.01, (ii) Guarantees by the Borrower or any Subsidiary that is a Loan Party of Indebtedness of any Subsidiary that is not a Loan Party shall be subject to Section 6.04 and (iii) Guarantees permitted under this clause (d) shall be subordinated to the Secured Obligations of the applicable Subsidiary on the same terms as the Indebtedness so Guaranteed is subordinated to the Secured Obligations;

(e) Indebtedness of the Borrower or any Subsidiary incurred to finance the acquisition, construction or improvement of any fixed or capital assets (whether or not constituting Purchase Money Obligations), including Capital Lease Obligations and any Indebtedness assumed in connection with the acquisition of any such assets or secured by a Lien on any such assets prior to the acquisition thereof, and extensions, renewals and replacements of any such Indebtedness in accordance with clause (f) hereof; provided that (i) such Indebtedness is incurred prior to or within ninety (90) days after such acquisition or the completion of such construction or improvement and (ii) the aggregate principal amount of Indebtedness permitted by this clause (e) shall not exceed $10,000,000 at any time outstanding;

 

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(f) Indebtedness which represents an extension, refinancing, or renewal of Indebtedness constituting First Lien Obligations or of any of the Indebtedness described in clauses (b), (e), (i) and (j) hereof; provided that, (i) the principal amount as of the date hereof of such Indebtedness is not increased, (ii) any Liens securing such Indebtedness are not extended to any additional property of any Loan Party, (iii) no Loan Party that is not originally obligated with respect to repayment of such Indebtedness is required to become obligated with respect thereto, (iv) such extension, refinancing or renewal does not result in a shortening of the average weighted maturity of the Indebtedness so extended, refinanced or renewed, (v) the terms of any such extension, refinancing, or renewal are not materially less favorable to the obligor thereunder than the original terms of such Indebtedness and (vi) if the Indebtedness that is refinanced, renewed, or extended was subordinated in right of payment to the Secured Obligations, then the terms and conditions of the refinancing, renewal, or extension Indebtedness must include subordination terms and conditions that are at least as favorable to the Administrative Agent and the Lenders as those that were applicable to the refinanced, renewed, or extended Indebtedness;

(g) Indebtedness owed to any person providing workers’ compensation, health, disability or other employee benefits or property, casualty or liability insurance, pursuant to reimbursement or indemnification obligations to such person, in each case incurred in the ordinary course of business;

(h) Indebtedness of the Borrower or any Subsidiary in respect of performance bonds, bid bonds, appeal bonds, surety bonds and similar obligations, in each case provided in the ordinary course of business;

(i) Indebtedness of any Person that becomes a Domestic Subsidiary after the date hereof; provided that (i) such Indebtedness exists at the time such Person becomes a Subsidiary and is not created in contemplation of or in connection with such Person becoming a Domestic Subsidiary and (ii) the aggregate principal amount of Indebtedness permitted by this clause (i) shall not exceed $10,000,000 at any time outstanding;

(j) Indebtedness of any Person that becomes a Foreign Subsidiary after the date hereof; provided that (i) such Indebtedness exists at the time such Person becomes a Subsidiary and is not created in contemplation of or in connection with such Person becoming a Foreign Subsidiary and (ii) the aggregate principal amount of Indebtedness permitted by this clause (j) shall not exceed $10,000,000 at any time outstanding;

(k) other unsecured Indebtedness in an aggregate principal amount not exceeding $15,000,000 at any time outstanding; provided that the aggregate principal amount of Indebtedness of the Borrower’s Subsidiaries permitted by this clause (k) shall not exceed $10,000,000 at any time outstanding;

(l) subject to the last sentence of this Section 6.01, Indebtedness under Swap Obligations with respect to interest rates, foreign currency exchange rates or commodity prices, in each case not entered into for speculative purposes; provided that if such Swap Obligations relate to interest rates, (i) such Swap Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by the Loan Documents and (ii) the amount of such Swap Obligations (with such net obligations equaling the termination value under the corresponding Swap Agreements or other arrangements that would be payable by or to such Person at the time of termination thereof) does not exceed the principal amount of the Indebtedness to which such Swap Obligations relate; provided the sum of the amounts under this Section 6.01(l) and Section 6.01(m) shall not exceed $10,000,000 other than (subject to the last sentence of this Section 6.01) to the extent and for so long as such amount in excess of $10,000,000 is fully reserved for under the First Lien Credit Agreement by deducting the amount therefrom from Availability thereunder;

 

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(m) subject to the last sentence of this Section 6.01, Banking Services Obligations; provided the sum of the amounts under Section 6.01(l) and this Section 6.01(m) shall not exceed $10,000,000 other than (subject to the last sentence of this Section 6.01) to the extent and for so long as such amount in excess of $10,000,000 is fully reserved for under the First Lien Credit Agreement by deducting the amount therefrom from Availability thereunder; and

(n) Indebtedness, commitments and obligations in respect of Letters of Credit under the First Lien Credit Agreement in an aggregate principal amount not to exceed $125,000,000.

In no event (x) shall the aggregate principal amount of Indebtedness under Sections 6.01(l) and (m) and the Indebtedness incurred under the First Lien Obligations exceed $185,000,000, or (y) shall any Indebtedness under Sections 6.01(l) or (m) or Indebtedness in respect of the First Lien Obligations be allowed to be incurred if the incurrence thereof (or such amount remaining outstanding) would result in the total First Lien Secured Obligations exceeding $185,000,000 at any time or if otherwise the First Lien Secured Obligations then outstanding at such time exceeds $185,000,000.

SECTION 6.02 Liens. No Loan Party will, nor will it permit any Subsidiary to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except:

(a) Liens created pursuant to any Loan Document;

(b) Permitted Encumbrances;

(c) any Lien on any property or asset of the Borrower or any Subsidiary existing on the date hereof and set forth in Schedule 6.02; provided that (i) such Lien shall not apply to any other property or asset of the Borrower or Subsidiary and (ii) such Lien shall secure only those obligations which it secures on the date hereof and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof;

(d) Liens on fixed or capital assets acquired, constructed or improved by the Borrower or any Subsidiary; provided that (i) such security interests secure Indebtedness permitted by clause (e) of Section 6.01, (ii) such security interests and the Indebtedness secured thereby are incurred prior to or within ninety (90) days after such acquisition or the completion of such construction or improvement, (iii) the Indebtedness secured thereby does not exceed the cost of acquiring, constructing or improving such fixed or capital assets and (iv) such security interests shall not apply to any other property or assets of the Borrower or Subsidiary;

(e) any Lien existing on any property or asset prior to the acquisition thereof by any Loan Party or any Subsidiary or existing on any property or asset of any Person prior to the acquisition of such Person by any Loan Party or any Subsidiary; provided that (i) such Lien is not created in contemplation of or in connection with such acquisition, (ii) such Lien shall not apply to any other property or assets of a Loan Party and (iii) such Lien shall secure only those obligations which it secures on the date of such acquisition or the date such Person becomes a Loan Party, as the case may be and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof;

 

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(f) Liens of a collecting bank arising in the ordinary course of business under Section 4-208 of the UCC in effect in the relevant jurisdiction covering only the items being collected upon;

(g) possessory Liens in favor of lessees or sublessees of property leased or subleased by the Borrower or any Subsidiary in the ordinary course of business of the Borrower or such Subsidiary; provided that such Liens attach only to such property;

(h) Liens arising out of Sale and Leaseback Transactions permitted by Section 6.06;

(i) Liens granted by a Subsidiary that is not a Loan Party in favor of the Borrower or another Loan Party in respect of Indebtedness owed by such Subsidiary;

(j) Liens granted by a Foreign Subsidiary on its assets; provided that such security interests secure Indebtedness permitted by clause (j) of Section 6.01 provided further that (x) such Liens do not extend to, or encumber, property which constitutes Collateral and (y) such Liens extend only to the property (or Equity Interests) of the Subsidiary incurring such Indebtedness (other than the Specified Assets);

(k) First-priority Liens incurred pursuant to the First Lien Security Documents so long as securing solely First Lien Secured Obligations in principal amount not exceeding for all First Lien Secured Obligations in the aggregate $185,000,000 and only so long as the Obligations are secured by a second priority Lien (or a first priority Lien with respect to the Pledged Specified Assets) on the property or assets subject thereto except as otherwise provided in Section 5.11(e) and only so long as such First Lien Loan Documents, the creditors subject thereto, and all Liens granted under or in connection thereto remain subject to the Intercreditor Agreement; provided, that no Banking Services Obligations or Swap Obligations shall be permitted to be secured by a Lien pursuant to this Section 6.02(k) unless the full amount thereof is fully reserved for in the calculation of Availability, and no such Bank Services Obligations or Swap Obligations shall be permitted to be secured in an amount in excess of the amount thereof on the first date of the occurrence of a default or event of default under the First Lien Credit Agreement (without giving effect to any waiver or amendment relating thereto, and regardless of any passage of time or notice);

(l) reserve deposit accounts and/or Liens granted in respect of such reserve deposit accounts in connection with various payment processing transactions between the Borrower and/or any Subsidiary, and any third party payment processor;

(m) Liens of sellers of goods to the Borrower or any of its Subsidiaries arising under Article 2 of the UCC in effect in the relevant jurisdiction in the ordinary course of business, covering only the goods sold and securing only the unpaid purchase price for such goods and related expenses;

(n) the filing of UCC financing statements solely as a precautionary measure in connection with operating leases or consignment of goods;

(o) Liens incurred in the ordinary course of business of the Borrower or any Subsidiary with respect to obligations that do not in the aggregate exceed $1,000,000 at any time outstanding, so long as such Liens, to the extent covering any Collateral, are subordinated to the Liens granted pursuant to the Collateral Documents on terms satisfactory to the Administrative Agent;

 

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(p) bankers’ Liens, rights of setoff and other similar Liens existing solely with respect to cash and cash equivalents on deposit in one or more accounts maintained by the Borrower or any Subsidiary, in each case granted in the ordinary course of business in favor of the bank or banks with which such accounts are maintained, securing amounts owing to such bank with respect to cash management and operating account arrangements, including those involving pooled accounts and netting arrangements; provided that, unless such Liens are non consensual and arise by operation of law, in no case shall any such Liens secure (either directly or indirectly) the repayment of any Indebtedness for borrowed money;

(q) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;

(r) Liens arising by virtue of deposits or otherwise made in the ordinary course of business to secure liability for premiums to insurance carriers and payments to utilities; and

(s) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by the Borrower or any Subsidiary in the ordinary course of business in accordance with the past practices of the Borrower or such Subsidiary;

provided, however, that no consensual Liens shall be permitted to exist, directly or indirectly, on any Collateral (x) representing Securities (as defined in the Security Agreement), other than Liens granted pursuant to the Security Documents and the First Lien Security Documents or (y) that constitute Accounts, Trademarks or Inventory (as each term is defined in the Security Agreement), other than as permitted in Section 6.02 of the First Lien Credit Agreement.

SECTION 6.03 Fundamental Changes. (a) No Loan Party will, nor will it permit any Subsidiary to, merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Event of Default shall have occurred and be continuing (i) any Subsidiary of the Borrower may merge into the Borrower in a transaction in which the Borrower is the surviving corporation, (ii) any Loan Party (other than the Borrower) may merge into any Loan Party in a transaction in which the surviving entity is a Loan Party, (iii) any Subsidiary that is not a Loan Party may liquidate or dissolve if the Borrower determines in good faith that such liquidation or dissolution is in the best interests of the Borrower and is not materially disadvantageous to the Lenders and (iv) any other Person may merge into or consolidate with the Borrower or any Subsidiary in connection with a Permitted Acquisition so long as the Borrower or such Subsidiary is the surviving entity of such merger or consolidation; provided that any such merger involving a Person that is not a wholly owned Subsidiary immediately prior to such merger shall not be permitted unless also permitted by Section 6.04.

(b) No Loan Party will, nor will it permit any of its Subsidiaries to, engage in any business other than businesses of the type conducted by the Borrower and its Subsidiaries on the date of execution of this Agreement and businesses reasonably related thereto

SECTION 6.04 Investments, Loans, Advances, Guarantees and Acquisitions. No Loan Party will, nor will it permit any Subsidiary to, purchase, hold or acquire (including pursuant to any merger with any Person that was not a Loan Party and a wholly owned Subsidiary prior to such merger)

 

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any capital stock, evidences of indebtedness or other securities (including any option, warrant or other right to acquire any of the foregoing) of, make or permit to exist any loans or advances to, Guarantee any obligations of, or make or permit to exist any investment or any other interest in, any other Person, or purchase or otherwise acquire (in one transaction or a series of transactions) any assets of any other Person constituting a business unit (whether through purchase of assets, merger or otherwise), except:

(a) Permitted Investments subject, to the extent requested by the Administrative Agent, to control agreements in favor of the Administrative Agent for the benefit of the Secured Parties or otherwise subject to a perfected security interest in favor of the Administrative Agent for the benefit of the Secured Parties;

(b) investments in existence on the date of this Agreement and described in Schedule 6.04;

(c) investments by the Borrower and the Subsidiaries in Equity Interests in their respective Subsidiaries; provided that (A) any such Equity Interests held by a Loan Party shall be pledged pursuant to a Security Agreement (subject to the limitations applicable to common stock of an Affected Foreign Subsidiary referred to in Section 5.11) and (B) the aggregate amount of investments by Loan Parties in Subsidiaries that are not Loan Parties (together with outstanding intercompany loans permitted under clause (B) to the proviso to Section 6.04(d) and outstanding Guarantees permitted under the proviso to Section 6.04(e)) shall not exceed $10,000,000 at any time outstanding (in each case determined without regard to any write-downs or write-offs);

(d) loans or advances made by a Loan Party to any Subsidiary and made by any Subsidiary to any Loan Party or any other Subsidiary; provided that (A) any such loans and advances made by a Loan Party shall be evidenced by an Intercompany Note and (B) the amount of such loans and advances made by Loan Parties to Subsidiaries that are not Loan Parties (together with outstanding investments permitted under clause (B) to the proviso to Section 6.04(c) and outstanding Guarantees permitted under the proviso to Section 6.04(e)) shall not exceed $10,000,000 at any time outstanding (in each case determined without regard to any write-downs or write-offs);

(e) Guarantees constituting Indebtedness permitted by Section 6.01; provided that the aggregate principal amount of Indebtedness of Subsidiaries that are not Loan Parties that is Guaranteed by any Loan Party shall (together with outstanding investments permitted under clause (B) to the proviso to Section 6.04(c) and outstanding intercompany loans permitted under clause (B) to the proviso to Section 6.04(d)) shall not exceed $10,000,000 at any time outstanding (in each case determined without regard to any write-downs or write-offs);

(f) loans or advances made by a Loan Party to its employees on an arms-length basis in the ordinary course of business consistent with past practices for travel and entertainment expenses, relocation costs and similar purposes up to a maximum of $2,000,000 in the aggregate at any one time outstanding;

(g) subject to Sections 4.2(a) and 4.4 of the Security Agreement, notes payable, or stock or other securities issued by Account Debtors (as defined in the Security Agreement) to a Loan Party pursuant to negotiated agreements with respect to settlement of such Account Debtor’s Accounts (as defined in the Security Agreement) in the ordinary course of business, consistent with past practices;

 

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(h) investments of any Person existing at the time such Person becomes a Subsidiary of the Borrower or consolidates or merges with the Borrower or any of its Subsidiaries (including in connection with a Permitted Acquisition) so long as such investments were not made in contemplation of such Person becoming a Subsidiary or of such merger;

(i) investments received in connection with the dispositions of assets permitted by Section 6.05;

(j) investments constituting deposits described in clauses (c) and (d) of the definition of the term “Permitted Encumbrances”;

(k) Permitted Acquisitions;

(l) acquisitions made by any Loan Party from any other Loan Party;

(m) investments in Persons that are not Subsidiaries and/or purchases of assets other than in the ordinary course of business not constituting Permitted Acquisitions from Persons that are not, and do not thereby become, Subsidiaries; provided that, the aggregate outstanding amount permitted under this clause (m) shall not at any time exceed $25,000,000;

(n) investments by the Borrower and the Subsidiaries in Equity Interests in their respective Subsidiaries and loans or advances made by a Loan Party to any Subsidiary or made by any Subsidiary to any Loan Party, in each case, made in order to consummate Permitted Acquisitions;

(o) Swap Obligations incurred pursuant to Section 6.01(l) or permitted under Section 6.17;

(p) other investments in an aggregate amount not to exceed $7,500,000;

(q) the Borrower and its Subsidiaries may (i) acquire and hold accounts receivable owing to any of them if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary terms, (ii) invest in, acquire and hold cash and cash equivalents, (iii) endorse negotiable instruments held for collection in the ordinary course of business or (iv) make deposits permitted under Section 6.02;

(r) loans and advances to directors, employees and officers of the Borrower and its Subsidiaries for bona fide business purposes to purchase Equity Interests of the Borrower, in an aggregate amount not to exceed $250,000 at any time outstanding;

(s) investments in securities of trade creditors or customers in the ordinary course of business received in settlement of a bona fide dispute or judgment or upon foreclosure or pursuant to any plan of reorganization or liquidation or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers;

(t) investments to the extent such investments reflect an increase in the value of investments;

(u) investments consisting of cash earnest money deposits made by the Borrower or any Subsidiary in connection with any letter of intent or purchase agreement permitted hereunder; and

(v) investments acquired in connection with Permitted Acquisitions.

 

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The amount of any investment shall be the original cost of such investment plus the cost of all additions thereto less all returns of capital, dividends and other cash returns thereof and less all liabilities expressly and irrevocably assumed by another person in connection with the sale of such investment, without any adjustments for increases or decreases in value, or write ups, write downs or write offs with respect to such investment. The amount of any loan shall be the initial principal amount of such loan less all returns of principal and other cash returns thereof.

SECTION 6.05 Asset Sales. No Loan Party will, nor will it permit any Subsidiary to, sell, transfer, lease or otherwise dispose of any asset, including any Equity Interest owned by it, nor will the Borrower permit any Subsidiary to issue any additional Equity Interest in such Subsidiary (other than to the Borrower or another Subsidiary in compliance with Section 6.04), except:

(a) sales, transfers and dispositions of (i) inventory in the ordinary course of business, (ii) used, obsolete, worn out or surplus equipment or property in the ordinary course of business and (iii) the abandonment or other disposition of immaterial intellectual property that is, in the reasonable judgment of the Borrower, no longer economically practicable to maintain or useful in the conduct of the business of the Borrower and its Subsidiaries taken as a whole;

(b) sales, transfers and dispositions to any Loan Party or any Subsidiary; provided that any such sales, transfers or dispositions involving a Subsidiary that is not a Loan Party shall be made in compliance with Sections 6.04 and 6.09;

(c) sales, transfers and dispositions of accounts receivable in connection with the compromise, settlement or collection thereof;

(d) sales, transfers and dispositions of Permitted Investments and other investments permitted by clauses (i) and (k) of Section 6.04;

(e) Sale and Leaseback Transactions permitted by Section 6.06;

(f) dispositions resulting from any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any property or asset of the Borrower or any Subsidiary;

(g) sales, transfers and other dispositions of assets (other than Equity Interests in a Subsidiary unless all Equity Interests in such Subsidiary are sold) that are not permitted by any other paragraph of this Section; provided that the aggregate fair market value of all assets sold, transferred or otherwise disposed of in reliance upon this paragraph (g) shall not exceed $25,000,000 during the term of this Agreement;

(h) leases or subleases of real or personal property in the ordinary course of business and in accordance with the applicable Collateral Documents; and

(i) transactions permitted by Section 6.03 or Section 6.04;

provided that all sales, transfers, leases and other dispositions permitted hereby in respect of property having a value in excess of $600,000 (other than those permitted by paragraphs (b) and (f) above) shall be made for fair value and for at least 75% cash consideration.

 

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SECTION 6.06 Sale and Leaseback Transactions. No Loan Party will, nor will it permit any Subsidiary to, enter into any arrangement, directly or indirectly, whereby it shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property that it intends to use for substantially the same purpose or purposes as the property sold or transferred (a “Sale and Leaseback Transaction”), except for any such sale of any fixed or capital assets by the Borrower or any Subsidiary that is made for cash consideration in an amount not less than the fair value of such fixed or capital asset and is consummated within ninety (90) days after the Borrower or such Subsidiary acquires or completes the construction of such fixed or capital asset.

SECTION 6.07 [Reserved].

SECTION 6.08 Restricted Payments. No Loan Party will, nor will it permit any Subsidiary to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except (i) the Borrower may declare and pay dividends with respect to its common stock payable solely in additional shares of its common stock, and, with respect to its preferred stock, payable solely in additional shares of such preferred stock or in shares of its common stock, (ii) the Subsidiaries may declare and pay dividends ratably with respect to their Equity Interests, (iii) the Borrower may make Restricted Payments pursuant to and in accordance with stock option plans or other benefit plans for management or employees of the Borrower and its Subsidiaries, and (iv) the Borrower and the Subsidiaries may declare or make, or agree to pay or make, directly or indirectly, any other Restricted Payment so long as (A) no Default has occurred and is continuing prior to giving effect to such Restricted Payment or would arise after giving effect thereto, (B) Availability exceeds $25,000,000 after giving pro forma effect to such Restricted Payment for a period of six (6) consecutive months prior to such Restricted Payment and (C) the Fixed Charge Coverage Ratio, after giving effect to such Restricted Payment on a pro forma basis, determined for the four consecutive Fiscal Quarters ending on the last day of the most recently ended Fiscal Quarter of the Borrower for which financial statements are available, is equal to or greater than 1.25 to 1.00.

SECTION 6.09 Transactions with Affiliates. No Loan Party will, nor will it permit any Subsidiary to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (a) transactions that (i) are in the ordinary course of business and (ii) are at prices and on terms and conditions not less favorable to the Loan Party or such Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties, (b) transactions between or among the Loan Party and any Subsidiary that is a Loan Party not involving any other Affiliate, (c) any investment permitted by Sections 6.04(c) or 6.04(d) and guarantees permitted by Section 6.04(e), (d) any Indebtedness permitted under Section 6.01(c), (e) any Restricted Payment permitted by Section 6.08, (f) loans or advances to employees permitted under Section 6.04, (g) the payment of reasonable fees to directors of the Borrower or any Subsidiary who are not employees of the Borrower or any Subsidiary, and compensation and employee benefit arrangements paid to, and indemnities provided for the benefit of, directors, officers or employees of the Borrower or its Subsidiaries in the ordinary course of business and (h) any issuances of securities or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment agreements, stock options and stock ownership plans approved by the Borrower’s board of directors.

 

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SECTION 6.10 Financial Covenants.

(a) Minimum EBITDA. For any Test Period ending after the Effective Date, (x) if at any time EBITDA is less than $34,000,000 but equal to or greater than $30,000,000, the ratio of Indebtedness to EBITDA shall not exceed 3.0 to 1.0 and (y) EBITDA shall not be less than $30,000,000 at any time.

(b) Limitation on Capital Expenditures. The aggregate amount of Capital Expenditures made in any period set forth below, shall not exceed the amount set forth opposite such period below:

 

Period

   Amount  

Effective Date—December 31, 2012

   $ 7,500,000   

January 1, 2013—December 31, 2013

   $ 9,000,000   

January 1, 2014—December 31, 2014

   $ 9,500,000   

January 1, 2015—December 31, 2015

   $ 10,000,000   

January 1, 2016—December 31, 2016

   $ 10,500,000   

January 1, 2017—December 31, 2017

   $ 11,000,000   

January 1, 2018—Final Maturity Date

   $ 11,000,000   

; provided, however, that if the aggregate amount of Capital Expenditures made in any Fiscal Year shall be less than the maximum amount of Capital Expenditures permitted under this Section 6.10(b) for such Fiscal Year (before giving effect to any carryover), then an amount of such shortfall not exceeding 50% of such maximum amount may be added to the amount of Capital Expenditures permitted under this Section 6.10(b) for the immediately succeeding (but not any other) Fiscal Year.

(c) Fixed Charge Coverage Ratio. For any Test Period ending after the Effective Date, the Fixed Charge Coverage Ratio shall not be less than 1.10 to 1.00.

SECTION 6.11 Prepayments of Other Indebtedness; Modifications of Organizational Documents; Material Indebtedness and Other Documents, etc.; Limitation on Overadvances. No Loan Party will, nor will it permit any Subsidiary to directly or indirectly:

(a) make (or give any irrevocable notice in respect thereof) any voluntary or optional payment or prepayment on or redemption or acquisition for value of, or any prepayment or redemption as a result of any asset sale, change of control or similar event of, any Indebtedness described in clauses (a) or (b) of the definition of Indebtedness (other than Indebtedness under the First Lien Loan Documents and the Loans), except for redemption or repayment of Indebtedness in exchange for Qualified Capital Stock or as otherwise permitted by this Agreement (and in each case the payment of accrued and unpaid interest in connection therewith);

(b) amend, modify or waive, or permit the amendment, modification or waiver of, any provision of any First Lien Loan Document or any other Material Indebtedness (including, for the avoidance of doubt, any such action that would result in an amendment, modification or waiver of the definition of Borrowing Base or any other modification, waiver or amendment that would increase Availability), or cause or permit the First Lien Administrative Agent to modify or waive any of its reserve policies or practices with respect to the Borrowing Base or Availability from those in effect on the Effective Date without the consent of the Administrative Agent;

 

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(c) amend, modify or waive any of its rights under (a) any Material Indebtedness in any way that creates a Burdensome Restriction or (b) its certificate of incorporation, by-laws, operating, management or partnership agreement or other organizational documents, in each case, to the extent any such amendment, modification or waiver would be adverse to the Lenders; or

(d) cause or permit the First Lien Obligations to exceed the Borrowing Base (or the Aggregate Commitment (as defined in the First Lien Credit Agreement as in effect on July 27, 2012, or thereafter as such definition may be modified in accordance with the Intercreditor Agreement), if less) at any time other than in an amount not to exceed 10% of the lesser of (x) the Aggregate Commitment or (y) the Borrowing Base, or permit any such overadvance to be outstanding for a period of time of more than 30 consecutive days or more than 60 days in any Fiscal Year, or cause or permit any such overadvance to occur unless it is to preserve or protect the Collateral, or any portion thereof, or to enhance the likelihood of, or maximize the amount of, repayment of the First Lien Secured Obligations, or to pay any other amount chargeable to or required to be paid by Borrower pursuant to the terms of the First Lien Credit Agreement.

SECTION 6.12 Restrictive Agreements. No Loan Party will, nor will it permit any Subsidiary to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of such Loan Party or any of its Subsidiaries to create, incur or permit to exist any Lien upon any of its property or assets, or (b) the ability of any Subsidiary to pay dividends or other distributions with respect to any shares of its capital stock or to make or repay loans or advances to the Borrower or any other Subsidiary or to Guarantee Indebtedness of the Borrower or any other Subsidiary; provided that (i) the foregoing shall not apply to restrictions and conditions imposed by law, by any Loan Document, or by any First Lien Loan Documents as in effect on July 27, 2012 (or thereafter as such First Lien Loan Documents may be modified in accordance with the Intercreditor Agreement), so long as such First Lien Loan Documents, the creditors subject thereto, and all Liens granted under or in connection thereto remain subject to the Intercreditor Agreement, (ii) the foregoing shall not apply to restrictions and conditions existing on the date hereof identified on Schedule 6.12 (but shall apply to any extension or renewal of, or any amendment or modification expanding the scope of, any such restriction or condition), (iii) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of the assets of, or Equity Interests in, a Subsidiary pending such sale; provided such restrictions and conditions apply only to the Subsidiary that is to be sold and such sale is permitted hereunder, (iv) clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness and (v) clause (a) of the foregoing shall not apply to customary provisions in leases restricting the assignment thereof.

SECTION 6.13 Fiscal Year. No Loan Party will, nor will it permit any Subsidiary to change its Fiscal Year-end to a date other than December 31.

 

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SECTION 6.14 Anti-Terrorism Law; Anti-Money Laundering. No Loan Party will, nor will it permit any Subsidiary to:

(a) Directly or indirectly, (i) knowingly conduct any business or engage in making or receiving any contribution of funds, goods or services to or for the benefit of any Person described, in Section 3.21, (ii) knowingly deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order or any other Anti-Terrorism Law, or (iii) knowingly 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 any Anti-Terrorism Law (and the Loan Parties shall deliver to the Lenders any certification or other evidence requested from time to time by any Lender in its reasonable discretion, confirming the Loan Parties’ compliance with this Section 6.14).

(b) Cause or permit any of the funds of such Loan Party that are used to repay the Loans to be derived from any unlawful activity with the result that the making of the Loans would be in violation of any Requirement of Law.

SECTION 6.15 Limitation on Use of Stock Proceeds to Prepay Loans. No Loan Party will, nor will it permit any Subsidiary to, directly or indirectly use the proceeds of any issuance of capital stock to repay or prepay the Loans until after the first anniversary of the Effective Date. Thereafter Borrower may prepay in full all of the Loans at par out of the proceeds of an issuance of common stock by Borrower so long as such is consummated within 20 days of the closing thereof.

SECTION 6.16 Availability Under First Lien Credit Agreement. No Loan Party will, nor will it permit any Subsidiary to, directly or indirectly cause or permit Availability under the First Lien Credit Agreement to be less than $25,000,000 on a pro forma basis for the period of three (3) months after the consummation of the most recent Permitted Acquisition with respect to which the Acquisition Consideration exceeds $5,000,000.

SECTION 6.17 Swap Agreements. No Loan Party will, nor will it permit any Subsidiary to, enter into any Swap Agreement, except (a) Swap Agreements entered into to hedge or mitigate risks to which any Loan Party or any Subsidiary has actual exposure (other than those in respect of Equity Interests of Borrower or any of its Subsidiaries), and (b) Swap Agreements entered into in order to effectively cap, collar or exchange interest rates (from fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect to any interest-bearing liability or investment of any Loan Party or any Subsidiary.

SECTION 6.18 LTB as Passive Holding Company. Notwithstanding any other provision of this Agreement or any other Loan Document to the contrary, Borrower shall not cause or permit LTB to directly or indirectly, incur or suffer to exist any Indebtedness, incur or suffer to exist any Lien on any of its property or assets, sell, dispose of, or transfer or create any direct or indirect interest in any of its property or assets (including without limitation the Equity Interests in Grupo Vasconia) or conduct or transact any business or activity or enter into any transaction (written or oral) other than owning and maintaining its Equity Interests in Grupo Vasconia and matters incidental thereto, and other ministerial matters pertaining to maintaining the corporate existence of LTB. No Company other than LTB shall own or hold or have any interest in the Equity Interests of Grupo Vasconia owned by LTB as of the Effective Date or at any time thereafter. Borrower will always own not less than 99.9% of the Equity Interests of LTB, with the balance owned by one or more executive officers of Borrower.

 

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SECTION 6.19 First Lien Secured Obligations. Borrower shall not cause or permit, or suffer to exist, the aggregate principal amount of First Lien Secured Obligations outstanding to exceed $185,000,000.

ARTICLE VII

GUARANTEE

SECTION 7.01 The Loan Party Guarantee. The Subsidiary Guarantors hereby jointly and severally guarantee, as a primary obligor and not as a surety to each Secured Party and their respective successors and assigns, the prompt payment in full when due (whether at stated maturity, by required prepayment, declaration, demand, by acceleration or otherwise) of the principal of and interest (including any interest, fees, costs or charges that would accrue but for the provisions of the Title 11 of the United States Code after any bankruptcy or insolvency petition under Title 11 of the United States Code) on the Loans made by the Lenders to, and the Notes held by each Lender of, Borrower, and all other Secured Obligations from time to time owing to the Secured Parties by any Loan Party under any Loan Document or any Swap Agreement related to the Loans or (at the request of Borrower) Treasury Services Agreement, in each case entered into with a counterparty that is a Secured Party, in each case strictly in accordance with the terms thereof (such obligations being herein collectively called the “Guaranteed Obligations”). The Subsidiary Guarantors hereby jointly and severally agree that if Borrower or other Subsidiary Guarantor(s) shall fail to pay in full when due (whether at stated maturity, by acceleration or otherwise) any of the Guaranteed Obligations, the Subsidiary Guarantors will promptly pay the same in cash, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Guaranteed Obligations, the same will be promptly paid in full when due (whether at extended maturity, by acceleration or otherwise) in accordance with the terms of such extension or renewal.

SECTION 7.02 Obligations Unconditional. The obligations of the Subsidiary Guarantors under Section 7.01 shall constitute a guaranty of payment and to the fullest extent permitted by applicable Requirements of Law, are absolute, irrevocable and unconditional, joint and several, irrespective of the value, genuineness, validity, regularity or enforceability of the Guaranteed Obligations of Borrower under this Agreement, the Notes, if any, or any other agreement or instrument referred to herein or therein, or any substitution, release or exchange of any other guarantee of or security for any of the Guaranteed Obligations, and, irrespective of any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a surety or Subsidiary Guarantor (except for payment in full). Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not alter or impair the liability of the Subsidiary Guarantors hereunder which shall remain absolute, irrevocable and unconditional under any and all circumstances as described above:

(i) at any time or from time to time, without notice to the Subsidiary Guarantors, the time for any performance of or compliance with any of the Guaranteed Obligations shall be extended, or such performance or compliance shall be waived;

(ii) any of the acts mentioned in any of the provisions of this Agreement or the Notes, if any, or any other agreement or instrument referred to herein or therein shall be done or omitted;

 

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(iii) the maturity of any of the Guaranteed Obligations shall be accelerated, or any of the Guaranteed Obligations shall be amended in any respect, or any right under the Loan Documents or any other agreement or instrument referred to herein or therein shall be amended or waived in any respect or any other guarantee of any of the Guaranteed Obligations or any security therefor shall be released or exchanged in whole or in part or otherwise dealt with;

(iv) any Lien or security interest granted to, or in favor of, any Lender or Agent as security for any of the Guaranteed Obligations shall fail to be perfected; or

(v) the release of any other Subsidiary Guarantor pursuant to Section 7.09.

To the extent not prohibited by applicable law, the Subsidiary Guarantors hereby expressly waive diligence, presentment, demand of payment, protest and all notices whatsoever, and any requirement that any Secured Party exhaust any right, power or remedy or proceed against Borrower under this Agreement or the Notes, if any, or any other agreement or instrument referred to herein or therein, or against any other Person under any other guarantee of, or security for, any of the Guaranteed Obligations. To the extent not prohibited by applicable law, the Subsidiary Guarantors waive any and all notice of the creation, renewal, extension, waiver, termination or accrual of any of the Guaranteed Obligations and notice of or proof of reliance by any Secured Party upon this Loan Party Guarantee or acceptance of this Loan Party Guarantee, and the Guaranteed Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred in reliance upon this Loan Party Guarantee, and all dealings between Borrower and the Secured Parties shall likewise be conclusively presumed to have been had or consummated in reliance upon this Loan Party Guarantee. This Loan Party Guarantee shall be construed as a continuing, absolute, irrevocable and unconditional guarantee of payment without regard to any right of offset with respect to the Guaranteed Obligations at any time or from time to time held by Secured Parties, and the obligations and liabilities of the Subsidiary Guarantors hereunder shall not be conditioned or contingent upon the pursuit by the Secured Parties or any other Person at any time of any right or remedy against Borrower or against any other Person which may be or become liable in respect of all or any part of the Guaranteed Obligations or against any collateral security or guarantee therefor or right of offset with respect thereto. This Loan Party Guarantee shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon the Subsidiary Guarantors and the successors and assigns thereof, and shall inure to the benefit of the Lenders, and their respective successors and assigns, notwithstanding that from time to time during the term of this Agreement there may be no Guaranteed Obligations outstanding.

SECTION 7.03 Reinstatement. The obligations of the Subsidiary Guarantors under this Article VII shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of Borrower or other Loan Party in respect of the Guaranteed Obligations is rescinded or must be otherwise restored by any holder of any of the Guaranteed Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise.

SECTION 7.04 Subrogation; Subordination. Each Subsidiary Guarantor hereby agrees that until the payment and satisfaction in full of all Guaranteed Obligations (other than nonasserted, contingent indemnification obligations) and the expiration and termination of the Commitments of the Lenders under this Agreement it shall waive any claim and shall not exercise any right or remedy, direct or indirect, arising by reason of any performance by it of its guarantee in Section 7.01, whether by subrogation or otherwise, against Borrower or any other Subsidiary Guarantor of any of the Guaranteed Obligations or any security for any of the Guaranteed Obligations. Any Indebtedness of any Loan Party permitted pursuant to Section 6.01(c) or (d) shall be subordinated to such Loan Party’s Secured Obligations in the manner set forth in the Intercompany Note evidencing such Indebtedness.

 

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SECTION 7.05 Remedies. The Subsidiary Guarantors jointly and severally agree that, as between the Subsidiary Guarantors and the Lenders, the obligations of Borrower under this Agreement and the Notes, if any, may be declared to be forthwith due and payable as provided in Section 8.01 (and shall be deemed to have become automatically due and payable in the circumstances provided in Section 8.01) for purposes of Section 7.01, notwithstanding any stay, injunction or other prohibition preventing such declaration (or such obligations from becoming automatically due and payable) as against Borrower and that, in the event of such declaration (or such obligations being deemed to have become automatically due and payable), such obligations (whether or not due and payable by Borrower) shall forthwith become due and payable by the Subsidiary Guarantors for purposes of Section 7.01.

SECTION 7.06 Instrument for the Payment of Money. Each Subsidiary Guarantor hereby acknowledges that the guarantee in this Article VII constitutes an instrument for the payment of money, and consents and agrees that any Lender or Agent, at its sole option, in the event of a dispute by such Subsidiary Guarantor in the payment of any moneys due hereunder, shall have the right to bring a motion-action under New York CPLR Section 3213.

SECTION 7.07 Continuing Guarantee. The guarantee in this Article VII is a continuing guarantee of payment, and shall apply to all Guaranteed Obligations whenever arising.

SECTION 7.08 General Limitation on Guarantee Obligations. In any action or proceeding involving any state corporate limited partnership or limited liability company law, or any applicable state, federal or foreign bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally (including, without limitation, Section 547, 548, 550 of Title 11 of the United States Code, or under any applicable state Uniform Fraudulent Transfer Act or Uniform Fraudulent Conveyance Act), if the obligations of any Subsidiary Guarantor under Section 7.01 would otherwise be held or determined to be void, voidable, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of the amount of its liability under Section 7.01, then, notwithstanding any other provision to the contrary, the amount of such liability shall, without any further action by such Subsidiary Guarantor, any Loan Party or any other Person, be automatically limited and reduced to the highest amount (after giving effect to the right of contribution established in Section 7.10) that is valid and enforceable and not subordinated to the claims of other creditors as determined in such action or proceeding. In determining the limitations, if any, on the amount of any Subsidiary Guarantor’s obligations hereunder pursuant to the preceding sentence, it is the intention of the parties hereto that any rights of subrogation, indemnification or contribution which such Subsidiary Guarantor may have under this Loan Party Guarantee, any other agreement or applicable law shall be taken into account.

SECTION 7.09 Release of Subsidiary Guarantors. If, in compliance with the terms and provisions of the Loan Documents, all or substantially all of the Equity Interests or property of any Subsidiary Guarantor are sold or otherwise transferred (a “Transferred Guarantor”) to a Person or Persons, none of which is Borrower or a Subsidiary, such Transferred Guarantor shall, upon the consummation of such sale or transfer, be automatically released from its obligations under this Agreement (including under Section 10.03 hereof) and its obligations to pledge and grant any Collateral owned by it pursuant to any Security Document and, in the case of a sale of all or substantially all of the Equity Interests of the Transferred Guarantor, the pledge of such Equity Interests to the Collateral Agent pursuant to the Security Agreements shall be automatically released, and the Collateral Agent shall take such actions as are necessary or reasonably requested by Borrower to effect each release described in this Section 7.09 in accordance with the relevant provisions of the Security Documents; provided that such Subsidiary Guarantor is also released from its obligations under the First Lien Loan Documents on the same terms.

 

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SECTION 7.10 Right of Contribution. Each Subsidiary Guarantor hereby agrees that to the extent that a Subsidiary Guarantor shall make a payment under this Agreement (a “Guarantor Payment”) which, taking into account all other Guarantor Payments then previously or concurrently made by any other Subsidiary Guarantor, exceeds the amount which otherwise would have been paid by or attributable to such Subsidiary Guarantor if each Subsidiary Guarantor had paid the aggregate Guaranteed Obligations satisfied by such Guarantor Payment in the same proportion as such Subsidiary Guarantor’s “Allocable Amount” (as defined below) (as determined immediately prior to such Guarantor Payment) bore to the aggregate Allocable Amounts of each of the Subsidiary Guarantors as determined immediately prior to the making of such Guarantor Payment, then subject to the terms and conditions of Section 7.04, each remaining Subsidiary Guarantor respectively agrees that such Subsidiary Guarantor has the present right to recover the amount of such excess from the remaining Subsidiary Guarantors, pro rata based upon their respective Allocable Amounts in effect immediately prior to such Guarantor Payment, which right shall be enforceable against the remaining Subsidiary Guarantors to the full extent that the Guaranteed Obligations are enforceable against such Subsidiary Guarantor. Without limiting the foregoing, in the event any Subsidiary Guarantor is required, by reason of this Loan Party Guarantee, to pay an amount in excess of its Allocable Amount, the remaining Subsidiary Guarantors jointly and severally agree to pay such Subsidiary Guarantor, upon demand, the amount of such excess. Subject only to the provisions of Section 7.04 hereof, such Subsidiary Guarantor shall be subrogated to any and all rights of the Secured Parties against the remaining Subsidiary Guarantors to the extent of such excess payment. As of any date of determination, the “Allocable Amount” of any Subsidiary Guarantor shall be equal to the excess of the fair saleable value of the property of such Subsidiary Guarantor over the total liabilities of such Subsidiary Guarantor (including the maximum amount reasonably expected to become due in respect of contingent liabilities, calculated, without duplication, assuming each other Subsidiary Guarantor that is also liable for such contingent liability pays its ratable share thereof), giving effect to all payments made by other Subsidiary Guarantors as of such date in a manner to maximize the amount of such contributions. This Section 7.10 is intended only to define the relative rights of the Subsidiary Guarantors, and nothing set forth in this Section 7.10 is intended to or shall impair the obligations of the Subsidiary Guarantors, jointly and severally, to pay any amounts as and when the same shall become due and payable in accordance with the terms of this Loan Party Guarantee. The parties hereto acknowledge that the rights of contribution and indemnification hereunder shall constitute assets of the Subsidiary Guarantor or Subsidiary Guarantors to which such contribution and indemnification is owing. The rights of the indemnifying Subsidiary Guarantors against other Subsidiary Guarantors under this Section 7.10 shall be exercisable upon the full and indefeasible payment of the Guaranteed Obligations in cash.

ARTICLE VIII

EVENTS OF DEFAULT

SECTION 8.01 Events of Default. Upon the occurrence and during the continuance of the following events (“Events of Default):

(a) default shall be made in the payment of any principal of any Loan when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment (whether voluntary or mandatory) thereof or by acceleration thereof or otherwise;

(b) default shall be made in the payment of any interest on any Loan or any Fee or any other amount (other than an amount referred to in paragraph (a) above) due under any Loan Document, when and as the same shall become due and payable, and such default shall continue unremedied for a period of three (3) Business Days;

 

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(c) any representation or warranty made by any Loan Party in any Loan Document, or any representation, warranty, statement or information contained in any report, certificate, financial statement or other instrument of any Loan Party furnished pursuant to any Loan Document, shall prove to have been false or misleading in any material respect when so made, deemed made or furnished;

(d) default shall be made in the due observance or performance by any Company of any covenant, condition or agreement contained in Section 5.02, 5.03(a) or 5.08 or in Article VI;

(e) default shall be made in the due observance or performance by any Company of any covenant, condition or agreement contained in any Loan Document (other than those specified in paragraphs (a), (b) or (d) immediately above) and such default shall continue unremedied or shall not be waived, in each case for a period of 30 days after written notice thereof from the Administrative Agent or any Lender to Borrower;

(f) any Company shall (i) fail to pay any principal or interest, regardless of amount, due in respect of any Indebtedness (other than the Obligations), when and as the same shall become due and payable beyond any applicable grace period, or (ii) fail to observe or perform any other term, covenant, condition or agreement contained in any agreement or instrument evidencing or governing any such Indebtedness if the effect of any failure referred to in this clause (ii) is to cause, or to permit the holder or holders of such Indebtedness or a trustee or other representative on its or their behalf (with or without the giving of notice, the lapse of time or both) to cause, such Indebtedness to become due prior to its stated maturity or become subject to a mandatory offer purchase by the obligor; provided that, other than in the case of the First Lien Loans, it shall not constitute an Event of Default pursuant to this paragraph (f) unless the aggregate amount of all such Indebtedness referred to in clauses (i) and (ii) exceeds $5,000,000 (or such lower amount as is in the First Lien Credit Agreement in the analogous default provision) at any one time; provided that, in the case of Swap Obligations, the amount counted for this purpose shall be the amount payable by all Companies if such Swap Obligations were terminated at such time).

(g) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of any Loan Party or material Subsidiary of a substantial part of the property of any Loan Party or material Subsidiary, under Title 11 of the U.S. Code, as now constituted or hereafter amended, or any other federal, state or foreign bankruptcy, insolvency, receivership or similar law; (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Company or for a substantial part of the property of any Company; or (iii) the winding-up or liquidation of any Company; and such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered;

(h) any Loan Party or material Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal, state or foreign bankruptcy, insolvency, receivership or similar law; (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in clause (g) above; (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Loan Party or material Subsidiary for a substantial part of the property of any Loan Party or material Subsidiary; (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding; (v) make a general assignment for the benefit of creditors; (vi) become unable, admit in writing its inability or fail generally to pay its debts as they become due; (vii) take any action for the purpose of effecting any of the foregoing; or (viii) wind up or liquidate;

 

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(i) one or more final judgments, orders or decrees for the payment of money in an aggregate amount in excess of $5,000,000 (to the extent not adequately covered by insurance with respect to which a solvent and unaffiliated insurance company has acknowledged coverage) shall be rendered against any Company or any combination thereof and the same shall remain undischarged, unvacated or unbonded for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to levy upon properties of any Company to enforce any such judgment;

(j) one or more ERISA Events or noncompliance with respect to Foreign Plans shall have occurred that, in the opinion of the Required Lenders, when taken together with all other such ERISA Events and noncompliance with respect to Foreign Plans that have occurred, would reasonably be expected to result in a Material Adverse Effect or in the imposition of a Lien on any properties of a Company;

(k) any security interest and Lien purported to be created by any Security Document shall cease to be in full force and effect, or shall cease to give the Collateral Agent, for the benefit of the Secured Parties, the Liens, rights, powers and privileges purported to be created and granted under such Security Document (including a perfected second priority security interest in and Lien on all of the Collateral thereunder (except as otherwise expressly provided in such Security Document)) in favor of the Collateral Agent, or shall be asserted by Borrower or any other Loan Party not to be a valid, perfected, second priority (except as otherwise expressly provided in this Agreement or such Security Document including Liens permitted under Section 6.02) security interest in or Lien on the Collateral covered thereby;

(l) any material Loan Document or any material provisions thereof shall at any time and for any reason be declared by a court of competent jurisdiction to be null and void, or a proceeding shall be commenced by any Loan Party or any other Person, or by any Governmental Authority, seeking to establish the invalidity or unenforceability thereof (exclusive of questions of interpretation of any provision thereof), or any Loan Party shall repudiate or deny any portion of its liability or obligation for the Obligations; or

(m) there shall have occurred a Change in Control.

then, and in every such event (other than an event with respect to Borrower described in paragraph (g) or (h) above), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by written notice to Borrower, take either or both of the following actions, at the same or different times: (i) terminate forthwith the Commitments and (ii) declare the Loans then outstanding to be forthwith due and payable in whole or in part, whereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and any unpaid accrued Fees and all other Obligations of Borrower accrued hereunder and under any other Loan Document, shall become forthwith due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by Borrower and the Subsidiary Guarantors, anything contained herein or in any other Loan Document to the contrary notwithstanding; and in any event, with respect to Borrower described in paragraph (g) or (h) above, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and any unpaid accrued Fees and all other Obligations of Borrower accrued hereunder and under any other Loan Document, shall automatically become due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by Borrower and the Subsidiary Guarantors, anything contained herein or in any other Loan Document to the contrary notwithstanding.

 

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SECTION 8.02 Rescission. If at any time after termination of the Commitments or acceleration of the maturity of the Loans, Borrower shall pay all arrears of interest and all payments on account of principal of the Loans owing by it that shall have become due otherwise than by acceleration (with interest on principal and, to the extent permitted by law, on overdue interest, at the rates specified herein) and all Events of Default (other than non-payment of principal of and accrued interest on the Loans due and payable solely by virtue of acceleration) shall be remedied or waived pursuant to Section 10.02, then upon the written consent of the Required Lenders and written notice to Borrower, the termination of the Commitments or the acceleration and their consequences may be rescinded and annulled; but such action shall not affect any subsequent Default or impair any right or remedy consequent thereon. The provisions of the preceding sentence are intended merely to bind the Lenders to a decision that may be made at the election of the Required Lenders, and such provisions are not intended to benefit Borrower and do not give Borrower the right to require the Lenders to rescind or annul any acceleration hereunder, even if the conditions set forth herein are met.

SECTION 8.03 Application of Proceeds. Subject to the terms of the Intercreditor Agreement, the proceeds received by the Collateral Agent in respect of any sale of, collection from or other realization upon all or any part of the Collateral pursuant to the exercise by the Collateral Agent of its remedies shall be applied, in full or in part, together with any other sums then held by the Collateral Agent pursuant to this Agreement, promptly by the Collateral Agent as follows:

(a) First, to the payment of all reasonable out-of-pocket costs and expenses, fees, commissions and taxes of such sale, collection or other realization including compensation to the Collateral Agent and its agents and counsel, and all expenses, liabilities and advances made or incurred by the Collateral Agent in connection therewith and all amounts for which the Collateral Agent is entitled to indemnification pursuant to the provisions of any Loan Document, together with interest on each such amount at the highest rate then in effect under this Agreement from and after the date such amount is due, owing or unpaid until paid in full;

(b) Second, to the payment of all other reasonable out-of-pocket costs and expenses of such sale, collection or other realization including compensation to the other Secured Parties and their agents and counsel and all costs, liabilities and advances made or incurred by the other Secured Parties in connection therewith, together with interest on each such amount at the highest rate then in effect under this Agreement from and after the date such amount is due, owing or unpaid until paid in full;

(c) Third, without duplication of amounts applied pursuant to clauses (a) and (b) above, to the payment in full, pro rata, of interest and other amounts constituting Obligations and any fees, premiums and scheduled periodic payments due under Swap Agreements or Treasury Services Agreements constituting Secured Obligations and any interest accrued thereon, in each case equally and ratably in accordance with the respective amounts thereof then due and owing;

(d) Fourth, to the payment in full, pro rata, of principal amount of the Obligations and any premium thereon and any breakage, termination or other payments under Swap Agreements and Treasury Services Agreements constituting Secured Obligations and any interest accrued thereon; and

(e) Fifth, the balance, if any, to the Person lawfully entitled thereto (including the applicable Loan Party or its successors or assigns) or as a court of competent jurisdiction may direct.

 

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In the event that any such proceeds are insufficient to pay in full the items described in clauses (a) through (e) of this Section 8.03, the Loan Parties shall remain liable, jointly and severally, for any deficiency.

ARTICLE IX

THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT

SECTION 9.01 Appointment and Authority. Each of the Lenders irrevocably appoints JPMORGAN CHASE BANK, N.A., to act on each Lender’s behalf as the Administrative Agent and the Collateral Agent hereunder and under the other Loan Documents and authorizes such Agents to take such actions on its behalf and to exercise such powers as are delegated to such Agents by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent, the Collateral Agent and the Lenders, and neither Borrower nor any other Loan Party shall have rights as a third party beneficiary of any of such provisions. Each Lender hereby acknowledges and agrees that (i) the Administrative Agent, on behalf of itself and on behalf of the Lenders will execute, deliver and perform the actions set forth under and in the Intercreditor Agreement, (ii) it approves and consents to the Intercreditor Agreement and the Administrative Agent’s execution, delivery and performance thereunder.

SECTION 9.02 Rights as a Lender. Each Person serving as an Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not an Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include each Person serving as an Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with Borrower or any Subsidiary or other Affiliate thereof as if such Person were not an Agent hereunder and without any duty to account therefor to the Lenders.

SECTION 9.03 Exculpatory Provisions.

(a) No Agent shall have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, no Agent:

(i) shall be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

(ii) shall have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that such Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents); provided that such Agent shall not be required to take any action that, in its reasonable judgment or the reasonable judgment of its counsel, may expose such Agent to liability or that is contrary to any Loan Document or applicable Requirements of Law; and

(iii) shall, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as such Agent or any of its Affiliates in any capacity.

 

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No Agent shall be liable for any action taken or not taken by it (x) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as such Agent shall believe in good faith shall be necessary, under the circumstances as provided in Section 10.02) or (y) in the absence of its own gross negligence or willful misconduct. No Agent shall be deemed to have knowledge of any Default unless and until notice describing such Default is given to such Agent by Borrower or a Lender.

No Agent shall be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to such Agent. Without limiting the generality of the foregoing, the use of the term “agent” in this Agreement with reference to the Administrative Agent or the Collateral Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom and is intended to create or reflect only an administrative relationship between independent contracting parties.

SECTION 9.04 Reliance by Agent. Each Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. Each Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan that by its terms must be fulfilled to the satisfaction of a Lender the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Loan. Each Agent may consult with legal counsel (who may be counsel for Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

SECTION 9.05 Delegation of Duties. Each Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through, or delegate any and all such rights and powers to, any one or more sub-agents appointed by such Agent. Each Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of each Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Agent.

 

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SECTION 9.06 Resignation of Agent. Each Agent may at any time give notice of its resignation to the Lenders and Borrower, which resignation will be effective immediately if in the Agent’s sole reasonable discretion it determines it has a conflict of interest arising from its role as Agent hereunder (such a resignation, a “Conflict Resignation”). Upon any such notice of resignation other than a Conflict Resignation, the Required Lenders shall have the right, with the consent (not to be unreasonably withheld, delayed or conditioned) of Borrower except after and during the continuance of an Event of Default, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation, then the retiring Agent may on behalf of the Lenders appoint a successor Agent meeting the qualifications set forth above with Borrower’s consent (not be unreasonably withheld, delayed or conditioned) except after and during the continuance of any Event of Default; provided that (i) if the Agent has given notice of an immediate Conflict Resignation or (ii) if the Agent shall notify Borrower and the Lenders that no qualifying Person has accepted such appointment or Borrower has not consented, then such resignation shall nonetheless become effective in accordance with such notice and (1) the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Collateral Agent on behalf of the Lenders under any of the Loan Documents, the retiring Collateral Agent shall continue to hold such collateral security as nominee until such time as a successor Collateral Agent is appointed) and (2) all payments, communications and determinations provided to be made by, to or through an Agent shall instead be made by or to each Lender directly, until such time as the Required Lenders, with Borrower’s consent (not be unreasonably withheld, delayed or conditioned) except after and during the continuance of any Event of Default, shall appoint a successor Agent as provided for above in this paragraph. Upon the acceptance of a successor’s appointment as Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Agent, and the retiring Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this paragraph). The fees payable by Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between Borrower and such successor. After the retiring Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Article IX and Section 10.03 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Agent was acting as Agent.

SECTION 9.07 Non-Reliance on Agent and Other Lenders. Each Lender acknowledges that it has, independently and without reliance upon any Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender further represents and warrants that it has reviewed the Confidential Information Memorandum and each other document made available to it on the Platform (as defined below) in connection with this Agreement and has acknowledged and accepted the terms and conditions applicable to the recipients thereof. Each Lender also acknowledges that it will, independently and without reliance upon any Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

SECTION 9.08 [Reserved].

 

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ARTICLE X

MISCELLANEOUS

SECTION 10.01 Notices.

(a) Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier as follows:

(i) if to any Loan Party, to Borrower at:

Lifetime Brands, Inc.

1000 Stewart Avenue

Garden City, NY 11530

Attention: Laurence Winoker, Chief Financial Officer

Email: larry.winoker@lifetimebrands.com

(ii) if to the Administrative Agent or the Collateral Agent, to it at:

JPMorgan Chase Bank, N.A.

395 North Service Road, Floor 03

Melville, NY, 11747-3139

Attention: John Budzynski

Email: John.Budzynski@chase.com

(iii) if to a Lender, to it at its address (or telecopier number) set forth in its Administrative Questionnaire.

Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received. Notices delivered through electronic communications to the extent provided in paragraph (b) below, shall be effective as provided in said paragraph (b).

(b) Electronic Communications. Notices and other communications to the Administrative Agent, Collateral Agent are Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices to any Lender pursuant to Article II if such Lender has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent, the Collateral Agent or Borrower may, in its reasonable discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

 

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

(c) Change of Address, etc. Any party hereto may change its address or for notices and other communications hereunder by notice to the other parties hereto.

(d) Posting. Each Loan Party hereby agrees that it will provide to the Administrative Agent all information, documents and other materials that it is obligated to furnish to the Administrative Agent pursuant to this Agreement and any other Loan Document, including all notices, requests, financial statements, financial and other reports, certificates and other information materials, but excluding any such communication that (i) relates to a request for a new, or a conversion of an existing, Borrowing or other extension of credit (including any election of an interest rate or interest period relating thereto), (ii) relates to the payment of any principal or other amount due under this Agreement prior to the scheduled date therefor, (iii) provides notice of any Default under this Agreement or (iv) is required to be delivered to satisfy any condition precedent to the effectiveness of this Agreement and/or any borrowing or other extension of credit hereunder (all such non-excluded communications, collectively, the “Communications), by transmitting the Communications in an electronic/soft medium in a format reasonably acceptable to the Administrative Agent at such e-mail address(es) provided to Borrower from time to time or in such other form, including hard copy delivery thereof, as the Administrative Agent shall reasonably require. In addition, each Loan Party agrees to continue to provide the Communications to the Administrative Agent in the manner specified in this Agreement or any other Loan Document or in such other form, including hard copy delivery thereof, as the Administrative Agent shall reasonably require. Nothing in this Section 10.01 shall prejudice the right of the Agents, any Lender or any Loan Party to give any notice or other communication pursuant to this Agreement or any other Loan Document in any other manner specified in this Agreement or any other Loan Document or as any such Agent shall reasonably require.

To the extent consented to by the Administrative Agent in writing from time to time, Administrative Agent agrees that receipt of the Communications by the Administrative Agent at its e-mail address(es) set forth above shall constitute effective delivery of the Communications to the Administrative Agent for purposes of the Loan Documents; provided that Borrower shall also deliver to the Administrative Agent an executed original of each Compliance Certificate required to be delivered hereunder.

Each Loan Party further agrees that Administrative Agent may make the Communications available to the Lenders by posting the Communications on Intralinks or a substantially similar electronic transmission system (the “Platform”). The Platform is provided “as is” and “as available.” The Agents do not warrant the accuracy or completeness of the Communications, or the adequacy of the Platform and expressly disclaim liability for errors or omissions in the communications. No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of third party rights or freedom from viruses or other code defects, is made by any Agent in connection with the Communications or the Platform. In no event shall the Administrative Agent or any of its Related Parties have any liability to the Loan Parties, any Lender or any other Person for damages of any kind, including direct or indirect,

 

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special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of any Loan Party’s or the Administrative Agent’s transmission of communications through the Internet, except to the extent the liability of such Person is found in a final non-appealable judgment by a court of competent jurisdiction to have resulted from such Person’s gross negligence, bad faith or willful misconduct.

SECTION 10.02 Waivers; Amendment.

(a) Generally. No failure or delay by any Agent or any Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of each Agent and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of any Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by this Section 10.02, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of whether any Agent or any Lender may have had notice or knowledge of such Default at the time. No notice or demand on Borrower in any case shall entitle Borrower to any other or further notice or demand in similar or other circumstances.

(b) Required Consents. Subject to Section 10.02(c) and (d), neither this Agreement nor any other Loan Document nor any provision hereof or thereof may be waived, amended, supplemented or modified except, in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by Borrower and the Required Lenders or, in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by the Administrative Agent, the Collateral Agent (in the case of any Security Document) and the Loan Party or Loan Parties that are party thereto, in each case with the written consent of the Required Lenders; provided that no such agreement shall be effective if the effect thereof would:

(i) increase the Commitment of any Lender without the written consent of such Lender (it being understood that no amendment, modification, termination, waiver or consent with respect to any condition precedent, covenant or Default shall constitute an increase in the Commitment of any Lender);

(ii) reduce the principal amount of any Loan or reduce the rate of interest thereon (other than interest pursuant to Section 2.06(c)), or reduce any Fees payable hereunder (under Section 2.05 or otherwise), or change the form or currency of payment of any Obligation, without the written consent of each Lender directly affected thereby (it being understood that any amendment or modification to the financial definitions in this Agreement shall not constitute a reduction in the rate of interest for purposes of this clause (ii));

(iii) (A) change the scheduled Final Maturity Date, or any scheduled date of payment of or the installment otherwise due on the principal amount of any Loan under Section 2.09, (B) postpone the date for payment of any interest or fees payable hereunder, or (C) change the amount of, waive or excuse any such payment (other than waiver of any increase in the interest rate pursuant to Section 2.06(c));

 

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(iv) increase the maximum duration of Interest Periods hereunder, without the written consent of each Lender directly affected thereby;

(v) permit the assignment or delegation by Borrower of any of its rights or obligations under any Loan Document, without the written consent of each Lender;

(vi) release all or substantially all of the Subsidiary Guarantors from their Loan Party Guarantee, or limit their liability in respect of such Loan Party Guarantee, without the written consent of each Lender;

(vii) release all or substantially all of the Collateral from the Liens of the Security Documents or alter the relative priorities of the Secured Obligations entitled to the Liens of the Security Documents, in each case without the written consent of each Lender;

(viii) change Section 2.14(b), (c) or (d) in a manner that would alter the pro rata sharing of payments or setoffs required thereby or any other provision in a manner that would alter the pro rata allocation among the Lenders of Loan disbursements, including the requirements of Section 2.02(a), without the written consent of each Lender directly affected thereby;

(ix) change any provision of this Section 10.02(b) or Section 10.02(c) or (d), without the written consent of each Lender directly affected thereby;

(x) change the percentage set forth in the definition of “Required Lenders,” or any other provision of any Loan Document (including this Section) specifying the number or percentage of Lenders required to waive, amend or modify any rights thereunder or make any determination or grant any consent thereunder, without the written consent of each Lender other than to increase such percentage or number or to give any additional Lender or group of Lenders such right to waive, amend or modify or make any such determination or grant any such consent;

(xi) contractually subordinate all or substantially all of the Obligations to any other obligation; and

(xii) change or waive any provision of Article X as the same applies to any Agent, or any other provision hereof as the same applies to the rights or obligations of any Agent, in each case without the written consent of such Agent;

provided, further, that any waiver, amendment or modification of the Intercreditor Agreement (and any related definitions) may be effected by an agreement or agreements in writing entered into among the Collateral Agent, the Administrative Agent and the “First Lien Collateral Agent” (as defined in the Intercreditor Agreement) (without the consent of any Loan Party, so long as such amendment, waiver or modification does not impose any additional duties or obligations on the Loan Parties or alter or impair any right of any Loan Party under the Loan Documents, but with the consent of the Required Lenders).

(c) Collateral. Without the consent of any other Person, the applicable Loan Party or Parties and the Administrative Agent and/or Collateral Agent may (in its or their respective sole discretion, or shall, to the extent required by any Loan Document) enter into any amendment or waiver of any Loan Document, or enter into any new agreement or instrument, to effect the granting, perfection, protection, expansion or enhancement of any security interest in any Collateral or additional property to become Collateral for the benefit of the Secured Parties, or as required by local law to give effect to, or protect any security interest for the benefit of the Secured Parties, in any property or so that the security interests therein comply with applicable Requirements of Law.

 

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(d) Dissenting Lenders. If, in connection with any proposed change, waiver, discharge or termination of the provisions of this Agreement as contemplated by Section 10.02(b), the consent of the Required Lenders is obtained but the consent of one or more of such other Lenders whose consent is required is not obtained, then Borrower shall have the right to replace all, but not less than all, of such non-consenting Lender or Lenders (so long as all non-consenting Lenders are so replaced) with one or more Persons pursuant to Section 2.16 so long as at the time of such replacement each such new Lender consents to the proposed change, waiver, discharge or termination. Each Lender agrees that, if Borrower elects to replace such Lender in accordance with this Section, it shall promptly execute and deliver to the Administrative Agent an Assignment and Assumption to evidence such sale and purchase and shall deliver to the Administrative Agent any Note (if Notes have been issued in respect of such Lender’s Loans) subject to such Assignment and Assumption; provided that the failure of any such non-consenting Lender to execute an Assignment and Assumption shall not render such sale and purchase (and the corresponding assignment) invalid and such assignment shall be recorded in the Register.

SECTION 10.03 Expenses; Indemnity; Damage Waiver.

(a) Costs and Expenses. Borrower shall pay (i) all actual, reasonable and invoiced out-of-pocket expenses incurred by the Administrative Agent, the Collateral Agent and their respective Affiliates (including the reasonable fees, charges and disbursements of counsel for the Administrative Agent and/or the Collateral Agent, but excluding allocated costs of internal counsel; provided that Borrower shall not be required to reimburse the legal fees and expenses of more than one primary outside counsel and reasonably necessary local and specialty counsel) in connection with the syndication of the credit facilities provided for herein (including the obtaining and maintaining of CUSIP numbers for the Loans, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendment, amendment and restatement, modification or waiver of the provisions hereof or thereof, including in connection with post-closing searches to confirm that security filings and recordations have been properly made and, (ii) all out-of-pocket expenses incurred by the Administrative Agent, the Collateral Agent or any Lender (including the reasonable fees, charges and disbursements of any counsel for the Administrative Agent, the Collateral Agent or any Lender), in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section 10.03, or (B) in connection with the Loans made hereunder, including all such reasonable out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans and (iii) all documentary and similar taxes and charges in respect of the Loan Documents.

(b) Indemnification by Borrower. Subject to the provisions of Section 2.12 and Section 2.15 (which shall provide the only source of indemnification for the matters covered therein), Borrower shall indemnify the Administrative Agent (and any sub-agent thereof), the Collateral Agent (and any sub-agent thereof) each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all actual, direct out of pocket losses, claims, damages, liabilities and all actual, reasonable and invoiced related expenses (including the reasonable fees, charges and disbursements of one counsel and reasonably necessary local and specialty counsel for Indemnitees, unless the interests of such Indemnitees are sufficiently divergent) incurred by any Indemnitee or asserted against any Indemnitee by any third party or by Borrower or any other Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document, or any amendment, amendment and

 

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restatement, modification or waiver of the provisions hereof or thereof, or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) any Loan or the use or proposed use of the proceeds therefrom, (iii) any actual or alleged presence or Release or threatened Release of Hazardous Materials on, at, under or from any property owned, leased or operated by any Company at any time, or any Environmental Liability related in any way to any Company, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, cost, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence, bad faith or willful misconduct of such Indemnitee, (y) arising out of any claim, litigation, investigation or proceeding, that involves an action that does not involve any act or omission by the Borrower and that is brought by one Indemnitee against another Indemnitee or (z) result from a claim brought by Borrower or any other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Loan Document, if Borrower or such Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.

(c) Reimbursement by Lenders. To the extent that Borrower for any reason fails to indefeasibly pay any amount required under paragraph (a) or (b) of this Section 10.03 to be paid by it to the Administrative Agent (or any sub-agent thereof), the Collateral Agent or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), the Collateral Agent (or any sub-agent thereof) or such Related Party, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent), the Collateral Agent (or any sub-agent thereof) or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent), the Collateral Agent (or any sub-agent thereof) in connection with such capacity. The obligations of the Lenders under this paragraph (c) are subject to the provisions of Section 2.14. For purposes hereof, a Lender’s “pro rata share” shall be determined based upon its share of the sum of the total outstanding Loans at the time.

(d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable Requirements of Law, no party hereto shall assert, and each party hereto hereby waives, any claim against any other party hereto, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof. No Indemnitee referred to in paragraph (b) above 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 Loan Documents or the transactions contemplated hereby or thereby.

(e) Payments. All amounts due under this Section shall be payable not later than 10 Business Days after written demand therefor, together with invoices related thereto.

 

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SECTION 10.04 Successors and Assigns.

(a) Successors and Assigns Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent, the Collateral Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of paragraph (b) of this Section 10.04, (ii) by way of participation in accordance with the provisions of paragraph (d) of this Section 10.04 or (iii) by way of pledge or assignment of a security interest subject to the restrictions of paragraph (f) of this Section (and any other attempted assignment or transfer by Borrower or any Lender shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in paragraph (d) of this Section and, to the extent expressly contemplated hereby, the other Indemnitees) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Assignments by Lenders. On or after the Effective Date, any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that

(i) except in the case of any assignment made in connection with the primary syndication of the Commitment and Loans or an assignment of the entire remaining amount of the assigning Lender’s Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender or an Affiliate of a Lender or an Approved Fund with respect to a Lender, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date) shall not be less than $1,000,000 in respect of Loans and/or Commitments, and unless in each case each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, Borrower otherwise consent (each such consent not to be unreasonably withheld or delayed); provided, that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five (5) Business Days after having received notice thereof from the Administrative Agent;

(ii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loan or the Commitment assigned, except that this clause (ii) shall not prohibit any Lender from assigning all or a portion of its rights and obligations among separate tranches on a non-pro rata basis; and

(iii) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500, and the Eligible Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

 

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Subject to acceptance and recording thereof by the Administrative Agent pursuant to paragraph (c) of this Section 10.04, from and after the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 2.12, 2.13, 2.15 and 10.03 with respect to facts and circumstances occurring prior to the effective date of such assignment. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (d) of this Section 10.04.

(c) Register. The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and related interest amounts) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive (absent manifest error), and Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by Borrower, the Collateral Agent and any Lender (with respect to its own interest only), at any reasonable time and from time to time upon reasonable prior notice.

(d) Participations. Any Lender may at any time, without the consent of, or notice to, Borrower or the Administrative Agent sell participations to any Person (other than a natural Person or Borrower or any of Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) Borrower, the Administrative Agent and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.

Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce the Loan Documents and to approve any amendment, modification or waiver of any provision of the Loan Documents; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in clause (i), (ii) or (iii) of the first proviso to Section 10.02(b) that affects such Participant. Subject to paragraph (e) of this Section, Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.12, 2.13 and 2.15 (subject to the requirements and limitations of those Sections) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.08 as though it were a Lender; provided such Participant agrees to be subject to Section 2.14 as though it were a Lender.

Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and related interest amounts) of each participant’s interest in the Loans or other obligations under this Agreement (the “Participant Register”). The entries in the Participant Register shall be conclusive, absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.

 

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(e) Limitations on Participant Rights. A Participant shall not be entitled to receive any greater payment under Sections 2.12, 2.13 and 2.15 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant.

(f) Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto (or shall entitle any such pledgee to vote as a Lender). In the case of any Lender that is a fund that invests in bank loans, such Lender may, without the consent of Borrower or the Administrative Agent, collaterally assign or pledge all or any portion of its rights under this Agreement, including the Loans and Notes or any other instrument evidencing its rights as a Lender under this Agreement, to any holder of, trustee for, or any other representative of holders of, obligations owed or securities issued, by such fund, as security for such obligations or securities.

(g) Electronic Execution of Assignments. The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable Requirement of Law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

SECTION 10.05 Survival of Agreement. All covenants, agreements, representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Agents or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid. The provisions of Sections 2.12, 2.14, 2.15 and Article X shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, replacement of the Lenders and the Commitments or the termination of this Agreement or any provision hereof (other than Section 10.12 which shall solely survive and remain in full force and effect for a period of two years after the latest of such dates).

SECTION 10.06 Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become

 

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effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by telecopier or Adobe PDF file shall be effective as delivery of a manually executed counterpart of this Agreement.

SECTION 10.07 Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

SECTION 10.08 Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable Requirements of Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency), but excluding payroll tax, withholding, trust and petty cash accounts, at any time owing by such Lender or any such Affiliate to or for the credit or the account of Borrower or any other Loan Party against any and all of the obligations of Borrower or such Loan Party now or hereafter existing under this Agreement or any other Loan Document to such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement or any other Loan Document and although such obligations of Borrower or such Loan Party may be contingent or unmatured or are owed to a branch or office of such Lender different from the branch or office holding such deposit or obligated on such Indebtedness. The rights of each Lender and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender or their respective Affiliates may have. Each Lender agrees to notify Borrower and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.

SECTION 10.09 Governing Law; Jurisdiction; Consent to Service of Process.

(a) Governing Law. This Agreement shall be construed in accordance with and governed by the law of the State of New York, without regard to conflicts of law principles that would require the application of the laws of another jurisdiction.

(b) Submission to Jurisdiction. Each party hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to any Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State court or, to the fullest extent permitted by applicable law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or any other Loan Document shall affect any right that the Administrative Agent or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against any Loan Party or its properties in the courts of any jurisdiction.

 

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(c) Waiver of Venue. Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent permitted by applicable Requirements of Law, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in Section 10.09(b). Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable Requirements of Law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d) Service of Process. Each party hereto irrevocably consents to service of process in any action or proceeding arising out of or relating to any Loan Document, in the manner provided for notices (other than telecopier) in Section 10.01. Nothing in this Agreement or any other Loan Document will affect the right of any party hereto to serve process in any other manner permitted by applicable Requirements of Law.

SECTION 10.10 Waiver of Jury Trial. Each party hereto hereby waives, to the fullest extent permitted by applicable Requirements of Law, any right it may have to a trial by jury in any legal proceeding directly or indirectly arising out of or relating to this Agreement, any other Loan Document or the transactions contemplated hereby (whether based on contract, tort or any other theory). Each party hereto (a) certifies that no representative, agent or attorney of any 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 by, among other things, the mutual waivers and certifications in this Section.

SECTION 10.11 Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

SECTION 10.12 Treatment of Certain Information; Confidentiality. Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, advisors and other representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any Governmental Authority or regulatory authority (including any self-regulatory authority, such as the National Association of Insurance Commissioners); provided that to the extent practicable and permitted by applicable law, the party requested to disclose the Information will provide prompt written notice of such request to Borrower, will allow Borrower a reasonable opportunity to seek appropriate protective measures prior to disclosure, and will disclose the minimum amount of Information required by law, (c) to the extent required by applicable Requirements of Law or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section 10.12, to (i) any assignee of or Participant in, or any bona fide prospective assignee of or Participant in, any of its rights or obligations under this Agreement, (ii) any actual or bona fide prospective counterparty (or its advisors) to any swap or derivative transaction relating to Borrower and its obligations or (iii) any rating agency for the purpose of obtaining a credit rating applicable to any Lender, (g) with the prior consent of Borrower or (h) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent, any Lender or any of their respective Affiliates on a

 

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nonconfidential basis from a source other than Borrower. For purposes of this Section, “Information” means all information received from Borrower or any of its Subsidiaries relating to Borrower or any of its Subsidiaries or any of their respective businesses, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by Borrower or any of its Subsidiaries; provided that, in the case of information received from Borrower or any of its Subsidiaries after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information which shall in no event be less than commercially reasonable care.

SECTION 10.13 USA PATRIOT Act Notice. Each Lender that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies Borrower, which information includes the name, address and tax identification number of Borrower and other information regarding Borrower that will allow such Lender or the Administrative Agent, as applicable, to identify Borrower in accordance with the Act. This notice is given in accordance with the requirements of the Act and is effective as to the Lenders and the Administrative Agent.

SECTION 10.14 Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable Requirements of Law (collectively, the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable Requirements of Law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.

SECTION 10.15 Post Closing Requirements. Notwithstanding anything to the contrary set forth herein or in any other Loan Document, the following may be completed, delivered or otherwise resolved by the following dates. The following may occur subsequent to the Effective Date. The following shall be completed by the Loan Parties, at their sole cost and expense. The Administrative Agent, in its sole discretion, may extend any such completion date for any such item. Failure to complete, deliver or otherwise resolve any of the following by the date required therefor (as may be extended, if at all, by the Administrative Agent in its sole discretion) shall result in an Event of Default (without the benefit of any grace or cure periods). The Administrative Agent shall determine, in its sole discretion, whether the following have been completed, delivered or otherwise resolved by the dates required therefor. In addition, the Administrative Agent, in its sole discretion, may waive any of the following.

 

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Action Item

  

Completion Date therefor

Delivery of a file-stamped UCC-3 termination statement with respect to the financing statement filed against the Borrower in the State of Delaware with the initial filing number 2012 1859539.    Within twenty (20) days after the Effective Date.
Execution and delivery to the Administrative Agent of an English-law Charge over Shares of 65% of the Equity Interests in Lifetime Brands UK Limited held by Lifetime Delaware Holdings, LLC in favor of the Collateral Agent (in form and substance reasonably acceptable to Administrative Agent), together with any other certificates, documents or instruments the Administrative Agent may request, including without limitation, an opinion letter of counsel to the Loan Parties, addressed to the Administrative Agent, the Collateral Agent and the holders of Secured Obligations (in form and substance reasonably acceptable to Administrative Agent). It is the expectation of the Borrower and the Administrative Agent that the documentation referenced above in this paragraph will be substantially similar to that delivered in connection with the English-law Charge over Shares provided to the First Lien Administrative Agent in January 2012, with appropriate adjustments to reflect the Lien being provided to the Collateral Agent and any other adjustments mutually agreed to by the Administrative Agent and the Borrower.    Within forty-five (45) days after the Effective Date.
Execution and delivery to the Administrative Agent of a Cayman Islands-law Share Charge of 65% of the Equity Interests in Wallace Silversmiths De Puerto Rico Ltd. held by Lifetime Brands, Inc. in favor of the Collateral Agent (in form and substance reasonably acceptable to Administrative Agent), together with any other certificates, documents or instruments the Administrative Agent may request, including without limitation, an opinion letter of counsel to the Loan Parties, addressed to the Administrative Agent, the Collateral Agent and the holders of Secured Obligations (in form and substance reasonably acceptable to Administrative Agent ). It is the expectation of the Borrower and the Administrative Agent that the documentation referenced above in this paragraph will be substantially similar to that delivered in connection with the Cayman Islands-law Share Charge provided to the First Lien Administrative Agent in October 2010 with appropriate adjustments to reflect the Lien being provided to the Collateral Agent and any other adjustments mutually agreed to by the Administrative Agent and the Borrower.    Within forty-five (45) days after the Effective Date.

[Signature Pages Follow]

 

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

 

LIFETIME BRANDS, INC.,

By:

   
  Name: Laurence Winoker
  Title: Senior Vice President & CFO

 

SUBSIDIARY GUARANTORS:
PFALTZGRAFF FACTORY STORES, INC.

By:

   
  Name: Laurence Winoker
  Title: Senior Vice President

 

TMC ACQUISITION INC.
By:    
  Name: Laurence Winoker
  Title: Senior Vice President

 

LIFETIME DELAWARE HOLDINGS, LLC
By:    
  Name: Laurence Winoker
  Title: Senior Vice President

 

Signature Page to Senior Secured Credit Agreement


JPMORGAN CHASE BANK, N.A., as a Lender,

Administrative Agent and Collateral Agent

By:    
  Name:
  Title:

 

 

Signature Page to Senior Secured Credit Agreement


SOVEREIGN BANK, N.A., as a Lender
By:    
Name:
Title:

 

Signature Page to Senior Secured Credit Agreement


SCHEDULE 1.01(a)

EFFECTIVE DATE COMMITMENTS

 

LENDER    COMMITMENT  

JPMORGAN CHASE BANK, N.A.

   $ 29,400,000.00   

SOVEREIGN BANK, N.A.

   $ 5,600,000.00   

AGGREGATE COMMITMENT

   $ 35,000,000.00   

 

Signature Page to Senior Secured Credit Agreement


Schedule 1.01(b)

Subsidiary Guarantors

TMC Acquisition Inc., a Delaware corporation

Pfaltzgraff Factory Stores, Inc., a Delaware corporation

Lifetime Delaware Holdings, LLC, a Delaware limited liability company

 

Signature Page to Senior Secured Credit Agreement


Schedule 3.05

Properties

 

Loan Party

  

Locations

  

Owned/

Leased

Lifetime Brands, Inc.   

1000 Stewart Avenue

Garden City, NY 11530

(Corporate headquarters/main showroom)

   Leased
Lifetime Brands, Inc.   

10825 Production Avenue

Fontana, CA 92337

(Principal West Coast warehouse and distribution facility)

   Leased
Lifetime Brands, Inc.   

22 Blake Street

Medford, MA 02155

(Offices, showroom, warehouse and distribution facility)

   Leased
Lifetime Brands, Inc.   

362-363 River Street

Winchendon, MA 01475

(Warehouse and distribution facility, and spice packing line)

   Owned
Lifetime Brands, Inc.   

12 Applegate Drive

Robbinsville, NJ 08691

(Principal East Coast warehouse and distribution facility)

   Leased
Lifetime Brands, Inc.   

303 South Broadway, Suite #470

Tarrytown, New York 10591

(Office – Kamenstein division)

   Leased
Lifetime Brands, Inc.   

802 SE Plaza Avenue, Suite 106

Bentonville, Arkansas

(Regional sales office)

   Leased
Lifetime Brands, Inc.   

W134 N5526 Campell Drive, Suite 5510, Menomonee Falls,

Wisconsin

(Regional sales office)

   Leased
Lifetime Brands, Inc.   

41 Madison Avenue

Portion of the 10th Floor

New York, New York

(Office / Showroom)

   Leased
Lifetime Brands, Inc.   

Atlanta Gift Mart / Rms. 916A, B

Atlanta, Georgia

(Showroom)

   Leased
Lifetime Brands, Inc.   

Atlanta Gift Mart

Rms. 1518, 1522, 1528, 1530

Atlanta, Georgia

(Showroom)

(Note: Lease expired on May 31, 2012 and as of the Effective Date is on a month to month basis while new lease agreement is being negotiated)

   Leased

 

Signature Page to Senior Secured Credit Agreement


Loan Party

  

Locations

  

Owned/

Leased

TMC Acquisition Inc.   

51 Madison Avenue

Portions of Ground and Mezzanine

New York, New York

(Showroom)

   Leased
Pfaltzgraff Factory Stores, Inc.   

3501 Concord Road

York, PA 17402

(Office – Retail Direct division)

   Leased

 

Signature Page to Senior Secured Credit Agreement


Schedule 3.06

Disclosed Matters

 

1. Notice of Potential Liability and Request for Information regarding the San German Ground Water Contamination Superfund Site, San German Puerto Rico

Wallace Silversmiths de Puerto Rico, Ltd. (“Wallace de Puerto Rico”), a wholly-owned subsidiary of the Company, operates a manufacturing facility in San Germán, Puerto Rico, that is leased from the Puerto Rico Industrial Development Company (“PRIDCO”). In March 2008, the United States Environmental Protection Agency (the “EPA”) announced that the San Germán Ground Water Contamination site in Puerto Rico (the “Site”) had been added to the Superfund National Priorities List due to contamination present in the local drinking water supply.

In May 2008, Wallace de Puerto Rico received from the EPA a Notice of Potential Liability and Request for Information Pursuant to 42 U.S.C. Sections 9607(a) and 9604(e) of the Comprehensive Environmental Response, Compensation, Liability Act. The Company responded to the EPA’s Request for Information on behalf of Wallace. In July, 2011, Wallace de Puerto Rico received a letter from the EPA requesting access to the property that it leases from PRIDCO and the Company granted such access.

The Company is not aware of any determination by the EPA that any remedial action is warranted for the Site; and, accordingly, is not able to estimate the extent of any possible liability.

 

2. Notice of initiation of an anti-dumping proceeding concerning imports of ceramic tableware and kitchenware originating in the People’s Republic of China

Creative Tops Limited, an indirect wholly-owned subsidiary of the Company in the United Kingdom received from the European Commission a Notice of initiation of an anti-dumping proceeding concerning imports of ceramic tableware and kitchenware originating in the People’s Republic of China being dumped into the United Kingdom. The Notice indicates that the pending investigation will determine whether product is being dumped in the European Union and, if so, whether the imposition of anti-dumping measures would not be against the European Union’s interest.

 

Signature Page to Senior Secured Credit Agreement


Schedule 3.14

Insurance

LIFETIME BRANDS, INC.- SCHEDULE OF INSURANCE

 

Line of Insurance

  

Limits /Deductible

   Policy Period   

Carrier (Specific)

  

Policy Number

Directors and Officers       3/31/12-
3/31/13
   Illinois National Insurance Co - A    017086672
Excess Directors and Officers       3/31/12-
3/31/13
   Allied World Assurance Company (U.S.), Inc.    03054410
Excess Directors and Officers       3/31/12-
3/31/13
   Federal Insurance Company    68047967
Employee Benefit Plan Fiduciary Liability Insurance (Fiduciary)       3/31/12-
3/31/13
   Illinois National Insurance Company    017086767
Executive Risk—Primary (Special Crime)       3/31/11-
3/31/14
   U.S. Specialty Insurance Co    U71185268
Commercial Crime       3/31/12-
3/31/13
   National Union Fire Ins Co of Pittsburgh - A    017086674
Commercial Property       11/19/2011-
11/19/2012
   Affiliated FM Insurance Co.    KJ552
General Liability       11/19/2011-
11/19/2012
   Liberty Mutual Fire Insurance Company    TB2-621-094220-051
Commercial Automobile All States       11/19/2011-
11/19/2012
   Liberty Mutual Fire Insurance Company.    AS2-621-094220-041
Workers Compensation       11/19/2011-
11/19/2012
   Great American Alliance    WC17087660 & -WC17087670
Umbrella Liability       11/19/2011-
11/19/2012
   Liberty Insurance Corporation    TH7-621-094220-011
XS Umbrella Liability       11/19/2011-
11/19/2012
   Continental Casualty Company    L4031096322
Foreign Package       11/19/2011-
11/19/2012
   Liberty Insurance Corporation    LC7-F21-094220-021
Foreign Voluntary Compensation and Employers Liability       11/19/2011-
11/19/2012
   Liberty Insurance Corporation    WC7-F21-094220-031
Marine Stock Throughput       12/30/2011-
12/30/2012
   Lloyds of London    BO753PC1106957000
Equipment Breakdown (Puerto Rico)       11/19/2011-
11/19/2012
   CNA    BM4025743094

 

Signature Page to Senior Secured Credit Agreement


Package (Puerto Rico)       11/19/2011-
11/19/2012
   Real Legacy Assurance Co.    CPP20770086
Commercial Automobile (Puerto Rico)       11/19/2011-
11/19/2012
   Real Legacy Assurance Co.    CLP20771737
Flood       4/16/2012-
4/16/2013
   Fidelity National Indemnity Insurance Company    20 1150814167 00
Flood       4/16/2012-
4/16/2013
   Fidelity National Indemnity Insurance Company    20 1150820297 00
Bond       1/5/2012-
1/5/2013
   Argonaut Insurance Co.    111221005
Bond       6/29/2012 –
6/29/2013
   Travelers Casualty and Surety Co.    9911S4820
Commercial Property ( WOFE SH, GZ, TJ)       01/06/2012-
01/05/2013
   PICC PROPERTY AND CASUALTY COMPANY LTD.    PQBB2012440100000037

LIFETIME BRANDS, INC.- SCHEDULE OF INSURANCE FOR ITS CREATIVE TOPS LIMITED SUBSIDIARY

 

Line of Insurance

  

Limits /Deductible

   Policy Period   

Carrier (Specific)

  

Policy Number

Commercial Property

(Commercial Combined)

      10/31/2011 to
10/31/2012
   Aviva Insurance    24831547 CCI
General Liability       10/30/11 to
10/30/12
   Aviva Insurance    24831547 CCI
Commercial Automobile       08/12/11 to
08/12/2012
   Zurich Insurance    KF645839
Employers Liability       10/30/11 to
10/30/12
   Aviva Insurance    24831547 CCI

Marine Stock Throughput

(Part of the Lifetime Brands Policy which covers the company worldwide)

      6/30/2012-
12/30/2012
   Lloyds of London    BO753PC1106957000

There is one remaining installment payment due on Lifetime Brands, Inc.’s Workers Compensation insurance, due July 31, 2012 in the amount of $20,328.51. All other insurance invoices for the year have been paid without any special financing arrangements.

 

Signature Page to Senior Secured Credit Agreement


Schedule 3.15

Capitalization and Subsidiaries

 

Lifetime Brands, Inc.

(Delaware corporation)

Authorized Shares:    100 shares of Series A Preferred Stock par value of $1.00, 2,000,000 shares Series B Preferred Stock par value of $1.00 and 25,000,000 shares of common stock par value $.01 per share
   12,474,580 shares of common stock issued and outstanding at May 31, 2012 (publicly held)

TMC Acquisition Inc.

(Delaware corporation)

  
Authorized Shares:   

1,000 shares of common stock, par value $.01 per share

100 shares issued to and held by Lifetime Brands, Inc.

Pfaltzgraff Factory Stores, Inc.

(Delaware corporation)

  
Authorized Shares:   

1,000 shares of common stock, par value $.01 per share

100 shares issued to and held by Lifetime Brands, Inc.

Lifetime Delaware Holdings, LLC

(Delaware Limited Liability Company)

Authorized Units:    1,000 units issued to and held by Lifetime Brands, Inc.

Wallace Silversmiths de Puerto Rico LTD

(Cayman Islands corporation)

Authorized Shares:   

5,000,000 shares of common stock, par value $.01 per share

1,000 shares issued to and held by Lifetime Brands, Inc.

LTB DE Mexico, S.A. DE C.V.

(United States of Mexico corporation)

  
Authorized Shares:   

50,000 shares of common stock, par value 1.00 peso per share

49,999 shares issued to and held by Lifetime Brands, Inc. 1 share issued to and held by James Gary Siegel

Lifetime Brands, Inc. (HK) Limited

(Hong Kong corporation)

Authorized Shares:   

10,000 ordinary shares

 

1 share issued to and held by Lifetime Brands, Inc.

1 share issued to and held by James Gary Siegel

 

Signature Page to Senior Secured Credit Agreement


New Goal Development Limited

(Hong Kong corporation)

Authorized Shares:   

10,000 ordinary shares

 

1 share issued to and held by Creative Tops Holdings Limited

Lifetime Brands Global Sourcing (Shanghai) Consultancy Limited

(Incorporated in Shanghai, the PRC)

Authorized Capital:   

US$150,000

 

All shares held by Lifetime Brands, Inc.

Grand Venture Enterprises Limited

(Hong Kong corporation)

  
Authorized Shares:   

10,000 ordinary shares

 

1 share issued to and held by New Goal Development Limited.

Lifetime Brands UK Limited

(A company incorporated and registered in England and Wales)

Authorized Shares:   

100 ordinary shares £1 per share

 

100 shares issued to and held by Lifetime Delaware Holdings, LLC.

Lifetime Brands Holdings Limited

(A company incorporated and registered in England and Wales)

Authorized Shares:   

100 ordinary shares £1 per share

 

1 share issued to and held by Creative Tops Holdings Limited.

 

Signature Page to Senior Secured Credit Agreement


LVA Limited

(Hong Kong corporation)

Authorized Shares:   

10,000 ordinary shares

 

80 shares issued to and held by New Goal Development Limited.

 

10 shares issued to and held by Grupo Vasconia, S.A.B.

 

10 shares issued to and held by Accent-Fairchild Group Inc.

Creative Tops Holdings Limited

(A company incorporated and registered in England and Wales)

Authorized Shares:   

127,930 ordinary shares of £0.01 per share

 

All shares issued to and held by Lifetime Brands UK Limited.

Creative Tops Limited

(A company incorporated and registered in England and Wales)

Authorized Shares:   

102 ordinary shares of £1 per share

 

All shares issued to and held by Creative Tops Holdings Limited.

Creative Tops Far East Limited

(Hong Kong corporation)

  
Authorized Shares:   

10,000 ordinary shares of HKD 1 per share

 

All shares issued to New Goal Development Limited.

Lifetime Brands Do Brasil Participacões Ltda.

(A Brazilian Limitada—limited liability company)

Authorized Quotas (shares):   

14,275,792,00 quotas (shares) with a par value of one Brazilian real (R$1.00) each

 

14,275,791 Quotas issued to Lifetime Brands Holdings Limited.

 

1 Quota issued to Lifetime Brands UK Limited.

 

Signature Page to Senior Secured Credit Agreement


Schedule 3.22

Environmental Matters

See Schedule 3.06.

 

Exhibit A


Schedule 6.01

Existing Indebtedness

Description

 

1. Capitalized equipment leases: NONE

 

2. Swap obligations: NONE

 

3. Insurance premium finance arrangements: There is one remaining installment payment due on

Lifetime Brands, Inc.’s Workers Compensation insurance, due July 31, 2012 in the amount of $20,328.51. All other insurance invoices for the year have been paid without any special financing arrangements.

 

4. Guarantees :

 

  (a) Guarantee of Lifetime Brands, Inc. in the maximum amount of HK$4 million (which, as of the Effective Date, converts to approx. US $515,641) in respect of any liability that may arise in respect of LVA Limited’s liability for breach of any of its obligations pursuant to the Housewares Corporation of Asia Limited joint venture agreement. LVA Limited holds a 50% equity interest in Housewares Corporation of Asia Limited. Lifetime Brands, Inc.’s indirect subsidiary, New Goal Development Limited, owns an 80% equity interest in LVA Limited.

 

  (b) Guarantees by Lifetime Brands, Inc. of real property leases and other similar obligations of the Borrower’s operating subsidiaries in an aggregate amount not to exceed $20 million.

 

Exhibit A


Schedule 6.02

Existing Liens and Security Interests

 

Debtor

  

Secured Party

  

Collateral

Lifetime Brands, Inc.    Marlin Leasing Corp.    Office equipment, two Xerox Docucolor copiers, Xerox photocopiers.
Lifetime Brands, Inc.    Marlin Business Bank    Office equipment, Xerox Docucolor copiers.
Lifetime Brands, Inc.    Canon Financial Services    Specific equipment, such as graphics equipment.
Lifetime Brands, Inc.    Ricoh Americas Corp.    Office equipment, such as photocopiers.
Lifetime Brands, Inc.    Raymond Leasing Corp.    Office equipment, such as photocopiers.
Lifetime Brands, Inc.    CIT Technology Finance Service    Specific equipment such as Plotter Printer.
Lifetime Brands, Inc.    De Lage Landen Financial Services    Office equipment, such as photocopiers.
Lifetime Brands, Inc.    Hilo Yale Industrial Trucks, Inc.    Scissor Lift.
Lifetime Brands, Inc.    Interstate Trailer Sales, Inc.    Warehouse equipment.
Lifetime Brands, Inc.    Lease Line, Inc.    Warehouse equipment.
Lifetime Brands, Inc.    Mail finance    Office equipment, such as photocopiers.
Lifetime Brands, Inc.    Pitney Bowes, Inc.    Office equipment, such as postage meter machine.
Lifetime Brands, Inc.    Premier Trailer Leasing, Inc.    Warehouse equipment.
Lifetime Brands, Inc.    Quality Copy Products    Office equipment, such as photocopiers.
Lifetime Brands, Inc.    Raymond Handling Solutions, Inc.    Warehouse equipment.
Lifetime Brands, Inc.    Reliable Office Systems & Supplies    Office equipment, such as photocopiers.
Lifetime Brands, Inc.    Arbor Material Handling, Inc.    Warehouse equipment.
Lifetime Brands, Inc.    Xerox Corp.    Office equipment, such as photocopiers.
Lifetime Brands, Inc.    Belmont Springs Water Co., Inc.    Water Cooler Rental
Lifetime Brands, Inc.    GE Capital    Office equipment, such as photocopiers.
Lifetime Brands, Inc.    Poland Spring    Water Cooler Rental
Lifetime Brands, Inc.    Stonybrook Water Company    Water Cooler Rental
Lifetime Brands, Inc.    Superior Forklift Repair, Inc.    Forklift Rental
Lifetime Brands, Inc.    Mercedes Benz Financial Services    Auto Lease
Lifetime Brands, Inc.    Lexus Financial Services    Auto Lease
Lifetime Brands, Inc.    BMW Financial Services    Auto Lease
Lifetime Brands, Inc.    Ford Motor Company    Auto Financing
Lifetime Brands, Inc.    Ikon Financial Services    Office equipment, such as photocopiers.

 

Exhibit A


Schedule 6.04

Existing Investments

 

1. In addition to Borrower’s investments in its own Subsidiaries, Borrower’s subsidiary, LTB de MEXICO, S.A. de C.V., holds a 30% equity interest in Grupo Vasconia, S.A.B.

 

2. In addition to Borrower’s investments in its own Subsidiaries, Borrower’s indirect Subsidiary, New Goal Development Limited (a Hong Kong entity), holds an 80% equity interest in LVA Limited (a Hong Kong entity). LVA Limited holds a 50% equity interest in Housewares Corporation of Asia Limited (a Hong Kong entity). Borrower’s indirect subsidiary, New Goal Development Limited, also holds a 50% equity interest in World Alliance Enterprises Limited (a Hong Kong entity), however, World Alliance Enterprises Limited is in the process of being deregistered and its business terminated.

 

3. In addition to Borrower’s investments in its own Subsidiaries, Borrower’s indirect Subsidiary, Grand Venture Enterprises Limited (a Hong Kong entity) holds a 50% equity interest in Grand Venture Holdings Limited (a Hong Kong entity). In connection with this 50% equity interest, Borrower’s indirect subsidiary, Grand Venture Enterprises Limited is to provide a shareholder loan of USD 500,000 to the joint venture entity, Grand Venture Holdings Limited.

 

4 In addition to Borrower’s investments in its own Subsidiaries, Borrower’s indirect Subsidiary, Lifetime Brands do Brasil Participações Ltda. (a Brazilian Limitada or limited liability company) holds a 40% equity interest in GS Internacional S.A. (a closely-held corporation or sociedade por ações de capital fechado), registered before the Board of Trade of the State of Espírito Santo—JUCEES under NIRE, Brazil).

 

5. Amounts payable to Borrower pursuant to Asset Purchase Agreement dated as of December 15, 2008, among Lifetime Brands, Inc., as Seller, Use Bath Fixtures, L.L.C., as Purchaser, and Michael J. Velsmid, Jr., outstanding balance of $206,796.42 as of the Effective Date, with a payment of $34,466.07 due to Borrower on July 21, 2012, however, as of the Effective Date, such payment has not yet been made.

 

6. Promissory Note dated July 7, 2010 in the name of Muriel Bernstein as the “Debtor” in consideration of an interest-free loan in the amount of $10,000.00 by Lifetime Brands, Inc., with such Promissory Note becoming due and immediately payable upon the earlier to occur of: (i) the date July 6, 2015; (ii) the closing date of the Debtor’s residence in New Rochelle, New York; or (iii) 30 days after appointment of the executor of Debtor’s estate after Debtor’s death.

 

Exhibit A


Schedule 6.12

Existing Restrictive Agreements

Shareholders’ Agreement by and among New Goal Development Limited and Grupo Vasconia, S.A.B. and Accent Fairchild Group Inc. as “Shareholders” of LVA Limited provides that except upon prior approval of all of the other Shareholders to or as specified in Clause 6.2, no Shareholder may sell, transfer, assign, charge or create any security interest or encumbrance over, or otherwise dispose of, the beneficial interest over all or any part of the Shares beneficially owned by it; provided that the foregoing restrictions shall not apply (i) to any sale, transfer or disposition of all or any part of the Shares to an Affiliate or (ii) to any charge, security interest or encumbrance incurred in connection with a bank credit or other financing arrangement entered into in the ordinary course of business. Section 6.2 of such Shareholders’ Agreement provides that in the event either of New Goal Development Limited, Grupo Vasconia, S.A.B., or Accent Fairchild Group Inc. proposes to transfer all or part of its Shares to one of its Affiliates, it can do so provided that (i) the transferee agrees in writing to be bound by the terms and conditions of the Shareholders’ Agreement and (ii) the transferor shall remain liable for any breaches of the Shareholders’ Agreement by the transferee.

The Joint Venture and Shareholders’ Agreement by and between Corporate Power Limited and LVA Limited as “Shareholders” of Housewares Corporation of Asia Limited provides that neither party shall for a 3 year period from January 18, 2011, directly or indirectly transfer, mortgage, pledge, charge or otherwise dispose of or encumber or grant a security interest lien, charge, privilege or similar right in or on any of the Shares other than in connection with (i) the death, insolvent liquidation or bankruptcy of one of the other Parties; or (ii) unanimous written agreement by all Parties, other than to a subsidiary, parent company, company commonly controlled by the same shareholders or otherwise related to any Shareholder by way of a control of one half or more of the membership of its board of directors or one half or more of its equity capital.

Shareholders’ Agreement by and among Grand Venture Enterprises Limited (a Hong Kong entity and an indirect subsidiary of Borrower) and Manweal Development Limited (a Hong Kong entity) as “Shareholders” of Grand Venture Holdings Limited (a Hong Kong entity) provides that except upon prior approval of all of the other Shareholders, no Shareholder may sell, transfer, assign, charge or create any security interest or encumbrance over, or otherwise dispose of, the beneficial interest over all or any part of the Shares beneficially owned by it; provided that the foregoing restrictions shall not apply (i) to any sale, transfer or disposition of all or any part of the Shares to an Affiliate of such Shareholder or (ii) to any charge, security interest or encumbrance incurred in connection with a bank credit or other financing arrangement entered into in the ordinary course of the business of such Shareholder. Clause 7.2(b) of such Shareholders’ Agreement also states that Grand Venture Enterprises Limited covenants and undertakes, and shall cause its shareholder Lifetime Brands, Inc. to covenant and undertake, to Manweal Development Limited that it/they shall not and shall not give effect to any sale, transfer, assignment or otherwise disposal of, or creation of any encumbrance in respect of any or all of the issued shares of Grand Venture Holdings Limited, or offer or allot or make any new

 

Exhibit A


issuance of shares or securities convertible into shares of Grand Venture Enterprises Limited, whether now or any time in the future for as long as Grand Venture Enterprises Limited owns any Shares in Grand Venture Holdings Limited except with respect to transfers to its Affiliates and in all other cases with prior written consent of Manweal Development Limited.

Shareholders’ Agreement by and among Lifetime Brands Do Brasil Participações Ltda (a Brazilian limited liability company and an indirect subsidiary of Borrower), as “Shareholder”, Paulo Sérgio Gomes Soares, as “Shareholder” and GS Internacional S.A. (a closely-held corporation (sociedade por ações de capital fechado), registered before the Board of Trade of the State of Espírito Santo – JUCEES, Brazil), provides that no Shareholder may transfer any Equity Securities without prior written consent of the other Shareholder, except that Borrower may (i) transfer their Equity Securities at any time and from time to time, to one or more of its Affiliates or to other companies which are part of Borrower’s group; and (ii) exercise a “Tag-Along Right”. Clause 5.6 of such Shareholders’ Agreement also states that during the term of the Shareholders’ Agreement, no Shareholder may create, attempt to create, permit the creation of or accept the imposition of any Lien on any Equity Securities, unless such Lien is approved in writing by the Board of Directors of GS Internacional S.A. and that any creation or attempt to create any Lien in violation of this provision of the Shareholders’ Agreement shall be null and void ab initio, shall not be acknowledged by GS Internacional S.A. or any of the Shareholders, shall not be binding on, shall not create any liability or obligation on the part of, the GS Internacional S.A. or any of the Shareholders, and shall not be given effect by GS Internacional S.A. in its corporate books.

 

Exhibit A


EXHIBIT A

ASSIGNMENT AND ASSUMPTION

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

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

 

1.    Assignor:   

 

  
2.    Assignee:   

 

  
      [and is an Affiliate/Approved Fund of [identify Lender]1]
3.    Borrower:    Lifetime Brands, Inc.
4.    Administrative Agent:    JPMorgan Chase Bank, N.A., as the administrative agent under the Credit Agreement

 

1  Select as applicable.

 

Exhibit A


 

5.    Credit Agreement:    Credit Agreement dated as of [            ], 2012 among Lifetime Brands, Inc., the other Loan Parties party thereto, the Lenders parties thereto and JPMorgan Chase Bank, N.A., as Administrative Agent

 

Exhibit A


6. Assigned Interest:

 

Facility Assigned    Aggregate Amount of
Loans for all Lenders
     Amount of Loans
Assigned
     Percentage Assigned of
Loans2
 

Loans

   $         $           %   

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

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

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

 

ASSIGNOR
[NAME OF ASSIGNOR]
By:    
  Title:
 

 

ASSIGNEE
[NAME OF ASSIGNEE]
By:    
  Title:

 

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

 

Exhibit A


[Consented to and]3 Accepted:

 

JPMORGAN CHASE BANK, N.A., as

Administrative Agent

By    
  Title:

 

[Consented to:]4

 

LIFETIME BRANDS, INC.

By    
  Title:

 

 

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

 

Exhibit A


ANNEX 1

[                    ]5

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties.

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

1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Credit Agreement that are required to be satisfied by it in order to acquire the Assigned Interest and become a Lender, (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 5.01 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender, and (v) if it is not a United States Person, attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

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

 

 

5  Describe Credit Agreement at option of Administrative Agent.

 

Exhibit A


3. General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument.

Delivery of an executed counterpart of a signature page of this Assignment and Assumption by facsimile shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be construed in accordance with and governed by the law of the State of New York, but giving effect to federal laws applicable to national banks.

 

Exhibit A


EXHIBIT B

COMPLIANCE CERTIFICATE

 

To: The Lenders parties to the

Credit Agreement Described Below

This Compliance Certificate is furnished pursuant to that certain Credit Agreement dated as of [            ], 2012 (as amended, modified, renewed or extended from time to time, the “Agreement”) among Lifetime Brands, Inc. (the “Company”), the other Loan Parties from time to time party thereto, the Lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent for the Lenders. Unless otherwise defined herein, capitalized terms used in this Compliance Certificate have the meanings ascribed thereto in the Agreement.

THE UNDERSIGNED HEREBY CERTIFIES THAT:

1. I am the duly elected                      of the Company;

2. I have reviewed the terms of the Agreement and I have made, or have caused to be made under my supervision, a detailed review of the transactions and conditions of the Company and its Subsidiaries during the accounting period covered by the attached financial statements [for quarterly or monthly financial statements add: and such financial statements present fairly in all material respects the financial condition and results of operations of the Company and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes];

3. The examinations described in paragraph 2 did not disclose, except as set forth below, and I have no knowledge of (i) the existence of any condition or event which constitutes a Default during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate or (ii) any change in GAAP or in the application thereof that has occurred since the date of the audited financial statements referred to in Section 3.04 of the Agreement;

4. I hereby certify that no Loan Party has changed (i) its name, (ii) its chief executive office, (iii) principal place of business, (iv) the type of entity it is or (v) its state of incorporation or organization without having given the Administrative Agent the notice required by Section 4.15 of the Security Agreement;

5. Schedule I attached hereto sets forth financial data and computations evidencing the Fixed Charge Coverage Ratio for the most recently ended four (4) fiscal quarters and the Company’s compliance with certain covenants of the Agreement, all of which data and computations are true, complete and correct;

 

Exhibit B


6. Schedule II hereto sets forth financial data and computations evidencing the Capital Expenditures for the applicable period set forth in Section 6.10(b) of the Credit Agreement and the Company’s compliance with certain covenants of the Agreement, all of which data and computations are true, complete and correct; and

7. Schedule III attached hereto sets forth financial data and computations evidencing [(a)] EBITDA [and (b) the ratio of Indebtedness to EBITDA, in each case]6 for the most recently ended four (4) fiscal quarters, and the Company’s compliance with certain covenants of the Agreement, all of which data and computations are true, complete and correct.

Described below are the exceptions, if any, to paragraph 3 by listing, in detail, the (i) nature of the condition or event, the period during which it has existed and the action which the Company has taken, is taking, or proposes to take with respect to each such condition or event or (ii) the change in GAAP or the application thereof and the effect of such change on the attached financial statements:

 

 

 

 

 

 

  

 

6  To be included if EBITDA is less than $34,000,000.

 

Exhibit B


The foregoing certifications, together with the computations set forth in Schedule I, Schedule II and Schedule III hereto and the financial statements delivered with this Certificate in support hereof, are made and delivered this      day of                 ,         .

 

LIFETIME BRANDS, INC.
By:    
Name:    
Title:    

 

Exhibit B


SCHEDULE I

Compliance as of                     ,          with

Fixed Charge Coverage Ratio Provisions of

the Agreement

 

Exhibit B


SCHEDULE II

Compliance as of                     ,         with

Capital Expenditures Provisions of

the Agreement

 

Exhibit B


SCHEDULE III

Compliance as of                     ,         with

EBITDA [and Indebtedness to EBITDA] Provisions of

the Agreement

 

Exhibit B


EXHIBIT C

FORM OF INTEREST ELECTION REQUEST

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

[                    ]7

Attention: [                    ]

                     , 20        

Ladies and Gentlemen:

This Interest Election Request is delivered to you pursuant to Section 2.08 of the Credit Agreement dated as of [            ], 2012 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) among LIFETIME BRANDS, INC., a Delaware corporation, the Loan Parties from time to time party thereto, the Lenders from time to time party thereto, JPMORGAN CHASE BANK, N.A., as administrative agent (in such capacity, the “Administrative Agent”) for the Lenders

Borrower hereby requests that on [                ]8 (the “Interest Election Date”),

1. $[                ] of the presently outstanding principal amount of the Loans originally made on [            ], 2012.

2. and all presently being maintained as [ABR Loans] [Eurodollar Loans],

3. be [converted into] [continued as],

4. [Eurodollar Loans having an Interest Period of [one/two/three/six months]] [ABR Loans].

The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the proposed Interest Election Date, both before and after giving effect thereto and to the application of the proceeds therefrom:

(a) the foregoing [conversion] [continuation] complies with the terms and conditions of the Credit Agreement (including, without limitation, Section 2.08 of the Credit Agreement);

(b) no Default has occurred and is continuing, or would result from such proposed [conversion] [continuation].

 

 

7  JPM to provide contact information.
8  Shall be a Business Day that is no earlier than (a) the date hereof in the case of a conversion into ABR Loans to the extent this Interest Election Request is delivered to the Administrative Agent not later than 1:00 p.m., New York City time on the date hereof, otherwise the Business Day following the date of delivery hereof, and (b) three Business Days following the date hereof in the case of a conversion into/continuation of Eurodollar Loans to the extent this Interest Election Request is delivered to the Administrative Agent not later than 1:00 p.m New York City time on the date hereof, otherwise the fourth Business Day following the date of delivery hereof.

 

Exhibit C


[Signature Page Follows]

 

8


IN WITNESS WHEREOF, the undersigned has caused this Interest Election Request to be executed by its authorized officer as of the date first set forth above.

 

LIFETIME BRANDS, INC.
By:    
Name:  
Title:  

 

Exhibit C


EXHIBIT D

FORM OF JOINDER AGREEMENT

THIS JOINDER AGREEMENT (this “Agreement”), dated as of                     ,         , 20    , is entered into between [New Subsidiary], a [            ] (the “New Subsidiary”) and JPMorgan Chase Bank, N.A., in its capacity as administrative agent (the “Administrative Agent”) under that certain Credit Agreement, dated as of [            ], 2012 among Lifetime Brands, Inc. (the “Company”), the other Loan Parties from time to time party thereto, the Lenders from time to time party thereto and the Administrative Agent (as the same may be amended, modified, extended or restated from time to time, the “Credit Agreement”). All capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Credit Agreement.

The New Subsidiary and the Administrative Agent, for the benefit of the Lenders, hereby agree as follows:

1. The New Subsidiary hereby acknowledges, agrees and confirms that, by its execution of this Agreement, the New Subsidiary will be deemed to be a Loan Party under the Credit Agreement and a “Subsidiary Guarantor” for all purposes of the Credit Agreement and shall have all of the obligations of a Loan Party and a Subsidiary Guarantor thereunder as if it had executed the Credit Agreement. The New Subsidiary hereby ratifies, as of the date hereof, and agrees to be bound by, all of the terms, provisions and conditions contained in the Credit Agreement, including without limitation (a) all of the representations and warranties of the Loan Parties set forth in Article III of the Credit Agreement, (b) all of the covenants set forth in Articles V and VI of the Credit Agreement and (c) all of the guarantee obligations set forth in Article VII of the Credit Agreement. Without limiting the generality of the foregoing terms of this paragraph 1, the New Subsidiary, subject to the limitations set forth in Section 7.08 of the Credit Agreement, hereby (i) guarantees, jointly and severally with the other Subsidiary Guarantors, to the Administrative Agent and the Lenders, as provided in Article VII of the Credit Agreement, the prompt payment and performance of the Guaranteed Obligations in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration or otherwise) strictly in accordance with the terms thereof and (ii) agrees that if any of the Guaranteed Obligations are not paid or performed in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration or otherwise), the New Subsidiary will, jointly and severally together with the other Subsidiary Guarantors, promptly pay and perform the same, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Guaranteed Obligations, the same will be promptly paid in full when due (whether at extended maturity, as a mandatory prepayment, by acceleration or otherwise) in accordance with the terms of such extension or renewal.

2. If required, the New Subsidiary is, simultaneously with the execution of this Agreement, executing and delivering such Collateral Documents (and such other documents and instruments) as requested by the Administrative Agent in accordance with the Credit Agreement or the other Loan Documents.

3. The address of the New Subsidiary for purposes of Section 10.01 of the Credit Agreement is as follows:

 

       
       
       
       

 

Exhibit D


4. The New Subsidiary hereby waives acceptance by the Administrative Agent and the Lenders of the guarantee by the New Subsidiary upon the execution of this Agreement by the New Subsidiary.

5. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument.

6. THIS NOTE SHALL BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.

IN WITNESS WHEREOF, the New Subsidiary has caused this Agreement to be duly executed by its authorized officer, and the Administrative Agent, for the benefit of the Lenders, has caused the same to be accepted by its authorized officer, as of the day and year first above written.

 

[NEW SUBSIDIARY]
By:    
Name:    
Title:    

 

Acknowledged and accepted:

 

JPMORGAN CHASE BANK, N.A., as Administrative Agent

By:    
Name:    
Title:    

 

Exhibit D


EXHIBIT E

List of Closing Documents

[Attached]

 

Exhibit E


LIFETIME BRANDS, INC.

SENIOR SECURED CREDIT AGREEMENT

July 27, 2012

LIST OF CLOSING DOCUMENTS1

 

Agreement

  

Responsible Party

  

Signatories

A.     LOAN DOCUMENTS

     

1.      Senior Secured Credit Agreement (the “Credit Agreement”) by and among Lifetime Brands, Inc., a Delaware corporation (the “Borrower”), the Subsidiary Guarantors from time to time parties thereto (the “Guarantors” and, collectively with the Borrower, the “Loan Parties”), the financial institutions from time to time parties thereto as Lenders (the “Lenders”) and JPMorgan Chase Bank, N.A., in its capacities as Administrative Agent and Collateral Agent in each case for itself and the other Lenders (in each such capacity respectively, the “Administrative Agent” and the “Collateral Agent”).

   Sidley   

¨Borrower

¨TMC Acquisition Inc.

¨Pfaltzgraff Factory Stores, Inc.

¨Lifetime Delaware Holdings, LLC

¨ Lender

¨ Administrative Agent

Schedule 1.01(a) Effective Date Commitments

   Sidley    N/A

Schedule 1.01(b) Subsidiary Guarantors

   Borrower    N/A

Schedule 3.05 Properties

   Borrower    N/A

Schedule 3.06 Disclosed Matters

   Borrower    N/A

Schedule 3.14 Insurance

   Borrower    N/A

Schedule 3.15 Capitalization and Subsidiaries

   Borrower    N/A

Schedule 3.22 Environmental Matters

   Borrower    N/A

Schedule 6.01 Existing Indebtedness

   Borrower    N/A

Schedule 6.02 Existing Liens

   Borrower    N/A

Schedule 6.04 Existing Investments

   Borrower    N/A

 

1  Each capitalized term used herein and not defined herein shall have the meaning assigned to such term in the above-defined Credit Agreement. Items appearing in bold and italics shall be prepared and/or provided by the Borrower and/or Borrower’s counsel.


Agreement

 

Responsible Party

  

Signatories

Schedule 6.12 Existing Restrictions

  Borrower    N/A

Exhibit A Form of Assignment and Assumption

  Sidley    N/A

Exhibit B Form of Compliance Certificate

  Sidley    N/A

Exhibit C Form of Interest Election Request

  Sidley    N/A

Exhibit D Form of Joinder Agreement

  Sidley    N/A

Exhibit E List of Closing Documents

  Sidley    N/A

Exhibit F Form of Note

  Sidley    N/A

Exhibit G Form of Security Agreement

  Sidley    N/A

Exhibit H Form of Opinion of Company Counsel

  Nixon Peabody    N/A

Exhibit I Form of Opinion of Mexico Local Counsel

  White & Case    N/A

Exhibit J Form of Intercompany Note

  Sidley    N/A

Exhibit K1-K2 Form of United States Tax Compliance Certificates

  Sidley    N/A

Exhibit L Form of Intercreditor Agreement

  Sidley    N/A

2.      Notes, if any, executed by the Borrower in favor of each of the Lenders, if any, which has requested a note pursuant to Section 2.04 of the Credit Agreement.

  Sidley    ¨ Borrower

3.      Pledge and Security Agreement, executed by the Loan Parties and Collateral Agent, together with pledged instruments and allonges, stock certificates, stock powers executed in blank, pledge instructions and acknowledgments, as appropriate.

  Sidley/ Borrower   

¨ Borrower

¨TMC Acquisition Inc.

¨ Pfaltzgraff Factory Stores, Inc.

¨ Lifetime Delaware Holdings, LLC

¨ Administrative Agent


Agreement

  

Responsible Party

  

Signatories

Exhibit A         Type of Entity; Principal Place of Business or Chief Executive Office; FEIN; State Organization Number; Jurisdiction of Incorporation; Properties Leased by the Grantors; Properties Owned by the Grantors; Public Warehouses or Other Locations

   Borrower    N/A

Exhibit B         Deposit Accounts; Deposit Accounts with Lock Boxes; Securities Accounts

   Borrower    N/A

Exhibit C         Letter of Credit Rights; Chattel Paper

   Borrower    N/A

Exhibit D         Patents; Trademarks; Copyrights

   Borrower    N/A

Exhibit E         Title Documents

   Borrower    N/A

Exhibit F         Fixtures

   Borrower    N/A

Exhibit G         List of Pledged Collateral, Securities and other Investment Property

   Borrower    N/A

Exhibit H         Offices in which Financing Statements have been Filed

   Borrower    N/A

Exhibit I         Form of Amendment

   Borrower    N/A

Exhibit J         Commercial Tort Claims

   Borrower    N/A

Exhibit K         Form of Joinder Agreement

   Sidley    N/A

4.      Intercreditor Agreement by and among the Administrative Agent, the Collateral Agent, JPMorgan Chase Bank, N.A., in its capacity as administrative agent under the First Lien Loan Documents, and certain of the Loan Parties.

   Sidley   

¨ Borrower

¨ TMC Acquisition Inc.

¨ Pfaltzgraff Factory Stores, Inc.

¨ Lifetime Delaware Holdings, LLC

¨ Administrative Agent

¨ First Lien Administrative Agent


Agreement

  

Responsible Party

  

Signatories

5.      Certificates of Insurance listing the Collateral Agent as (x) lender loss payee for the property, casualty and business interruption insurance policies of the Loan Parties, together with long-form lender loss payable endorsement, and (y) additional insured with respect to the liability insurance of the Loan Parties, together with an additional insured endorsement

   Borrower    N/A

6.      Intellectual Property Confirmatory Grants of Security Agreements.

   Sidley    ¨ Borrower

7.      Releases of Intellectual Property Confirmatory Grants of Security Agreements granted in connection with Existing Credit Agreement.

   Borrower    ¨ Citibank

8.      Mexican Pledge Agreement, together with pledged stock certificates and endorsement of share certificate

 

Note: The original share certificate is in possession of Citibank. Citibank to return certificate to Lifetime Brands, Inc. when executing the Termination Agreement in order for Lifetime Brands, Inc. to cancel the existing endorsement and issue the new one to be attached to the share certificate delivered to JP Morgan Chase Bank, N.A. when the Mexican Pledge Agreement is executed.

   KSA   

¨ Borrower

¨ Administrative Agent

9.      Termination Agreement of the Mexican Pledge Agreement with Citibank

   Borrower   

¨ Borrower

¨ Citibank

10.    Termination Agreement of existing Intercreditor Agreement

   Sidley   

¨ Borrower

¨ TMC Acquisition Inc.

¨ Pfaltzgraff Factory Stores, Inc.

¨ Lifetime Delaware Holdings, LLC

¨ Citibank

¨ ABL Administrative Agent


Agreement

  

Responsible Party

  

Signatories

B. UCC DOCUMENTS

     

11.    UCC, tax lien and name variation search reports for each Loan Party from the appropriate offices in the relevant jurisdictions.

   Sidley    N/A

12.    UCC financing statements naming each Loan Party as debtor and the Collateral Agent as secured party as filed with the appropriate offices.

   Sidley    N/A

13.    UCC-3 termination statements with respect to each Loan Party in connection with UCC financing statements filed in connection with Existing Credit Agreement, as filed with the appropriate offices.

   Borrower    N/A

C.     CORPORATE DOCUMENTS

     

14.    Certificate of the Secretary or an Assistant Secretary of each Loan Party certifying (i) that there have been no changes in the Certificate of Incorporation or other charter document of such Loan Party, as attached thereto and as certified as of a recent date by the Secretary of State (or the equivalent thereof) of the jurisdiction of its organization, since the date of the certification thereof by such Secretary of State (or the equivalent thereof), (ii) the By-Laws or other applicable organizational document, as attached thereto, of such Loan Party as in effect on the date of such certification, (iii) resolutions of the Board of Directors or other governing body of such Loan Party authorizing the execution, delivery and performance of each Loan Document to which it is a party, and (iv) the names, titles and true signatures of the incumbent officers of each Loan Party authorized to sign the Loan Documents to which it is a party.

   Borrower   

¨ Borrower

¨ TMC Acquisition Inc.

¨ Pfaltzgraff Factory Stores, Inc.

¨Lifetime Delaware Holdings, LLC

15.    Secretary certificate of LTB de México

   Borrower    ¨ LTB de México

16.    Good Standing Certificate (or analogous documentation if applicable) for each Loan Party from the Secretary of State (or the equivalent thereof) of the jurisdiction of its organization, to the extent generally available in such jurisdiction.

   Borrower    N/A

17.    Entry for the Stock Registry Book of LTB de México canceling the pledge in favor of Citibank

   Sidley/KSA    ¨ LTB de México

18.    Entry for the Stock Registry Book of LTB de México registering the pledge in favor of JP Morgan Chase Bank, N.A.

   Sidley/KSA    ¨ LTB de México


Agreement

  

Responsible Party

  

Signatories

D.     OPINION

     

19.    Opinion of Nixon Peabody, U.S. counsel for the Loan Parties.

   Nixon Peabody    ¨ Nixon Peabody

20.    Opinion of White & Case, Mexican counsel for the Loan Parties.

   White & Case    ¨ White & Case

E.     CLOSING CERTIFICATE AND MISCELLANEOUS

     

21.    A certificate signed by the chief financial officer of the Company, dated as of the Effective Date: (i) stating that no Default has occurred and is continuing, (ii) stating that the representations and warranties contained in Article III of the Credit Agreement are true and correct as of such date, and (iii) certifying any other factual matters as may be reasonably requested by the Administrative Agent.

   Borrower    ¨ Borrower

22.    Payoff documentation providing evidence satisfactory to the Administrative Agent that the Existing Credit Agreement shall have been terminated and cancelled and all indebtedness thereunder shall have been fully repaid (except to the extent being so repaid with the initial Loans) and any and all liens thereunder shall have been terminated and released.

   Borrower   

¨ Borrower

¨ Citibank

23.    A fully executed copy of the First Lien Credit Agreement Amendment, in form and substance acceptable to the Administrative Agent.

   Borrower    N/A

24.    A solvency certificate in form and substance satisfactory to the Administrative Agent from a Financial Officer of the Borrower.

   Borrower    ¨ Borrower

25.    A Borrowing Base Certificate (as defined in the First Lien Credit Agreement) which calculates the Borrowing Base as of the end of the calendar month immediately preceding the calendar month in which the Effective Date occurs, unless the Effective Date occurs before the 20th day of the month, in which case Borrower shall deliver a Borrowing Base Certificate as of the end of the next preceding calendar month.

   Borrower    N/A

26.    Borrowing Request with respect to the Loans to be made on the Effective Date.

   Borrower    ¨ Borrower

27.    Fee Letter

   Sidley   

¨ Borrower

¨ Administrative Agent


Agreement

  

Responsible Party

  

Signatories

F.     POST-CLOSING DOCUMENTS

     

28.    Post-filing UCC lien search report for the Loan Parties from the appropriate offices in the relevant jurisdictions.

   Sidley    N/A

29.    Deposit Account Control Agreements

   Borrower   

[¨Borrower]

[¨Guarantors]

¨ Administrative Agent

¨First Lien Administrative Agent

30.    Collateral Access Agreements

   Borrower   

[¨ Borrower]

[¨ Guarantors]

¨ Administrative Agent

¨ First Lien Administrative Agent

31.    English-law Charge over Shares of 65% of the Equity Interests in Lifetime Brands UK Limited held by Lifetime Delaware Holdings, LLC

   Borrower   

¨ Lifetime Delaware Holdings, LLC

¨ Administrative Agent

32.    Cayman Islands-law Share Charge of 65% of the Equity Interests in Wallace Silversmiths De Puerto Rico Ltd. held by Lifetime Brands, Inc. in favor of the Collateral Agent

   Borrower   

¨ Borrower

¨ Administrative Agent

33.    File-stamped UCC-3 termination statement with respect to the financing statement filed against the Borrower in the State of Delaware with the initial filing number 2012 1859539

   Borrower    N/A


EXHIBIT F

FORM OF NOTE

[INSERT DATE]

FOR VALUE RECEIVED, LIFETIME BRANDS, INC., a Delaware corporation (the “Borrower”), promises to pay to the order of [INSERT NAME OF LENDER] (the “Lender”) the aggregate unpaid principal amount of all Loans made by the Lender to the Borrower pursuant to Article II of the Credit Agreement identified and defined below. Such payments shall be made in immediately available funds on the dates and at the offices of JPMorgan Chase Bank, N.A., as Administrative Agent, specified in the Credit Agreement, together with interest on the unpaid principal amount hereof at the rates and on the dates determined in accordance with the Credit Agreement. The Borrower shall pay the principal of and accrued and unpaid interest on the Loans in full on the Final Maturity Date and as otherwise set forth in the Credit Agreement.

The Lender shall, and is hereby authorized to, record on the schedule attached hereto, or otherwise record in accordance with its usual practice, the date and amount of each Loan and the date and amount of each principal payment hereunder.

This Note is one of the promissory notes issued pursuant to, and is entitled to the benefits of, the Credit Agreement dated as of [            ], 2012 by and among the Borrower, the Loan Parties from time to time party thereto, the institutions from time to time party thereto as Lenders and JPMorgan Chase Bank, N.A., as the “Administrative Agent” (as the same may be amended, restated, supplemented or otherwise modified from time to time, the Credit Agreement), to which reference is hereby made for a statement of the terms and conditions governing this Note, including the terms and conditions under which this Note may be prepaid or its maturity date accelerated. Each capitalized term used herein and not defined herein shall have the meaning ascribed thereto in the Credit Agreement. The Credit Agreement, among other things, provides for the making of “Loans” by the Lender to the Borrower in an aggregate amount not to exceed at any time outstanding such Lender’s Commitment.

The Borrower hereby waives presentment, demand, protest and notice of any kind. No failure to exercise, and no delay in exercising, any rights hereunder on the part of the holder hereof shall operate as a waiver of such rights.

THIS NOTE SHALL BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.

[Signature Page Follows]

 

Exhibit F


IN WITNESS WHEREOF, the party hereto has caused this Note to be duly executed as of the date first above written.

 

LIFETIME BRANDS, INC.
By:    

Name:

Title:

 

Exhibit F


Schedule of Loans and Payments of Principal

to

Note of Lifetime Brands, Inc.

 

Date    Principal
Amount of
Loan
   Maturity
of Interest
Period
   Principal
Amount Paid
   Unpaid
Balance


EXHIBIT G

FORM OF SECURITY AGREEMENT

[Attached]

 

-2-


EXECUTION COPY

PLEDGE AND SECURITY AGREEMENT

THIS PLEDGE AND SECURITY AGREEMENT (as it may be amended or modified from time to time, the “Security Agreement”) is entered into as of July 27, 2012 by and among Lifetime Brands, Inc., a Delaware corporation (the “Borrower”), the Subsidiaries of the Borrower listed on the signature pages hereto or that become party hereto after the date hereof (together with the Borrower, the “Grantors”), and JPMorgan Chase Bank, N.A., in its capacity as collateral agent (the “Collateral Agent”) for the Secured Parties (as defined in the Credit Agreement referred to below).

PRELIMINARY STATEMENT

The Collateral Agent, the Loan Parties, the Lenders (as defined therein) and JPMorgan Chase Bank, N.A., as Administrative Agent are entering into a Senior Secured Credit Agreement dated as of the date hereof (as it may be amended or modified from time to time, the “Credit Agreement”). Each Grantor is entering into this Security Agreement in order to induce the Lenders to enter into and extend credit to the Borrower under the Credit Agreement and to secure the Secured Obligations that it has agreed to guarantee pursuant to Article VII of the Credit Agreement.

ACCORDINGLY, the Grantors and the Collateral Agent, on behalf of the Secured Parties, hereby agree as follows:

ARTICLE I

DEFINITIONS

1.1. Terms Defined in Credit Agreement. All capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Credit Agreement.

1.2. Terms Defined in UCC. Terms defined in the UCC which are not otherwise defined in this Security Agreement are used herein as defined in the UCC.

1.3. Definitions of Certain Terms Used Herein. As used in this Security Agreement, in addition to the terms defined in the Preliminary Statement, the following terms shall have the following meanings:

Accounts” shall have the meaning set forth in Article 9 of the UCC.

Account Debtor” means any Person obligated on an Account.

Activation Notice” means, with respect to any Deposit Account Control Agreement, a notice delivered by the Collateral Agent to the related depositary bank pursuant to such Deposit Account Control Agreement, whereby such depositary bank agrees to exclusively follow instructions from the Collateral Agent with respect to funds on deposit in the related Deposit Account(s) upon such depositary bank’s receipt of such notice.

Article” means a numbered article of this Security Agreement, unless another document is specifically referenced.

Chattel Paper” shall have the meaning set forth in Article 9 of the UCC.

 

-3-


Closing Date” means the Effective Date as defined in the Credit Agreement.

Collateral” shall have the meaning set forth in Article II.

Collateral Access Agreement” means any landlord waiver or other agreement, in form and substance satisfactory to the Collateral Agent, among the Collateral Agent and any third party (including any bailee, consignee, customs broker, or other similar Person) in possession of any Collateral or any landlord of any Loan Party for any real property where any Collateral is located, as such landlord waiver or other agreement may be amended, restated, or otherwise modified from time to time.

Collateral Deposit Account” shall have the meaning set forth in Section 7.1(a).

Collateral Report” means any certificate, report or other document delivered by any Grantor to the Collateral Agent or any Lender with respect to the Collateral pursuant to any Loan Document.

Collection Account” shall have the meaning set forth in Section 7.1(b).

Commercial Tort Claims” means the commercial tort claims of each Grantor, including each commercial tort claim specifically described in Exhibit J hereto.

Confirmatory Grant of Security Interest” means, with respect to any Grantor and its Patents, Trademarks, or Copyrights, an agreement with a list of such Patents, Trademarks or Copyrights attached as an exhibit thereto, in form and substance satisfactory to the Collateral Agent, duly executed by such Grantor, to be filed in the United States Patent and Trademark Office or the United States Copyright Office, as applicable, evidencing the Collateral Agent’s Lien on such Patents, Trademarks or Copyrights, as applicable.

Control” shall have the meaning set forth in Article 8 or, if applicable, in Section 9-104, 9-105, 9-106 or 9-107 of Article 9 of the UCC.

Copyrights” means, with respect to any Person, all of such Person’s right, title, and interest in and to the following: (a) all copyrights, rights and interests in copyrights, works protectable by copyright, copyright registrations, and copyright applications; (b) all renewals of any of the foregoing; (c) all income, royalties, damages, and payments now or hereafter due and/or payable under any of the foregoing, including, without limitation, damages or payments for past or future infringements for any of the foregoing; (d) the right to sue for past, present, and future infringements of any of the foregoing; and (e) all rights corresponding to any of the foregoing throughout the world.

Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

Deposit Account Control Agreement” means an agreement, in form and substance satisfactory to the Collateral Agent, among any Loan Party, a banking institution holding such Loan Party’s funds, and the Collateral Agent with respect to collection and Control of all deposits and balances held in a deposit account maintained by any Loan Party with such banking institution.

Deposit Accounts” shall have the meaning set forth in Article 9 of the UCC.

Documents” shall have the meaning set forth in Article 9 of the UCC.

 

-4-


Equipment” shall have the meaning set forth in Article 9 of the UCC.

Event of Default” means an event described in Section 5.1.

Excluded Payments” shall have the meaning set forth in Section 4.6(d)(iii).

Exhibit” refers to a specific exhibit to this Security Agreement, unless another document is specifically referenced.

Fixtures” shall have the meaning set forth in Article 9 of the UCC.

General Intangibles” shall have the meaning set forth in Article 9 of the UCC.

Goods” shall have the meaning set forth in Article 9 of the UCC.

Intercreditor Agreement” means that certain Intercreditor Agreement, dated as of the date hereof, by and among the Collateral Agent, the Administrative Agent, JPMorgan Chase Bank, N.A., in its capacity as administrative agent under the First Lien Loan Documents, and each of the Loan Parties party thereto, as amended, modified or supplemented from time to time.

Instruments” shall have the meaning set forth in Article 9 of the UCC.

Inventory” shall have the meaning set forth in Article 9 of the UCC.

Investment Property” shall have the meaning set forth in Article 9 of the UCC.

Lenders” means the lenders party to the Credit Agreement and their successors and assigns.

Letter-of-Credit Rights” shall have the meaning set forth in Article 9 of the UCC.

Licenses” means, with respect to any Person, all of such Person’s right, title, and interest in and to (a) any and all licensing agreements or similar arrangements in and to its Patents, Copyrights, or Trademarks, (b) all income, royalties, damages, claims, and payments now or hereafter due or payable under and with respect thereto, including, without limitation, damages and payments for past and future breaches thereof, and (c) all rights to sue for past, present, and future breaches thereof.

Material Deposit Account” means a Deposit Account (other than a zero balance account or a payroll account) with an average monthly balance equal to or greater than $50,000.

Patents” means, with respect to any Person, all of such Person’s right, title, and interest in and to: (a) any and all patents and patent applications; (b) all inventions and improvements described and claimed therein; (c) all reissues, divisions, continuations, renewals, extensions, and continuations-in-part thereof; (d) all income, royalties, damages, claims, and payments now or hereafter due or payable under and with respect thereto, including, without limitation, damages and payments for past and future infringements thereof; (e) all rights to sue for past, present, and future infringements thereof; and (f) all rights corresponding to any of the foregoing throughout the world.

Pledged Collateral” means all Instruments, Securities and other Investment Property of the Grantors, whether or not physically delivered to the Collateral Agent pursuant to this Security Agreement.

 

-5-


Receivables” means the Accounts, Chattel Paper, Documents, Investment Property, Instruments and any other rights or claims to receive money which are General Intangibles or which are otherwise included as Collateral.

Section” means a numbered section of this Security Agreement, unless another document is specifically referenced.

Securities Account” has the meaning set forth in Article 8 of the UCC.

Security” has the meaning set forth in Article 8 of the UCC.

Stock Rights” means all dividends, instruments or other distributions and any other right or property which the Grantors shall receive or shall become entitled to receive for any reason whatsoever with respect to, in substitution for or in exchange for any Equity Interest constituting Collateral, any right to receive an Equity Interest and any right to receive earnings, in which the Grantors now have or hereafter acquire any right, issued by an issuer of such Equity Interest.

Supporting Obligations” shall have the meaning set forth in Article 9 of the UCC.

Trademarks” means, with respect to any Person, all of such Person’s right, title, and interest in and to the following: (a) all trademarks (including service marks), trade names, trade dress, and trade styles and the registrations and applications for registration thereof and the goodwill of the business symbolized by the foregoing; (b) all licenses of the foregoing, whether as licensee or licensor; (c) all renewals of the foregoing; (d) all income, royalties, damages, and payments now or hereafter due or payable with respect thereto, including, without limitation, damages, claims, and payments for past and future infringements thereof; (e) all rights to sue for past, present, and future infringements of the foregoing, including the right to settle suits involving claims and demands for royalties owing; and (f) all rights corresponding to any of the foregoing throughout the world.

UCC” means the Uniform Commercial Code, as in effect from time to time, of the State of New York or of any other state the laws of which are required as a result thereof to be applied in connection with the attachment, perfection or priority of, or remedies with respect to, Collateral Agent’s or any other Secured Party’s Lien on any Collateral.

The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms.

1.4 Second Priority to the Senior Obligations. Notwithstanding anything to the contrary herein or in any other Loan Document, each party hereto agrees and acknowledges that any reference herein or in any other Loan Document to the “second priority security interest” (or any similar language) of the Secured Parties in the Collateral shall solely be with respect to the Senior Obligations (as defined in the Intercreditor Agreement) and only to the extent (x) such Senior Obligations remain outstanding, and (y) the holders of such Senior Obligations and all Liens granted under or in connection thereto remain subject to the Intercreditor Agreement. For the avoidance of doubt, the security interest of the Secured Parties in the Collateral (other than the Specified Assets) shall have a first priority Lien to Liens of all other Persons other than with respect to the Senior Obligations as set forth above (subject to Liens expressly permitted by Section 6.02 of the Credit Agreement) and the Secured Parties shall have a first priority Lien (subject to Liens expressly permitted by Section 6.02 of the Credit Agreement) with respect to the Specified Assets to Liens of all other Persons. For the avoidance of doubt, other than with respect to the Senior Obligations, nothing herein shall be construed as an acknowledgement or agreement by the parties hereto of a second priority or subordinate security interest of the Secured Parties in the Collateral.

 

-6-


ARTICLE II

GRANT OF SECURITY INTEREST

2.1 Grant of Security Interest. (a) Each Grantor hereby pledges, assigns and grants to the Collateral Agent, on behalf of and for the ratable benefit of the Secured Parties, a security interest in all of its right, title and interest in, to and under all personal property and other assets, whether now owned by or owing to, or hereafter acquired by or arising in favor of such Grantor (including under any trade name or derivations thereof), and whether owned or consigned by or to, or leased from or to, such Grantor, and regardless of where located (all of which will be collectively referred to as the “Collateral”), including:

all Accounts;

all Chattel Paper;

all Copyrights, Patents and Trademarks;

all Documents;

all Equipment;

all Fixtures;

all General Intangibles;

all Goods;

all Instruments;

all Inventory;

all Investment Property;

all cash or cash equivalents;

all letters of credit, Letter-of-Credit Rights and Supporting Obligations;

all Deposit Accounts and Securities Accounts;

all Commercial Tort Claims; and

all accessions to, substitutions for and replacements, proceeds (including Stock Rights), insurance proceeds and products of the foregoing, together with all books and records, customer lists, credit files, computer files, programs, printouts and other computer materials and records related thereto and any General Intangibles at any time evidencing or relating to any of the foregoing;

to secure the prompt and complete payment and performance of the Secured Obligations.

 

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(b) The Collateral Agent acknowledges and agrees that the Liens granted to the Collateral Agent hereunder and the exercise of its rights and remedies pursuant to Article V shall be subject to the Intercreditor Agreement. In the event of any conflict between the terms of the Intercreditor Agreement and this Agreement, the terms of the Intercreditor Agreement shall govern and control as among the Collateral Agent and the ABL Representative (as defined in the Intercreditor Agreement). Notwithstanding any other provision hereof, for so long as any Senior Obligations (as defined in the Intercreditor Agreement) remain outstanding and such Senior Obligations, the holders of such Senior Obligations, and all Liens granted to secure the Senior Obligations remain subject to the Intercreditor Agreement, any obligation hereunder to deliver to the Collateral Agent any Collateral may be satisfied by causing such Collateral to be delivered to the Senior Representative (as defined in the Intercreditor Agreement) to be held in accordance with the Intercreditor Agreement.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

Each Grantor represents and warrants to the Collateral Agent and the Secured Parties that:

3.1. Title, Perfection and Priority. Such Grantor has good and valid rights in or the power to transfer the Collateral and title to the Collateral with respect to which it has purported to grant a security interest hereunder, free and clear of all Liens except for Liens permitted under Section 4.1(e), and has full power and authority to grant to the Collateral Agent the security interest in such Collateral pursuant hereto. When financing statements have been filed in the appropriate offices against such Grantor in the locations listed on Exhibit H, the Collateral Agent will have a fully perfected second priority security interest in that Collateral of the Grantor in which a security interest may be perfected by filing, subject only to Liens permitted under Section 4.1(e).

3.2. Type and Jurisdiction of Organization, Organizational and Identification Numbers. The type of entity of such Grantor, its state of organization, the organizational number issued to it by its state of organization and its federal employer identification number are set forth on Exhibit A.

3.3. Principal Location. Such Grantor’s mailing address and the location of its place of business (if it has only one) or its chief executive office (if it has more than one place of business), are disclosed in Exhibit A; such Grantor has no other places of business except those set forth in Exhibit A.

3.4. Collateral Locations. All of such Grantor’s locations where Collateral is located are listed on Exhibit A. All of said locations are owned by such Grantor except for locations (i) which are leased by the Grantor as lessee and designated in Part VII(b) of Exhibit A and (ii) at which Inventory is held in a public warehouse or is otherwise held by a bailee or on consignment as designated in Part VII(c) of Exhibit A.

3.5. Deposit Accounts and Securities Accounts. All of such Grantor’s Deposit Accounts and Securities Accounts are listed on Exhibit B.

3.6. Exact Names. Such Grantor’s name in which it has executed this Security Agreement is the exact name as it appears in such Grantor’s organizational documents, as amended, as filed with such Grantor’s jurisdiction of organization. Such Grantor has not, during the past five years, been known by or used any other corporate or fictitious name, or been a party to any merger or consolidation, or been a party to any acquisition.

 

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3.7. Letter-of-Credit Rights and Chattel Paper. Exhibit C lists (i) all Chattel Paper of such Grantor and (ii) all Letter-of-Credit Rights of such Grantor, to the extent such Letter-of-Credit Rights individually or in the aggregate have a value in excess of $2,000,000. All action by such Grantor necessary or desirable to protect and perfect the Collateral Agent’s Lien on each item listed on Exhibit C (including the delivery of all originals and the placement of a legend on all Chattel Paper as required hereunder) has been duly taken. The Collateral Agent will have a fully perfected second priority security interest in the Collateral listed on Exhibit C, subject only to Liens permitted under Section 4.1(e).

3.8. Accounts and Chattel Paper. The names of the obligors, amounts owing, due dates and other information with respect to its Accounts and Chattel Paper are and will be correctly stated in all records of such Grantor relating thereto and in all invoices and Collateral Reports with respect thereto furnished to the Collateral Agent by such Grantor from time to time. As of the time when each Account or each item of Chattel Paper arises, such Grantor shall be deemed to have represented and warranted that such Account or Chattel Paper, as the case may be, and all records relating thereto, are genuine and in all respects what they purport to be.

3.9. [Reserved].

3.10. Intellectual Property. Such Grantor does not have any interest in, or title to, any Patent, Trademark or Copyright except as set forth in Exhibit D. This Security Agreement is effective to create a valid and continuing Lien and, upon filing of appropriate financing statements in the offices listed on Exhibit H and Confirmatory Grants of Security Interest with respect to such Grantor’s Patents, Trademarks and Copyrights in the United States Copyright Office or the United States Patent and Trademark Office, as applicable, fully perfected second priority security interests in favor of the Collateral Agent on such Grantor’s Patents, Trademarks and Copyrights. Such perfected security interests are enforceable as such as against any and all creditors of and purchasers from such Grantor, and all action necessary or desirable, other than the filing of financing statements and Confirmatory Grants of Security Interest, to protect and perfect the Collateral Agent’s Lien on such Grantor’s Patents, Trademarks and Copyrights has been duly taken.

3.11. Filing Requirements. None of its Equipment is covered by any certificate of title, except for the vehicles described in Part I of Exhibit E. None of the Collateral owned by it is of a type for which security interests or liens may be perfected by filing under any federal statute except for (a) the vehicles described in Part II of Exhibit E and (b) Patents, Trademarks and Copyrights held by such Grantor and described in Exhibit D. The legal description, county and street address of each property on which any Fixtures are located is set forth in Exhibit F together with the name and address of the record owner of each such property.

3.12. No Financing Statements, Security Agreements. No financing statement or security agreement describing all or any portion of the Collateral which has not lapsed or been terminated naming such Grantor as debtor has been filed or is of record in any jurisdiction except (a) for financing statements or security agreements naming the Collateral Agent on behalf of the Secured Parties as the secured party and (b) as permitted by Section 4.1(e).

 

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3.13. Pledged Collateral.

 

  (a) Exhibit G sets forth a complete and accurate list of all Pledged Collateral owned by such Grantor. Such Grantor is the direct, sole beneficial owner and sole holder of record of the Pledged Collateral listed on Exhibit G as being owned by it, free and clear of any Liens, except for the security interest granted to the Collateral Agent for the benefit of the Secured Parties hereunder and except for the liens granted pursuant to the First Lien Credit Agreement. Such Grantor further represents and warrants that (i) all Pledged Collateral owned by it constituting an Equity Interest has been (to the extent such concepts are relevant with respect to such Pledged Collateral) duly authorized and validly issued, and is fully paid and non-assessable, (ii) with respect to any certificates delivered to the Collateral Agent representing an Equity Interest, either such certificates are Securities as defined in Article 8 of the UCC as a result of actions by the issuer or otherwise, or, if such certificates are not Securities, such Grantor has so informed the Collateral Agent so that the Collateral Agent may take steps to perfect its security interest therein as a General Intangible, (iii) all such Pledged Collateral held by a securities intermediary is covered by a control agreement among such Grantor, the securities intermediary and the Collateral Agent pursuant to which the Collateral Agent has Control and (iv) all Pledged Collateral which represents Indebtedness owed to such Grantor has been duly authorized, authenticated or issued and delivered by the issuer of such Indebtedness, is the legal, valid and binding obligation of such issuer and such issuer is not in default thereunder.

 

  (b) In addition, (i) none of the Pledged Collateral owned by it has been issued or transferred in violation of the securities registration, securities disclosure or similar laws of any jurisdiction to which such issuance or transfer may be subject, (ii) there are existing no options, warrants, calls or commitments of any character whatsoever relating to such Pledged Collateral or which obligate the issuer of any Equity Interest included in the Pledged Collateral to issue additional Equity Interests, and (iii) no consent, approval, authorization, or other action by, and no giving of notice, filing with, any governmental authority or any other Person is required for the pledge by such Grantor of such Pledged Collateral pursuant to this Security Agreement or for the execution, delivery and performance of this Security Agreement by such Grantor, or for the exercise by the Collateral Agent of the voting or other rights provided for in this Security Agreement or for the remedies in respect of the Pledged Collateral pursuant to this Security Agreement, except as may be required in connection with such disposition by laws affecting the offering and sale of securities generally.

 

  (c) Except as set forth in Exhibit G, such Grantor owns 100% of the issued and outstanding Equity Interests which constitute Pledged Collateral owned by it and none of the Pledged Collateral which represents Indebtedness owed to such Grantor is subordinated in right of payment to other Indebtedness or subject to the terms of an indenture.

3.14. Commercial Tort Claims. All of such Grantor’s Commercial Tort Claims are listed on Exhibit J, as supplemented from time to time.

 

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ARTICLE IV

COVENANTS

From the date of this Security Agreement, and thereafter until this Security Agreement is terminated, each Grantor agrees that:

4.1. General.

 

  (a) Collateral Records. Such Grantor will maintain complete and accurate books and records with respect to the Collateral owned by it, and furnish to the Collateral Agent, with sufficient copies for each of the Secured Parties, such reports relating to such Collateral as the Collateral Agent shall from time to time request.

 

  (b) Authorization to File Financing Statements; Ratification. Such Grantor hereby authorizes the Collateral Agent to file, and if requested will deliver to the Collateral Agent, all financing statements and other documents and take such other actions as may from time to time be requested by the Collateral Agent in order to maintain a second priority perfected security interest in and, if applicable, Control of, the Collateral owned by such Grantor. Any financing statement filed by the Collateral Agent may be filed in any filing office in any UCC jurisdiction and may (i) indicate such Grantor’s Collateral (1) as all assets of the Grantor or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the UCC or such jurisdiction, or (2) by any other description which reasonably approximates the description contained in this Security Agreement, and (ii) contain any other information required by part 5 of Article 9 of the UCC for the sufficiency or filing office acceptance of any financing statement or amendment, including (A) whether such Grantor is an organization, the type of organization and any organization identification number issued to such Grantor, and (B) in the case of a financing statement filed as a fixture filing or indicating such Grantor’s Collateral as as-extracted collateral or timber to be cut, a sufficient description of real property to which the Collateral relates. Such Grantor also agrees to furnish any such information to the Collateral Agent promptly upon request. Such Grantor also ratifies its authorization for the Collateral Agent to have filed in any UCC jurisdiction any initial financing statements or amendments thereto if filed prior to the date hereof.

 

  (c) Further Assurances. Such Grantor will, if so requested by the Collateral Agent, furnish to the Collateral Agent, as often as the Collateral Agent requests, statements and schedules further identifying and describing the Collateral owned by it and such other reports and information in connection with its Collateral as the Collateral Agent may reasonably request, all in such detail as the Collateral Agent may specify. Such Grantor also agrees to take any and all actions necessary to defend title to the Collateral against all persons and to defend the security interest of the Collateral Agent in its Collateral and the priority thereof against any Lien not expressly permitted hereunder.

 

  (d) Disposition of Collateral. Such Grantor will not sell, lease or otherwise dispose of the Collateral owned by it except for dispositions specifically permitted pursuant to Section 6.03 or 6.05 of the Credit Agreement.

 

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  (e) Liens. Such Grantor will not create, incur, or suffer to exist any Lien on the Collateral owned by it except (i) the security interest created by this Security Agreement, and (ii) Liens permitted pursuant to Section 6.02 of the Credit Agreement.

 

  (f) Other Financing Statements. Such Grantor will not authorize the filing of any financing statement naming it as debtor covering all or any portion of the Collateral owned by it, except as permitted by Section 4.1(e). Such Grantor acknowledges that it is not authorized to file any financing statement naming the Collateral Agent as a secured party or amendment or termination statement with respect to any financing statement without the prior written consent of the Collateral Agent, subject to such Grantor’s rights under Section 9-509(d)(2) of the UCC.

 

  (g) Locations. Such Grantor will not (i) maintain any Collateral owned by it at any location other than those locations listed on Exhibit A, (ii) otherwise change, or add to, such locations without concurrently therewith obtaining a Collateral Access Agreement for each such location to the extent required by the Credit Agreement, or (iii) change its principal place of business or chief executive office from the location identified on Exhibit A, other than as permitted by the Credit Agreement.

 

  (h) Compliance with Terms. Such Grantor will perform and comply with all obligations in respect of the Collateral owned by it and all agreements to which it is a party or by which it is bound relating to such Collateral.

4.2. Receivables.

 

  (a) Certain Agreements on Receivables. Such Grantor will not make or agree to make any discount, credit, rebate or other reduction in the original amount owing on a Receivable or accept in satisfaction of a Receivable less than the original amount thereof, except that, prior to the occurrence of an Event of Default, such Grantor may reduce the amount of Accounts arising from the sale of Inventory in accordance with its present policies and in the ordinary course of business.

 

  (b) Collection of Receivables. Except as otherwise provided in this Security Agreement, such Grantor will collect and enforce, at such Grantor’s sole expense, all amounts due or hereafter due to such Grantor under the Receivables owned by it.

 

  (c) Delivery of Invoices. Such Grantor will deliver to the Collateral Agent, immediately upon its request after the occurrence and during the continuation of an Event of Default, duplicate invoices with respect to each Account owned by it bearing such language of assignment as the Collateral Agent shall specify.

 

  (d) [Reserved.]

 

  (e) Electronic Chattel Paper. Such Grantor shall take all steps necessary to grant the Collateral Agent Control of all electronic chattel paper in accordance with the UCC and all “transferable records” as defined in each of the Uniform Electronic Transactions Act and the Electronic Signatures in Global and National Commerce Act.

 

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4.3. Inventory and Equipment.

 

  (a) Maintenance of Goods. Such Grantor will do all things necessary to maintain, preserve, protect and keep its Inventory and the Equipment in good repair and working and saleable condition, except for damaged or defective goods arising in the ordinary course of such Grantor’s business and except for ordinary wear and tear in respect of the Equipment.

 

  (b) Returned Inventory. If an Account Debtor returns any Inventory to such Grantor when no Event of Default exists, then such Grantor shall promptly determine the reason for such return and shall issue a credit memorandum to the Account Debtor in the appropriate amount. Such Grantor shall immediately report to the Collateral Agent any return involving an amount in excess of $2,000,000. Each such report shall indicate the reasons for the returns and the locations and condition of the returned Inventory. In the event any Account Debtor returns Inventory to such Grantor when an Event of Default exists, such Grantor, upon the request of the Collateral Agent, shall: (i) hold the returned Inventory in trust for the Collateral Agent; (ii) segregate all returned Inventory from all of its other property; (iii) dispose of the returned Inventory solely according to the Collateral Agent’s written instructions; and (iv) not issue any credits or allowances with respect thereto without the Collateral Agent’s prior written consent. All returned Inventory shall be subject to the Collateral Agent’s Liens thereon.

 

  (c) Inventory Count; Perpetual Inventory System. Such Grantor will conduct a physical count of its Inventory at least once per fiscal year of such Grantor, and after and during the continuation of an Event of Default, at such other times as the Collateral Agent requests. Such Grantor, at its own expense, shall deliver to the Collateral Agent the results of each physical verification, which such Grantor has made, or has caused any other Person to make on its behalf, of all or any portion of its Inventory. Such Grantor will maintain a perpetual inventory reporting system at all times.

 

  (d) Equipment. Such Grantor shall promptly inform the Collateral Agent of any additions to or deletions from its Equipment which individually exceed $3,000,000. Such Grantor shall not permit any Equipment to become a fixture with respect to real property or to become an accession with respect to other personal property with respect to which real or personal property the Collateral Agent does not have a Lien. Such Grantor will not, without the Collateral Agent’s prior written consent, alter or remove any identifying symbol or number on any of such Grantor’s Equipment constituting Collateral.

 

  (e) Titled Vehicles. Such Grantor will give the Collateral Agent notice of its acquisition of any vehicle covered by a certificate of title and deliver to the Collateral Agent, upon request, the original of any vehicle title certificate and provide and/or file all other documents or instruments necessary to have the Lien of the Collateral Agent noted on any such certificate or with the appropriate state office.

 

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4.4. Delivery of Instruments, Securities, Chattel Paper and Documents. Such Grantor will (a) deliver to the Collateral Agent immediately upon ABL Obligations Payment Date (as defined in the Intercreditor Agreement) the originals of all Chattel Paper, Securities and Instruments constituting Collateral owned by it (if any then exist), (b) hold in trust for the Collateral Agent upon receipt and immediately thereafter deliver to the Collateral Agent any such Chattel Paper, Securities and Instruments constituting Collateral, (c) upon the Collateral Agent’s request, deliver to the Collateral Agent (and thereafter hold in trust for the Collateral Agent upon receipt and immediately deliver to the Collateral Agent) any Document evidencing or constituting Collateral and (d) upon the Collateral Agent’s request, deliver to the Collateral Agent a duly executed amendment to this Security Agreement, in the form of Exhibit I hereto (the “Amendment”), pursuant to which such Grantor will pledge such additional Collateral. Such Grantor hereby authorizes the Collateral Agent to attach each Amendment to this Security Agreement and agrees that all additional Collateral owned by it set forth in such Amendments shall be considered to be part of the Collateral.

4.5. Uncertificated Pledged Collateral. Such Grantor will permit the Collateral Agent from time to time to cause the appropriate issuers (and, if held with a securities intermediary, such securities intermediary) of uncertificated securities or other types of Pledged Collateral owned by it not represented by certificates to mark their books and records with the numbers and face amounts of all such uncertificated securities or other types of Pledged Collateral not represented by certificates and all rollovers and replacements therefor to reflect the Lien of the Collateral Agent granted pursuant to this Security Agreement. Within sixty (60) days (or such later date as may be agreed to by the Collateral Agent in its sole discretion) of the Closing Date, with respect to any Pledged Collateral owned by it, such Grantor will take any actions necessary to cause (a) the issuers of uncertificated securities which are Pledged Collateral and (b) any securities intermediary which is the holder of any such Pledged Collateral, to cause the Collateral Agent to have and retain Control over such Pledged Collateral. Without limiting the foregoing, such Grantor will, with respect to any such Pledged Collateral held with a securities intermediary (including in connection with a Securities Account), on or within sixty (60) days (or such later date as may be agreed to by the Collateral Agent in its sole discretion) of the Closing Date, cause such securities intermediary to enter into a control agreement with the Collateral Agent, in form and substance satisfactory to the Collateral Agent, giving the Collateral Agent Control.

4.6. Pledged Collateral.

 

  (a) Changes in Capital Structure of Issuers. Such Grantor will not (i) permit or suffer any issuer of an Equity Interest constituting Pledged Collateral owned by it to dissolve, merge, liquidate, retire any of its Equity Interests or other Instruments or Securities evidencing ownership, reduce its capital, sell or encumber all or substantially all of its assets (except for Liens permitted pursuant to Section 6.02 of the Credit Agreement and sales of assets permitted pursuant to Section 4.1(d)) or merge or consolidate with any other entity; provided that this Section 4.6(a) shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.03 of the Credit Agreement, or (ii) vote any such Pledged Collateral in favor of any of the foregoing.

 

  (b) Issuance of Additional Securities. Such Grantor will not permit or suffer the issuer of an Equity Interest constituting Pledged Collateral owned by it to issue additional Equity Interests, any right to receive the same or any right to receive earnings, except to such Grantor or any other Grantor.

 

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  (c) Registration of Pledged Collateral. Such Grantor will permit any registerable Pledged Collateral owned by it to be registered in the name of the Collateral Agent or its nominee at any time at the option of the Collateral Agent or Required Lenders.

 

  (d) Exercise of Rights in Pledged Collateral.

(i) Without in any way limiting the foregoing and subject to clause below, such Grantor shall have the right to exercise all voting rights or other rights relating to the Pledged Collateral and other Equity Interests owned by it for all purposes not inconsistent with this Security Agreement, the Credit Agreement or any other Loan Document; provided however, that no vote or other right shall be exercised or action taken which would have the effect of impairing the rights of the Collateral Agent in respect of such Pledged Collateral and other Equity Interests.

(ii) Such Grantor will permit the Collateral Agent or its nominee at any time after the occurrence and during the continuance of an Event of Default, without notice, to exercise all voting rights or other rights relating to the Pledged Collateral and other Equity Interests owned by it, including, without limitation, exchange, subscription or any other rights, privileges, or options pertaining to any Equity Interest or Investment Property constituting such Pledged Collateral and other Equity Interests as if it were the absolute owner thereof.

(iii) Such Grantor shall be entitled to collect and receive for its own use all cash dividends and interest paid in respect of the Pledged Collateral and other Equity Interests owned by it to the extent not in violation of the Credit Agreement other than any of the following distributions and payments (collectively referred to as the “Excluded Payments”): (A) dividends and interest paid or payable other than in cash in respect of such Pledged Collateral, and instruments and other property received, receivable or otherwise distributed in respect of, or in exchange for, any Pledged Collateral and other Equity Interests; (B) dividends and other distributions paid or payable in cash in respect of such Pledged Collateral in connection with a partial or total liquidation or dissolution or in connection with a reduction of capital, capital surplus or paid-in capital of an issuer; and (C) cash paid, payable or otherwise distributed, in respect of principal of, or in redemption of, or in exchange for, such Pledged Collateral and other Equity Interests; provided however, that until actually paid, all rights to such distributions shall remain subject to the Lien created by this Security Agreement; and

 

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(iv) All Excluded Payments and all other distributions in respect of any of the Pledged Collateral and other Equity Interests owned by such Grantor, whenever paid or made, shall be delivered to the Collateral Agent to hold as Collateral and shall, if received by such Grantor, be received in trust for the benefit of the Collateral Agent, be segregated from the other property or funds of such Grantor, and be forthwith delivered to the Collateral Agent as Collateral in the same form as so received (with any necessary endorsement).

4.7. Intellectual Property.

 

  (a) Such Grantor will use its reasonable commercial efforts to secure all consents and approvals necessary or appropriate for the assignment to or benefit of the Collateral Agent of any License held by such Grantor and to enforce the security interests granted hereunder.

 

  (b) Such Grantor shall notify the Collateral Agent immediately if it knows or has reason to know that any application or registration relating to any Patent, Trademark or Copyright (now or hereafter existing) may become abandoned or dedicated, or of any adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office or any court) regarding such Grantor’s ownership of any Patent, Trademark or Copyright, its right to register the same, or to keep and maintain the same.

 

  (c) In no event shall such Grantor, either directly or through any agent, employee, licensee or designee, file an application for the registration of any Patent, Trademark or Copyright with the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency without giving the Collateral Agent prior written notice thereof, and, upon request of the Collateral Agent, such Grantor shall execute and deliver any and all security agreements as the Collateral Agent may request to evidence a second priority security interest of the Collateral Agent on such Patent, Trademark or Copyright, and the General Intangibles of such Grantor relating thereto or represented thereby.

 

  (d) Except as permitted by Section 6.05(a)(iii) of the Credit Agreement, such Grantor shall take all actions necessary or requested by the Collateral Agent to maintain and pursue each application, to obtain the relevant registration and to maintain the registration of each of its Patents, Trademarks and Copyrights (now or hereafter existing) but excluding works protectable by copyright for which application for registration has not been made, including the filing of applications for renewal, affidavits of use, affidavits of noncontestability and opposition and interference and cancellation proceedings.

 

  (e)

Such Grantor shall, if it shall reasonably determine that such Patent, Trademark or Copyright is material to the conduct of its business or operations, promptly sue for infringement, misappropriation or dilution and to recover any and all damages for such infringement, misappropriation or dilution, and shall take such other actions as the Collateral Agent shall deem appropriate under the circumstances to

 

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  protect such Patent, Trademark or Copyright. In the event that such Grantor institutes suit because any of its Patents, Trademarks or Copyrights constituting Collateral is infringed upon, or misappropriated or diluted by a third party, such Grantor shall comply with Section 4.8.

4.8. Commercial Tort Claims. Such Grantor shall promptly, and in any event within five Business Days after the same is acquired by it, notify the Collateral Agent of any Commercial Tort Claim (as defined in the UCC) acquired by it in an amount in excess of $250,000 and, unless the Collateral Agent otherwise consents, such Grantor shall enter into an amendment to this Security Agreement, in the form of Exhibit I hereto, granting to Collateral Agent a second priority security interest in such Commercial Tort Claim.

4.9. Letter-of-Credit Rights. If such Grantor is or becomes the beneficiary of a letter of credit, during the occurrence and continuance of an Event of Default, it shall promptly, and in any event within two Business Days after the later of (x) becoming a beneficiary and (y) the occurrence of such Event of Default, notify the Collateral Agent of such Letter of Credit and use its commercially reasonable efforts to cause the issuer and/or confirmation bank to (i) consent to the assignment of any Letter-of-Credit Rights to the Collateral Agent and (ii) agree following the ABL Obligations Payment Date (as defined in the Intercreditor Agreement) to direct all payments thereunder to a Deposit Account at the Collateral Agent or subject to a Deposit Account Control Agreement, all in form and substance reasonably satisfactory to the Collateral Agent.

4.10. Federal, State or Municipal Claims. Such Grantor will promptly notify the Collateral Agent of any Collateral which constitutes a claim in an amount in excess of $250,000 against the United States government or any state or local government or any instrumentality or agency thereof, the assignment of which claim is restricted by federal, state or municipal law.

4.11. No Interference. Such Grantor agrees that it will not interfere with any right, power and remedy of the Collateral Agent provided for in this Security Agreement or now or hereafter existing at law or in equity or by statute or otherwise, or the exercise or beginning of the exercise by the Collateral Agent of any one or more of such rights, powers or remedies.

4.12. Insurance.

 

  (a) In the event any Collateral is located in any area that has been designated by the Federal Emergency Management Agency as a “Special Flood Hazard Area,” such Grantor shall purchase and maintain flood insurance on such Collateral (including any personal property which is located on any real property leased by such Loan Party within a “Special Flood Hazard Area”). The amount of flood insurance required by this Section shall at a minimum comply with applicable law, including the Flood Disaster Protection Act of 1973, as amended.

 

  (b)

All insurance policies required hereunder and under Section 5.04 of the Credit Agreement shall name the Collateral Agent (for the benefit of the Collateral Agent and the other Secured Parties) as an additional insured or as loss payee, as applicable, and shall contain loss payable clauses or mortgagee clauses, through endorsements in form and substance satisfactory to the Collateral Agent, which provide that: (i) all proceeds thereunder with respect to any Collateral shall be

 

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  payable to the Collateral Agent; (ii) no such insurance shall be affected by any act or neglect of the insured or owner of the property described in such policy; and (iii) such policy and loss payable clauses or mortgagee clauses may be canceled, amended, or terminated only upon at least thirty days prior written notice given to the Collateral Agent.

 

  (c) All premiums on any such insurance shall be paid when due by such Grantor, and copies of the policies delivered to the Collateral Agent. If such Grantor fails to obtain any insurance as required by this Section, the Collateral Agent may obtain such insurance at the Borrower’s expense. By purchasing such insurance, the Collateral Agent shall not be deemed to have waived any Default arising from the Grantor’s failure to maintain such insurance or pay any premiums therefor.

4.13. Collateral Access Agreements. Such Grantor shall use commercially reasonable efforts to obtain a Collateral Access Agreement, from the lessor of each leased property, mortgagee of owned property or bailee or consignee with respect to any warehouse, processor or converter facility or other location where Collateral is stored or located, which agreement or letter shall provide access rights, contain a waiver or subordination of all Liens or claims that the landlord, mortgagee, bailee or consignee may assert against the Collateral at that location, and shall otherwise be reasonably satisfactory in form and substance to the Collateral Agent. After the Closing Date, no real property or warehouse space shall be leased by such Grantor and no Inventory shall be shipped to a processor or converter under arrangements established after the Closing Date, unless such Grantor uses commercially reasonable efforts to obtain a satisfactory Collateral Access Agreement with respect to such location. Such Grantor shall timely and fully pay and perform its obligations under all leases and other agreements with respect to each leased location or third party warehouse where any Collateral is or may be located.

4.14. Deposit Account Control Agreements. (a) Within sixty (60) days (or such later date as may be agreed to by the Collateral Agent in its sole discretion) of the Closing Date, such Grantor will provide to the Collateral Agent a Deposit Account Control Agreement with respect to each Material Deposit Account of such Grantor duly executed on behalf of the applicable financial institution at which such Material Deposit Account is maintained.

(b) Grantors will not permit the aggregate amount of the average monthly balances at any time in Deposit Accounts other than (i) Material Deposit Accounts, (ii) Collateral Deposit Accounts, (iii) Deposit Accounts at a depositary bank that is a Lender (but only for so long as such depositary bank is a Lender), or (iv) Deposit Accounts subject to a duly executed and effective Deposit Account Control Agreement in favor of the Collateral Agent, to exceed $500,000.

4.15. Change of Name or Location; Change of Fiscal Year. Such Grantor shall not (a) change its name as it appears in official filings in the state of its incorporation or organization, (b) change its chief executive office, principal place of business, mailing address, corporate offices or warehouses or locations at which Collateral is held or stored, or the location of its records concerning the Collateral as set forth in the Security Agreement, (c) change the type of entity that it is, (d) change its organization identification number, if any, issued by its state of incorporation or other organization, or (e) change its state of incorporation or organization, in each case, unless the Collateral Agent shall have received at least thirty days prior written notice of such change and such Grantor certifies that either (1) such change will not adversely affect the validity, perfection or priority of the Collateral

 

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Agent’s security interest in the Collateral, or (2) any reasonable action requested by the Collateral Agent in connection therewith has been completed or taken (including any action to continue the perfection of any Liens in favor of the Collateral Agent, on behalf of Secured Parties, in any Collateral) as acknowledged by the Collateral Agent in writing, provided that any new location shall be in the continental U.S. Such Grantor shall not change its fiscal year which currently ends on December 31.

4.16. [Reserved].

4.17. Updating of Exhibits to the Security Agreement. The Borrower will provide to the Collateral Agent, concurrently with the delivery of the Compliance Certificate as required by Section 5.01(d) of the Credit Agreement, updated versions of the Exhibits to this Security Agreement (provided that if there have been no changes to any such Exhibits since the previous updating thereof required hereby, the Borrower shall indicate that there has been “no change” to the applicable Exhibit(s)).

ARTICLE V

EVENTS OF DEFAULT AND REMEDIES

5.1. Events of Default. The occurrence of any one or more of the following events shall constitute an Event of Default hereunder:

(a) Any representation or warranty made by or on behalf of any Grantor under or in connection with this Security Agreement shall be materially false as of the date on which made.

(b) The breach by any Grantor of any of the terms or provisions of Article IV or Article VII.

(c) The breach by any Grantor (other than a breach which constitutes an Event of Default under any other Section of this Article V) of any of the terms or provisions of this Security Agreement which is not remedied within ten days after such breach.

(d) The occurrence of any “Event of Default” under, and as defined in, the Credit Agreement.

(e) Any Equity Interest which is included within the Collateral shall at any time constitute a Security or the issuer of any such Equity Interest shall take any action to have such interests treated as a Security unless (i) all certificates or other documents constituting such Security have been delivered to the Collateral Agent and such Security is properly defined as such under Article 8 of the UCC of the applicable jurisdiction, whether as a result of actions by the issuer thereof or otherwise, or (ii) upon the later of (A) the sixtieth (60th) day (or such later date as may be agreed to by the Collateral Agent in its sole discretion) after the Closing Date or (B) the date on which such Equity Interest constituted a Security or any action was taken to have such Equity Interest treated as a Security, the Collateral Agent shall have entered into a control agreement, in form and substance satisfactory to the Collateral Agent, with the issuer of such Security or with a securities intermediary relating to such Security and such Security is defined as such under Article 8 of the UCC of the applicable jurisdiction, whether as a result of actions by the issuer thereof or otherwise.

 

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5.2. Remedies.

 

  (a) Upon the occurrence of an Event of Default, the Collateral Agent may, and at the request of the Required Lenders shall, exercise any or all of the following rights and remedies:

 

  (i) those rights and remedies provided in this Security Agreement, the Credit Agreement, or any other Loan Document; provided that this Section 5.2(a) shall not be understood to limit any rights or remedies available to the Collateral Agent and the other Secured Parties prior to an Event of Default;

 

  (ii) those rights and remedies available to a secured party under the UCC (whether or not the UCC applies to the affected Collateral) or under any other applicable law (including, without limitation, any law governing the exercise of a bank’s right of setoff or bankers’ lien) when a debtor is in default under a security agreement;

 

  (iii) without in any way limiting the provisions set forth in Article VII, give notice of sole control or any other instruction under any Deposit Account Control Agreement or other control agreement with any securities intermediary and take any action therein with respect to such Collateral;

 

  (iv) without notice (except as specifically provided in Section 8.1 or elsewhere herein), demand or advertisement of any kind to any Grantor or any other Person, enter the premises of any Grantor where any Collateral is located (through self-help and without judicial process) to collect, receive, assemble, process, appropriate, sell, lease, assign, grant an option or options to purchase or otherwise dispose of, deliver, or realize upon, the Collateral or any part thereof in one or more parcels at public or private sale or sales (which sales may be adjourned or continued from time to time with or without notice and may take place at any Grantor’s premises or elsewhere), for cash, on credit or for future delivery without assumption of any credit risk, and upon such other terms as the Collateral Agent may deem commercially reasonable; and

 

  (v) concurrently with written notice to the applicable Grantor, transfer and register in its name or in the name of its nominee the whole or any part of the Pledged Collateral, to exchange certificates or instruments representing or evidencing Pledged Collateral for certificates or instruments of smaller or larger denominations, to exercise the voting and all other rights as a holder with respect thereto, to collect and receive all cash dividends, interest, principal and other distributions made thereon and to otherwise act with respect to the Pledged Collateral as though the Collateral Agent was the outright owner thereof.

 

  (b) The Collateral Agent, on behalf of the Secured Parties, 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.

 

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  (c) The Collateral Agent shall have the right upon any such public sale or sales and, to the extent permitted by law, upon any such private sale or sales, to purchase for the benefit of the Collateral Agent and the other Secured Parties, the whole or any part of the Collateral so sold, free of any right of equity redemption, which equity redemption the Grantor hereby expressly releases.

 

  (d) Until the Collateral Agent is able to effect a sale, lease, or other disposition of Collateral, the Collateral Agent shall have the right to hold or use Collateral, or any part thereof, to the extent that it deems appropriate for the purpose of preserving Collateral or its value or for any other purpose deemed appropriate by the Collateral Agent. The Collateral Agent may, if it so elects, seek the appointment of a receiver or keeper to take possession of Collateral and to enforce any of the Collateral Agent’s remedies (for the benefit of the Collateral Agent and other Secured Parties), with respect to such appointment without prior notice or hearing as to such appointment.

 

  (e) [Reserved]

 

  (f) Notwithstanding the foregoing, neither the Collateral Agent nor any other Secured Party shall be required to (i) make any demand upon, or pursue or exhaust any of their rights or remedies against, any Grantor, any other obligor, guarantor, pledgor or any other Person with respect to the payment of the Secured Obligations or to pursue or exhaust any of their rights or remedies with respect to any Collateral therefor or any direct or indirect guarantee thereof, (ii) marshal the Collateral or any guarantee of the Secured Obligations or to resort to the Collateral or any such guarantee in any particular order, or (iii) effect a public sale of any Collateral.

 

  (g) Each Grantor recognizes that the Collateral Agent may be unable to effect a public sale of any or all the Pledged Collateral and may be compelled to resort to one or more private sales thereof in accordance with clause (a) above. Each Grantor also acknowledges that any private sale may result in prices and other terms less favorable to the seller than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall not be deemed to have been made in a commercially unreasonable manner solely by virtue of such sale being private. The Collateral Agent shall be under no obligation to delay a sale of any of the Pledged Collateral for the period of time necessary to permit any Grantor or the issuer of the Pledged Collateral to register such securities for public sale under the Securities Act of 1933, as amended, or under applicable state securities laws, even if the applicable Grantor and the issuer would agree to do so.

5.3. Grantor’s Obligations Upon Default. Upon the request of the Collateral Agent after the occurrence of an Event of Default, each Grantor will:

(a) assemble and make available to the Collateral Agent the Collateral and all books and records relating thereto at any place or places specified by the Collateral Agent, whether at a Grantor’s premises or elsewhere;

 

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(b) permit the Collateral Agent, by the Collateral Agent’s representatives and agents, to enter, occupy and use any premises where all or any part of the Collateral, or the books and records relating thereto, or both, are located, to take possession of all or any part of the Collateral or the books and records relating thereto, or both, to remove all or any part of the Collateral or the books and records relating thereto, or both, and to conduct sales of the Collateral, without any obligation to pay the Grantor for such use and occupancy; and

(c) at its own expense, cause the independent certified public accountants then engaged by each Grantor to prepare and deliver to the Collateral Agent and each other Secured Party, at any time, and from time to time, promptly upon the Collateral Agent’s request, the following reports with respect to the applicable Grantor: (i) a reconciliation of all Accounts; (ii) an aging of all Accounts; (iii) trial balances; and (iv) a test verification of such Accounts.

5.4. Grant of Intellectual Property License. For the purpose of enabling the Collateral Agent to exercise the rights and remedies under this Article V, each Grantor hereby (a) grants to the Collateral Agent, for the benefit of the Collateral Agent and the other Secured Parties, an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to any Grantor) to use, license or sublicense any intellectual property rights now owned or hereafter acquired by such Grantor, and wherever the same may be located, and including in such license access to 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 and (b) irrevocably agrees that the Collateral Agent may sell any of such Grantor’s Inventory directly to any person, including without limitation persons who have previously purchased the Grantor’s Inventory from such Grantor and in connection with any such sale or other enforcement of the Collateral Agent’s rights under this Security Agreement, may sell Inventory which bears any Trademark owned by or licensed to such Grantor and any Inventory that is covered by any Copyright owned by or licensed to such Grantor and the Collateral Agent may finish any work in process and affix any Trademark owned by or licensed to such Grantor and sell such Inventory as provided herein. Notwithstanding the foregoing, the Collateral Agent agrees not to exercise any rights or remedies granted pursuant to this Section 5.4 unless an Event of Default has occurred and is continuing.

ARTICLE VI

ACCOUNT VERIFICATION; ATTORNEY IN FACT; PROXY

6.1. Account Verification. The Collateral Agent may, not more frequently than once during any 12-month period (or, during the occurrence and continuance of an Event of Default, at any time), in the Collateral Agent’s own name, in the name of a nominee of the Collateral Agent, or in the name of any Grantor communicate (by mail, telephone, facsimile or otherwise) with the Account Debtors of any such Grantor, parties to contracts with any such Grantor and obligors in respect of Instruments of any such Grantor to verify with such Persons, to the Collateral Agent’s satisfaction, the existence, amount, terms of, and any other matter relating to, Accounts, Instruments, Chattel Paper, payment intangibles and/or other Receivables.

6.2. Authorization for Secured Party to Take Certain Action.

 

  (a)

Each Grantor irrevocably authorizes the Collateral Agent at any time and from time to time in the sole discretion of the Collateral Agent and appoints the Collateral Agent as its attorney-in-fact (i) to execute on behalf of such Grantor as debtor and to file financing statements necessary or desirable in the Collateral

 

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  Agent’s sole discretion to perfect and to maintain the perfection and priority of the Collateral Agent’s security interest in the Collateral, (ii) to endorse and collect any cash proceeds of the Collateral, (iii) to file a carbon, photographic or other reproduction of this Security Agreement or any financing statement with respect to the Collateral as a financing statement and to file any other financing statement or amendment of a financing statement (which does not add new collateral or add a debtor) in such offices as the Collateral Agent in its sole discretion deems necessary or desirable to perfect and to maintain the perfection and priority of the Collateral Agent’s security interest in the Collateral, (iv) to contact and enter into one or more agreements with the issuers of uncertificated securities which are Pledged Collateral or with securities intermediaries holding Pledged Collateral as may be necessary or advisable to give the Collateral Agent Control over such Pledged Collateral, (v) to apply the proceeds of any Collateral received by the Collateral Agent to the Secured Obligations, (vi) to discharge past due taxes, assessments, charges, fees or Liens on the Collateral (except for such Liens as are specifically permitted hereunder), (vii) to contact Account Debtors for any reason, (viii) to demand payment or enforce payment of the Receivables in the name of the Collateral Agent or such Grantor and to endorse any and all checks, drafts, and other instruments for the payment of money relating to the Receivables, (ix) to sign such Grantor’s name on any invoice or bill of lading relating to the Receivables, drafts against any Account Debtor of the Grantor, assignments and verifications of Receivables, (x) to exercise all of such Grantor’s rights and remedies with respect to the collection of the Receivables and any other Collateral, (xi) to settle, adjust, compromise, extend or renew the Receivables, (xii) to settle, adjust or compromise any legal proceedings brought to collect Receivables, (xiii) to prepare, file and sign such Grantor’s name on a proof of claim in bankruptcy or similar document against any Account Debtor of such Grantor, (xiv) to prepare, file and sign such Grantor’s name on any notice of Lien, assignment or satisfaction of Lien or similar document in connection with the Receivables, (xv) to change the address for delivery of mail addressed to such Grantor to such address as the Collateral Agent may designate and to receive, open and dispose of all mail addressed to such Grantor, and (xvi) to do all other acts and things necessary to carry out this Security Agreement; and such Grantor agrees to reimburse the Collateral Agent on demand for any payment made or any expense incurred by the Collateral Agent in connection with any of the foregoing; provided that this authorization shall not relieve such Grantor of any of its obligations under this Security Agreement or under the Credit Agreement.

 

  (b) All acts of said attorney or designee are hereby ratified and approved. The powers conferred on the Collateral Agent, for the benefit of the Collateral Agent and other Secured Parties, under this Section 6.2 are solely to protect the Collateral Agent’s interests in the Collateral and shall not impose any duty upon the Collateral Agent or any other Secured Party to exercise any such powers. The Collateral Agent agrees that, except for the powers granted in Section 6.2(a)(i)-(vi) and Section 6.2(a)(xvi), it shall not exercise any power or authority granted to it unless an Event of Default has occurred and is continuing.

 

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6.3. Proxy. EACH GRANTOR HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS THE COLLATERAL AGENT AS ITS PROXY AND ATTORNEY-IN-FACT (AS SET FORTH IN SECTION 6.2 ABOVE) WITH RESPECT TO ITS PLEDGED COLLATERAL, INCLUDING THE RIGHT TO VOTE SUCH PLEDGED COLLATERAL, WITH FULL POWER OF SUBSTITUTION TO DO SO. IN ADDITION TO THE RIGHT TO VOTE ANY SUCH PLEDGED COLLATERAL, THE APPOINTMENT OF THE COLLATERAL AGENT AS PROXY AND ATTORNEY-IN-FACT SHALL INCLUDE THE RIGHT TO EXERCISE ALL OTHER RIGHTS, POWERS, PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF SUCH PLEDGED COLLATERAL WOULD BE ENTITLED (INCLUDING GIVING OR WITHHOLDING WRITTEN CONSENTS OF SHAREHOLDERS, CALLING SPECIAL MEETINGS OF SHAREHOLDERS AND VOTING AT SUCH MEETINGS). SUCH PROXY SHALL BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE NECESSITY OF ANY ACTION (INCLUDING ANY TRANSFER OF ANY SUCH PLEDGED COLLATERAL ON THE RECORD BOOKS OF THE ISSUER THEREOF) BY ANY PERSON (INCLUDING THE ISSUER OF SUCH PLEDGED COLLATERAL OR ANY OFFICER OR AGENT THEREOF), UPON THE OCCURRENCE OF AN EVENT OF DEFAULT.

6.4. Nature of Appointment; Limitation of Duty. THE APPOINTMENT OF THE COLLATERAL AGENT AS PROXY AND ATTORNEY-IN-FACT IN THIS ARTICLE VI IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE UNTIL THE DATE ON WHICH THIS SECURITY AGREEMENT IS TERMINATED IN ACCORDANCE WITH SECTION 8.14. NOTWITHSTANDING ANYTHING CONTAINED HEREIN, NEITHER THE COLLATERAL AGENT, NOR ANY OTHER SECURED PARTY, NOR ANY OF THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES SHALL HAVE ANY DUTY TO EXERCISE ANY RIGHT OR POWER GRANTED HEREUNDER OR OTHERWISE OR TO PRESERVE THE SAME AND SHALL NOT BE LIABLE FOR ANY FAILURE TO DO SO OR FOR ANY DELAY IN DOING SO, EXCEPT IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION; PROVIDED THAT, IN NO EVENT SHALL THEY BE LIABLE FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.

ARTICLE VII

COLLECTION AND APPLICATION OF

COLLATERAL PROCEEDS; DEPOSIT ACCOUNTS

7.1. Collection of Receivables.

 

  (a) Within sixty (60) days (or such later date as may be agreed to by the Collateral Agent in its sole discretion) of the Closing Date, each Grantor shall execute and deliver to the Collateral Agent Deposit Account Control Agreements for each Deposit Account maintained by such Grantor into which all cash, checks or other similar payments relating to or constituting payments made in respect of Receivables will be deposited (a “Collateral Deposit Account”), which Collateral Deposit Accounts are identified as such on Exhibit B. After the Closing Date, each Grantor will comply with the terms of Section 7.2.

 

  (b)

Subject to the terms of the Intercreditor Agreement, on and after the occurrence of an Event of Default, the Collateral Agent may, and at the request of the Required Lenders shall, deliver an Activation Notice to any or all depositary

 

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  banks at which any Deposit Account (including, without limitation, any Collateral Deposit Account) subject to a Deposit Account Control Agreement is maintained, requesting that all funds in such Deposit Account(s) be swept on a daily basis into a collection account maintained by the Borrower with the Collateral Agent (the “Collection Account”).

7.2. Covenant Regarding New Deposit Accounts. Before opening or replacing any Collateral Deposit Account or a Material Deposit Account, each Grantor shall cause each bank or financial institution in which it seeks to open a Deposit Account, to enter into a Deposit Account Control Agreement with the Collateral Agent in order to give the Collateral Agent Control of such Deposit Account. In the case of Material Deposit Accounts maintained with Secured Parties, the terms of such letter shall be subject to the provisions of the Credit Agreement regarding setoffs.

ARTICLE VIII

GENERAL PROVISIONS

8.1. Waivers. The Collateral Agent shall give each Grantor reasonable notice of the time and place of any public sale or the time after which any private sale or other disposition of all or any part of the Collateral may be made. Such notice and any other notice from the Collateral Agent made pursuant hereto shall be deemed reasonable if sent to the Grantors, addressed as set forth in Article IX, at least ten days prior to (i) the date of any such public sale or (ii) the time after which any such private sale or other disposition may be made. To the maximum extent permitted by applicable law, each Grantor waives all claims, damages, and demands against the Collateral Agent or any other Secured Party arising out of the repossession, retention or sale of the Collateral, except such as arise solely out of the gross negligence or willful misconduct of the Collateral Agent or such other Secured Party as finally determined by a court of competent jurisdiction. To the extent it may lawfully do so, each Grantor absolutely and irrevocably waives and relinquishes the benefit and advantage of, and covenants not to assert against the Collateral Agent or any other Secured Party, any valuation, stay, appraisal, extension, moratorium, redemption or similar laws and any and all rights or defenses it may have as a surety now or hereafter existing which, but for this provision, might be applicable to the sale of any Collateral made under the judgment, order or decree of any court, or privately under the power of sale conferred by this Security Agreement, or otherwise. Except as otherwise specifically provided herein, each Grantor hereby waives presentment, demand, protest or any notice (to the maximum extent permitted by applicable law) of any kind in connection with this Security Agreement or any Collateral.

8.2. Limitation on Collateral Agent’s and Other Secured Parties’ Duty with Respect to the Collateral. The Collateral Agent shall have no obligation to clean up or otherwise prepare the Collateral for sale. The Collateral Agent and each other Secured Party shall use reasonable care with respect to the Collateral in its possession or under its control. Neither the Collateral Agent nor any other Secured Party shall have any other duty as to any Collateral in its possession or control or in the possession or control of any agent or nominee of the Collateral Agent or such other Secured Party, or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto. To the extent that applicable law imposes duties on the Collateral Agent to exercise remedies in a commercially reasonable manner, each Grantor acknowledges and agrees that it is commercially reasonable for the Collateral Agent (i) to fail to incur expenses deemed significant by the Collateral Agent to prepare Collateral for disposition or otherwise to transform raw material or work in process into finished goods or other finished products for disposition, (ii) to fail to obtain third party consents for access to Collateral to be disposed of,

 

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or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies against Account Debtors or other Persons obligated on Collateral or to remove Liens on or any adverse claims against Collateral, (iv) to exercise collection remedies against Account Debtors and other Persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (v) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (vi) to contact other Persons, whether or not in the same business as such Grantor, for expressions of interest in acquiring all or any portion of such Collateral, (vii) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (viii) to dispose of Collateral by utilizing internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capacity of doing so, or that match buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail markets, (x) to disclaim disposition warranties, such as title, possession or quiet enjoyment, (xi) to purchase insurance or credit enhancements to insure the Collateral Agent against risks of loss, collection or disposition of Collateral or to provide to the Collateral Agent a guaranteed return from the collection or disposition of Collateral, or (xii) to the extent deemed appropriate by the Collateral Agent, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist the Collateral Agent in the collection or disposition of any of the Collateral. Each Grantor acknowledges that the purpose of this Section 8.2 is to provide non-exhaustive indications of what actions or omissions by the Collateral Agent would be commercially reasonable in the Collateral Agent’s exercise of remedies against the Collateral and that other actions or omissions by the Collateral Agent shall not be deemed commercially unreasonable solely on account of not being indicated in this Section 8.2. Without limitation upon the foregoing, nothing contained in this Section 8.2 shall be construed to grant any rights to any Grantor or to impose any duties on the Collateral Agent that would not have been granted or imposed by this Security Agreement or by applicable law in the absence of this Section 8.2.

8.3. Compromises and Collection of Collateral. The Grantors and the Collateral Agent recognize that setoffs, counterclaims, defenses and other claims may be asserted by obligors with respect to certain of the Receivables, that certain of the Receivables may be or become uncollectible in whole or in part and that the expense and probability of success in litigating a disputed Receivable may exceed the amount that reasonably may be expected to be recovered with respect to a Receivable. In view of the foregoing, each Grantor agrees that the Collateral Agent may at any time and from time to time, if an Event of Default has occurred and is continuing, compromise with the obligor on any Receivable, accept in full payment of any Receivable such amount as the Collateral Agent in its sole discretion shall determine or abandon any Receivable, and any such action by the Collateral Agent shall be commercially reasonable so long as the Collateral Agent acts in good faith based on information known to it at the time it takes any such action.

8.4. Secured Party Performance of Debtor Obligations. Without having any obligation to do so, the Collateral Agent may perform or pay any obligation which any Grantor has agreed to perform or pay in this Security Agreement and the Grantors shall reimburse the Collateral Agent for any amounts paid by the Collateral Agent pursuant to this Section 8.4. The Grantors’ obligation to reimburse the Collateral Agent pursuant to the preceding sentence shall be a Secured Obligation payable on demand.

 

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8.5. Specific Performance of Certain Covenants. Each Grantor acknowledges and agrees that a breach of any of the covenants contained in Sections 4.1(d), 4.1(e), 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.12, 4.13, 4.14, 4.15, 5.3, or 8.6 or in Article VII will cause irreparable injury to the Collateral Agent and the other Secured Parties, that the Collateral Agent and the other Secured Parties have no adequate remedy at law in respect of such breaches and therefore agrees, without limiting the right of the Collateral Agent or the other Secured Parties to seek and obtain specific performance of other obligations of the Grantors contained in this Security Agreement, that the covenants of the Grantors contained in the Sections referred to in this Section 8.5 shall be specifically enforceable against the Grantors.

8.6. Dispositions Not Authorized. No Grantor is authorized to sell or otherwise dispose of the Collateral except as set forth in Section 4.1(d) and notwithstanding any course of dealing between any Grantor and the Collateral Agent or other conduct of the Collateral Agent, no authorization to sell or otherwise dispose of the Collateral (except as set forth in Section 4.1(d)) shall be binding upon the Collateral Agent or the other Secured Parties unless such authorization is in writing signed by the Collateral Agent with the consent or at the direction of the Required Lenders.

8.7. No Waiver; Amendments; Cumulative Remedies. No delay or omission of the Collateral Agent or any other Secured Party to exercise any right or remedy granted under this Security Agreement shall impair such right or remedy or be construed to be a waiver of any Default or an acquiescence therein, and any single or partial exercise of any such right or remedy shall not preclude any other or further exercise thereof or the exercise of any other right or remedy. No waiver, amendment or other variation of the terms, conditions or provisions of this Security Agreement whatsoever shall be valid unless in writing signed by the Collateral Agent and each Grantor and then only to the extent in such writing specifically set forth. All rights and remedies contained in this Security Agreement or by law afforded shall be cumulative and all shall be available to the Collateral Agent and the other Secured Parties until the Secured Obligations have been paid in full.

8.8. Limitation by Law; Severability of Provisions. All rights, remedies and powers provided in this Security Agreement may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law, and all the provisions of this Security Agreement are intended to be subject to all applicable mandatory provisions of law that may be controlling and to be limited to the extent necessary so that they shall not render this Security Agreement invalid, unenforceable or not entitled to be recorded or registered, in whole or in part. Any provision in this Security Agreement that is held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or invalid without affecting the remaining provisions in that jurisdiction or the operation, enforceability, or validity of that provision in any other jurisdiction, and to this end the provisions of this Security Agreement are declared to be severable.

8.9. Reinstatement. This Security Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against any Grantor for liquidation or reorganization, should any Grantor become insolvent or make an assignment for the benefit of any creditor or creditors or should a receiver or trustee be appointed for all or any significant part of any Grantor’s assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Secured 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 Secured Obligations,

 

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whether as a “voidable preference,” “fraudulent conveyance,” 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 Secured Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

8.10. Benefit of Agreement. The terms and provisions of this Security Agreement shall be binding upon and inure to the benefit of the Grantors, the Collateral Agent and the other Secured Parties and their respective successors and assigns (including all persons who become bound as a debtor to this Security Agreement), except that no Grantor shall have the right to assign its rights or delegate its obligations under this Security Agreement or any interest herein, without the prior written consent of the Collateral Agent. No sales of participations, assignments, transfers, or other dispositions of any agreement governing the Secured Obligations or any portion thereof or interest therein shall in any manner impair the Lien granted to the Collateral Agent, for the benefit of the Collateral Agent and the other Secured Parties, hereunder.

8.11. Survival of Representations. All representations and warranties of the Grantors contained in this Security Agreement shall survive the execution and delivery of this Security Agreement.

8.12. Taxes and Expenses. Any taxes (including income taxes) payable or ruled payable by Federal or State authority in respect of this Security Agreement shall be paid by the Grantors, together with interest and penalties, if any. The Grantors shall reimburse the Collateral Agent for any and all out-of-pocket expenses and internal charges (including reasonable attorneys’, auditors’ and accountants’ fees and reasonable time charges of attorneys, paralegals, auditors and accountants who may be employees of the Collateral Agent) paid or incurred by the Collateral Agent in connection with the preparation, execution, delivery, administration, collection and enforcement of this Security Agreement and in the audit, analysis, administration, collection, preservation or sale of the Collateral (including the expenses and charges associated with any periodic or special audit of the Collateral). Any and all costs and expenses incurred by the Grantors in the performance of actions required pursuant to the terms hereof shall be borne solely by the Grantors.

8.13. Headings. The title of and section headings in this Security Agreement are for convenience of reference only, and shall not govern the interpretation of any of the terms and provisions of this Security Agreement.

8.14. Termination. This Security Agreement shall continue in effect (notwithstanding the fact that from time to time there may be no Secured Obligations outstanding) until (i) the Credit Agreement has terminated pursuant to its express terms and (ii) all of the Secured Obligations have been paid and performed in full and no commitments of the Collateral Agent or the other Secured Parties which would give rise to any Secured Obligations are outstanding.

8.15. Entire Agreement. This Security Agreement embodies the entire agreement and understanding between the Grantors and the Collateral Agent relating to the Collateral and supersedes all prior agreements and understandings between the Grantors and the Collateral Agent relating to the Collateral.

 

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8.16. CHOICE OF LAW. THIS SECURITY AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

8.17. CONSENT TO JURISDICTION. EACH GRANTOR HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY U.S. FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT AND EACH GRANTOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE COLLATERAL AGENT OR ANY OTHER SECURED PARTY TO BRING PROCEEDINGS AGAINST ANY GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY GRANTOR AGAINST THE COLLATERAL AGENT OR ANY OTHER SECURED PARTY OR ANY AFFILIATE OF THE COLLATERAL AGENT OR ANY OTHER SECURED PARTY INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK, NEW YORK.

8.18. WAIVER OF JURY TRIAL. EACH GRANTOR, THE COLLATERAL AGENT AND EACH OTHER SECURED PARTY HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.

8.19. Indemnity. Each Grantor hereby agrees to indemnify the Collateral Agent and the other Secured Parties, and their respective successors, assigns, agents and employees, from and against any and all liabilities, damages, penalties, suits, costs, and expenses of any kind and nature (including, without limitation, all expenses of litigation or preparation therefor whether or not the Collateral Agent or any other Secured Party is a party thereto) imposed on, incurred by or asserted against the Collateral Agent or any other Secured Party, or their respective successors, assigns, agents and employees, in any way relating to or arising out of this Security Agreement, or the manufacture, purchase, acceptance, rejection, ownership, delivery, lease, possession, use, operation, condition, sale, return or other disposition of any Collateral (including, without limitation, latent and other defects, whether or not discoverable by the Collateral Agent or the other Secured Parties or any Grantor, and any claim for Patent, Trademark or Copyright infringement).

8.20. Counterparts. This Security Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any of the parties hereto may execute this Security Agreement by signing any such counterpart.

 

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8.21. Joinder of Additional Guarantors. The Borrower and Grantors shall cause each Subsidiary of the Borrower which, from time to time, after the date hereof shall be required to pledge any assets to the Collateral Agent for the benefit of the Secured Parties pursuant to the provisions of the Credit Agreement, to execute and deliver to the Collateral Agent a Joinder Agreement substantially in the form of Exhibit K, and upon such execution and delivery, such Subsidiary shall constitute a “Grantor” for all purposes hereunder with the same force and effect as if originally named as a Grantor herein. The execution and delivery of such Joinder Agreement shall not require the consent of any Grantor hereunder. The rights and obligations of each Grantor hereunder shall remain in full force and effect notwithstanding the addition of any new Grantor as a party to this Agreement.

ARTICLE IX

NOTICES

9.1. Sending Notices. Any notice required or permitted to be given under this Security Agreement shall be sent by United States mail, personal delivery or nationally established overnight courier service, and shall be deemed received, when received, if sent by hand or overnight courier service, or mailed by certified or registered mail and, in each case, addressed to the Grantors at the notice address set forth on Exhibit A, and to the Collateral Agent and the other Secured Parties at the addresses set forth in accordance with Section 10.01 of the Credit Agreement.

9.2. Change in Address for Notices. Each of the Grantors, the Collateral Agent and the other Secured Parties may change the address for service of notice upon it by a notice in writing to the other parties.

ARTICLE X

THE COLLATERAL AGENT

JPMorgan Chase Bank, N.A. has been appointed Collateral Agent for the Secured Parties hereunder pursuant to Article IX of the Credit Agreement. It is expressly understood and agreed by the parties to this Security Agreement that any authority conferred upon the Collateral Agent hereunder is subject to the terms of the delegation of authority made by the Secured Parties to the Collateral Agent pursuant to the Credit Agreement, and that the Collateral Agent has agreed to act (and any successor Collateral Agent shall act) as such hereunder only on the express conditions contained in such Article IX. Any successor Collateral Agent appointed pursuant to Article IX of the Credit Agreement shall be entitled to all the rights, interests and benefits of the Collateral Agent hereunder.

 

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IN WITNESS WHEREOF, the Grantors and the Collateral Agent have executed this Security Agreement as of the date first above written.

 

GRANTORS:

 

LIFETIME BRANDS, INC.

By:    
  Name:
  Title:

 

TMC ACQUISITION INC.
By:    
  Name:
  Title:

 

PFALTZGRAFF FACTORY STORES, INC.
By:    
  Name:
  Title:

 

LIFETIME DELAWARE HOLDINGS, LLC
By:    
  Name:
  Title:

Signature Page to Pledge and Security Agreement


JPMORGAN CHASE BANK, N.A., as Collateral Agent
By:    
  Name:
  Title:

Signature Page to Pledge and Security Agreement


EXHIBIT A1

(See Sections 3.2, 3.3, 3.4 and 9.1 of Security Agreement)

NOTICE ADDRESS FOR ALL GRANTORS

 

 

c/o                                                                                                                                                                          

 
Attention:                                                                                                                                                           
Facsimile:                                                                                                                                                           

INFORMATION AND COLLATERAL LOCATIONS OF {Insert name of applicable Grantor}

 

I. Name of Grantor:                                                                                                           

 

II. State of Incorporation or Organization:                                                                                  

 

III. Type of Entity:                                                                                                       

 

IV. Organizational Number assigned by State of Incorporation or Organization:                                              

 

V. Federal Identification Number:                                                                              

 

VI. Place of Business (if it has only one) or Chief Executive Office (if more than one place of business) and Mailing Address:             

 

 

 

 

 

 

Attention:                                         

 

VII. Locations of Collateral:

 

  (a) Properties Owned by the Grantor:

 

 

1  Grantors to provide information.

 

Exhibit A-1


(b) Properties Leased by the Grantor (Include Landlord’s Name):

 

(c) Public Warehouses or other Locations pursuant to Bailment or Consignment Arrangements (include name of Warehouse Operator or other Bailee or Consignee):

 

Exhibit A-2


INFORMATION AND COLLATERAL LOCATIONS OF {Insert name of applicable Grantor}

 

  I. Name of Grantor:                                                  

 

  II. State of Incorporation or Organization:                                                                  

 

  III. Type of Entity:                                                          

 

  IV. Organizational Number assigned by State of Incorporation or Organization:                                                          

 

  V. Federal Identification Number:                                                              

 

  VI. Place of Business (if it has only one) or Chief Executive Office (if more than one place of business) and Mailing Address:

 

 

 

 

 

 

Attention:                                         

 

  VII. Locations of Collateral:

 

  (a) Properties Owned by the Grantor:

 

  (b) Properties Leased by the Grantor (Include Landlord’s Name):

 

  (c) Public Warehouses or other Locations pursuant to Bailment or Consignment Arrangements (include name of Warehouse Operator or other Bailee or Consignee):

 

Exhibit A-3


EXHIBIT B

(See Section 3.5 of Security Agreement)

DEPOSIT ACCOUNTS

 




Name of Grantor

   Name of Institution    Account Number    Check here if Deposit
Account is a Collateral
Deposit Account
   Description of
Deposit Account
if not a Collateral
Deposit Account

DEPOSIT ACCOUNTS WITH LOCK BOXES

 


Name of Grantor

  
Name of Institution
  
Lock Box Number

SECURITIES ACCOUNTS

 

Name of Grantor

   Name of Institution    Account Number    Check here if Deposit
Account is a Collateral
Deposit Account
   Description of
Deposit Account
if not a Collateral
Deposit Account

 

Exhibit B-1


EXHIBIT C

(See Section 3.7 of Security Agreement)

LETTER-OF-CREDIT-RIGHTS

CHATTEL PAPER

 

Exhibit C-1


EXHIBIT D

(See Sections 3.10 and 3.11 of Security Agreement)

INTELLECTUAL PROPERTY RIGHTS

PATENTS

 

Name of Grantor

 

Patent Description

 

Patent Number

 

Issue Date

PATENT APPLICATIONS

 

Name of Grantor

 

Patent Application

 

Application Filing Date

 

Application Serial Number

TRADEMARKS

 

Name of Grantor

 

Trademark

 

Registration Date

 

Registration Number

TRADEMARK APPLICATIONS

 

Name of Grantor

 

Trademark Application

 

Application Filing Date

 

Application Serial Number

 

 

 

Exhibit D-1


COPYRIGHTS

 

Name of Grantor

 

Copyright

 

Registration Date

 

Registration Number

COPYRIGHT APPLICATIONS

 

Name of Grantor

 

Copyright Application

 

Application Filing Date

 

Application Serial Number

INTELLECTUAL PROPERTY LICENSES

 

Name of Grantor

 

Name of Agreement

 

Date of Agreement

 

Parties to Agreement

 

 

 

Exhibit D-2


EXHIBIT E

(See Section 3.11 of Security Agreement)

TITLE DOCUMENTS

 

I. Vehicles subject to certificates of title:

 

Name of Grantor

 

Description

 

Title Number

 

State Where Issued

 

II. Aircraft/engines/parts, ships, railcars and other vehicles governed by federal statute:

 

Name of Grantor

 

Description

 

Registration Number

 

 

 

Exhibit E-1


EXHIBIT F

(See Section 3.11 of Security Agreement)

FIXTURES

 

I. Legal description, county and street address of property on which Fixtures are located (by Grantor):

 

II. Name and Address of Record Owner:

 

 

 

 

 

 

 

 

 

 

 

Exhibit F-1


EXHIBIT G

(See Section 3.13 of Security Agreement and Definition of “Pledged Collateral”)

LIST OF PLEDGED COLLATERAL, SECURITIES AND OTHER INVESTMENT PROPERTY

STOCKS

 

Name of Grantor

 

Issuer

 

Certificate Number(s)

 

Number of Shares

 

Class of Stock

 

Percentage of Outstanding Shares

BONDS

 

Name of Grantor

 

Issuer

 

Number

 

Face Amount

 

Coupon Rate

 

Maturity

GOVERNMENT SECURITIES

 

Name of Grantor

 

Issuer

 

Number

 

Type

 

Face Amount

 

Coupon Rate

 

Maturity

OTHER SECURITIES OR OTHER INVESTMENT PROPERTY

(CERTIFICATED AND UNCERTIFICATED)

 

 

 

Exhibit G-1


Name of Grantor

 

Issuer

 

Description of Collateral

 

Percentage Ownership Interest

[Add description of custody accounts or arrangements with securities intermediary, if applicable]

 

 

 

Exhibit G-2


EXHIBIT H

(See Section 3.1 of Security Agreement)

OFFICES IN WHICH FINANCING STATEMENTS HAVE BEEN FILED

 

 

 

Exhibit H-1


EXHIBIT I

(See Section 4.4 and 4.8 of Security Agreement)

AMENDMENT

This Amendment, dated                     ,         , is delivered pursuant to Sections 4.4 and/or 4.8 of the Security Agreement referred to below. All defined terms herein shall have the meanings ascribed thereto or incorporated by reference in the Security Agreement. The undersigned hereby certifies that the representations and warranties in Article III of the Security Agreement are and continue to be true and correct. The undersigned further agrees that this Amendment may be attached to that certain Pledge and Security Agreement, dated                          ,         , between the undersigned, as the Grantors, and JPMorgan Chase Bank, N.A., as the Collateral Agent (the “Security Agreement”), and that the Collateral listed on Schedule I to this Amendment shall be and become a part of the Collateral referred to in said Security Agreement and shall secure all Secured Obligations referred to in said Security Agreement.

 

By:      
Name:     
Title:    

 

 

 

Exhibit I-1


SCHEDULE I TO AMENDMENT

STOCKS

 

Name of Grantor

 

Issuer

 

Certificate Number(s)

 

Number of Shares

 

Class of Stock

 

Percentage of Outstanding Shares

BONDS

 

Name of Grantor

 

Issuer

 

Number

 

Face Amount

 

Coupon Rate

 

Maturity

GOVERNMENT SECURITIES

 

Name of Grantor

 

Issuer

 

Number

 

Type

 

Face Amount

 

Coupon Rate

 

Maturity

OTHER SECURITIES OR OTHER INVESTMENT PROPERTY

(CERTIFICATED AND UNCERTIFICATED)

 

 

 

Schedule I-1


Name of Grantor

 

Issuer

 

Description of Collateral

 

Percentage Ownership Interest

[Add description of custody accounts or arrangements with securities intermediary, if applicable]

 

 

 

Schedule I-2


COMMERCIAL TORT CLAIMS

 

Name of Grantor

 

Description of Claim

 

Parties

 

Case Number; Name of Court
where Case was Filed

 

Schedule I-3


EXHIBIT J

(See “Commercial Tort Claims” Definition)

COMMERCIAL TORT CLAIMS

 

 

 

Exhibit J-1


EXHIBIT K

[Form of]

JOINDER AGREEMENT

[Name of New Grantor]

[Address of New Grantor]

[Date]

 

 

 

 

 

 

 

 

Ladies and Gentlemen:

Reference is made to the Pledge and Security Agreement (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement”; capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement), dated as of July 27, 2012, made by LIFETIME BRANDS, INC., a Delaware corporation (the “Borrower”), the Guarantors party thereto and JPMORGAN CHASE BANK, N.A., as collateral agent (in such capacity and together with any successors in such capacity, the “Collateral Agent”).

This Joinder Agreement supplements the Security Agreement and is delivered by the undersigned, [                    ] (the “New Grantor”), pursuant to Section 8.21 of the Security Agreement. The New Grantor hereby agrees to be bound as a Grantor to the Security Agreement by all of the terms, covenants and conditions set forth in the Security Agreement to the same extent that it would have been bound if it had been a signatory to the Security Agreement on the date of the Security Agreement. Without limiting the generality of the foregoing, the New Grantor hereby grants and pledges to the Collateral Agent, as collateral security for the full, prompt and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of the Secured Obligations, a Lien on and security interest in, all of its right, title and interest in, to and under the Collateral and expressly assumes all obligations and liabilities of a Grantor thereunder. The New Grantor hereby makes each of the representations and warranties and agrees to each of the covenants applicable to the Grantors contained in the Security Agreement.

 

 

Exhibit K-1


Annexed hereto are supplements to each of the schedules to the Security Agreement and the Credit Agreement, as applicable, with respect to the New Grantor. Such supplements shall be deemed to be part of the Security Agreement or the Credit Agreement, as applicable.

This Joinder Agreement and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original, but all such counterparts together shall constitute one and the same agreement.

THIS JOINDER AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.


EXHIBIT H

FORM OF OPINION OF COMPANY COUNSEL

[Attached]


 

LOGO

437 Madison Avenue

New York, New York 10022-7001

(212) 940-3000

July 27, 2012

To the Lenders, the Administrative

  Agent and the Collateral Agent referred to below

c/o JPMorgan Chase Bank, N.A.,

  as Administrative Agent

270 Park Avenue

New York, New York 10017

Ladies and Gentlemen:

We have acted as special U.S. counsel to Lifetime Brands, Inc., a Delaware corporation (the “Company”), Pfaltzgraff Factory Stores, Inc., a Delaware corporation (“Pfaltzgraff”), TMC Acquisition Inc., a Delaware corporation (“TMC”) and Lifetime Delaware Holdings, LLC, a Delaware limited liability company (“Holdings”) (the Company, Pfaltzgraff, TMC and Holdings are hereinafter sometimes referred to collectively as the “U.S. Loan Parties” and each singly as a “U.S. Loan Party”), in connection with the execution and delivery by the U.S. Loan Parties to JPMorgan Chase Bank, N.A., as Administrative Agent (when acting in such capacity, the “Administrative Agent”) and as Collateral Agent (when acting in such capacity, the “Collateral Agent”) of that certain Senior Secured Credit Agreement, dated of even date herewith (the “Credit Agreement”), by and among the Company, the Subsidiary Guarantors party thereto, the banks and other financial institutions identified therein as Lenders, the Administrative Agent and the Collateral Agent. This opinion is furnished to you pursuant to the provisions of Section 4.01(a) of the Credit Agreement. All capitalized terms not defined herein but defined in the Credit Agreement shall have the meanings given to such terms in the Credit Agreement, and if not defined therein, then the meanings given to such terms in the U.S. Security Agreement (as defined below).

In connection with this opinion letter, we have examined, among other documents, copies of the following documents in the forms executed and delivered on the date hereof (collectively, the “Loan Documents”):

1. The Credit Agreement;

2. The Note, dated of even date herewith, from the Company made payable to the order of JPMorgan Chase Bank, N.A. in the original principal amount of $29,400,000;

3. The Note, dated of even date herewith, from the Company made payable to the order of Sovereign Bank in the original principal amount of $5,600,000; and

4. A certain Pledge and Security Agreement, dated of even date herewith (the “U.S. Security Agreement”), by and between the Company, the Subsidiaries of the Company listed on the signature pages thereto (together with the Company, the “U.S. Grantors”) and the Collateral Agent.

WWW.NIXONPEABODY.COM


The Lenders, the Administrative Agent and the Collateral Agent

July 27, 2012

Page 2

 

In connection with this opinion letter, we have also examined the following (collectively, the “UCC-1 Financing Statements”):

(a) an unfiled copy of that certain UCC-1 Financing Statement (the “UCC-1 Financing Statement—Company”) naming the Company as debtor and the Collateral Agent as secured party, in the form attached hereto as Exhibit A, which we understand is to be filed with the Delaware Secretary of State (the “Delaware Secretary of State”).

(b) an unfiled copy of that certain UCC-1 Financing Statement (the “UCC-1 Financing Statement—Pfaltzgraff”) naming Pfaltzgraff as debtor and the Collateral Agent as secured party, in the form attached hereto as Exhibit B, which we understand is to be filed with the Delaware Secretary of State;

(c) an unfiled copy of that certain UCC-1 Financing Statement (the “UCC-1 Financing Statement—TMC”) naming TMC as debtor and the Collateral Agent as secured party, in the form attached hereto as Exhibit C, which we understand is to be filed with the Delaware Secretary of State; and

(d) an unfiled copy of that certain UCC-1 Financing Statement (the “UCC-1 Financing Statement—Holdings”) naming Holdings as debtor and the Collateral Agent as secured party, in the form attached hereto as Exhibit D, which we understand is to be filed with the Delaware Secretary of State.

In addition, we have examined originals or copies, certified or otherwise identified to our satisfaction, of the following:

For the Company:

(i) the Certificate of Incorporation of the Company, as certified by the Company to be in effect on the date hereof;

(ii) the By-Laws of the Company, as certified by the Company to be in effect on the date hereof;

(iii) a Certificate, dated as of July 23, 2012, from the Delaware Department of State relating to the legal existence of the Company in the State of Delaware;

(iv) a Certificate of Secretary of the Company, dated of even date herewith, certifying to, among other things, the adoption by the Board of Directors of the Company of resolutions authorizing the execution, delivery and performance by the Company of the Loan Documents to which the Company is a party and the transactions contemplated thereby and the continuing validity, force and effect of those resolutions;

For Pfaltzgraff:

(v) the Certificate of Incorporation of Pfaltzgraff, as certified by Pfaltzgraff to be in effect on the date hereof;

 

NIXON PEABODY LLP


The Lenders, the Administrative Agent and the Collateral Agent

July 27, 2012

Page 3

 

(vi) the By-Laws of Pfaltzgraff, as certified by Pfaltzgraff to be in effect on the date hereof;

(vii) a Certificate, dated as of July 23, 2012, from the Delaware Department of State relating to the legal existence of Pfaltzgraff in the State of Delaware;

(viii) a Certificate of Secretary of Pfaltzgraff, dated of even date herewith, certifying to, among other things, the adoption by the Board of Directors of Pfaltzgraff of resolutions authorizing the execution, delivery and performance by Pfaltzgraff of the Loan Documents to which Pfaltzgraff is a party and the transactions contemplated thereby and the continuing validity, force and effect of those resolutions;

For TMC:

(ix) the Certificate of Incorporation of TMC, as certified by TMC to be in effect on the date hereof;

(x) the By-Laws of TMC, as certified by TMC to be in effect on the date hereof;

(xi) a Certificate, dated as of July 23, 2012, from the Delaware Department of State relating to the legal existence of TMC in the State of Delaware;

(xii) a Certificate of Secretary of TMC, dated of even date herewith, certifying to, among other things, the adoption by the Board of Directors of TMC of resolutions authorizing the execution, delivery and performance by TMC of the Loan Documents to which TMC is a party and the transactions contemplated thereby and the continuing validity, force and effect of those resolutions;

For Holdings:

(xiii) the Certificate of Formation for Holdings, as certified by Holdings to be in effect on the date hereof;

(xiv) the Limited Liability Company Agreement for Holdings, as certified by Holdings to be in effect on the date hereof;

(xv) a Certificate, dated as of July 23, 2012, from the Delaware Department of State relating to the legal existence of Holdings in the State of Delaware;

(xvi) a Certificate of Secretary of Holdings, dated of even date herewith, certifying to, among other things, the adoption by the Managers of Holdings of resolutions authorizing the execution, delivery and performance by Holdings of the Loan Documents to which Holdings is a party and the transactions contemplated thereby and the continuing validity, force and effect of those resolutions;

 

NIXON PEABODY LLP


The Lenders, the Administrative Agent and the Collateral Agent

July 27, 2012

Page 4

 

Miscellaneous:

(xvii) Amended and Restated Credit Agreement, dated as of October 28, 2011, as amended by Amendment No. 1 to Amended and Restated Credit Agreement, dated as of March 23, 2012, and Amendment No. 2 to Amended and Restated Credit Agreement, dated as of July 27, 2012, by and among the Company, the Foreign Subsidiary Borrowers from time to time party thereto, the other Loan Parties from time to time party thereto, the financial institutions identified therein as Lenders, the Administrative Agent and others named therein in the form provided to us by the Company (the “ABL Credit Agreement”); and

(xviii) a Certificate of Officers of the U.S. Loan Parties, dated of even date herewith, from each of the U.S. Loan Parties, a copy of which is attached hereto as Annex 1 and incorporated herein by reference (the “Certificate of Officers”).

The certificates described in clauses (iii), (vii), (xi) and (xv) above are hereinafter sometimes referred to collectively as the “Certificates of Legal Existence/Good Standing.”

For purposes of this opinion letter, we have assumed the genuineness of all signatures (other than those signatures on behalf of the U.S. Loan Parties), the conformity to originals of all documents submitted to us as copies, and the authenticity of the originals of such copies and the legal competence and capacity (in the case of all natural persons) to execute the documents as to which we opine or on which we rely. We have also assumed the factual accuracy of all certificates submitted to us and of any representations or warranties made by the U.S. Loan Parties and all of the other parties to the Loan Documents. We have further assumed the legal existence of all of the parties (other than the U.S. Loan Parties) to the Loan Documents, and the due authorization, execution and delivery of the Loan Documents by all of the parties thereto (other than the U.S. Loan Parties). We have assumed that each of the Loan Documents is a legal, valid and binding obligation of all of the parties thereto (other than the U.S. Loan Parties), enforceable against all such parties (other than the U.S. Loan Parties), in accordance with its respective terms. We wish to point out to you that our firm does not represent the U.S. Loan Parties on all matters and, as a result, there may be matters of a legal nature with respect to which we have not been consulted by the U.S. Loan Parties or as to which we have not been informed.

The members of our firm involved in the preparation of this opinion are licensed to practice law in the State of New York, and in rendering the opinions set forth herein, we do not purport to be experts on, or to express an opinion herein concerning any law other than (a) the laws of the State of New York (including Article 9 of the Uniform Commercial Code as in effect on the date hereof in the State of New York (the “New York UCC”), (b) Article 9 of the Uniform Commercial Code as in effect on the date hereof in the State of Delaware (the “Delaware UCC”), (c) the General Corporation Law of the State of Delaware as in effect on the date hereof, Del. Code Ann. tit. 8, sec. 101 et seq. (2012)(the “Delaware Corporation Statute”), (d) the Limited Liability Company Act of the State of Delaware as in effect on the date hereof, Del. Code Ann. tit. 6, sec. 18-101 et seq. (2012)((the “Delaware Limited Liability Company Act”), and (e) the federal laws of the United States of America, in each case as in effect as of the date hereof, irrespective of any choice of law provisions which may be contained in any of the Loan Documents. As used herein, the term “Applicable UCC” means the New York UCC and the Delaware UCC, collectively or singly, as the context may require.

With respect to any matters concerning the Delaware UCC, the Delaware Corporation Statute or the Delaware Limited Liability Act, we draw your attention to the fact that we are not admitted to practice in the State of Delaware. With your permission, (a) our opinions expressed herein concerning the Delaware UCC are limited to Article 9 of the Delaware UCC and are based solely upon our review of the statutory language of said Article 9, as reported in the CCH Secured Transactions Guide, as supplemented as of a recent date and not on any legislative history or judicial decisions or any rules, regulations, guidelines, releases or interpretations concerning the Delaware UCC; (b) our opinions

 

NIXON PEABODY LLP


The Lenders, the Administrative Agent and the Collateral Agent

July 27, 2012

Page 5

 

expressed herein concerning the Delaware Corporation Statute are based solely upon our review of the statutory language of said Statute, as in effect on the date hereof, and not on any legislative history or judicial decisions or any rules, regulations, guidelines, releases or interpretations concerning the Delaware Corporation Statute; and (c) our opinions expressed herein concerning the Delaware Limited Liability Act are based solely upon our review of the statutory language of said Act, as in effect on the date hereof, and not on any legislative history or judicial decisions or any rules, regulations, guidelines, releases or interpretations concerning the Delaware Limited Liability Act.

A. Based upon and subject to the foregoing, and subject to the qualifications and limitations set forth in Part B below, we are of the opinion that:

1. The Company (a) is a corporation incorporated and validly existing under the laws of the State of Delaware and (b) has the corporate power and authority to enter into and perform its obligations under each of the Loan Documents to which it is a party.

2. Pfaltzgraff (a) is a corporation incorporated and validly existing under the laws of the State of Delaware and (b) has the corporate power and authority to enter into and perform its obligations under each of the Loan Documents to which it is a party.

3. TMC (a) is a corporation incorporated and validly existing under the laws of the State of Delaware and (b) has the corporate power and authority to enter into and perform its obligations under each of the Loan Documents to which it is a party.

4. Holdings (a) is a limited liability company organized and validly existing under the laws of the State of Delaware and (b) has the limited liability company power and authority to enter into and perform its obligations under each of the Loan Documents to which it is a party.

5. Each of the U.S. Loan Parties has taken all necessary corporate and limited liability company, as applicable, action to authorize the execution, delivery and performance by it of each of the Loan Documents to which it is a party.

6. A duly authorized officer of each U.S. Loan Party has executed and delivered, for and on behalf of such U.S. Loan Party, each of the Loan Documents to which such U.S. Loan Party is a party.

7. Each of the Loan Documents to which each U.S. Loan Party is a party constitutes a legal, valid and binding obligation of such U.S. Loan Party, enforceable against such U.S. Loan Party, in accordance with its terms.

8. The execution and delivery by each U.S. Loan Party of the Loan Documents to which it is a party, and the performance of its obligations thereunder, do not: (a) violate any present law, statute or regulation of the State of New York, the Delaware Corporation Statute, the Delaware Limited Liability Company Act or the federal laws of the United States of America as in effect on the date hereof which in our experience is normally applicable to transactions of the type contemplated by the Loan Documents or (b) violate any provision of (i) the Certificate of Incorporation or By-Laws of the Company, Pfaltzgraff or TMC, in each case as amended and in effect on the date hereof, (ii) the Certificate of Formation or Limited Liability Company Agreement of Holdings, in each case, as amended and in effect on the date hereof, or (iii) the ABL Credit Agreement.

 

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July 27, 2012

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9. No consents or authorizations of, or filings with or notice to, any Governmental Authority of the United States of America, the State of New York or pursuant to the Delaware Corporation Statute or the Delaware Limited Liability Company Act, which are applicable to transactions of the type contemplated by the Loan Documents are required for the execution, delivery and performance by each U.S. Loan Party of the Loan Documents to which it is a party except for (a) such consents, authorizations and filings which on or prior to the date hereof, have been obtained or otherwise made; and (b) the filings of the UCC-1 Financing Statements with the Delaware Secretary of State.

10. The U.S. Security Agreement is effective to create in favor of the Collateral Agent a valid security interest, to the extent that Article 9 of the New York UCC is applicable thereto, in any Collateral (as defined in the U.S. Security Agreement) in which each Grantor has rights, as security for the payment of the Secured Obligations (as defined in the U.S. Security Agreement).

11. Upon the filing of the UCC-1 Financing Statements with the Delaware Secretary of State, such filings will be sufficient to perfect the security interests granted to the Collateral Agent for the benefit of the Secured Parties under the U.S. Security Agreement in all of the rights, title and interests of each of the Company, Pfaltzgraff, TMC and Holdings in that portion of the Collateral (as defined in the U.S. Security Agreement) in which a security interest may be perfected solely by the filing of one or more financing statements under the Delaware UCC.

12. None of the U.S. Loan Parties is an “investment company” as defined in the Investment Company Act of 1940, as amended.

13. The making of any Loan on the date hereof pursuant to the Credit Agreement and the application of proceeds thereof as provided in the Credit Agreement will not violate Regulation U (12 CFR Part 221), as promulgated by the Board of Governors of the Federal Reserve System and in effect on the date hereof.

B. The opinions set forth in Part A above are given subject to the qualifications stated therein, and subject to the following qualifications, limitations and assumptions:

1. Our opinion is limited to the specific opinions expressed in Part A above, and no other opinions are intended nor should they be inferred.

2. The opinions expressed in Sections 1(a), 2(a), 3(a) and 4(a) of Part A above as to the valid existence and the good standing of each of the U.S. Loan Parties in the State of Delaware is as of the date of the applicable Certificate of Legal Existence/Good Standing, and is based solely on such certificate. We express no opinion as to the tax good standing status of any U.S. Loan Party under any governmental taxing authority.

 

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July 27, 2012

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3. As to any facts material to this opinion, we have relied, to the extent that we deemed such reliance proper, upon certificates of public officials and officers and representatives of the U.S. Loan Parties, and upon representations and warranties of the parties set forth in the Loan Documents. We have not made or undertaken any independent investigation to establish or verify the accuracy or completeness of such factual matters, or as to any representation, warranty, data or other information, whether written or oral, that may have been provided by or on behalf of the U.S. Loan Parties or any other person, and we assume, in rendering this opinion, that none of such information contains any untrue statement of a material fact or omits to state a material fact necessary to render the statements made, in light of the circumstances in which they were made, not misleading.

4. The opinions expressed herein are subject to the following further qualifications;

(a) our opinions in Part A above are qualified to the extent that enforceability of the Loan Documents may be limited by (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws of general applicability affecting the enforcement of creditors’ rights, (ii) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and public policy, including without limitation (A) the possible unavailability of specific performance, injunctive relief or any other equitable remedy and (B) concepts of materiality, reasonableness, good faith and fair dealing and (iii) certain mandatory restrictions and limitations contained in the Applicable UCC (including, without limitation, Section 9-602 thereof);

(b) the obligations of each of the U.S. Loan Parties under the Loan Documents and the rights of the Administrative Agent, the Collateral Agent and/or the Lenders may be subject to possible limitations upon the exercise of remedial or procedural provisions contained in the Loan Documents; provided, however, such limitations do not, in our opinion, make the remedies which will be afforded to the Administrative Agent, the Collateral Agent and/or the Lenders inadequate for the practical realization of the substantive benefits purported to be provided to them by the Loan Documents; and

(c) any provisions of the Loan Documents which permit a party thereto to take action or make determinations, or to benefit from indemnities and similar undertakings of the U.S. Loan Parties, may be subject to a requirement that such action be taken or such determinations be made, and that any action or inaction by any such party which may give rise to a request for payment under any such indemnities or undertakings be taken or not taken, on a reasonable basis and in good faith.

5. No opinion is rendered herein as to (a) the enforceability of any provision in the Loan Documents purporting to waive the effect of applicable laws, rights to notice and hearings prior to the granting of any relief, or the right to trial by jury; (b) the enforceability of any choice of law provision contained in any of the Loan Documents; (c) the enforceability of any provision of any agreement relating to confessions of judgment, waivers of defenses, the imposition of “penalty-rate” interest or the imposition of interest on interest; (d) the effectiveness of any power of attorney granted pursuant to any of the Loan Documents; (e) any provisions of the Loan Documents which provide for indemnification, contribution, waiver or release to the extent such provisions may be limited or rendered unenforceable, in whole or in part, by applicable Federal or state securities laws, criminal statutes, or the policies underlying such laws and by the effect of general rules of contract law that limit the enforceability of provisions releasing, exculpating or exempting a party from, or requiring indemnification for liability for action or inaction, to the extent the action or inaction involves gross

 

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July 27, 2012

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negligence, recklessness, willful misconduct or unlawful conduct, or which provide for waivers which are rendered ineffective or unenforceable by the provisions of the Applicable UCC, or waivers of contingent claims or rights; (f) any provision purporting to grant relief or remedies in advance, including, without limitation, any consent to the appointment of a receiver or the granting of relief from the automatic stay in bankruptcy under Title I of the Bankruptcy Reform Act of 1978, as amended and codified at Title 11 of the United States Code; (g) the availability of the remedy of specific performance or of any other equitable remedy or relief, to enforce any right or obligation under any of the Loan Documents; (h) any provision of any Loan Document to the extent that it provides that the Administrative Agent, the Collateral Agent or any Lender may set off and apply any deposits at any time held, or any other indebtedness at any time owing, by the Administrative Agent, the Collateral Agent or any Lender to or for the account of any U.S. Loan Party; (i) the payment of any liquidated damages or other amount which may be held by a court to be a penalty or forfeiture; (j) Federal or state blue sky laws, rules or regulations or antitrust law, or ERISA or tax laws, rules, regulations or ordinances, or (k) the waiver of inconvenient forum or any claim that venue is improper or provisions relating to subject matter jurisdiction of the courts set forth in any of the Loan Documents.

6. We express no opinion as to any rights, title or interests of any U.S. Loan Party in or to any property (including any of the Collateral (as defined in the U.S. Security Agreement)).

7. Except as otherwise provided in Sections 10 and 11 of Part A above, we express no opinion as to the validity, legality, creation, perfection or enforceability of any security interest, lien or encumbrance in any property granted or purported to be granted by any U.S. Loan Party.

8. We express no opinion as to the priority of any security interest, lien or encumbrance in any property granted or purported to be granted by any U.S. Loan Party.

9. We have assumed that each U.S. Grantor has received “value” (as defined in Section 1-201(44) of the Applicable UCC) in exchange for granting a security interest in the Collateral (as defined in the U.S. Security Agreement);

10. We note that in the case of proceeds, the continuation of the perfection of a security interest therein is limited to the extent set forth by the applicable provisions of Section 9-315 of the Applicable UCC and to property of a type subject to the Applicable UCC.

11. We have assumed that none of the Collateral (as defined in the U.S. Security Agreement) consists of “consumer goods” (as defined in Section 9-102(a)(23) of the Applicable UCC) or “farm products” (as defined in Section 9-102(a)(34) of the Applicable UCC) or accounts resulting from the sale thereof or beneficial interests in a trust or a decedent’s estate, deposit accounts, letters of credit and policies of insurance.

12. We express no opinion with regard to the perfection of security interests under the U.S. Security Agreement in the case of any Collateral (as defined in the U.S. Security Agreement) which is or may become fixtures or which is installed in or affixed to, or becomes a part of a product or mass with goods which are not items of Collateral (as defined in the U.S. Security Agreement).

13. We note that the validity, legality, creation, perfection and enforceability of any security interest granted under the U.S. Security Agreement in that portion of the Collateral (as defined in the U.S. Security Agreement) which constitutes limited liability company interests in one or more limited liability companies organized under the State of Delaware, may be limited by the provisions of Sections 18-702 and 18-704 of the Delaware Limited Liability Company Act.

 

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14. We express no opinion as to the adequacy or accuracy of the description of the Collateral (as defined in the U.S. Security Agreement) insofar as such description includes terms which are not defined under Article 9 of the Applicable UCC.

15. We express no opinion with respect to accounts that are due from the United States or any State of the United States, or any agency or department of the United States or any state and are subject to the Assignment of Claims Act of 1940 or any similar state statutes.

16. We express no opinion as to the creation, perfection or enforceability of any security interest in any commercial tort claim which is not described with particularity in the U.S. Security Agreement, as required by Section 9-108(e)(1) of the Applicable UCC.

17. Although this opinion is given only as of the date hereof, we call your attention to the following: (a) the effectiveness of each UCC-1 Financing Statement will lapse five (5) years from the date of filing unless a continuation statement is properly filed within six (6) months prior to such termination in accordance with Section 9-515 of the Delaware UCC; (b) Sections 9-507 and 9-508 of the Delaware UCC provide that if a debtor so changes its name or identity that a filed financing statement becomes seriously misleading, the filing is not effective to perfect a security interest in collateral acquired by that debtor more than four (4) months after such change unless (i) in the case of a change of the debtor’s name, an appropriate amendment is filed in accordance with Section 9-507(c) of the Delaware UCC prior to the expiration of such period, or (ii) in the case of a change in the debtor’s identity, an appropriate initial financing statement is filed before the expiration of that period in accordance with Section 9-508(b) of the Delaware UCC; (c) if a debtor changes its location (as defined in Section 9-307 of the Delaware UCC) to another jurisdiction, perfection of the security interests of the secured party ceases at the expiration of four (4) months from the date of the change of that debtor’s location, or when perfection would have ceased under the law of the original jurisdiction, whichever period first expires, unless perfection against such collateral occurs in the new jurisdiction before the end of such period; and (d) if a transfer of collateral occurs to a Person that thereby becomes a debtor and is located in another jurisdiction, appropriate action must be taken within one (1) year in order to perfect in accordance with the laws of such jurisdiction, as provided in Section 9-316 of the Delaware UCC.

18. We have assumed that there are no agreements or understandings among the parties, written or oral, and there is no usage of trade or course of prior dealing among the parties that would, in either case, define, supplement, or qualify the terms of any of the Loan Documents.

19. We express no opinion as to the applicability to the obligations of any of the U.S. Loan Parties as guarantors or co-obligors (or the enforceability of such obligations) of Section 548 of the Bankruptcy Code, or any other provision of law relating to fraudulent conveyances, transfers or obligations.

 

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July 27, 2012

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All opinions set forth herein are given as of the date hereof under the factual circumstances as we understand them (as qualified herein) and applicable law existing as of this date.

The opinions set forth herein are expressed solely for the benefit of the Administrative Agent, the Collateral Agent and the Lenders and for the benefit of any assignee of the Loans in connection with the transactions provided for in the Credit Agreement, and without our prior written consent, may not be relied upon for any other purpose or by any other person for any purpose. This opinion is not to be referred to, furnished to, or quoted in, any document, report, or financial statement, or filed with, or delivered to, or disclosed to, any governmental authority (with the exception of government regulators to which the Administrative Agent, the Collateral Agent or any Lender is obligated under law to disclose such documentation) or other person, without our prior written consent or as otherwise required by law.

 

Very truly yours,
LOGO

 

NIXON PEABODY LLP


CERTIFICATE OF OFFICERS

FOR

U.S. LOAN PARTIES

Annex 1

 

NIXON PEABODY LLP


FORM OF

UCC-1 FINANCING STATEMENT – COMPANY

Exhibit A

 

NIXON PEABODY LLP


LOGO
UCC FINANCING STATEMENT FOLLOW INSTRUCTIONS (front and back) CAREFULLY A. NAME & PHONE OF CONTACT AT FILER [optional] B. SEND ACKNOWLEDGMENT TO: (Name and Address) THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY 1. DEBTOR’S EXACT FULL LEGAL NAME – insert only one debtor name (1 a or 1 b) – do not abbreviate or combine names OR 1c. MAILING ADDRESS 1000 Stewart Avenue 1d. SEE INSTRUCTIONS 1a. ORGANIZATION’S NAME LIFETIME BRANDS, INC. 1b. INDIVIDUAL’S LAST NAME ADD’L INFO RE ORGANIZATION DEBTOR 1e. TYPE OF ORGANIZATION Corporation FIRST NAME CITY Garden City 1f. JURISDICTION OF ORGANIZATION Delaware MIDDLE NAME STATE NY 1g. ORGANIZATIONAL I.D. #, if any NONE POSTAL CODE 11530 SUFFIX COUNTRY SA 2. ADDITIONAL DEBTOR’S EXACT FULL LEGAL NAME—insert only one debtor name (2a or 2b)—do not abbreviate or combine names OR 2c. MAILING ADDRESS 2d. SEE INSTRUCTIONS 2a. ORGANIZATION’S NAME 2b. INDIVIDUAL’S LAST NAME ADD’L INFO RE ORGANIZATION DEBTOR 2e. TYPE OF ORGANIZATION FIRST NAME CITY 2f. JURISDICTION OF ORGANIZATION MIDDLE NAME STATE 2g. ORGANIZATIONAL ID. #, if any NONE POSTAL CODE SUFFIX COUNTRY 3 SECURED PARTY’S NAME (or NAME of TOTAL ASSIGNEE of ASSIGNOR S/P)- insert only one secured party name (3a or 3b) OR 3c. MAILING ADDRESS 395 North Service Road, Floor 03 3a. ORGANIZATION’S NAME JPMorgan Chase Bank, N.A., as Collateral Agent 3b, INDIVIDUAL’S LAST NAME FIRST NAME CITY Melville MIDDLE NAME STATE NY POSTAL CODE 11747-3139 SUFFIX COUNTRY USA 4. This FINANCING STATEMENT covers the following collateral: All assets of the Debtor whether now owned or hereafter acquired or arising and wheresoever located, including all accessions thereto and products and proceeds thereof. ?This FINANCING STATEMENT is to be filed [for record ] (or recorded) in the REAL 7. Check to REQUEST SEARCH REPORT(S) on Debtor(s) All Dehtors ESTATE RECORDS Attach Addendum [if aDDlicablel [ADDITIONAL FEE1 [optional] All Debtors Debtor 1 Debtor 2 ALTERNATIVE DESIGNATION (if applicable):D LESSEE/LESSOR CONSIGNEE/CONSIGNOR BAILEE/BAILOR SELLER/BUYER D AG LIEN NON-UCC FILING 8. OPTIONAL FILER REFERENCE DATA To be filed in the office of the Delaware Secretary of State. CHI (3977381v.l


FORM OF

UCC-1 FINANCING STATEMENT—PFALTZGRAFF

Exhibit B

 

NIXON PEABODY LLP


LOGO

UCC FINANCING STATEMENT FOLLOW INSTRUCTIONS (front and back) CAREFULLY A. NAME & PHONE OF CONTACT AT FILER [optional] B SEND ACKNOWLEDGMENT TO (Name and Address) THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY 1. DEBTOR’S EXACT FULL LEGAL NAME—insert only one debtor name (1a or 1b)—do not abbreviate or combine names OR 1a ORGANIZATION’S NAME PFALTZGRAFF FACTORY STORES, INC. 1b. INDIVIDUAL’S LAST NAME FIRST NAME MIDDLE NAME SUFFIX 1c. MAILING ADDRESS 100